Chapter 1 Marketing Today & Tomorrow

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. (AMA 2009) (FYI – Who are “stakeholders?”)

Marketing is the creation and maintenance of satisfying exchange relationships.

Marketing is the key tool in matching supply and demand.

What is Marketing?

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Why study Marketing? Marketing takes place all around you –

advertising, transportation, research. All businesses & organizations are involved in

marketing. When you make a purchase you are involved

in marketing. An understanding of marketing will make you

a better consumer, a better employee, a better leader, and lead to better career opportunities.

How businesses use marketing to increase their effectiveness and profits. Frameworks 2.2

How does Marketing benefit you?

Bridges the gap between you and the maker or seller of an item. (You don’t have to travel to factories or farms to buy products.)

Makes buying easy for customers. (Large selection of products under one roof, convenient locations, and hours of operation.)

Creates a variety of new and improved products. (Competition forces businesses to sell more and better products.)

Reduces prices. (Effective marketing sells more products which reduces the per unit cost of each item.)

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To be successful in business requires being marketing oriented.

Every business/organization in the U.S. is involved in marketing.

Over 4 million businesses have marketing as their primary activity – auto dealers, real estate agents, insurance agents, travel agencies, banks, and all retailers.

Millions of other businesses use marketing in limited roles – attorneys, physicians, accounting firms, government agencies, colleges and universities, and construction companies.

Why is Marketing important?

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Products – goods or services.

Non-profit organizations – military branches, churches, charities, libraries, schools, or colleges.

Places or destinations – States, countries, or cities.

Events – launch of a new product, concert, festival, fair, grand opening, or special service.

Ideas – anti-smoking campaigns, recycling programs, safety awareness, anti-drug campaigns

Individuals – politicians, artists, sports stars, or other celebrities.

What can be Marketed?

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Non-Profit Organization Marketing

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http://www.nationalguard.com/citizensoldier/index.php

Non-Profit Organization Marketing

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Place Marketing

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http://www.harrison-chamber.com/

Place Marketing

Event Marketing

Marketing of Ideas (cause marketing)

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Marketing of Ideas (cause marketing)

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Marketing of Ideas (cause marketing)

Marketing of People/Politicians

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Marketing of Celebrities

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Celebrities are constantly engaged in marketing. They often market themselves and the movies they star in.

Marketing of Dead Celebrities

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Video Presentation: Can you really use marketing with dead celebrities?

Marketing of Sports Celebrities

Video Presentation

Is LeBron James a person or a brand?

Steve Kroft profiles Cavalier's superstar, LeBron James, who at only 24, is already among an elite handful of athletes who command tens of millions a year in playing and marketing fees.

The Marketing Functions

1. Market Planning - identifying and understanding markets.2. Product & Service Management – design and development of

products/services that will satisfy customer needs.3. Distribution – getting products/services to customers. Includes

determining the best procedure to be used so prospective customers can locate a product.

4. Pricing – establishing the value of products/services.5. Promotion – communicating information to customers to inform,

persuade, or remind them about a company or its products.6. Selling – direct, personal, and persuasive communication with

customers.7. Market-Information Management – obtaining, managing, and using

market and customer information.8. Financing – budgeting for the business and providing financial

assistance to customers.9. Risk Management – providing security for products, buildings,

equipment, inventory, employees, and customers.

The Need for Marketing

Good products will not be successful without good marketing.

Customers will not buy good products they’ve never heard of, can’t find, can’t afford, don’t understand, don’t know they need, or simply don’t want!

Marketing activities must be carefully planned and coordinated with other business activities.

The Need for Marketing

"If a man can write a better book, preach a better sermon, or make a better mousetrap, than his neighbor, though he build his house in the woods, the world will make a beaten path to his door."

- Ralph Waldo Emerson      

1803 – 1882 American philosopher

and poet.

Often misquoted as: "Build a better mousetrap and the world will beat a path to your door."

Which is the better mousetrap?

The product must be what the customer wants!

But there are some things that customers just will not buy!

The Development of Marketing in Business

Today, no person or country is self-sufficient. We all rely on other people for things we need and want.

To be self-sufficient people would have to over-come the need for a variety of goods and services.

The Development of Marketing in Business

Bartering, exchanging products/services with others by agreeing on their value, without using money, was used before the development of a money system.

Bartering Booms During Economic Tough Times By Emily Bazar, USA TODAY

Even though Ron Giesler, 42, lost his job wiring oil rigs three weeks ago, the Seabrook, Texas, resident is still working as an electrician. He's just getting paid in trade: laptops, computer parts and other used goods.

When Christine Rietsch, 41, of Fridley, Minn., had her hours cut, she got creative so her two children could have a merry Christmas. She drew a portrait of a man's wife and son and received the Guitar Hero video game in return.

Giesler and Rietsch are among a growing number of people turning to bartering to help them survive the recession. In barter, people trade goods and services without exchanging money.

Barter "absolutely thrives in bad times," says Roger Staiger, a professor at Johns Hopkins University's business school. Last month, a Denver developer asked Staiger for help restructuring a loan. Lacking cash, he gave Staiger a Colorado ski trip, and the developer's wife is designing his Web page.

"This is part of the underground economy that does not contribute to the GDP (gross domestic product), but it absolutely contributes to helping people and fostering trade," he says.

Giesler and Rietsch both use Craigslist. Giesler has done six barters with homeowners who need electrical work. He sold a laptop he received to help with the mortgage. Rietsch, a nurse, has done a variety of trades, such as trading a table for a chair. "If you're able to give somebody a service or good they're looking for, it saves both of you money that can go towards bills or food or gasoline," she says.On Craigslist, postings in the bartering section were up 100% between July 2008 and July 2009, says spokeswoman Susan MacTavish Best. "Bartering is particularly popular in areas that have been hit with foreclosures," she says.

U-Exchange.com, a website that connects people who want to swap and trade, had nearly 1.1 million page views between mid-January and mid-February, says John Moore, founder of the site. During the same period last year, there were almost 362,000.

Businesses also barter. The Gulf Coast Trade Exchange has 500 members from Gulf Shores, Ala., to Destin, Fla., who earn credit for providing goods and services to each other.

“We have been getting lots of calls," says owner Fran Crumpton. "People are more concerned about the bottom line and their future."

Bartering Booms During Economic Tough Times By Emily Bazar, USA TODAY

Currency was developed as a medium of exchange to make buying and selling easier, and because people began to specialize in performing certain jobs.

The Development of Marketing in Business

How valuable is gold today? VIDEO

The Development of Marketing in Business

The U.S. Monetary System

The U.S. Mint is in a bind: should it continue to produce pennies and nickels whose metal content is worth more than their face value? Morley Safer reports.

Video Presentation

With this specialization of labor, people made more products and had more money. This created a need for central markets.

The Development of Marketing in Business

The Forum was the central marketplace and business center of ancient Rome. Visitors went here to do their banking, trading, and shopping. Elaborate temples and public buildings were also a part of the Forum.

Central Markets were located where people frequently traveled or gathered.

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4.2 million square feet Employees 13,000Parking spaces - 12,550

Attractions

The Park at MOAUnderwater Adventures AquariumLEGO Imagination Center Dinosaur Walk Museum A.C.E.S. Flight Simulation

Cost to build - $650 millionStore front footage - 4.3 miles

The Mall of AmericaBloomington, Minnesota

More than 520 storesSit-down restaurants - 20 Fast food restaurants - 30 Specialty food stores - 36 Movie screens – 14Wedding Chapels - 1

The Branson Landing

The Functions of Business

1. Production – Obtains or creates products or services for sale.2. Operations – Support the primary function of the business

and keep the business operating efficiently. Buildings and equipment must be maintained. Products must be obtained, transported, and stored. Paperwork and computerized records must be prepared and obtained.

3. Accounting & Finance – Planning and managing the resources and records of a business.

4. Management – Developing, implementing, and evaluating the plans and activities of a business.

5. Marketing – All business must communicate with customers and make their products/services available to ensure satisfying exchanges.

The Functions of Business

Production – forms of production: Processing raw materials into something

useful – oil refineries and paper mills. Agriculture – Growing food for consumption. Manufacturing – Automobiles and computers

are manufactured. Services – Preparing a tax return, seeing a

doctor, dentist, or getting a hair cut. Merchandising – Buying an assortment of

products (made by others) for resale to consumers. Examples include retailers and wholesalers.

Coordination of Business Functions

Each of the functions of an effective business depends on the other functions.

Products can be produced, but if the company is not operated or managed well, adequate records are not maintained, or marketing is ineffective, the products will not be sold at a profit.

Understanding the Marketing Concept

The Marketing Concept is using the needs of customers as the primary focus during the planning, production, pricing, distribution, and promotion of a product or service.

The Marketing Concept is a company wide consumer orientation.

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Identify needs of

customers

Develop and

market products

or services

Operate a business profitably

Implementing the Marketing Concept

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Getting the Word Out – Page 20

After The Sale Follow-up. Making contact with the customer after the sale with a letter, phone call, or e-mail.

Recognition And Special Services. Recognizing purchasers in promotions, newsletters, or at events.

Incentives. Offering purchasers financial incentives or discounts for recommending the business to prospective customers.

Buzz Marketing. (AKA – Viral Marketing) Using high profile entertainment or news to get people to talk about their brand.

Product Seeding. Placing the right product in the right hands at the right time and providing information or samples to influential individuals.

Conversation Creation. (AKA – Viral Marketing) Developing interest or fun advertising, e-mails, catch phrases, entertainment, or promotions designed to start word of mouth activity.

Viral Marketing

Marketing that facilitates and encourages people to pass along a marketing message.

Viral marketing depends on a high pass-along rate from person to person. If a large percentage of recipients forward something to a large number of friends, the overall growth snowballs very quickly. If the pass-along numbers get too low, the overall growth quickly fizzles.

A lot like “word-of-mouth.”

At last year's Academy Awards, for example, one of two Best Actress gift-bags featured Gucci sunglasses, a Sprint PCS phone, Christian Tse 18-carat gold Iris earrings, and more. The Best Actor bag featured Gucci eyewear, a Maurice Lacroix Swiss watch and assorted other goodies. According to news reports, the retail value of one such group of bags at the Oscars exceeded $110,000 each!

Jessica Alba wearing free Gucci sunglasses

Product Seeding

Energy Brands, makers of the Glaceau Vitamin Water line, discovered product seeding in 2004. As a result of its long-time strategy to "home deliver" the vitamin-enhanced drink to celebrities (including Sean "Puffy" Combs and Tom Cruise), the company gained a fan in 50 Cent. Having mentioned his preference for the product in a series of interviews, the Hip Hop star - who is well known for his fitness-centered lifestyle - became an obvious choice for brand spokesperson.

Product Seeding

Jennifer Aniston with her “seeded” bottle of water.

Guerrilla Marketing

achieving conventional goals, such as profits … with unconventional methods, such as investing energy instead of money.

Sean Stevens (left) and Peter Berdovsky found something amusing during their arraignment inside Charlestown District Court.

Months later, Berdovsky (left) and Stevens showed much more remorse, acknowledged their roles, and apologized.

Guerrilla Marketing

Guerrilla Marketing

Implementing the Marketing Concept

The first step is to identify the market the company wants to serve.

A market is a description of a unique group of prospective customers a business wants to serve and their location.

A market is all potential customers who share common needs and wants and who have the ability and willingness to buy the product.

The Marketing Mix

The second step is to develop a marketing mix that will meet the needs of the market and provide a profit for the business.

The 4 elements of the Marketing Mix: 1. Product

2. Distribution or place

3. Price

4. Promotion

(Also known as the 4 P’s of Marketing.)

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Video Presentation

The Marketing Mix

1. Product – anything offered to a market by the business to satisfy needs, could include physical products, services, or ideas.

2. Distribution or place – includes the location and methods used to make the product available to the consumer. Determining the best procedure to be used so prospective customers can locate a product.

3. Price – the amount the customer will pay for the product.

4. Promotion – includes the methods used and the information communicated to encourage customers to purchase and increase their satisfaction.

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Companies make

decisions about what and how to

produce products and

services without

worrying about marketing.

Production Emphasis

“They can have it in any color they want, as long as its black.” Henry Ford

Companies emphasized widespread distribution

and promotion in order to sell products and

services.

The Sales Emphasis

Production Era

• Emphasis on producing and distributing new products

1900s–1920s

Sales Era

• Emphasis on using advertising and salespeople to convince customers to buy a company’s products

1930s–1940s

Marketing Department Era

• Emphasis on developing many new marketing activities to sell products

1950s–1960s

Marketing Concept Era

• Emphasis on satisfying customers’ needs with a carefully developed marketing mix

1970s–Today

Relationship Marketing – focuses on developing loyal customers who continue to purchase from the business for a long period of time.

Improving the Marketing Concept

Relationship Marketing

“Like A Good Neighbor, ______ ______ is There”

Businesses must develop strategies

that will encourage

customers to return again and

again!

Employee Empowerment

Employee empowerment is an approach to customer service that gives employees the authority to solve many customer problems.

Requires that businesses trust employees to make good decisions in the best interests of the company and the customer.

The assignment sheet is due at the end of the video.

That’s Marketing

Marketing Video

Test