Essay Marketing

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Overview of Marketing

McGraw-Hill/Irwin

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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

CHAPTER

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 1 – Overview of Marketing

Define the role of marketing in organizations.

Describe how marketers create value for a product or service.

Understand why marketing is important both within and outside the firm.

Overview of Marketing

LO1

LO2

LO3

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LEARNING OBJECTIVES

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These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

What is Marketing?

Marketing is an organizational function and a set of processes for creating, capturing, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

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Point out that this new definition is somewhat controversial, because many feel it includes everything within marketing.

Ask students: Do you agree? Answers might include uncertainly in the definition of value.

Marketing is about Satisfying Customer Needs and Wants

What group is Pepsi targeting with this ad?

What other benefits of soft drinks might Pepsi advertise?

What groups might these benefits appeal to?

PRNewsFoto/PepsiCo; AP Photo.

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Students might mention groups based on age or gender, but the ad is targeted to those who find taste to be an important element.

Other benefits might include calorie-conscious or carbonated beverages.

Marketing Entails an Exchange

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Each party to the exchange gives up something of value: The customer usually gives up money, however, sometimes they also give up time and information. The firm gives up the good or service. The exchange in the end is mutually beneficial.

Marketing Requires Product, Price, Place, and Promotion Decisions

Product

Creating value

PRNewsFoto/PepsiCo;

AP Photo.

Price

Capturing value

©Digital Vision Ltd.

Place

Delivering value

©BrandX/JupiterImages/Getty Images.

Promotion

Communication value

©Stockbyte/PunchStock.

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This is an overview of the 4P’s which will be discussed in greater depth.

Ask students to choose a product they see in the classroom (i.e., VitaminWater, Coke, Aquafina) and ask them to describe the 4P’s for this product.

Product: Creating Value

The fundamental purpose of Marketing is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs.

Royalty-Free/Corbis

Roz Wodward/Getty Images

Flying Colours Ltd./Getty Images

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Students often can relate to goods and services, but the marketing of ideas is a new concept to them. Use the example of drunk driving prevention;

Ask Students: How is that idea marketed?

Answer: Organizations such as Mothers Against Drunk Driving or Students Against Drunk Driving often receive support from brewers and distillers in promoting responsible drinking and safe driving.

Ask students: What is the exchange these groups are asking consumers to enter?

Answer: They want you to consume alcohol in a manner that is consistent with safety, which means sacrificing some consumption.

Goods

Services

Ideas

Price: Capturing Value

Price is everything a buyer gives up (money, time, energy) in exchange for the product.

How much are customers willing to pay and can a profit can be made at that point.

AP Photo/The Canadian Press, Jacques Boissinot.

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A good example of how price expresses value is the variations in price associated with air travel.

The prices can vary based on demand for the flight, timing, and destinations.

Pricing strategies will be discussed in later chapters, but you may also wish at this point to introduce the notion of market pricing versus cost pricing.

Place: Delivering the Value Proposition

Place, or supply chain management, describes all activities necessary to get the product to the right customer when the customer wants it.

Where would you find this product in the store?

Courtesy Horizon Organic Dairy

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Place delivers the product to the customers. Students may overlook the importance of this component of the marketing mix because it is not as readily visible from the consumer perspective. To get this point across, suggest a few products and then trace the path those products likely take from manufacturer to retailer to consumer.

Promotion: Communicating Value

Promotion is communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response.

Photo by Paul Hawthorne/Getty Images

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Calvin Klein’s provocative advertising has helped create an image that is filled with youth, style, and sex appeal.

Marketing Can be Performed by Individuals and Organizations

ETSY Website

C2C

Consumer B

B2C

Consumer A

B2B

Retailer (Sells PCs & monitors)

Manufacturer (Makes monitors)

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This exhibit illustrates how the same product, a desktop computer, can be sold from firm to firm, from firm to consumer, and then be used consumer to consumer to sell C2C.

Ask students whether they’ve bought from other consumers online. Many options are available to buy C2C online, especially with the development of online cooperatives like esty.com.

Follow the web link to visit this site.

Marketing Impacts Various Stakeholders

Courtesy National Fluid Milk Processor Promotion Board; Agency: Lowe Worldwide, Inc.

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Marketers affect many stakeholders. Customers represent one stakeholder group but others include all those in the supply chain, employees, and society at large.

Supply chain partners include manufacturers, agents, wholesalers, retailers, and so on. Companies market to employees with employment marketing, also known as internal marketing, to recruit and retain the best employees.

Society

Customers

Employees

Supply

Chain

Marketing Helps Create Value

1. H.Armstrong Roberts/Retrofile/Getty Images

2. Jamie Grill/Iconica/Getty Images

3. ©Ted Dayton Photography/Beateworks/Corbis

4. Ciaran Griffin/Stockbyte/Getty Images

5. ©Colin Anderson/Blend Images/Corbis

Production

Sales

Marketing

Value based marketing

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Marketing has been through several eras. This exhibit graphically represents the changes over time from an emphasis on production to one based on value-based marketing. The production-oriented era took place around the turn of the 20th century, when most firms believed a good product would sell itself. In the sales-oriented era, production and distribution techniques improved and supply outpaced demand. Firms found an answer to overproduction by focusing on sales. In the market-oriented era, the focus was on what customers wanted. Now, we are in the value-based era, which maintains the market orientation but also includes a focus on giving greater value than the competition.

Value reflects the relationship of benefits to costs. Value-based marketing means implementing a marketing strategy according to what customers value.

Value-Based Marketing

“Pure Dark Chocolate

Light Exquisite Cookie”

Courtesy Pepperidge Farm.

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Ask students how this campaign for Pepperidge Farm Cookies is about value. It does this by describing their ingredients in very luxurious terms… very impressive for a supermarket cookie that is not highly priced.

CHECK YOURSELF

What is the definition of marketing?

Marketing is about satisfying ______ and ______.

What are the four components of the marketing mix?

Who can perform marketing?

What are the various eras of marketing?

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Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Needs and wants

Product, price, place, and promotion

Individuals and organizations

Production, sales, market, and value-based

How Do Firms Become Value Driven?

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Firms become value driven by focusing on four activities.

Ask students why it is important to share information?

This brings up the point that many good marketing companies have cross functional teams. The finance, IS and operations departments work together to bring value to the end consumer.

Sharing Information

Balancing Benefits with Costs

Building Relationships with Customers

CHECK YOURSELF

Does providing a good value mean selling at a low price?

What are the benefits of long-term relationships with customers?

How are marketers connecting with customers using social and mobile media?

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Value-based marketing isn’t just about low price, it is also about creating strong products and services.

A relational orientation is based on the philosophy that buyers and sellers should develop a long-term relationship for the benefit of both parties.

Marketers are steadily embracing new technologies, such as social and mobile media, to allow them to connect better with their customers and thereby serve their needs more effectively.

Why Is Marketing Important?

Digital Vision/Getty Images

Jason Reed/Getty Images

Andrew Ward/Life File/Getty Images

BananaStock/JupiterImages

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Ask students why it is marketing so important?

Marketing has shifted its focus dramatically, it also has evolved into a major business function that crosses all areas of a firm or organization.

Check Yourself

List five factors that emphasize the importance of marketing.

A firm doing the right thing emphasizes the importance of marketing to _________.

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Expands global presence, pervasive across organization, pervasive across supply chain, makes life easier, enriches society, can be entrepreneurial.

To do the right thing, the firm will emphasize society. This is a good time to introduce the debate of whether it is best to do right by society or right by stakeholders.

Exchange is the trade of things of value between the buyer and the seller so that each is better off as a result.

Glossary

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Exchange is the trade of things of value between the buyer and the seller so that each is better off as a result.

Goods are items that you can physically touch.

Glossary

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Goods are items that you can physically touch.

Services are intangible customer benefits that are produced by people or machines and cannot be separated from the producer.

Glossary

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Goods are items that you can physically touch.

Ideas include thoughts, opinions, and philosophies, and intellectual concepts which can be marketed.

Glossary

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Ideas include thoughts, opinions, and philosophies, and intellectual concepts which can be marketed.

A supply chain is the group of firms that make and deliver a given set of goods and services.

Glossary

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A supply chain is the group of firms that make and deliver a given set of goods and services.

Value reflects the relationship of benefits to costs.

Glossary

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Value reflects the relationship of benefits to costs.