Download Create and Deliver Value

Chapter 1
Welcome to the World of
Marketing:
Create and Deliver Value
Chapter Objectives
 Understand who marketers are, where they
work, and marketing’s role in the firm
 Explain what marketing is and how it provides
value to everyone involved in the marketing
process
 Explain the evolution of the marketing process
 Understand the range of services and goods
that organizations market
 Understand value from the perspectives of
customers, producers, and society
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Real People, Real Choices:
Decision Time at Ron Jon Surf Shop, Inc.
 Which tactic should Ron use to
advertise at airports?
– Option 1: Focus advertising on rental cars by
placing Ron Jon ads on maps and mirror
hangers
– Option 2: Advertise on wall-mounted backlit
photographs (dioramas)
– Option 3: Advertise on escalator “gateways”
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Welcome to a “Brand You”
 You are a product and have “market value” as
a person
 You “position” yourself for a job interview
 Don’t “sell yourself short”
 Personal image consultants often help people
to devise a “marketing strategy”
 Your choice of goods and services allows
you to package and promote yourself
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The Who and Where of
Marketing
 Marketers:
– Are real people who make
choices that affect themselves,
their companies, and millions
of consumers (see “Real
People, Real Choices”)
– Work cross-functionally within
the firm
– Enjoy exciting, diverse careers
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Get the
scoop
on marketing
salaries!
Visit the
Occupational
Outlook
Handbook!
The Value of Marketing
 Definition of marketing (AMA, 2007)
– Marketing is the activity, set of institutions,
and processes for creating, communicating,
delivering and exchanging offerings that
have value for customers, clients, partners,
and society at large.
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Marketing Meets Needs
 Marketing meets the needs of diverse
stakeholders
– Stakeholders are buyers, sellers, investors,
community residents, citizens
 Marketing concept
– Identifying and satisfying consumer needs to
ensure long-term profitability
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Marketing Meets Needs
Ron Jon’s
success depends
upon its ability to
meet consumers’
intangible needs.
Visit their Web
site to learn more.
Ron Jon’s
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Marketing Meets Needs
 The modern marketplace
– Takes many forms, including a mall, eBay
auction, e-commerce Web site
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Marketing Is about Creating
Utility
 Utility:
The sum of the benefits we receive
from using a product/service
– Form utility
– Place utility
– Time utility
– Possession utility
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Marketing Is about
Exchange Relationships
 An exchange occurs when something
is obtained for something else in
return, like cash for goods or services
– Buyer receives an object, service, or idea that
satisfies a need
– Seller receives something of equivalent value
• Example: money, barter of services or goods,
trade-ins
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Exchange Relationships
Ron Jon’s
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The online game
Second Life allows
players to engage
in virtual
exchanges, in
which players can
purchase clothing
or other goods in
exchange for
currency the game
maker issues
The Evolution of Marketing
 The Production Era
– Production orientation
 The Sales Era
– Selling orientation
 The Relationship Era
–
–
Stardoll.com lets girls
create their own fashions,
Consumer orientation
or dress celebrities in
different outfits
Total quality management
 The Triple Bottom Line Era
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The Production Era
 Dominated by production orientation:
– A management philosophy that emphasizes
the most efficient ways to produce and
distribute products
 Marketing played an insignificant role
 Henry Ford’s Model T and Ivory soap
are examples of products that were
created under a production orientation
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The Selling Era
 When product availability exceeds
demand, businesses may focus
on a one-time sales of goods
rather than repeat business
 Dominated by selling orientation:
– Managerial view of marketing as a
sales function, or a way to move
products out of warehouses
to reduce inventory
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The Relationship Era
 Focused on a customer orientation:
– A management philosophy that emphasizes
satisfying customers’ needs and wants
 Marketing becomes more important in
the firm
 Total Quality Management (TQM) is
widely followed in the marketing
community
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The Triple Bottom Line Era:
Make Money and a Contribution
 Focuses on building
long-term bonds with
customers
This ad focuses on the
environmental bottom line
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– Triple orientation seeks
to maximize the
financial, social, and
environmental bottom
lines
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
The Triple Bottom Line Era:
Make Money and a Contribution
 Marketing uses customer relationship
management (CRM)
– CRM involves systematically tracking consumers’
needs in ways that also benefit society and delivers
profit to the firm
 Social marketing concept:
– Management philosophy that
marketers must satisfy customers’
needs in ways that also benefit
society and deliver value to the firm
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(RED)
Video
The Triple Bottom Line Era:
Make Money and a Contribution
 Sustainability:
– Creating products that meet present needs
and ensuring that future generations can
have their needs met
 Greater focus on accountability
– ROI (Return on Investment) is the direct
financial impact of a firm’s expenditure of
resources such as time or money
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
What Can Be Marketed?
 From “serious” goods/services to fun things
– Products mirror changes in popular culture
– Marketing messages often communicate myths
 Product: any good, service, or idea
– Consumer goods/services
– Business-to-business goods/services
– Not-for-profit marketing
– Idea, place, and people marketing
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The Marketing of Value
 Value:
– The benefits a customer receives from buying
a good or service
 Marketing communicates the value
proposition:
– A marketplace offering that fairly and
accurately sums up the value that the
customer will realize if he/she purchases
product/service
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Value from
the Customer’s Perspective
 Customer perspective:
– Value is the ratio of costs (price) to benefits
(utilities)
– Value proposition includes the whole bundle
of benefits the firm promises to deliver, not
just the benefits of the product itself
• Brand image is a critical component
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Value from
the Seller’s Perspective
 Value for the seller takes many forms
– Making a profitable exchange
– Earning prestige among rivals
– Taking pride in doing what a company does
well
– Nonprofits: motivating, educating, or
delighting the public
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Building Value Through
Customers
 Customers are now regarded as
partners rather than victims
 It is more expensive to attract new
customers than to retain current ones
 Calculating the lifetime value of a
customer allows a firm to decide which
customers are “worth keeping” vs.
which should be “fired”
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Providing Value Through
Competitive Advantage
 Creating a competitive advantage
requires:
– Identification of a distinctive competency:
The ability of a firm to outperform the
competition by providing customers with a
benefit the competition cannot provide
 Turning distinctive competencies into
differential benefits
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Differential Benefit?
Does this product
provide a differential
benefit that is important
to consumers? Are the
benefits provided to
consumers unique and
superior to those offered
by the competition, and
if so, is this competitive
advantage sustainable?
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Adding Value Through
the Value Chain
 Value chain:
A series of activities involved in
designing, producing, marketing,
delivering, and supporting any product
– Inbound logistics
– Operations
– Outbound logistics
– Marketing final product
– Service
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Figure 1.1
A Value Chain for the Apple iPod
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Figure 1.2
Make and Deliver Value
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Consumer-Generated Value:
From Audience to Community
 Consumer-generated value:
– Everyday people functioning in marketing
roles such as:
• Creating ads
• Providing input into new product development
• Serving as retailers
– Social networking is growing explosively
• Wisdom of crowds
– Open source business models
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Value from Society’s Perspective
 Marketing transactions and company
activities influence the world and add
or subtract value from society
 Stressing ethical or socially
responsible decisions is often good
business in the long run
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The Dark Side of Marketing
 Marketing is often criticized
 Illegal practices do occur
 Some marketing activities have
detrimental effects on society
 The dark side of marketing:
– Terrorism, addictive consumption,
exploitation, illegal activities, shrinkage,
anticonsumption
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
It’s Debatable
Class Discussion Question
Some people feel that marketers
manipulate consumers, while others
argue that people should be held
responsible for their own choices.
This ad is critical of the current trend
of lawsuits brought against fast-food
companies by people who blame
their health problems on the fast
food industry. Where do you stand?
Visit ConsumerFreedom.com
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Marketing as a Process
 Marketing planning (thinking
carefully and strategically about the
big picture)
– Analyzing the marketing environment
– Developing a marketing plan
– Deciding on a market segment
– Choosing the marketing mix—product,
price, promotion, and place
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Figure 1.3
The Marketing Mix
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Real People, Real Choices:
Decision Made at Ron Jon Surf Shop
 Bill chose option 2
– Implementation: Ron Jon tested the use of
dioramas in the Orlando Airport at gate arrival
and baggage claim areas. Survey data
gathered at the Cocoa Beach store showed
that shoppers noticed airport ads
– Measuring Success: Distributed 7,500
shopper surveys; collected demographic and
travel data (for non-residents)
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Keeping It Real: Fast-Forward to Next
Class Decision Time at PaperBackSwap
 Meet Richard of PaperBackSwap
 Firm is considering methods of
building Web site traffic and customers
for PaperBackSwap
 The decision to be made:
Which environmental trend should be
used to propel the new service into the
limelight?
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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permissionCopyright
of the publisher.
Printed
in theEducation,
United States
of America.
© 2009
Pearson
Inc.
Publishing as Prentice Hall
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall