IrwinMcGrawHill

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C H A P T E R O N E
MARKETING A FOCUS ON CUSTOMER RELATIONSHIPS AND
VALUE
Irwin/McGraw-Hill
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AFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO

• Define marketing and explain the importance of
  (1) discovering and (2) satisfying consumer needs
  and wants.
• Distinguish between marketing mix elements and
  environmental factors.
• Understand how organizations build strong
  customer relationships using current thinking
  about customer value and relationship marketing.
  

(continued)
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AFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO

• Describe how todays market orientation era
  differs from prior eras oriented to production
  and selling.
• Understand the meaning of ethics and social
  responsibility and how they relate to the
  individual, organizations, and society.
• Know what is required for marketing to occur and
  how it creates customer value and utilities for
  consumers.

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PP1-AA Rollerblade Skates

• Conversations with in-line skaters indicated
  that using Rollerblade skates
• was incredible fun
• was a great aerobic workout and made the skater
  stronger and healthier
• was quite different from traditional skating,
  which was practiced alone, mostly inside, and by
  young girls
• would have great appeal to people other than just
  off-season ice hockey skaters and skiers.

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PP1-1 Number of in-line skaters in the United
States
35
David Samuels and his Rollerblade team target
new opportunities
30 25 20 15 10 5 0
29.1
First ExtremeGames features in-line
skatingcompetition
27.5
Number of U.S.in-line skaterspasses 10,000,000
22.5
18.8
Number of U.S. in-line skate participants
(millions)
Two brothersreinventin-line skates
Rollerblades guerilla marketing launches
in-line skate industry
12.6
9.4
6.2
4.3
3.0
1994
1996
1998
1992
1990
1988
1986
1984
1982
1980
2000
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PP1-2a The see-if-youre-really-a-marketing-exper
t test

• 1. In a magazine article, a well-known actress
  said she often Rollerbladed for fun and
  exercise. What was Rollerblade, Inc.s reaction?
  (a) delighted, (b) upset, or (c) somewhere in
  between. Why?
• 2. What is Polavision? (a) a new breathable
  contact lens, (b) a TV network that competes with
  Home Box Office, (c) special bifocal glasses,
  (d) instant movies, or (e) a political newspaper.
  

(continued)
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PP1-2b The see-if-youre-really-a-marketing-exper
t test

• 3. Right after World War II, IBM commissioned a
  study to estimate the total market for electronic
  computers. The studys results were (a) less
  than 10, (b) 1,000, (c) 10,000, (d) 100,000, or
  (e) 1 million or more.
• 4. True or false Building good customer
  relationships is a critical marketing issue
  today, as illustrated by having a loyal Kleenex
  customer spending more than 1,000 during his or
  her lifetime, in todays dollars.
• 5. True or false Grinding done by city kids
  today uses a skateboard with bad wheels or
  bearings.

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PP1-BB Definition of Marketing
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.
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PP1-CC Definition of Market Orientation
An organization that has a market orientation
focuses its efforts on . . . .
(1) Continuously collecting information about
customers needs and competitors
capabilities, (2) sharing this information
across departments, and (3) using the
information to create customer value.
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PP1-DD Definition of Exchange
Exchange is . . . .
the trade of things of value between buyer and
seller so that each is better of after the trade.
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PP1-3 An organizations marketing department
relates to many people, groups, and forces
The Organization
Society
Society
Alliances
Ownership
Research and Development
Human Resources
Shareholders (owners)
Other Organizations
Information Systems
Manufacturing
Management
Relationships
Partnerships
Customers
Suppliers
Finance
Marketing
Environmental Forces
Social
Regulatory
Technological
Economic
Competitive
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PP1-EE Requirements for Marketing to Occur

• For marketing to occur, at least 4 factors are
• required
• 1. Two or more parties (individuals or
• organizations) with unsatisfied needs,
• 2. a desire and ability on their part to be
• satisfied,
• 3. a way for the parties to communicate, and
• 4. something to exchange.

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PP1-FF Concept Check

• 1. What is marketing?
• 2. Marketing focuses on __________
• and _________ consumer needs.
• 3. What four factors are needed for
• marketing to occur?

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PP1-GG Some Product Disasters

• 1. New Coke
• 2. Polavision
• 3. The Edsel
• 4. Players Beer
• 5. Crystal Pepsi

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PP1-HH Needs Wants

• Should marketing try to satisfy consumer needs or
  
• wants?
• A need occurs when a person feels physiologically
  deprived of basic necessities such as food,
  clothing, and shelter.
• A want is a felt need that is shaped by a
  persons knowledge, culture, and personality.
• What are the legal, ethical, and moral
• implications of satisfying wants and needs?

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PP1-4 Marketings first taskdiscovering
consumer needs
Organizations marketing department
Discover consumer needs
Information about needs
Potential consumers The market
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PP1-II What is a Market?

• Potential consumers make up a market,
• which is
• 1. People
• 2. with the desire and
• 3. with the ability to buy a
• specific product.

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PP1-JJ The Target Market

• Because the organization
• obviously cant satisfy all
• consumer needs, it must
• concentrate its efforts on
• certain needs of a specific
• group of potential consumers. This is the
  target market -- one or more specific groups of
  potential consumers toward which an organization
  directs its marketing program.

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PP1-KK The Four Ps Controllable Marketing Mix
Factors

• Product
• Price
• Promotion
• Place

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PP1-LL The Uncontrollable, Environmental Factors

• Social Factors
• Economic Factors
• Technological Factors
• Competitive Factors
• Regulatory Factors

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PP1-A Summary of factors that affect an
organizations marketing program
Competitive forces
Economic forces
Marketing program
Promotion
Product
Consumer
Regulatory forces
Social forces
Place
Price
Technological forces
Environmental forces
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PP1-MM Customer Value
Customer value is. . . .
the unique combination of benefits received by
target buyers that includes quality price
convenience on-time delivery after-sale
service
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PP1-NN Relationship Marketing

• Relationship marketing is linking the
  organization to
• its individual customers, employees, suppliers,
  and
• other partners for their mutual long-term
  benefits.
• Mutual long-term benefits between the
  organization and
• its customers require links to other vital
  stakeholders--
• including suppliers, employees, and partners
  such as
• wholesalers or retailers in a manufacturers
  channel of
• distribution.

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PP1-OO Mass Customization

• Mass Customization is tailoring goods
• or services to the tastes of individual
• customers in high volumes at a
• relatively low cost.

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PP1-PP Definition of Marketing Program
A marketing program is. . . .
a plan that integrates the marketing mix to
provide a good, service, or idea to prospective
buyers.
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PP1-5 Marketings Second Task Satisfying
Consumer Needs
Organizations marketing department
Concepts for products

• Satisfy consumer needs
• Find the right combination of
• Product
• Price
• Promotion
• Place

Discover consumer needs
Information about needs
Goods, services, ideas
Potential consumers The market
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PP1-6a Marketing Program for two of Rollerblade,
Inc.s skates, target at two distinctly
different segments

• Marketing Program Activity to Reach
• Rationale for
• Marketing Fast-Growing Rough-Road
  Marketing Program
• Mix Element Kids Segment Segment Activity
• Product Offer the Xten-plus Offer the Outback
  Use new-product
• skate for children that X skate with
  research, the latest
• extends so that it trapped air filled
  technology, and
• changes four shoe sizes wheels a full-
  extensive testing to
• as the children grow suspension frame
  offer high-quality
• that cushions the skates that satisfy
• ride on rough the wants needs
• roads cracked of carefully defined
• pavement customer segments

(continued)
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PP1-6b Marketing Program for two of Rollerblade,
Inc.s skates, target at two distinctly
different segments --

• Marketing Program Activity to Reach
• Rationale for
• Marketing Fast-Growing Rough-Road
  Marketing Program
• Mix Element Kids Segment Segment Activity
• Price Price _at_ 99/pair Price _at_ 199/pair
  Attempt to set
• prices that provide
• genuine value to the
• customer segment
• that is targeted

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PP1-6c Marketing Program for two of Rollerblade,
Inc.s skates, target at two distinctly
different segments

• Marketing Program Activity to Reach
• Rationale for
• Marketing Fast-Growing Rough-Road
  Marketing Program
• Mix Element Kids Segment Segment Activity
• Promotion Use demo vans blade- Feature Rblade
  Continue to increase
• mobiles to introduce brand in ESPN
  awareness of in-line
• children to in-line in-line sports
  skating to those new
• skating while working competitions to
  the sport while
• with Rblade dealers magazines such
  offering specific
• to place ads in local as Shape, Fitness,
  skate designs for
• newspapers Mademoiselle, and more advanced
• inline local segments want them
• newspapers

(continued)
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PP1-6d Marketing Program for two of Rollerblade,
Inc.s skates, target at two distinctly
different segments

• Marketing Program Activity to Reach
• Rationale for
• Marketing Fast-Growing Rough-Road
  Marketing Program
• Mix Element Kids Segment Segment Activity
• Place Distribute the Xten- Distribute the
  Make it easy for
• plus through sporting Outback X buyers
  in the
• goods stores through specially segment to
  buy in-line sporting at an outlet
  that is
• goods stores convenient and
• where they feel
• comfortable

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PP1-B A Rollerblade Ad to Show In-Line Skating
as Giving Both Exercise and Fun from the Early
1990s
Courtesy Rollerblade, Inc.
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PP1-C A Rollerblade Ad From the Late 1990s to
Show Specific Benefits of a Rollerboard Skate
Courtesy Rollerblade, Inc.
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PP1-D An UltraWheels Ad for Its Expander Line of
Expandable Skates
Courtesy First Team Sports
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PP1-E How Rollerblade, Inc.s marketing mix
actions today differ from those in 1986
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PP1-QQ Concept Check

• 1. An organization cant satisfy the
• needs of all consumers, so it must
• focus on one or more subgroups,
• which are its ______________.
• 2. What are the four marketing mix
• elements that make up the
• organizations marketing program?
• 3. What are uncontrollable variables?

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PP1-7 Four different orientations in the history
of American business
Production era Sales era Marketing concept
era Market orientation era
1860 1880 1900 1920 1940 1960 1980 2000
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PP1-RR Ethics Social Responsibility -- Key
Terms

• ethics
• social responsibility
• societal marketing concept
• macromarketing
• micromarketing

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PP1-SS The Breadth Depth of Marketing

• How marketing affects every person and
  organization
• Who markets?
• What do they market?
• Who buys and uses what is marketed?
• Who benefits from these marketing activities?
• How do they benefit?

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PP1-TT Who buys and uses what is marketed?

• Ultimate Consumers
• Organizational Buyers

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PP1-UU How Do Consumers Benefit?
Utility
Examples of Marketing Actionsthat Create Utility
Form Place Time Possession
Product design, packaging Distribution, store
location Inventory management, warehouses,
delivery Transactions, transfer of ownership
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PP1-F American Liver Foundation Ad

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PP1-VV Concept Check

• 1. Like Pillsbury, many firms have gone
• through four distinct orientations for their
• business starting with the _______ era and
• ending with todays _______ era.
• 2. What are the two key characteristics of the
• marketing concept?
• 3. In this book the term product refers to
• what three things?