Chapter 1 Defining Marketing for the TwentyFirst Century

Chapter 1 Defining Marketing for the Twenty-First Century Power. Point by Karen E. James Louisiana State University - Shreveport © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 0

Objectives § Understand the new economy. § Learn the tasks of marketing. § Become familiar with the major concepts and tools of marketing. § Understand the orientations exhibited by companies. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 1

Objectives § Learn how companies and marketers are responding to new challenges. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 2

The New Economy § Consumer benefits from the digital revolution include: – Increased buying power. – Greater variety of goods and services. – Increased information. – Enhanced shopping convenience. – Greater opportunities to compare product information with others. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 3

The New Economy § Firm benefits from the digital revolution include: – New promotional medium. – Access to richer research data. – Enhanced employee and customer communication. – Ability to customize promotions. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 4

Marketing Tasks § Marketing practices may pass through three stages: – Entrepreneurial marketing – Formulated marketing – Intrepreneurial marketing § As marketing becomes more formulated, creativity is inhibited. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 5

What Can Be Marketed? § Goods § Places § Services § Properties § Experiences § Organizations § Events § Information § Persons § Ideas © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 6

Marketing Defined § Kotler’s social definition: “Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. ” © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 7

Marketing Defined § The AMA managerial 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 objectives. ” © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 8

Core Marketing Concepts § Target markets and market segmentation § Exchange and transactions § Marketplace, marketspace, metamarkets § Relationship and networks § Marketers & prospects § Marketing channels § Needs, wants, demands § Supply chain § Product offering and brand § Competition § Value and satisfaction § Marketing program © 2003 Prentice Hall, Inc. § Marketing environment To accompany A Framework for Marketing Management, 2 nd Edition 9

Core Marketing Concepts § Target markets & segmentation – Differences in needs, behavior, demographics or psychographics are used to identify segments. – The segment served by the firm is called the target market. – The market offering is customized to the needs of the target market. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 10

Core Marketing Concepts § Shopping can take place in a: – Marketplace (physical entity, Lowe’s) – Marketspace (virtual entity, Amazon) § Metamarkets refer to complementary goods and services that are related in the minds of consumers. § Marketers seek responses from prospects. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 11

Core Marketing Concepts § Needs describe basic human requirements such as food, air, water, clothing, shelter, recreation, education, and entertainment. § Needs become wants when they are directed to specific objects that might satisfy the need. (Fast food) § Demands are wants for specific products backed by an ability to pay. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 12

Core Marketing Concepts § A Product is any offering that can satisfy a need or want, while a brand is a specific offering from a known source. § When offerings deliver value and satisfaction to the buyer, they are successful. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 13

Enhancing Value § Marketers can enhance the value of an offering to the customer by: – Raising benefits. – Reducing costs. – Raising benefits while lowering costs. – Raising benefits by more than the increase in costs. – Lowering benefits by less than the reduction in costs. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 14

Core Marketing Concepts § Exchange involves obtaining a desired product from someone by offering something in return. Five conditions must be satisfied for exchange to occur. § Transaction involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 15

Core Marketing Concepts § Relationship marketing aims to build long-term mutually satisfying relations with key parties, which ultimately results in marketing network between the company and its supporting stakeholders. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 16

Core Marketing Concepts Marketing Channels § Communication channels § Distribution channels § Service channels © 2003 Prentice Hall, Inc. § Deliver messages to and receive messages from target buyers. § Includes traditional media, non-verbal communication, and store atmospherics. To accompany A Framework for Marketing Management, 2 nd Edition 17

Core Marketing Concepts Marketing Channels § Communication channels § Distribution channels § Display or deliver the physical products or services to the buyer / user. § Service channels © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 18

Core Marketing Concepts Marketing Channels § Communication channels § Distribution channels § Carry out transactions with potential buyers by facilitating the transaction. § Service channels © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 19

Core Marketing Concepts § A supply chain stretches from raw materials to components to final products that are carried to final buyers. § Each company captures only a certain percentage of the total value generated by the supply chain. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 20

Core Marketing Concepts § Four levels of competition can be distinguished by the level of product substitutability: – Brand competition – Industry competition – Form competition – Generic competition © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 21

Core Marketing Concepts § The following forces in the broad environment have a major impact on the task environment: – Demographics – Economics – Natural environment – Technological environment – Political-legal environment – Social-cultural environment © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 22

Core Marketing Concepts § The marketing program is developed to achieve the company’s objectives. Marketing mix decisions include: – Product: provides customer solution. – Price: represents the customer’s cost. – Place: customer convenience is key. – Promotion: communicates with customer. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 23

Company Orientations § The orientation or philosophy of the firm typically guides marketing efforts. Several competing orientations exist: – Production concept – Product concept – Selling concept – Marketing concept – Customer concept – Societal marketing concept © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 24

The Marketing Concept § Achieving organizational goals requires that company be more effective than competitors in creating, delivering, and communicating customer value. § Four pillars of the marketing concept: – Target market – Customer needs – Integrated marketing – Profitability © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 25

Changes in the Marketplace § Globalization, technological advances, and deregulation have created many challenges: – Customers – Brand manufacturers – Store-based retailers § Both companies and marketers have been forced to respond adjust. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 26