copyright © houghton mifflin company. all rights reserved. 1–11–1 defining marketing marketing...

Copyright © Houghton Mifflin Company. All rights reserved. 1–1

Defining Marketing

• Marketing–The process of creating, distributing, promoting,

and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment

• Customers–The purchasers of organizations’

products; the focal point of all marketing activities


Componentsof Strategic Marketing

FIGURE 1.1


Marketing Focuses on Customers

• Target Market–A specific group of customers on whom an organization

focuses its marketing efforts• Large or small customer groups• Single or multiple product markets• Single or multiple products• Local to global markets

• What about Milk?• Chevy?• Corvette?


Marketing Deals with Products, Distribution, Promotion, and Price

• The Marketing Mix–Four marketing activities—product, distribution,

promotion, and pricing—that a firm can control to meet the needs of customers within its target market

ProductProduct

DistributionDistribution

PromotionPromotion

PricingPricing

TargetTargetMarketMarket


Marketing Mix Variables

ProductProduct

DistributionDistribution

PromotionPromotion

PricingPricing

Goods, services, or ideas that satisfy customer needs

The ready, convenient, and timely availability of products

Activities that inform customers about the organization and its products

Decisions and actions that establish pricing objectives and policies and set product prices


Marketing Builds Satisfying Exchange Relationships

• Exchange–The provision or transfer of goods, services, or ideas in

return for something of value

FIGURE 1.2


Marketing Builds Satisfying Exchange Relationships (cont’d)

• Exchange Conditions–Two or more participants have something of value that

the other party desires.–Exchange provides mutual benefit/satisfaction.–Each party has confidence in the exchange value of the

other party’s offering.–Each party must meet the expectations of the exchange

to become trusted by the other parties.

–So…..does this sound like a date?


Marketing Occurs in a Dynamic Environment

• Marketing Concept–A philosophy that an organization should try to satisfy

customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals

–Question: Do all companies practice mktg concept?–Customer satisfaction

• Analysis of customers’ current and long-term needs• Analysis of competitors’ capabilities• Integration of firm’s resources

• How?……research!


Evolution of the Marketing Concept

ProductProductOrientationOrientation

SalesSalesOrientationOrientation

MarketingMarketingOrientationOrientation

Late 19th century: efficient production of goods allowed firms to meet strong customer demand.

Mid-1920s–early 1950s: weakened demand required that products would have to be “sold.” (personal selling, advertising, and distribution was the focus)

Early 1950s–2000s: adopting a customer focus means a commitment to researching and responding to customer needs.

FIGURE 1.3


Implementing the Marketing Concept

• Becoming marketing oriented requires–establishing an information system to discover

customers’ needs and using the information to create satisfying products. MIS majors….That’s you!

–coordinating all marketing activities by restructuring the organization. Mktg majors!

–obtaining the support of all managerial and staff levels in the organization. Mgmt majors!


Managing Customer Relationships

• Relationship Marketing–Establishing long-term, mutually satisfying buyer-seller

relationships allowing for cooperation and mutual dependency

• Increased value of customer (loyalty) over time results in increased profitability.


Managing Customer Relationships (cont’d)• Customer Relationship Management (CRM)

–Using information about customers to create marketing strategies that develop and sustain desirable customer relationships

• Identifying buying-behavior patterns of customers• Using behavioral information to focus on the most

profitable customers

• Amazon.com


Value-Driven Marketing

• Value–A customer’s subjective assessment of benefits relative

to the costs in determining the worth of a product• Customer value = customer benefits – customer costs

–Customer benefits• Anything desired by the customer that is received in an

exchange

–Customer costs• Anything a customer gives up in an exchange for benefits

–Monetary price of the benefit

–Search costs (time and effort) to locate the product

–Risks associated with the exchange


The Importance of Marketing in Our Global Economy

• Marketing Costs Consume a Sizable Portion of Buyers’ Dollars

• Marketing Is Used in Nonprofit Organizations• Marketing Is Important to Business and the

Economy• Marketing Fuels Our

Global Economy


The Importance of Marketing in Our Global Economy (cont’d)

• Marketing Knowledge Enhances Consumer Awareness

• Marketing Connects People Through Technology• Socially Responsible Marketing Can Promote the

Welfare of Customers and Society• Marketing Offers Many

Exciting Career Prospects


Transparency Figure 1I

Starting Salaries for College Graduates

Source: American Demographics, December 2000, p. 27. Adapted with permission.


After reviewing this chapter you should:

• Be able to define marketing as focused on customers.• Know the meaning of important marketing terms,

including target market, marketing mix, marketing exchanges, and marketing environment.

• Be more aware of the marketing concept and marketing orientation.

• Understand the importance of building customer relationships.

• Have learned about the process of marketing management.

• Recognize the important role of marketing in our society.

Chapter 1 Chapter 1 Supplemental SlidesSupplemental Slides



Key Terms and Concepts

• The following slides (a listing of terms and concepts) are intended for use at the instructor’s discretion.

• To rearrange the slide order or alter the content of the presentation–select “Slide Sorter” under View on the main menu.–left click on an individual slide to select it; hold and drag

the slide to a new position in the slide show.–To delete an individual slide, click on the slide to select,

and press the Delete key.–Select “Normal” under View on the main menu to return

to normal view.


Important Terms

• Marketing–The process of creating, distributing, promoting,

and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment

• Customers–The purchasers of organizations’ products; the focal

point of all marketing activities

• Target Market–A specific group of customers on whom an organization

focuses its marketing efforts


Important Terms

• The Marketing Mix–Four marketing activities—product, distribution,

promotion, and pricing—that a firm can control to meet the needs of customers within its target market

• Product–Goods, services, or ideas that satisfy customer needs

• Distribution–The ready, convenient, and timely availability of

products

• Promotion–Activities that inform customers about the organization

and its products


Important Terms

• Pricing–Decisions and actions that establish pricing objectives

and policies and set product prices

• Exchange–The provision or transfer of goods, services, or ideas in

return for something of value

• Marketing Concept–A philosophy that an organization should try to satisfy

customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals


Important Terms

• Relationship Marketing–Establishing long-term, mutually satisfying buyer-seller

relationships allowing for cooperation and mutual dependency

• Customer Relationship Management (CRM)–Using information about customers to create marketing

strategies that develop and sustain desirable customer relationships

• Value–A customer’s subjective assessment of benefits relative

to the costs in determining the worth of a product


Important Terms

• Customer Benefits–Anything desired by the customer that is received in an

exchange

• Customer Costs–Anything a customer gives up in an exchange for

benefits

• Marketing Management–The process of planning, organizing, implementing, and

controlling marketing activities to facilitate exchanges effectively and efficiently


Important Terms

• Effectiveness–The degree to which an exchange helps an

organization achieve its objectives

• Efficiency–The process of minimizing the resources an

organization must spend to achieve a specific level of desired exchanges


Transparency Figure 1D

Percentage of Sales Online by Retail Segment

Source: Investor’s Business Daily, Wednesday, September 5, 2001, p. A6. Used with Permission.

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