chapter 1

Introduction to

Marketing

Harcourt, Inc.

Dr. Rosebloom

Objectives Objectives

�To develop an appreciation for

the historical perspective of how

markets have evolved

�To appreciate both views of the

evolution of marketing.

�To introduce marketing as an

exchange process

Dr. Rosebloom

�To understand the societal

implications of marketing

�To comprehend marketing as an

organizational process

�To introduce the fundamentals

of marketing strategy

Objectives Objectives

Dr. Rosebloom

Spontaneous Economic Combustion Spontaneous Economic Combustion

�Labor Specialization

�Consumption Satiation

Dr. Rosebloom

The Evolution of Marketing The Evolution of Marketing

Production Era

Sales Era

Marketing Era

Relationship

Marketing Era

Dr. Rosebloom

Orientation:

Dominant

time period:

The Evolution of Marketing The Evolution of Marketing

Production Era Production Era

� Business philosophy

focusing on

manufacturing

efficiency; demand

exceeds supply =

seller’s market

�Prior to the

1920s

Dr. Rosebloom

Orientation:

Dominant

time period:

Sales Era Sales Era

� Business philosophy

focusing on selling

existing products;

supply exceeds

demand = buyer’s

market

�Prior to the

1950s

The Evolution of Marketing The Evolution of Marketing

Dr. Rosebloom

Orientation:

Dominant

time period:

Marketing Era Marketing Era

� Business philosophy

focusing on

consumer wants and

needs; any

supply/demand

situation

�Last half of 20th

century

The Evolution of Marketing The Evolution of Marketing

Dr. Rosebloom

Orientation:

Dominant

time period:

Relationship Marketing Era Relationship Marketing Era

� Business philosophy

focusing on

reinforcing the

customer-oriented

focus of the

marketing era

�Last decade of

20th century

The Evolution of Marketing The Evolution of Marketing

Dr. Rosebloom

AMA Definition of Marketing AMA Definition of Marketing

�Marketing is the process of

planning and executing the

conception, pricing, promotion,

and distribution of ideas, goods,

and services to create exchanges

that will satisfy individual

and organizational

objectives

Dr. Rosebloom

Broader Definition of Marketing Broader Definition of Marketing

The definition of

marketing

includes the non-

profit sector of

society (homeless

shelter)

Dr. Rosebloom

Broader Definition of Marketing Broader Definition of Marketing

Hal Riney and

Partners

Oakland Museum

Dr. Rosebloom

Broader Definition of Marketing Broader Definition of Marketing

The definition of

marketing

includes the non-

profit sector of

society (U.S.

Army)

Dr. Rosebloom

Broader Definition of Marketing Broader Definition of Marketing

The Martin Agency

Drug Free America

Dr. Rosebloom

Broader Definition of Marketing Broader Definition of Marketing

The definition of

marketing

includes the non-

profit sector of

society (societal

cause)

Dr. Rosebloom

Broader Definition of Marketing Broader Definition of Marketing

The definition of

marketing

includes the non-

profit sector of

society (forest

protection)

Dr. Rosebloom

Exchange Process Exchange Process

Process by which one or more

parties give something of

value to each other to satisfy

perceived needs

Dr. Rosebloom

Exchanges Exchanges

Learning Environment Learning Environment

Tuition Tuition

Promised Action Promised Action

Votes Votes

Dr. Rosebloom

Exchanges Exchanges

Fee Fee

Consulting Consulting

Products/services Products/services

Money Money

Dr. Rosebloom

Exchanges Exchanges

Producer

Wholesaler

Retailer

Consumer

Dr. Rosebloom

Activities of Marketing Activities of Marketing

Dr. Rosebloom

Activities of Marketing Activities of Marketing

Exchange Exchange

�Buying - seeking and

evaluating alternatives

� Selling - promotion of

alternatives to consumers

Dr. Rosebloom

Activities of Marketing Activities of Marketing

Dr. Rosebloom

Activities of Marketing Activities of Marketing

Logistical Logistical

�Transporting - movement

of goods and services

� Storing - holding of goods

and services

Dr. Rosebloom

Activities of Marketing Activities of Marketing

Dr. Rosebloom

Activities of Marketing Activities of Marketing

Facilitating Facilitating

� Financing - facilitating exchange

� Risk-taking - holding title

� Providing information -

understanding markets (consumer

and industrial)

� Standardizing and grading - sorting

by size and quality

Dr. Rosebloom

The Marketing Concept The Marketing Concept

� Customer orientation

� Coordinated effort by all departments

of the firm to satisfy customers

� Emphasis on long term profit

Dr. Rosebloom

Strategic Marketing Concept Strategic Marketing Concept

Corporate mission is to seek

� Sustainable competitive

advantage

�Meet customer needs

Dr. Rosebloom

Societal Marketing Concept Societal Marketing Concept

� Adoption of Marketing Concept

� Considering the needs of society as a

whole

� Environment

� Health

� Safety

Dr. Rosebloom

Marketing Myopia Marketing Myopia

�Short sightedness by business

firms causing management to

define their business too

narrowly

Dr. Rosebloom

Marketing Myopia Examples Marketing Myopia Examples

Myopic

Description:

�Railroad

company

�Electricity

company

�Television

network

Broad

Description:

�Transportation

company

�Power

company

�Entertainment

provider

Dr. Rosebloom

The Marketing Mix Variables The Marketing Mix Variables

Product Distribution

Promotion Price

Target

Market

Dr. Rosebloom

The Marketing Mix Variables The Marketing Mix Variables

Target Market Target Market

Group(s) of potential

customers toward which

a firm directs its

marketing mix(es)

Dr. Rosebloom

The Marketing Mix Variables The Marketing Mix Variables

Product Strategy Product Strategy

� Identifying consumer needs and

wants

� New product development

� Designing the product

� Branding

� Packaging

Dr. Rosebloom

The Marketing Mix Variables The Marketing Mix Variables

Distribution Strategy Distribution Strategy

�Physical distribution

�Channel management

Dr. Rosebloom

The Marketing Mix Variables The Marketing Mix Variables

Pricing Strategy Pricing Strategy

�Pricing objectives

�Price determination

�Pricing policies

Dr. Rosebloom

The Marketing Mix Variables The Marketing Mix Variables

Promotion Strategy Promotion Strategy

�Advertising

� Personal selling

� Sales promotion

� POP, sponsorships, PR

Dr. Rosebloom

The Marketing Environment The Marketing Environment

�Microenvironment �Objectives and resources

�Macroenvironment �Competitive environment

�Legal/political environment

�Socio-cultural environment

�Economic environment

�Technological environment

Dr. Rosebloom

Environmental Scanning Environmental Scanning

� Identification of important

trends

�Analysis of impact on the

firm

Dr. Rosebloom

Separations Between Producers and Consumers Separations Between Producers and Consumers

Separations naturally exist between

producers and consumers, buyers

and sellers, and any other parties

who enter into exchanges

Dr. Rosebloom

� Producers and

consumers are

generally separated by

space or geography

Separations Between Producers and Consumers Separations Between Producers and Consumers

Spatial Separation Spatial Separation

Dr. Rosebloom

Functions Of Advertising Functions Of Advertising

Hal Riney and

Partners

Henry Weinhard

Dr. Rosebloom

� Producers and consumers want to produce and

consume at different times. Sales of skis

generally occur during the winter but

producers want to manufacture them all year

Separations Between Producers and Consumers Separations Between Producers and Consumers

Temporal Separation Temporal Separation

Dr. Rosebloom

� Producers may lack

information about

the whereabouts of

consumers and

consumers may lack

information about

the producer’s

offerings

Separations Between Producers and Consumers Separations Between Producers and Consumers

Perceptual Separation Perceptual Separation

Dr. Rosebloom

� There is a

separation between

producers and

consumers in

reference to title.

Producers pass

(exchange) title of

product/services for

title to the money

the consumer holds

Separations Between Producers and Consumers Separations Between Producers and Consumers

Ownership Separation Ownership Separation

Dr. Rosebloom

� There is a

separation between

producers and

consumers because

producers value the

costs and prices of

their products while

consumers value the

utility of the product

Separations Between Producers and Consumers Separations Between Producers and Consumers

Values Separation Values Separation

Dr. Rosebloom

Four Types of Utility Four Types of Utility

Utility Utility

Dr. Rosebloom

�Transformation of

raw materials

and/or labor into

a finished good

and/or service

that the consumer

desires

Four Types of Utility Four Types of Utility

Form Utility Form Utility

Dr. Rosebloom

Four Types of Utility Four Types of Utility

Form Utility Form Utility

The Martin Agency

Ping

Dr. Rosebloom

�Transformation of

raw materials

and/or labor into

a finished good

and/or service

that the consumer

desires

Four Types of Utility Four Types of Utility

Form Utility Form Utility

Dr. Rosebloom

Four Types of Utility Four Types of Utility

Utility Utility

Dr. Rosebloom

�Availability of a

good and/or

service where the

consumer wants

or needs it

Four Types of Utility Four Types of Utility

Place Utility Place Utility

Dr. Rosebloom

�Availability of a good and/or service

where the consumer wants or needs it

Four Types of Utility Four Types of Utility

Place Utility Place Utility

Dr. Rosebloom

�Availability of a

good and/or

service where the

consumer wants

or needs it

Four Types of Utility Four Types of Utility

Place Utility Place Utility

Dr. Rosebloom

Four Types of Utility Four Types of Utility

Utility Utility

Dr. Rosebloom

�Transferring title

of a good and/or

service from

producer to

consumer

Four Types of Utility Four Types of Utility

Ownership Utility Ownership Utility

Dr. Rosebloom

Four Types of Utility Four Types of Utility

Utility Utility

Dr. Rosebloom

�Availability of a

good and/or

service when

consumer

wants/needs it

Four Types of Utility Four Types of Utility

Time Utility Time Utility

Dr. Rosebloom

�Availability of a

good and/or

service when

consumer

wants/needs it

Four Types of Utility Four Types of Utility

Time Utility Time Utility

Dr. Rosebloom

Separations Functions of Marketing Utility

Spatial Transporting Place

Storing

Temporal Storing Time

Transporting

Financing

Risk-Taking

Perceptual Selling Form, plus

Providing Information facilitates

all others

Separations/Functions/Utility Separations/Functions/Utility

Dr. Rosebloom

Separations Functions of Marketing Utility

Ownership Buying Ownership

Selling

Risk-Taking

Financing

Values Buying Ownership

Selling Form

Standardizing and Grading

Providing Information

Separations/Functions/Utility Separations/Functions/Utility