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CHAPTER
CREATING
CUSTOMER
RELATIONSHIPS
AND VALUE
THROUGH
MARKETING
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-1
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
1. Define marketing and identify the
requirements for marketing to occur.
2. Explain how marketing discovers and
satisfies consumer needs.
3. Distinguish between marketing mix
elements and environmental forces.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-2
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
4. Explain how organizations build strong
relationships and customer value
through marketing.
5. Describe how today’s customer era
differs from prior eras oriented to
production and selling.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-3
A MARKETING AND PRODUCT
PUZZLE: HOW DO COLLEGE
STUDENTS STUDY?
• The Legend:
The Product
Nobody Seemed
to Want
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-4
A MARKETING AND PRODUCT
PUZZLE: HOW DO COLLEGE
STUDENTS STUDY?
• Discovering Student Studying Needs
+
3M Post-it® Notes or
Post-it® Flags
=
Felt Tip Highlighters
3M product that will combine
Post-it® Notes or
Post-it® Flags and Highlighters
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-5
A MARKETING AND PRODUCT
PUZZLE: HOW DO COLLEGE
STUDENTS STUDY?
• Satisfying
Student
Studying
Needs
• 3M’s Technology,
Marketing, and You
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-6
The Office Market Segment
How can 3M reach this segment with the
Post-it® Flag Highlighter?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-7
3M Post-it® Flag Highlighter
How do college students study?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-8
FIGURE 1-1 The see-if-you’re-really-amarketing-expert test
1. True
3. True
2. (c) 30%
4. (c) plastic bottles
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-9
WHAT IS MARKETING?
• Marketing: Using Exchanges to Satisfy
Needs
 Marketing
 Exchange
• The Diverse Forces Influencing
Marketing Activities
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-10
FIGURE 1-2 An organization’s marketing
department relates to many people, groups,
and forces
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-11
Concept Check
1. What is marketing?
A: Marketing is an organizational
function and a set of processes for
creating, communicating, and
delivering value to customers and for
managing customer relationships in
ways that benefit the organization
and its stakeholders.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-12
Concept Check
discovering
2. Marketing focuses on __________
and ________
satisfying consumer needs.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-13
HOW MARKETING DISCOVERS AND
SATISFIES CONSUMER NEEDS
• Discovering Consumer Needs
 The Challenge of Meeting Consumer Needs
With New Products
• “Focus on the consumer benefit”
• “Learn from the past”
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-14
Dr. Care Vanilla-Mint Aerosol Toothpaste
What “benefits” and what “showstoppers”?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-15
Hot Pockets Subs Microwaveable Snacks
What “benefits” and what “showstoppers”?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-16
Scooba Robotic Floor Washer
What “benefits” and what “showstoppers”?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-17
Coca Cola C2
What “benefits” and what “showstoppers”?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-18
HOW MARKETING DISCOVERS AND
SATISFIES CONSUMER NEEDS
• Discovering Consumer Needs
 Consumer Needs and Consumer Wants
• Need
• Want
 What a Market Is
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-19
FIGURE 1-3 Marketing’s first task:
discovering consumer needs
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-20
HOW MARKETING DISCOVERS AND
SATISFIES CONSUMER NEEDS
• Satisfying Consumer Needs
 Target Market
 The Four P’s: Controllable Marketing Mix
Factors
• Product
• Price
• Promotion • Place
 The Uncontrollable, Environmental Forces
• Social
• Economic
• Competitive
• Regulatory
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
• Technological
Slide 1-21
FIGURE 1-A Summary of factors that affect
an organization’s marketing program
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-22
THE MARKETING PROGRAM:
HOW CUSTOMER RELATIONSHIPS
ARE BUILT
• Customer Value and Customer
Relationships
 Best Price
 Best Product
 Best Service
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-23
Costco, Starbucks, and Lands’ End
What customer value strategy?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-24
THE MARKETING PROGRAM:
HOW CUSTOMER RELATIONSHIPS
ARE BUILT
• Relationship Marketing and the
Marketing Program
 Relationship Marketing: Easy to Understand,
Hard to Do
 The Marketing Program
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-25
FIGURE 1-4 Marketing’s second task:
satisfying consumer needs
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-26
THE MARKETING PROGRAM:
HOW CUSTOMER RELATIONSHIPS
ARE BUILT
• A 3M Product and
Marketing Program to
Help Students Study
 Moving from Ideas
to a Marketable
Highlighter Product
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-27
THE MARKETING PROGRAM:
HOW CUSTOMER RELATIONSHIPS
ARE BUILT
• A 3M Product and
Marketing Program to
Help Students Study
 Extending the
Product Line
 A Marketing Program
for the Post-it® Flag
Highlighter and Pen
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-28
FIGURE 1-5 Marketing programs for two
new 3M Post-it® brand products targeted at
two distinctly different customer segments:
college students and office workers
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-29
Concept Check
1. An organization can’t satisfy the
needs of all consumers, so it must
focus on one or more subgroups,
target markets
which are its ____________.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-30
Concept Check
2. What are the four marketing mix
elements that make up the
organization’s marketing program?
A: product, price, promotion, place
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-31
Concept Check
3. What are environmental forces?
A: Environmental forces are those that
the organization’s marketing
department can’t control. These
include social, economic,
technological, competitive, and
regulatory forces.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-32
HOW MARKETING BECAME
SO IMPORTANT
• Evolution of the Market Orientation
 Production Era
 Sales Era
 Marketing Concept Era
 Customer Era
• Market Orientation
• Customer Relationship Management (CRM)
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-33
FIGURE 1-B Four different orientations in
the history of American business
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-34
HOW MARKETING BECAME
SO IMPORTANT
• Ethics and Social Responsibility:
Balancing Interests
 Ethics
 Social Responsibility
• Societal Marketing Concept
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-35
HOW MARKETING BECAME
SO IMPORTANT
• The Breadth and Depth of Marketing
 Who Markets?
 What Is Marketed?
• Goods
• Services
• Ideas
 Who Buys and Uses What Is Marketed?
• Ultimate Consumers
• Organizational Buyers
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-36
Arizona Highways
Who markets and what is marketed?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-37
HOW MARKETING BECAME
SO IMPORTANT
• The Breadth and Depth of Marketing
 Who Benefits?
 How Do Consumers Benefit?
• Utility
 Form Utility
 Time Utility
 Place Utility
 Possession Utility
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-38
Concept Check
1. What are the two key characteristics
of the marketing concept?
A: (1) strive to satisfy the needs of
consumers (2) while also trying to
achieve the organization’s goals.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-39
Concept Check
2. What is the difference between goods
and services?
A: Goods are physical objects whereas
services are complex intangible
items, such as legal advice, a college
education, or airline travel.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-40
GOING ONLINE
YOUR PERSONAL
MECHANIZED
“TRANSPORTER”
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-41
Going Online
1. What do you see as the advantages and
disadvantages of the Segway HT?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-42
Going Online
2. For businesses, what applications
could the Segway HT be used for?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-43
Going Online
3. Why would consumers want to buy a
Segway HT?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-44
VIDEO CASE 1
ROLLERBLADE: BENEFITS
BEYOND EXPECTATIONS
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-45
VIDEO CASE 1
Rollerblade
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-46
VIDEO CASE 1
Rollerblade
1. What trends in the environmental
forces (social, economic,
technological, competitive, and
regulatory) (a) work for and
(b) work against Rollerblade’s
potential growth in the 21st century?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-47
VIDEO CASE 1
Rollerblade
2. Compare the likely marketing goals
for Rollerblade (a) in 1986 when
Rollerblade was launched and
(b) today?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-48
VIDEO CASE 1
Rollerblade
3. What kind of focused communication
and promotion actions might
Rollerblade take to reach the
(a) Fitness/Recreation and (b) Junior
market segments? For some starting
ideas, visit rollerblade.com.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-49
VIDEO CASE 1
Rollerblade
4. In searching for global markets to
enter, (a) what are some criteria
that Rollerblade should use to
select countries to enter, and
(b) what three or four countries
meet these criteria best and are the
most likely candidates?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-50
SUPPLEMENTAL
LECTURE NOTE 1-1
THE MARKETING
CHALLENGES FACING
ROLLERBLADE, INC.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-51
FIGURE 1-C Number of in-line skaters in the
United States
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-52
Rollerblade Print ad from the Early 1990s
What was Rollerblade’s focus?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-53
Rollerblade Print ad from the Early 2000s
What was Rollerblade’s focus?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-54
IN-CLASS ACTIVITY 1-1
DESIGNING A CANDY BAR
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-55
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-56
IN-CLASS ACTIVITY 1-2
WHAT MAKES A
BETTER MOUSETRAP?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-57
A Victorious Mouse
If a man
(woman)…makes
a better
mousetrap,
the world will
beat a path to his
(her) door.”
 Ralph Waldo Emerson
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-58
Victor® Metal Bait Pedal and
Live Catch Mousetraps
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-59
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-60
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-61
IN-CLASS ACTIVITY 1-3
DEVELOPING A
MARKETING PROGRAM
FOR ROLLERBLADE
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-62
Rollerblade 2006 Consumer Brochure
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-63
Rollerblade’s Crossfire 4D/Activa 4D Skates
That Target the Fitness Segment
Crossfire 4D
Activa 4D
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-64
Rollerblade’s Spiritblade Skate
That Targets the Recreation Segment
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-65
Rollerblade’s Micro TFS Skate
That Targets the Junior Segment
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-66
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-67
Marketing
AMA Definition of Marketing
Marketing is an organizational function
and a set of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-68
Exchange
Exchange is the trade of things of value
between buyer and seller so that each is
better off after the trade.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-69
Market
A market consists of people with both the
desire and ability to buy a specific
product.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-70
Target Market
The target market consists of one or
more specific groups of potential
customers toward which an organization
directs its marketing program.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-71
Marketing Mix
The marketing mix consists of
the marketing manager’s controllable
factors—product, price, promotion, and
place (the 4Ps)—that can be used to solve
a marketing problem.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-72
Environmental Forces
Environmental forces are the
uncontrollable factors involving social,
economic, technological, competitive, and
regulatory forces.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-73
Customer Value
Customer value is the unique
combination of benefits received
by targeted buyers that includes quality,
price, convenience, on-time delivery, and
both before-sale and after-sale service.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-74
Relationship Marketing
Relationship marketing links the
organization to its individual customers,
employees, suppliers, and other partners
for their mutual long-term benefits.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-75
Marketing Program
A marketing program is a plan that
integrates the marketing mix to provide a
good, service, or idea to prospective
buyers.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-76
Marketing Concept
The marketing concept is the idea that
an organization should (1) strive to satisfy
the needs of consumers (2) while also
trying to achieve the organization’s goals.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-77
Market Orientation
An organization that has a market
orientation focuses its efforts on
(1) continuously collecting information
about customers’ needs, (2) sharing this
information across departments, and
(3) using it to create customer value.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-78
Societal Marketing Concept
The societal marketing concept is the
view that an organization should satisfy
the needs of consumers in a way that
provides for society’s well-being.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-79
Ultimate Consumers
Ultimate consumers are the people who
use the goods and services purchased for
a household.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-80
Organizational Buyers
Organizational buyers are those
manufacturers, wholesalers, retailers,
and government agencies that buy goods
and services for their own use or for
resale.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-81
Utility
Utility is the benefits or customer value
received by users of the product.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 1-82