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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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
 The modern marketplace
– Takes many forms, including a mall, eBay
auction, e-commerce Web site
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
The Evolution of Marketing
 The Production Era
– Production orientation
 The Sales Era
– Selling orientation
 The Relationship Era
– Consumer orientation
– Total quality management
 The Triple Bottom Line Era
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
The Sales 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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
The Triple Bottom Line Era:
Make Money and a Contribution
 Focuses on building long-term bonds
with customers
– Triple orientation seeks to maximize the
financial, social, and environmental bottom
lines
 Marketing uses customer relationship
management (CRM)
– CRM involves systematically tracking
consumers’ needs in ways that also benefit
society and delivers profit to the firm
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
The Triple Bottom Line Era:
Make Money and a Contribution
 Social marketing concept:
– Management philosophy that marketers must
satisfy customers’ needs in ways that also
benefit society and deliver value to the firm
 Sustainability:
– Creating products that meet present needs
and ensuring that future generations can
have their needs met
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
The Triple Bottom Line Era:
Make Money and a Contribution
 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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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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
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– Inbound logistics
– Operations
– Outbound logistics
– Marketing final product
– Service
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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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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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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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© 2009
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Publishing as Prentice Hall
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall