Chapter 1Chapter 1An Overview of MarketingAn Overview of Marketing

What is Marketing?What is Marketing?

A Philosophy

An Attitude

A Perspective

A Management Orientation

A Set of Activities, including:

Products

Pricing

Promotion

Distribution

What is Marketing?What is Marketing?

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.

Marketing Management Marketing Management PhilosophiesPhilosophies

PhilosophyPhilosophy Key Ideas

ProductionProduction

SalesSales

MarketMarket

SocietalSocietal

Focus on efficiency of internal operations

Focus on satisfying customer needs and wants

Focus on satisfying customer needs and wants while enhancing individual and societal well-being

Focus on aggressive techniques for overcoming customer resistance

The Marketing ConceptThe Marketing Concept

Focuses on customer wants and needs to distinguish products from competition

Integrates all organization’s activities to satisfy customer wants and needs

Achieves organization’s long-term goals by satisfying customer wants and needs

http://acsi.asqc.org

Customer Satisfaction is KeyCustomer Satisfaction is KeyHow satisfied are your customers?

How do

you know?

What causes

different levels

of satisfaction?

What Customers Like - Q1/2000

American Satisfaction Index Results http://acsi.asq.org/)

Top: Nondurables - How can you screw up ketchup?

Middle: Durables - More complexity means more can go wrong

Bottom: Services - Stressed frontline workers/low wages

Most recent ResultsExample Industry Satisfaction Score Last Change

Beverage 84 + 1.2%

Apparel 79 NC

Autos 78 - 1.3%

Police (suburban) 78 + 9.8%

Commercial Banks 68 - 2.9

National News 64 + 3.2%

Internal Revenue 51 - 3.8%

The American Customer Satisfaction Index

Overall Customer

Satisfaction (ACSI)

Perceived Value

Perceived Quality

Customer Expectations

Customer Loyalty

+

-+

+

++

+

+

Customer Complaints

Customization & Reliability

Quality Relative to the Price Paid

Past Experiences, Word-of-Mouth

Future Predictions

Ultimate Dependent Variable (proxy for

profitability)

Satisfaction/Retention Metrics

““Putting the Service-Profit Chain to Work,” James L. Heskett, Putting the Service-Profit Chain to Work,” James L. Heskett, et al, et al, Harvard Business ReviewHarvard Business Review, March-April, 1994, PP 164-174., March-April, 1994, PP 164-174.

Extremely Somewhat Slightly Satisfied Very Extremely Somewhat Slightly Satisfied Very Dissatisfied Dissatisfied Dissatisfied SatisfiedDissatisfied Dissatisfied Dissatisfied Satisfied

R

eten

tio

nR

eten

tio

n

TerroristsTerrorists

zone of affectionzone of affection

zone of indifferencezone of indifference

zone of defectionzone of defection

0

20

4

0

60

8

0

100

%0

2

0

40

6

0

80

1

00%

ApostlesApostles

SatisfactionSatisfaction

The Profit Chain

Internal Service Quality

Employee Satisfaction

Workplace design Job design Employee Selection Employee development Employee rewards Employee recognition Tools for serving customers

Employee Retention

Employee Productivity

Customer Satisfaction

External Service Value

Customer Loyalty

Revenue Growth &

Profitability

Operations designed and delivered to meet customer needs

Retention Repeat business Referral

Relationship Marketing

Sales vs. Market OrientationsSales vs. Market Orientations

Organization’sFocus

Firm’sBusiness

ForWhom?

Primary Profit Goal?

Tools to Achieve

Selling goods and services

Everybody Maximum sales

volume

Primarily promotion

InwardSales Orientation

Market Orientation

Outward Coordinated use of all marketing activities

Customer satisfaction

Specific groups of

people

Satisfying wants and

needs

The Organization’s FocusThe Organization’s Focus

Create Customer

Value

Create Customer

Value

Build Long-Term Relationships

Build Long-Term Relationships

Maintain Customer

Satisfaction

Maintain Customer

Satisfaction

Key Issues in Developing Competitive Advantage

Key Issues in Developing Competitive Advantage

Defining a Firm’s BusinessDefining a Firm’s Business

““BenefitsBenefits” instead of “” instead of “goods/servicesgoods/services””

Ensures a customer focus

Encourages innovation

Stimulates an awareness of customer change

Marketing Process ActivitiesMarketing Process Activities

Understand the organization’s missionUnderstand the organization’s mission

Set marketing objectivesSet marketing objectives

Gather, analyze, interpret “SWOT” informationGather, analyze, interpret “SWOT” information

Develop a marketing strategyDevelop a marketing strategy

Implement the marketing strategyImplement the marketing strategy

Design performance measuresDesign performance measures

Evaluate marketing efforts--change if neededEvaluate marketing efforts--change if needed