BASIC MARKETING

Chapter 01
Marketing’s Value to
Consumers, Firms, & Society
 1-2

At the end of this presentation, you should

be able to:
1. Know what marketing is and why you should learn
about it.
2. Understand the difference between marketing and
macro-marketing.
3. Know the marketing functions and why marketing
specialists—including intermediaries and collaborators
—develop to perform them.
4. Understand what a market-driven economy is and how
it adjusts the macro-marketing system.
 1-3

At the end of this presentation, you should

be able to:
5. Know what the marketing concept is—and how it
should guide a firm or nonprofit organization.
6. Understand what customer value is and why it is
important to customer satisfaction.
7. Know how social responsibility and marketing ethics
relate to the marketing concept.
8. Understand the important new terms.
 1-4

The Management Job in Marketing

More than Selling or Advertising

More than Selling

All Those
and Advertising
Bicycles!
 1-5

Things a Firm Should Do in

Producing a Bike
Analyze
Analyze Needs
Needs
Predict The
Predict Wants
WantsThe
marketing
Estimate Demand
mix
Estimate Demand
Predict
Predict When
When
Determine
Determine Where
Where
Estimate
Estimate Price
Price
Decide
Decide Promotion
Promotion
Estimate
Estimate Competition
Competition
Provide
Provide Service
Service
 1-6

Production vs. Marketing

Marketing
Makes sure right goods &
services are produced

Production
Production
•• Making
Making Goods
Goods
•• Performing
Performing Services
Services

Creates Customer Satisfaction

 1-7

Marketing Is Important to You!

Important
Important to
to every
every consumer!
consumer!

Important
Important to
to your
your job!
job!

Affects
Affects innovation
innovation and
and
standard
standard of
of living
living
 1-8

Marketing
Stimulates
New Ideas

Courtesy of The Procter & Gamble Company.

 1-9

What Is Marketing?

Micro
Micro View
View Macro
Macro View
View

• Set of activities • Social process

and
• Performed by • Matches supply
individual with demand
organizations
 1-10

Marketing

Profit
Profit and
and More
More than
than
Nonprofit
Nonprofit Persuasion
Persuasion

Builds
Builds Key
Key Begins
Begins with
with
Relationships
Relationships Characteristics
Characteristics Needs
Needs

Involves
Involves Doesn’t
Doesn’t Go
Go ItIt
Exchanges
Exchanges Alone
Alone
 1-11

Building
Customer
Relationships
 1-12

Macro-Marketing

Emphasis
Emphasis is
is on
on Every
Every Economy
Economy
Whole
Whole System
System Needs
Needs It
It

Key
Key
Characteristics
Characteristics

Matches
Matches
Producers
Producers and
and
Consumers
Consumers
 1-13

Can Mass Production Satisfy a Society’s

Consumption Needs?
Economies of Scale - Lower Unit Cost

Unit
Cost
$

Output
Marketing Bridges the Gap!

Producers
Producers Marketing
Marketing Consumers
Consumers
Functions
Functions
 1-14

Overcoming
Spatial
Separation
 1-15

Marketing Facilitates Production and

Consumption (Exhibit 1-1)
Production Sector
• Spatial Separation
• Separation in Time
Marketing
• Discrepancies of
needed to • Separation of
Quantity
overcome Information
• Discrepancies of discrepancies • Separation in
Assortment and Values
separations • Separation of
Ownership

Consumption Sector
 1-16

Universal Functions of Marketing

Buying
Buying Selling
Selling

Market
Market Transporting
Transporting
Information
Information Marketing
Functions
Risk
Risk Taking
Taking Storing
Storing

Standardization
Standardization
Financing
Financing &
& Grading
Grading
 1-17

Who Performs Marketing Functions?

Producers Wholesalers Other

Specialists

Transport
Firms Retailers
Ad Agencies
ISP's

Product
Testing Research
Firms Firms Consumers
 1-18

How Decisions are Made in

an Economic System
Command
Command Market-Directed
Market-Directed
Economy
Economy Economy
Economy
• Government • Adjusts itself
officials decide • Price is value
• May work well if: measure
OR
• Simple • Freedom of
economy
choice
• Little Variety
• Government’s
• Adverse
role limited
Conditions
 1-19

Model of a Market-Directed
Macro-Marketing System (Exhibit 1-2)

Monitoring by government(s)
and public interest groups
 1-20

Marketing’s Role Has Changed Over Time

Focus:
Focus:
Simple
Simple Trade
Trade Era
Era Sell
Sell Surplus
Surplus

Focus:
Focus:
Production
Production Era
Era Increase
Increase Supply
Supply

Focus:
Focus:
Sales
Sales Era
Era Beat
Beat Competition
Competition

Marketing
Marketing Department
Department Focus:
Focus:
Era
Era Coordinate
Coordinate and
and Control
Control

Marketing Focus: Long-Run

Long-Run
Marketing Company
Company Era
Era Customer
Customer Satisfaction
Satisfaction
 1-21

The Marketing Concept (Exhibit 1-3)

Customer Total
satisfaction company
effort
The
Marketing
Concept

Profit (or another measure

of long-term success) as
an objective
 1-22

Creating
Customer
Satisfaction

Prestige Brands Holdings, Inc.

 1-23

Checking Your Knowledge

A store that is popular with newlyweds runs a wedding gift registry.

Five minutes before closing time on a Sunday, a young couple enters
the store and wants to register—a process that usually takes 30
minutes or more. A sales associate advises the couple to come back
when they have more time, even though a recent memo from the
store’s regional manager specifically instructed store personnel to
stay after closing time to help such customers. Which key element of
the marketing concept is the main problem area in this situation?

A. Customer need
B. Total company effort
C. Customer satisfaction
D. Marketing orientation
E. Product orientation
 1-24

Adopting the
Marketing
Concept
 1-25

The Marketing Concept & Customer Value

Take
Take Customer’s
Customer’s
Point
Point of
of View
View

Customer
Customer value
value
reflects
reflects
benefits
benefits and
and costs
costs

Customer
Customer May
May Not
Not
Dwell
Dwell On
On Value
Value
Costs Benefits
Where
Where Does
Does
Competition
Competition Fit?
Fit?

Customer
Customer Value
Value
Builds
Builds Relationships
Relationships
 1-26

Costs, Benefits, and Customer Value

(Exhibit 1-5)

High
Perceived
superior e
value il n
u e
Benefits target a l
customer sees irv
f a
in a firm’s ed
i v
goods and ce
r
services pe
r’s
e
t om Perceived
us inferior
C
Low value

Low Costs target customer High

sees to obtain benefits
 1-27

Interactive Exercise: Customer Value

 1-28

Checking Your Knowledge

Which of the following statements, made by marketing managers,

illustrates an understanding of the concept of customer value?

A. “It’s more important to acquire new customers than to retain

old ones.”
B. “The only time it’s really necessary to demonstrate
superior customer value is right before the actual sale.”
C. “My main concern is with meeting this month’s sales
quota—I’ll worry about relationship building later.”
D. “I might think my product is a good value, but what really
counts is if the customer thinks it’s a good value.”
E. “Customer value really boils down to which product is the
least expensive.”
 1-29

Checking Your Knowledge

A computer manufacturer is attempting to increase the

customer value associated with purchases of its products.
Which of the following might be a way to achieve this
increase in value?

A. Reduce price.
B. Increase technical support for customers.
C. Increase warranty coverage.
D. Offer free delivery.
E. Any of the above, depending on the needs of the
target market.
 1-30

Putting It All Together (Exhibit 1-6)

Total
Total Company
Company
Effort
Effort to
to Satisfy
Satisfy
Customers
Customers
Build
Build Profitable
Profitable Offer
Offer Superior
Superior
Customer
Customer Customer
Customer Value
Value
Relationships
Relationships

Increase
Increase Sales
Sales to
to Attract
Attract
Customers
Customers Customers
Customers

Satisfy
Satisfy
Retain
Retain Customers
Customers Customers
Customers
 1-31

The Marketing Concept Applies in

Nonprofit Organizations
Will
Will “Satisfied
“Satisfied
Newcomers
Newcomers Customers”
Customers”
to
to Marketing
Marketing Offer
Offer
Support?
Support?

Characteristics
Characteristics
of
of Nonprofit
Nonprofit
Organizations
Organizations

May
May Not
Not Be
Be The
The Bottom
Bottom
Organized
Organized for
for Line?
Line?
Marketing
Marketing
 1-32

Government
Marketing
 1-33

The Marketing Concept,

Social Responsibility, & Marketing Ethics

Micro - Macro
Group Needs Individual Needs
Dilemma

Should
Should All
All Do
Do All
All
Social
Social What
What ifif Profits
Profits
Needs
Needs Be
Be Marketers
Marketers Act
Act
Responsibility
Responsibility Suffer?
Suffer?
Satisfied?
Satisfied? Responsibly?
Responsibly?

The Marketing Concept Guides Ethics

 1-34

The Micro-
Macro
Dilemma
 1-35

You should now be able to:

1. Know what marketing is and why you should learn

about it.
2. Understand the difference between marketing and
macro-marketing.
3. Know the marketing functions and why marketing
specialists—including intermediaries and collaborators
—develop to perform them.
4. Understand what a market-driven economy is and how
it adjusts the macro-marketing system.
 1-36

You should now be able to:

5. Know what the marketing concept is—and how it

should guide a firm or nonprofit organization.
6. Understand what customer value is and why it is
important to customer satisfaction.
7. Know how social responsibility and marketing ethics
relate to the marketing concept.
8. Understand the important new terms.
 1-37

Key Terms

 Production  Buying function

 Customer satisfaction  Selling function
 Innovation  Transporting function
 Marketing  Storing function
 Pure subsistence economy  Standardization and grading
 Macro-marketing  Financing
 Economies of scale  Risk-taking
 Universal functions of  Market information function
marketing
 Intermediary
 1-38

Key Terms

 Collaborators  Marketing company era

 E-commerce  Marketing concept
 Economic system  Production orientation
 Command economy  Marketing orientation
 Market-directed economy  Customer value
 Simple trade era  Micro-macro dilemma
 Production era  Social responsibility
 Sales era  Marketing ethics
 Marketing department era