An Overview of Marketing chapter 1 Prepared by

An Overview of Marketing chapter 1 Prepared by Deborah Baker Texas Christian University © 2003 South-Western 1

Learning Objectives 1. Define the term marketing 2. Describe four marketing management philosophies chapter 1 3. Explain how firms implement the marketing concept 4. Describe the marketing process and identify the variables that make up the marketing mix 5. Describe several reasons for studying marketing Chapter 1 Version 3 e © 2003 South-Western 2

Learning Objective 1 Define the term marketing Chapter 1 Version 3 e © 2003 South-Western 3

What is Marketing? u Personal Selling? u Advertising? u Making products available in stores? u Maintaining inventories? 1 All of the above, plus much more! Chapter 1 Version 3 e © 2003 South-Western 4

1 What is Marketing? A Philosophy An Attitude A Set of Activities, including: Products A Perspective Pricing A Management Orientation Promotion Distribution Chapter 1 Version 3 e © 2003 South-Western 5

What is Marketing? 1 American Marketing Association Definition Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Chapter 1 Version 3 e © 2003 South-Western 6

1 The Concept of Exchange At Least Two Parties Ability to Communicate Offer Necessary Conditions for Exchange Desire to Deal With Other Party Chapter 1 Version 3 e Something of Value © 2003 South-Western Freedom to Accept or Reject 7

The Concept of Exchange 1 The idea that people give up something to receive something they would rather have. Chapter 1 Version 3 e © 2003 South-Western 8

Conditions for Exchange 1 • There must be at least two parties and each party… • Must have something the other party values • Must communicate and deliver goods • Must be free to accept or reject offer • Must want to deal with other party Chapter 1 Version 3 e © 2003 South-Western 9

The Concept of Exchange NO LE A S Chapter 1 Version 3 e 1 u Exchange may not take place even if conditions met u An agreement must be reached u Marketing occurs even if exchange does not take place © 2003 South-Western 10

Learning Objective 2 Describe four marketing management philosophies. Chapter 1 Version 3 e © 2003 South-Western 11

Marketing Management Philosophies 2 Production Sales Market Competing Philosophies Societal Marketing Chapter 1 Version 3 e © 2003 South-Western 12

Marketing Management Philosophies Philosophy Production Sales Market Societal Chapter 1 Version 3 e 2 Key Ideas Focus on efficiency of internal operations Focus on aggressive techniques for overcoming customer resistance Focus on satisfying customer needs and wants while enhancing individual and societal well-being © 2003 South-Western 13

2 Market Orientation Requirements u Top management leadership u A customer focus u Competitor intelligence u Interfunctional coordination u Customer relationships Chapter 1 Version 3 e © 2003 South-Western 14

2 Societal Marketing Orientation Marketing that preserves or enhances an individual’s and society’s long-term best interests u Less toxic products Chapter 1 Version 3 e u More durable products u Products with reusable or recyclable materials © 2003 South-Western 15

3 Learning Objective Explain how firms implement the marketing concept Chapter 1 Version 3 e © 2003 South-Western 16

The Marketing Concept 2 The idea that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational objectives. Chapter 1 Version 3 e © 2003 South-Western 17

The Marketing Concept 2 Focusing on customer wants and needs can be a source of competitive advantage by: u Creating customer value u Maintaining customer satisfaction u Building long-term relationships Chapter 1 Version 3 e © 2003 South-Western 18

3 Customer Value The ratio of benefits to the sacrifice necessary to obtain those benefits Chapter 1 Version 3 e © 2003 South-Western 19

3 Customer Value Requirements • • • Offer products that perform Give consumers more than they expect Avoid unrealistic pricing Give the buyer facts Offer organization-wide commitment in service and after-sales support Chapter 1 Version 3 e © 2003 South-Western 20

3 Customer Satisfaction The feeling that a product has met or exceeded the customer’s expectations. Chapter 1 Version 3 e © 2003 South-Western 21

Maintaining Customer Satisfaction Meet or exceed customer’s expectations u Focus on delighting customers u Provide solutions to customer’s problems u Chapter 1 Version 3 e © 2003 South-Western 22 3

3 Relationship Marketing The name of a strategy that entails forging long-term partnerships with customers, both individuals and firms. Chapter 1 Version 3 e © 2003 South-Western 23

3 Relationship Marketing’s Importance Attracting a new customer may be TEN TIMES the cost of keeping an old customer Chapter 1 Version 3 e © 2003 South-Western 24

Building Long-Term Relationships u Customer-oriented personnel u Effective training programs u Empowered employees u Teamwork Chapter 1 Version 3 e © 2003 South-Western 25 3

3 Empowerment Delegation of authority to solve customers’ problems quickly. Chapter 1 Version 3 e © 2003 South-Western 26

4 Learning Objective Describe the marketing process and identify the variables that make up the marketing mix Chapter 1 Version 3 e © 2003 South-Western 27

4 Marketing Process Activities Understand the organization’s mission Set marketing objectives Gather, analyze, interpret “SWOT” information Develop a marketing strategy Implement the marketing strategy Design performance measures Evaluate marketing efforts--change if needed Chapter 1 Version 3 e © 2003 South-Western 28

4 Environmental Scanning Collection and interpretation of information about forces, events and relationships in the external environment that may affect the future of the organization or the marketing plan implementation. Chapter 1 Version 3 e © 2003 South-Western 29

4 Environmental Scanning u Examination of macroenvironmental forces u Social u Demographic u Economic u Technological u Political / Legal u Competitive u Helps identify market opportunities u Provides guidelines for design of marketing strategy Chapter 1 Version 3 e © 2003 South-Western 30

4 The Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. Chapter 1 Version 3 e © 2003 South-Western 31

4 Marketing Mix: The “Four Ps” Price Promotion Place Product Chapter 1 Version 3 e © 2003 South-Western 32

4 Product Strategies • The starting point of the “ 4 Ps” • Includes physical unit, package, warranty, service, brand, image, and value Product Chapter 1 Version 3 e © 2003 South-Western 33

4 Distribution (Place) Strategies • Product availability where and when customers want them. • Involves all activities from raw materials to finished products Place Chapter 1 Version 3 e © 2003 South-Western 34

4 Promotion Strategies • Role is to bring about exchanges with target markets • Includes integration of personal selling, advertising, sales promotion, and public relations Promotion Chapter 1 Version 3 e © 2003 South-Western 35

4 Pricing Strategies • The most flexible of the “ 4 Ps” • Price X Units Sold = Total Revenue Price Chapter 1 Version 3 e © 2003 South-Western 36

5 Learning Objective Describe several reasons for studying marketing. Chapter 1 Version 3 e © 2003 South-Western 37

5 Why Study Marketing? u Plays an important role in society u Vital to business survival, profits and growth u Offers career opportunities u Affects your life every day Chapter 1 Version 3 e © 2003 South-Western 38

5 Why Study Marketing? “Marketing is too important to be left to the marketing department. ” --David Packard Hewlett-Packard Chapter 1 Version 3 e © 2003 South-Western 39

5 Why Study Marketing? u u 1/4 th to 1/3 rd of the entire civilian workforce in the U. S. performs marketing activities • Professional Selling Fastest route up the corporate ladder • Product Management • Marketing Research • Advertising • Retail Buying • Distribution Management • Product Development • Wholesaling Chapter 1 Version 3 e © 2003 South-Western 40

5 Why Study Marketing? u Half of every dollar spent by consumers pays for marketing costs u Become a betterinformed consumer Chapter 1 Version 3 e © 2003 South-Western 41