CHAPTER 1 Welcome to the World of Marketing: Creating and Delivering Value

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CHAPTER 1Welcome to the World of Marketing
Creating and Delivering Value
M A R K E T I N G
Real People, Real Choices Fourth Edition
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Why study Marketing

• Who pays your salary when you start working?
• Do you like meeting new people, traveling and
  seeing the world?
• Would you like to have the power to make others
  to do what you want?
• Would you like to own your own business someday?
  Or be a President / CEO of a company?

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Some marketing careers

• Marketing departments
• Marketing Consultancies
• Brand consultancy
• Marketing research
• International marketing
• Retailing

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What is Marketing
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. American
Marketing Association
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Marketers do it to satisfy needs

• Most successful firms practice the marketing
  concept
• first identify consumer needs and then provide
  products that satisfy those needs
• A need is the difference between a consumers
  actual state and some ideal or desired state
• physical needs (e.g. hunger, thirst, etc.)
• psychological needs (self-esteem, companionship,
  etc.)

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Needs versus Wants

• A need is the difference between the actual and
  ideal states of being
• A want is a desire for a particular product used
  to satisfy that need
• wants are culturally and socially influenced
  (e.g. formal wear for prom I-Pods and peer
  pressure, diamond rings and engagement, etc.)

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Benefits, Demand, and Markets

• A product delivers a benefit when it satisfies a
  want
• Want coupled with the resources to satisfy it
  results in demand
• A market consists of all the consumers with
  demand
• E.g. you have a need to move from home to the
  office so you want a car when you have the
  money to buy you demand a car all those who
  demand a car constitute the market for a car.

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Marketing Creates Utility

• Form utility transforming raw-materials to
  finished products (e.g. making cars from sheet
  steel)
• Place utility making products available where
  they are wanted (e.g. selling surf boards at
  Myrtle Beach)
• Time utility making products available when
  they are wanted (e.g. selling winter clothing in
  Fall)
• Possession utility derived by owning, using and
  enjoying the product (e.g. self-expression by
  wearing an i-pod)

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Exchange Relationships

• Exchange - the heart of every marketing act
• An exchange occurs when something is obtained for
  something else in return
• Both parties must willingly make the exchange
• Each party must be at liberty to reject the
  exchange

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What Can Be Marketed?

• Consumer Goods and Services
• Business-to-Business Goods and Services
  aircraft, ships, industrial machinery
• Not-for-Profit Marketing museums, churches,
  zoos, etc.
• Idea, Place, and People Marketing (anti-smoking
  Oregon Paris Hilton, Jessica Simpson, etc.)

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The Value Proposition

• Value All benefits received from buying a
  product / service (Rembrandt toothpaste
  benefits?)
• Marketing communicates these benefits as the
  value proposition (Rembrandt The whitening
  toothpaste)
• Costs All costs incurred (including time and
  effort) in buying the product / service
• Value Benefits / Costs
• Value is subjective Think about brands you love
  and those you dont love

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Providing Value to customers

• Distinctive Competency what is it that the firm
  does better than the competition? (What does
  Apple do better than competition?)
• Differential Benefit How can we leverage the
  distinctive competency to provide something
  unique which customers want. (How has Apple done
  this?)
• Competitive advantage Strategy-speak for the
  ability to provide consumers with something the
  competition cannot (What is Apples competitive
  advantage?)

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Value Chain Activities

• The series of activities involved in converting
  business inputs (e.g. raw-materials) into
  finished products for final sale.
• Inbound logistics
• Operations
• Outbound logistics
• Marketing and sales
• Service
• Competitive advantage occurs when a firm performs
  one or more of these activities better than the
  others

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Marketing as a Process

• Marketing planning some questions
• What product benefits will our customers be
  looking for in 3-5 years?
• What capabilities does our firm have that set it
  apart from the competition?
• What additional customer groups might provide
  important segments for us in the future?
• What legal issues may affect our business?

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Target Markets

• Mass Market - all possible customers regardless
  of differences in their specific needs and wants
• developing a basic product and a single strategy
  for everyone (e.g. Mortons salt)
• Market segments - distinct groups of customers
  within a larger market (e.g. the various I-pods
  and Shuffle)
• A target market - an organizations chosen
  segment (what is the target market for the
  shuffle, Hollister jeans?)

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Positioning the Product

• Plan how the target market should perceive the
  product in comparison to competitors brands -
  the market position
• What is the market position of Mercedes? BMW?
  Toyota? Apple?

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The Marketing Mix

• Product features, benefits, packaging, brand
  name, size, weight, color, etc.
• Place where is it available
• Price list price, discounts, rebates, pricing
  strategy, etc.
• Promotion informing and persuading consumers
  about our product.

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The Evolution of Marketing

• Production Era product focus
• Manufacture at lowest cost
• Selling Era sales focus
• Sell! Sell! Sell! At any price you can get!
• Consumer Orientation consumer focus
• Give what the consumer needs/wants
• New Era Orientation relationship focus
• Build customer loyalty

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New Era Orientation

• Customer relationship management
• Easier and cheaper selling to an existing
  customer than finding a new customer
• E.g. Frequent Flyer programs, etc.
• Social benefits
• Pollution control, green marketing, recyclables,
  etc.
• Accountability
• Marketing metrics each marketing action should
  have measurable results