Chapter 1 Marketing’s Value to Consumers, Firms, and Society
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Chapter 1 Marketing’s Value to Consumers, Firms, and Society
(Transcript excerpt focuses on introducing marketing’s role and core concepts for the chapter.)
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End-of-Presentation Objectives (Part 1)
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.
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End-of-Presentation Objectives (Part 2)
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.
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Marketing—What’s It All About? All Those Bicycles! More Than Selling and Advertising
Emphasizes that marketing involves more than just selling and advertising.
Visuals imply a real-world example (bicycles) to illustrate marketing activities beyond promotion.
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Things a Manager Should Do Before and After Deciding to Produce and Sell a Bike
Determine Wants
Predict Designs
Determine Where
Estimate Price
Decide Promotion
Identify Competition
Provide Service
Analyze Needs
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Marketing Is Important to You
Important to every consumer!
Important to your job (and your next job, too)
Affects innovation and standard of living
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Marketing Affects Innovation
Note: Video emphasizes how marketing relates to innovation (instruction to click play).
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How Should We Define Marketing?
Definition (as presented):
Performance of activities that accomplish objectives…
…by anticipating customer or client needs…
…from producer to a customer or client.
…and directing a flow of need-satisfying goods and services
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Marketing Key Characteristics
Profit and Nonprofit
More Than Persuasion
Begins with Needs
Doesn’t Do It Alone
Involves Exchanges
Builds Relationships
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Identify Customer Needs
Source: Help Remedies, Inc.
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Macro-Marketing Key Characteristics
Matches Producers and Consumers
Emphasis Is on Whole System
Every Society Needs It
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Consumption Sector Marketing Facilitates Production and Consumption (Exhibit 1-1)
Production Sector Marketing is needed to overcome discrepancies and separations
Discrepancies of Quantity
Discrepancies of Assortment
Spatial Separation
Separation in Time
Separation of Information
Separation in Values
Separation of Ownership
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Separation Between Producers and Consumers
Economies of Scale – Lower Unit Cost
Unit Cost (Conceptual): C_{unit}
Producers vs. Consumers
Marketing Functions: Marketing Bridges the Gap!
Output
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Universal Functions of Marketing
Buying
Selling
Transporting
Storing
Standardization & Grading
Financing
Risk Taking
Market Information
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Overcoming Spatial Separation
Visuals illustrate strategies to overcome spatial separation in markets.
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Who Performs Marketing Functions?
Transport Firms
ISPs
Product Testing Firms
Ad Agencies
Research Firms
Wholesalers
Other Specialists
Retailers
Consumers
Producers
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Economic Systems
Command Economy
Government officials decide about production and distribution
May work well if: Simple economy, Little variety, Adverse conditions
Market-Directed Economy
Adjusts itself
Price is value measure
Freedom of choice
Government’s role limited
Public interest groups
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Model of a Market-Directed Macro-Marketing System (Exhibit 1-2)
Many Individual Producers (heterogeneous supply)
Intermediaries / Collaborators perform universal marketing functions
To overcome discrepancies and separation of producers / consumers
To create value and direct flow of need-satisfying goods and services
Many Individual Consumers (heterogeneous demand)
Monitoring by government(s), public interest groups, and customers
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Producers, Consumers, and Marketing Specialists Perform Functions
Source: Homer TLC, Inc.
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Marketing’s Role Has Changed a Lot Over the Years
Focus: Sell Surplus
Long-Run Customer Satisfaction
Focus: Increase Supply
Focus: Beat Competition
Focus: Coordinate & Control
Eras: Simple Trade Era → Production Era → Sales Era → Marketing Department Era → Marketing Company Era
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Discovering Customer Needs
Source: Bank of the Wichitas®
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The Marketing Concept (Exhibit 1-3)
Profit (or another measure of long-term success) as an objective
Total company effort
Customer satisfaction
The Marketing Concept
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Checking Your Knowledge
A store that is popular with newlyweds runs a wedding gift registry. Five minutes before closing on a Sunday, a 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 memo from the store’s regional manager instructed staff to stay after closing 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
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Some Differences in Outlook: Adopters of the Marketing Concept vs Production-Oriented Managers (Exhibit 1–4)
Attitudes toward customers
Marketing Orientation: Customer needs determine company plans
Production Orientation: They should be glad we exist; focus on cutting costs and better products
Product offering
Role of marketing research
Interest in innovation
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Topic Comparisons (Marketing vs Production Orientation)
Customer service
Marketing Orientation: Satisfy customers before and after sale for a long-run relationship
Production Orientation: An activity to reduce consumer complaints
Focus of advertising
Marketing Orientation: Need-satisfying benefits of goods and services
Production Orientation: Product features and how products are made
Relationship with customer
Marketing Orientation: Long-run relationship; customer satisfaction
Production Orientation: Relationship ends after sale
Costs
Marketing Orientation: Eliminate non-value-adding costs
Production Orientation: Keep costs as low as possible
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The Marketing Concept and Customer Value
Costs
Benefits
Take the Customer’s Point of View
Customer May Not Dwell on Value
Where Does Competition Fit?
Customer Value Builds Relationships
Customer Value Reflects Benefits and Costs
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Customer Value Equals Benefits, Minus Costs (Exhibit 1-5)
Benefits
Functional (save time, simplify, provide info, reduce cost)
Emotional (provide entertainment, lower anxiety, offer superior design/aesthetics, provide rewards)
Life Changing (give hope, motivate, provide sense of belonging)
Costs
Monetary (money, interest rate, fees)
Inconvenience (time delay to receive benefit, effort required to receive benefit)
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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.”
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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 shipping.
E. Any of the above, depending on the needs of the target market.
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Total Company Effort to Satisfy Customers: Put It All Together (Exhibit 1-6)
Build Profitable Customer Relationships
Attract Customers
Offer Superior Customer Value
Satisfy Customers
Retain Customers
Increase Sales to Customers
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The Marketing Concept Applies in Nonprofit Organizations
Newcomers to Marketing Will “Satisfied Customers” Offer Support?
The Bottom Line?
May Not Be Organized for Marketing
Characteristics of Nonprofit Organizations
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Marketing Concept Used by Nonprofit Services
(Video prompt: Click on play button to view video)
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The Micro- Macro Dilemma
Source: New York City Department of Health/DCF Advertising
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Society’s Needs Must Be Considered
Source: Ben & Jerry’s United States, Inc.
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Society’s Needs Must Be Considered
The Marketing Concept, Social Responsibility, and Marketing Ethics
Should all consumer needs be satisfied? What if it cuts into profits?
Micro–Macro Dilemma
The Marketing Concept Guides Ethics
Group Needs vs Individual Needs
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Social Responsibility
Video prompt: Click on play button to view video
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Sample Criticisms of Marketing (Exhibit 1-8)
Advertising is everywhere
Poor quality and unsafe products
Too many unnecessary products
Serves the rich and exploits the poor
Overpromise service
Retailers raise prices without providing anything in return
Criticisms: Easy consumer credit
Misuse of private information of consumers
Interest in polluting products
Makes people materialistic
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Key Terms (Part 1)
production
customer satisfaction
innovation
marketing
pure subsistence economy
macro-marketing
economies of scale
universal functions of marketing
buying function
selling function
transporting function
storing function
standardization and grading
financing
risk taking
market information function
intermediary
collaborators
e-commerce
economic system
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Key Terms (Part 2)
command economy
market-directed economy
simple trade era
production era
sales era
marketing department era
marketing company era
marketing concept
production orientation
marketing orientation
marketing metrics
triple bottom line
customer value
micro–macro dilemma
social responsibility
marketing ethics