1 1 Marketing Chapter 1 Overview of Marketing

1 -1 Marketing Chapter 1 Overview of Marketing James Bowen, Phd 1 of 47

1 -2 Chapter Roadmap 2

1 -3 Building Value l l Black. Berry launched in 2000 available on 270 networks in over 110 countries sales of over $3 billion, 35% outside North America satisfies demand for information in real time 3

1 -4 What is Marketing? Marketing is a set of business practices designed to plan for and present an organization’s products or services in ways that build effective customer relationships. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 4

1 -5 Marketing is NOT Just about buyers and sellers exchanging money for goods and services or about making a profit 5

1 -6 Marketer’s Responsibility Marketers must address the ethical implications of their actions on society in general. 6

1 -7 Value The fundamental purpose of marketing is to create value for both the firm and customer. Value is in essence what you get for what you give up. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 7

1 -8 Test Your Knowledge Which of the A) B) C) D) following statements about marketing is NOT true? Marketing entails an exchange. Marketing is simply about making a profit. Good marketing requires thoughtful planning. Because marketing costs money, good marketers carefully seek potential customers who have both an interest in the product and an ability to buy. 8

1 -9 Marketing’s Core Aspects 9

1 -10 Core One: Satisfying Customer Needs and Wants • Begins with understanding their needs and wants • Developing products and services 10

1 -11 Satisfying Customer Needs and Wants How does a company address the diverse needs and wants of consumers for dental care products? 11

1 -12 Case in Point: Crest Challenge Answer Results Address the diverse needs and wants of consumers for dental care products. Develop a deep understanding of what benefits consumer are seeking in their dental care products and develop brands designed to deliver those benefits. Crest provides a wide variety of dental care products to deliver the desired benefits. 12

1 -13 Core Two: Marketing Entails Exchange • The exchange can occur between any two parties • Not simply a buyer and seller exchanging money for a good or service (barter) • Can be an exchange of information for convenience • What is the exchange at a museum or a lecture? 13

1 -14 Marketing Entails an Exchange Communications/Delivery CHAPTERS. ca Money/Information Goods/Services Producers (Sellers) Customers/ Consumers (Buyers) 14

1 -15 Test Your Knowledge Which of the A) B) C) D) following is NOT part of a marketing exchange? Sellers provide products or services. Sellers communicate and facilitate delivery. Marketers assess the effectiveness of their advertising. Buyers complete the exchange by giving money and information to the seller. 15

1 -16 Core Three: Marketing Requires Product, Price, Place, and Promotion Decisions 16

1 -17 Product Goods Services Ideas 17

1 -18 Price time money Price is everything the buyer gives up in exchange for the product- more then money energy 18

1 -19 Place All activities necessary to get the product to the right customer when that customer wants it. l Supply chain management is the field that examines these activities. l © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 19

1 -20 Place: Marketing Channels Distribution Strategy How does a company get the product to the right customer when and where they want it? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 20

1 -21 Case in Point: Country Grocer Challenge Answer Results To expand distribution beyond the Ottawa area. Using an online distribution system to allow customers all over Canada to order directly from its store in Ottawa. • Canadian Federation of Independent Grocers award of merit for 8 consecutive years • Awarded the National Silver Award as the best store in Canada in the small surface category. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 21

1 -22 Promotion • The communication activities of marketing • Used to inform, persuade and remind potential buyers • Used to influence their opinions or elicit a response Discussion question Who is the © 2007 target Mc. Graw-Hillaudience? Companies, Inc. , Mc. Graw-Hill/Irwin 22

1 -23 Test Your Knowledge Promotion is ______ by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response. A) smoke-and-mirrors B) coercion C) teasing D) communication 23

1 -24 Marketing Shaped by External Forces 24

1 -25 Core Four: Marketing Can Be Performed by Both Individuals and Organizations B 2 B: Wholesaling is often only Business to Business B 2 C: All retailing is Business to Consumer selling C 2 C: Swap Meets, EBay, yard sales, etc. Different types of marketing © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 25

1 -26 Core Five: Marketing Occurs in Many Settings Both profit and non-profit entities l Developing economies l Entire industries l 26

1 -27 Internet Marketing 1. 1 Facebook – social utility or marketing tool? • > 46 million members • used by TD Bank, Molson, AOL Canada, Boston Pizza, Lou magazine to reach target audiences • privacy concerns? 27

1 -28 Core Six: Marketing Helps Create Value product would sell itself Production-oriented era Sales-oriented era personal selling and advertising focus on what consumers want and need before design or production Market-oriented era Value-based marketing era relationship of benefits to costs, or what you get for what you give up firm’s focus went from the needs of the firm to the needs of the market © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 28

1 -29 Adding Value 1. 1 l l VOSS = super premium water $40 for 500 ml bottle Packaging inspired by fragrance industry Limited distribution built trendy image © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 29

1 -30 Value-Based Marketing l l Firms must offer customers something in excess of that being offered by the competitors. Firms must understand how each aspect of their product/service creates value for customers. Discussion question #1 What do you think are the key features of a hotel that create value? Discussion question #2 How do the keys features vary depending on the segment of traveller? 30

1 -31 Value is in the Eye of the Beholder That movie was a waste of money. That movie was so worth seeing! Discussion question If they saw the same movie, what could account for the difference in value derived from the experience? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 31

1 -32 How Firms Compete on the Basis of Value • Constantly changing consumers perceptions • Firms must constantly monitor the marketplace in order to create value © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 32

1 -33 Test Your Knowledge What must firms do to become value driven? A) Share information, balance benefits and costs, and build customer relationships. B) Set low prices, put profit above service, and use effective marketing strategies. C) Make logistics a priority, expand globally, and always offer new goods and services. D) Keep a vigilant eye on the market-place, undercut competitors, and provide competitive salaries. 33

1 -34 Entrepreneurial Marketing l l l Imasight based in Quebec Offers digital radiography technology See more patients Better utilize the physical space in hospitals and medical clinics Eliminate expensive and harmful chemicals © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 34

1 -35 Becoming Value Driven: Sharing Information technology such as Customer Relationship Management (CRM) programs are increasingly used by marketers to ensure that data is transmitted throughout the firm. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 35

1 -36 Sharing Information Why is sharing and coordinating information such a critical success factor for any firm? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 36

1 -37 Case in Point: Zara Challenge Answer Results How does the flagship brand of Europe’s fastest growing apparel retailer keep up with the latest trends? By implementing sophisticated information technology into its customer tracking and supply chain functions. Zara now has over 760 women’s clothing stores in 55 countries. Products move from design through the supply chain and onto the stores shelves in about two weeks. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 37

1 -38 Becoming Value Driven: Balancing Benefits and Cost • Understand key benefits • Focus on key benefits • Eliminate cost of less strategic benefits © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 38

1 -39 Becoming Value Driven: Building Relationships With Customers l Take a long term view of customer relationships l Use data to assist in maintaining the relationship © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 39

1 -40 Why is Marketing Important? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 40

1 -41 Marketing Expands Firms Global Presence Starbucks often promotes the same product in different countries. What products do you see in common? Starbucks Canada Starbucks Germany Starbucks Taiwan Starbucks Australia © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 41

1 -42 Marketing As Pervasive Across the Supply Chain l l Each step in the supply chain involves marketing All members in the chain must ultimately focus on creating value for their customer and the end user consumer © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 42

1 -43 Test Your Knowledge Which of the chain? A) B) C) D) following would NOT be considered part of a supply consumer retailer manufacturer customer service representative 43

1 -44 Marketing Makes Life Easier and Provides Employment Opportunities l Choices of products and services choices as well as information about those choices l Employment in diverse fields such as research, sales, promotions, global marketing © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 44

1 -45 Marketing Can Be Entrepreneurial Though important to large firms, marketing is equally important to the success of small ventures —especially new ventures. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin 45

1 -46 Chapter 1 Glossary l l l Customer relationship management: A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm’s most valued customers. Goods: Items that you can physically touch. Ideas: Include thoughts, opinions, and philosophies, and intellectual concepts such as these also can be marketed. Services: Intangible customer benefits that are produced by people or machines and cannot be separated from the producer. Supply chain: The group of firms that make and deliver a given set of goods and services. Supply chain management: Refers to a set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction into a seamless value chain. 46

1 -47 Chapter 1 Glossary l l l Value-based Marketing: Marketing that focuses on providing customers with benefits that far exceed the cost (money, time, effort) of acquiring and using a product or service while providing a reasonable return to the firm Need: A person feeling physiologically deprived of basic necessities, such as food, clothing, and shelter Want: The particular way in which a person chooses to satisfy a need, which is shaped by a person’s knowledge, culture, and personality. 47