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