Welcome to the World of Marketing: Create and Deliver Value Chapter One

Welcome to the World Welcome to the World of Marketing:of Marketing:

Create and Deliver ValueCreate and Deliver Value

Chapter OneChapter One

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-2

Chapter ObjectivesChapter Objectives

Understand who marketers are, where they work, Understand who marketers are, where they work, and marketing’s role in the firmand marketing’s role in the firm

Explain what marketing is and how it provides value Explain what marketing is and how it provides value to everyone involved in the marketing processto everyone involved in the marketing process

Explain the evolution of the marketing conceptExplain the evolution of the marketing concept Understand the range of services and goods that Understand the range of services and goods that

organizations marketorganizations market Understand value from the perspectives of Understand value from the perspectives of

customers, producers, and societycustomers, producers, and society Explain the basics of market planning and the Explain the basics of market planning and the

marketing mix tools we use in the marketing marketing mix tools we use in the marketing processprocess


Welcome to “Brand You”Welcome to “Brand You”

You are a product You are a product and have “market and have “market value” as a personvalue” as a person

You “position” You “position” yourself for a job yourself for a job interview in a interview in a number of waysnumber of ways


The Who and Where of The Who and Where of MarketingMarketing

Marketers:Marketers:

• Come from many different Come from many different backgroundsbackgrounds

• Work in many locationsWork in many locations

• Maintain cross-functional Maintain cross-functional relationships within the relationships within the firmfirm

• Enjoy exciting, diverse Enjoy exciting, diverse careerscareers

Get the scoop on marketing salaries! Visit the Occupational Outlook Handbook!


The Value of MarketingThe Value of Marketing

Definition of Marketing Definition of Marketing (AMA, 2007)(AMA, 2007)• Marketing is the Marketing is the

activity, set of activity, set of institutions, and institutions, and processes for creating, processes for creating, communicating, communicating, delivering and delivering and exchanging offerings exchanging offerings that have value for that have value for customers, clients, customers, clients, partners, and society at partners, and society at large.large.


Marketing Meets NeedsMarketing Meets Needs

Marketing meets the needs of diverse Marketing meets the needs of diverse stakeholdersstakeholders

• Stakeholders are buyers, sellers, Stakeholders are buyers, sellers, investors, community residents, investors, community residents, citizens, consumerscitizens, consumers

Marketing conceptMarketing concept

• Identifying and satisfying consumer Identifying and satisfying consumer needs to ensure long-term profitabilityneeds to ensure long-term profitability


Needs, Wants, and Benefits

Needs• Can be physical or psychological

Benefits• Outcome sought by consumer that satisfies

need or want and motivates buying behavior Want

• Desire to satisfy needs in specific ways Demand

• Customers’ desires for products coupled with the resources needed to obtain them


Marketing Meets NeedsMarketing Meets Needs

The modern marketplace The modern marketplace

• Takes many forms, including a mall, eBay Takes many forms, including a mall, eBay auction, e-commerce Web siteauction, e-commerce Web site


Marketing Creates UtilityMarketing Creates Utility

Utility: Utility: The sum of the benefits we receive The sum of the benefits we receive from using a product/servicefrom using a product/service

• Form utilityForm utility

• Place utilityPlace utility

• Time utilityTime utility

• Possession utilityPossession utility


Place UtilityPlace Utility

Rent the Runway is a Rent the Runway is a new service that rents new service that rents high-end dresses high-end dresses from fashion from fashion designers and rents designers and rents them at a one-tenth of them at a one-tenth of the cost of buying the the cost of buying the same garment in the same garment in the store.store.

Rent the Runway


Marketing and ExchangeMarketing and Exchange

An exchange occurs when something An exchange occurs when something is obtained for something else in is obtained for something else in return, like cash for goods or servicesreturn, like cash for goods or services

• Buyer receives an object, service, or Buyer receives an object, service, or idea that satisfies a needidea that satisfies a need

• Seller receives something of equivalent Seller receives something of equivalent valuevalue


The Evolution of Marketing The Evolution of Marketing

The Production EraThe Production Era• Production orientationProduction orientation

The Sales EraThe Sales Era• Selling orientationSelling orientation

The Relationship EraThe Relationship Era• Consumer orientationConsumer orientation

• Total quality managementTotal quality management The Triple Bottom Line Era The Triple Bottom Line Era


The Production EraThe Production Era

Dominated by production orientation:Dominated by production orientation:

• A management philosophy that A management philosophy that emphasizes the most efficient ways to emphasizes the most efficient ways to produce and distribute productsproduce and distribute products

Marketing played an insignificant roleMarketing played an insignificant role Henry Ford’s Model T and Ivory soap Henry Ford’s Model T and Ivory soap

are examples of products that were are examples of products that were created under a production orientationcreated under a production orientation


The Selling EraThe Selling Era

When product availability exceeds When product availability exceeds demand, businesses may focus demand, businesses may focus on a one-time sales of goods on a one-time sales of goods rather than repeat businessrather than repeat business

Dominated by selling orientation:Dominated by selling orientation:

• Managerial view of marketing as a Managerial view of marketing as a sales function, or a way to move sales function, or a way to move products out of warehouses products out of warehouses to reduce inventoryto reduce inventory


The Relationship EraThe Relationship Era

Focused on a customer orientation:Focused on a customer orientation:

• A management philosophy that A management philosophy that emphasizes satisfying customers’ emphasizes satisfying customers’ needs and wantsneeds and wants

Marketing becomes more important in Marketing becomes more important in the firmthe firm

Total Quality Management (TQM) is Total Quality Management (TQM) is widely followed in the marketing widely followed in the marketing communitycommunity


The Triple Bottom Line Era: The Triple Bottom Line Era: Make Money Make Money andand a a

ContributionContribution Focuses on building Focuses on building

long-term bonds with long-term bonds with customerscustomers

• Triple orientation Triple orientation seeks to maximize seeks to maximize the financial, social, the financial, social, and environmental and environmental bottom linesbottom lines

This ad focuses on the environmental bottom line



ContributionContribution Marketing uses customer relationship Marketing uses customer relationship

management (CRM)management (CRM)

• CRM involves systematically tracking CRM involves systematically tracking consumers’ needs in ways that also benefit consumers’ needs in ways that also benefit society and delivers profit to the firmsociety and delivers profit to the firm

Social marketing concept: Social marketing concept:

• Management philosophy that marketers must Management philosophy that marketers must satisfy customers’ needs in ways that also satisfy customers’ needs in ways that also benefit society and deliver value to the firm benefit society and deliver value to the firm



ContributionContribution Sustainability: Sustainability:

• Creating products that Creating products that meet present needs meet present needs and ensuring that and ensuring that future generations can future generations can have their needs methave their needs met

• Green marketing is one Green marketing is one type of sustainable type of sustainable business practicebusiness practice

ROI measures valueROI measures value


Green Marketing in ActionGreen Marketing in Action

Green marketing is Green marketing is practiced by many practiced by many forward-thinking forward-thinking firms today. firms today.

Visit Ads of the World to see examples of Volkswagen’s green marketing and sustainable business practices


What Can Be Marketed?What Can Be Marketed?

From “serious” goods and services to From “serious” goods and services to fun thingsfun things

• Products mirror Products mirror changes in changes in popular culture popular culture

• Marketing Marketing messages often messages often communicate communicate mythsmyths


What Can Be Marketed?What Can Be Marketed?

Product: any good, service, or ideaProduct: any good, service, or idea

• Consumer goods/servicesConsumer goods/services

• Business-to-business goods/servicesBusiness-to-business goods/services

• Not-for-profit marketingNot-for-profit marketing

• Idea, place, and Idea, place, and people marketingpeople marketing

Linked inLinked in


The Marketing of ValueThe Marketing of Value

Value: Value: • The benefits a customer receives from The benefits a customer receives from

buying a good or servicebuying a good or service Marketing communicates the value Marketing communicates the value

proposition: proposition: • A marketplace offering that fairly and A marketplace offering that fairly and

accurately sums up the value that the accurately sums up the value that the customer will realize if he/she customer will realize if he/she purchases product/servicepurchases product/service


Value from Value from the Customer’s Perspectivethe Customer’s Perspective

Customer perspective:Customer perspective:• Value is the ratio of costs Value is the ratio of costs (price)(price) to to

benefits benefits (utilities)(utilities)

• Value proposition includes the whole Value proposition includes the whole bundle of benefits the firm promises to bundle of benefits the firm promises to deliver, not just the benefits of the deliver, not just the benefits of the product itselfproduct itself

DiscussionDiscussion


Value from Value from the Seller’s Perspectivethe Seller’s Perspective

Value for the seller takes many formsValue for the seller takes many forms Seller’s should build value by Seller’s should build value by

marketing with customers, not to themmarketing with customers, not to them

• Partnering with customers via Partnering with customers via brandfestsbrandfests

Customers have value – it is more Customers have value – it is more expensive to attract new customers expensive to attract new customers than to retain current onesthan to retain current ones


Lifetime value of a customerLifetime value of a customer

• Calculating the projected profit from a Calculating the projected profit from a particular customer allows a firm particular customer allows a firm

Creating a competitive advantageCreating a competitive advantage

• Identification of a distinctive competencyIdentification of a distinctive competency

• Turning distinctive competencies into Turning distinctive competencies into differential benefitsdifferential benefitsExamples??Examples??

Value from Value from the Seller’s Perspectivethe Seller’s Perspective

PandoraVideo


It’s DebatableIt’s DebatableClass Discussion QuestionClass Discussion Question

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?


Figure 1.1Figure 1.1A Value Chain for the Apple A Value Chain for the Apple

iPodiPod


Figure 1.2Figure 1.2Steps in the Value ChainSteps in the Value Chain


Table 1.3Table 1.3An Example of a Customer An Example of a Customer

Service ScorecardService Scorecard


Consumer-Generated Value:Consumer-Generated Value:From Audience to CommunityFrom Audience to Community

Everyday people are generating value Everyday people are generating value instead of just buying it instead of just buying it http://www.crashthesuperbowl.comhttp://www.crashthesuperbowl.com

Social networking continues to grow Social networking continues to grow and leverages Web 2.0and leverages Web 2.0

Open source business models are on Open source business models are on the rise.the rise. http://www.moodle.comhttp://www.moodle.com


Value from Society’s Value from Society’s PerspectivePerspective

Marketing transactions add or subtract Marketing transactions add or subtract value from societyvalue from society

• Stressing socially responsible and Stressing socially responsible and ethical decisions is good businessethical decisions is good business

• Marketing is often criticizedMarketing is often criticized

• Marketing’s dark sideMarketing’s dark side


Marketing Is a ProcessMarketing Is a Process

Marketing planning is a major portion Marketing planning is a major portion of the process and involves:of the process and involves:

• Analyzing the marketing environment Analyzing the marketing environment

• Developing a marketing planDeveloping a marketing plan

• Deciding on a market segmentDeciding on a market segment

• Choosing the marketing mixChoosing the marketing mix——product, price, promotion, and placeproduct, price, promotion, and place


Figure 1.3Figure 1.3The Marketing MixThe Marketing Mix


Real People, Real Choices: Real People, Real Choices: Decision Made at PandoraDecision Made at Pandora

Joe chose option 2Joe chose option 2• Implementation:Implementation: Pandora chose personal Pandora chose personal

communication to build awareness. Town communication to build awareness. Town halls were led by the firm’s founder; email, halls were led by the firm’s founder; email, blogs, tweets, and Facebook were also blogs, tweets, and Facebook were also instrumental. Listeners wore branded instrumental. Listeners wore branded merchandise. Service was made available merchandise. Service was made available on as many devices as possible on as many devices as possible

• Measuring Success:Measuring Success: As of mid-2010, As of mid-2010, Pandora boasted 50 million listenersPandora boasted 50 million listeners


Keeping It Real:Keeping It Real: Fast-Forward to Fast-Forward to Next Class Decision Time at First FlavorNext Class Decision Time at First Flavor

Meet Jay of First FlavorMeet Jay of First Flavor First Flavor markets First Flavor markets edible film stripsedible film strips

that allow users to taste flavors. Other that allow users to taste flavors. Other potential uses of film strips beyond potential uses of film strips beyond sampling are being investigated sampling are being investigated

The decision to be made: The decision to be made: Whether or not to diversify into new Whether or not to diversify into new product categoriesproduct categories


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Welcome to the World of Marketing: Create and Deliver Value Chapter One