Download Create and Deliver Value

Chapter 1
Welcome to the World of
Marketing:
Create and Deliver Value
The Who and Where of Marketers
 Marketers:
Get the scoop on marketing salaries!
Visit the Occupational Outlook
Handbook!
At least one of the CEOs of large
companies have risen through the
marketing ranks. Why?
1-2
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.
1-3
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Marketing Creates Value. How?
Desired
state
Need
NEED
Current
state
WANT
Product
Marketing Creates Value. How?
WANT FOR
PRODUCT
DEMAND
BUYING
POWER
BENEFIT
VALUE
The Marketing Concept
Identifying and
satisfying consumer
needs to ensure longterm profitability
Marketing Creates Value – for
Whom?
customers
shareholders
society
workers
government
vendors
Marketing Meets Needs
 The modern marketplace
– Takes many forms, including a mall, eBay
auction, e-commerce Web site
1-8
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
1-9
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
1-10
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
–
–
Stardoll.com lets girls
create their own fashions,
Consumer orientation
or dress celebrities in
different outfits
Total quality management
 The Triple Bottom Line Era
1-11
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
1-12
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
1-13
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
1-14
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
This ad focuses on the
environmental bottom line
1-15
– 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
1-16
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
1-17
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
1-18
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
1-19
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
1-20
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
1-21
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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”
1-22
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
1-23
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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?
1-24
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
1-25
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 1.1
A Value Chain for the Apple iPod
1-26
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 1.2
Make and Deliver Value
1-27
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
1-28
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
1-29
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
1-30
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
1-31
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
1-32
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 1.3
The Marketing Mix
1-33
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall