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Chapter One
Marketing’s Role in the
Global Economy
Exhibit 1-1
Types of Utility and How They Are Provided
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Universal Functions of Marketing
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Exhibit 1-3
Marketing Facilitates Production and Consumption
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Facilitators
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Ad agencies
Marketing research firms
Information technology suppliers
Product testing labs
Public warehouses
Transporting specialists
Financial institutions
. . . and others
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Economics Systems
Marketing-Directed
Economic Systems
Consumer choices are
the invisible hand that
guides the economy
Planned
Economic Systems
Government planners
decide what consumers
should get
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
What is Marketing
• MICRO-MARKETING:
– the performance of activities that seek to accomplish an
organization's objectives by anticipating customer or client needs
and directing a flow of need-satisfying goods and services from
producers to customer or client
• MACRO-MARKETING:
– a social process that directs an economy's flow of goods and
services from producers to consumers in a way that effectively
matches supply and demand and accomplishes the objectives of
society
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Marketing Orientation
• Trying to carry out the marketing concept
• Maintaining a customer orientation
– All departments work together guided by
customer needs
– Focus on profit objective (or other overall
objective)
– NOT just trying to "unload" what the firm
has produced
Some Differences in Outlook Between Adopters
of the Marketing Concept and the
Typical Production-Oriented Managers
Topic
Attitudes toward customers
An Internet website
Product Offering
Role of marketing research
Interest in innovation
Importance of profit
Role of packaging
Inventory Levels
Focus of advertising
Role of sales force
Relationship with customer
Costs
Marketing Orientation
Production Orientation
Customer needs determine company
plans
They should be glad we exist, trying
to cut costs and bringing out better
products
A new way to serve customers
If we have a website, consumers will
flock to it
Company makes what it can sell
Company sells what it can make
To determine customer needs and
To determine customer reaction, if
how well company is satisfying them used at all.
Focus on locating new opportunities Focus is on technology and cost
cutting
A critical objective
A residual, what’s left after all costs
are covered
Designed for customer convenience
and as a selling tool
Set with customer requirements and
costs in mind.
Need-satisfying benefits of products
and services
Help the customer to buy if the
product fits customer’s needs, while
coordinating rest of firm
Customer satisfaction before and
after sale leads to a profitable longrun relationship.
Eliminate costs that do not give value
to the customer
Seen merely as protection for the
product
Set to make production more
convenient.
Product features and how products
are made
Sell the customer, don’t worry about
coordination with other promotion
efforts or rest of firm.
Relationship is seen a short term--ends when a sale is made
Keep costs as low as possible.
The Marketing Concept and Customer
Value
• Customer value concerns the difference between the
benefits a customer sees from a market offering and
the costs of obtaining those benefits
• Customer value takes the customer’s point of view
– But customer may not explicitly think in terms of
costs and benefits
• Costs and benefits are not just limited to economic
considerations
– Examples: Convenience in purchasing
–
Emotional reactions (status needs, etc.)
• In a competitive market, the firm that offers superior
value is likely to win business and get repeat
customers
Organizations with a Marketing Orientation
Carry Out the Marketing Concept
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Customer Satisfaction
• Customer satisfaction is the extent to which a firm
fulfills a consumer’s needs, desires, and expectations
• As some needs are met, others may become more
important
• Expectations may change based on experiences
– Satisfying experiences may lead to increasing
expectations
– Disappointing experiences may reduce
expectations
– Expectations may be realistic or unrealistic
Micro-Macro Dilemma
• Micro-macro dilemma: what is "good" for some
producers and consumers may not be good for
society as a whole.
• Examples:
– some consumers want handguns, but guns can be
dangerous
– all terrain vehicles are fun for some people, but may
result in injuries or damage to wilderness areas
– non-returnable soft drink bottles are convenient, but
sometimes result in litter and dangerous broken glass
along highways.
– repairing an old air-conditioning system might save
the owner money, but might require continued use of
ozone depleting fluorocarbons (used as coolant)
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Nonprofit Organizations and the
Marketing Concept
• Both public and private nonprofit organizations are
turning to marketing concepts
• Some nonprofits differ from business in important
ways:
– those who get benefits may not provide the
support
– may be difficult to agree on basic objective
– each volunteer tends to do what he or she wants to
do!
Social Responsibility and
Marketing Ethics
• Social responsibility concerns a firm's
obligation to improve its positive
effects on society and reduce its
negative effects
Marketing ethics are the moral
standards that guide marketing
decisions and actions
Excerpt from the Code of Ethics of
the American Marketing Association
“ ...Participants in the marketing exchange
process should be able to expect that:
1. Products and services offered are safe and fit
for their intended uses;
2. Communications about offered products and
services are not deceptive;
3. All parties intend to discharge their obligations,
financial and otherwise, in good faith; and
4. Appropriate internal methods exist for equitable
adjustment and/or redress of grievances
concerning purchases…”
Exhibit 1-5
Sample Criticisms of Marketing
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Advertising is often annoying, misleading, or wasteful.
Product quality and safety are poor.
There are too many unnecessary products.
Packaging and labels are often confusing and deceptive.
Middlemen just add to the cost of distribution.
Marketing serves the rich and exploits the poor.
Service often stinks, and nobody cares when a consumer has a
problem.
Marketing creates interest in products that pollute the
environment.
Private information about consumers is collected to sell them
things they don’t want.
Marketing makes people too materialistic.
Easy credit makes people buy things they can’t afford.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing