4. Marketing Defined 1-3 Micro-marketing The performance of activities that seek to accomplish an organization’s objectives by anticipating customer needs and directing the flow of need-satisfying goods and services. Macro-marketing A social process that directs an economy’s flow of goods and services to effectively match supply and demand and to meet society’s objectives.
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7. Utility and Marketing Exhibit 1-1 1-6 From Production From Marketing Form Task Time Place Possession Utility Value that comes from satisfying human needs
8. Exchange and Marketing In very basic economic systems, each seller must meet directly with each buyer in order to exchange something of value. As needs increase, the number of exchanges can soon become unmanageable for one person. Exhibit 1-2A 1-7 Ten exchanges required without central market Pots Baskets Hats Knives Hoes
9. Exchange and Marketing Five exchanges required with central market Exhibit 1-2 B 1-8 In a centralized market, a buyer can go to one location to find many different products from many different sellers. By reducing the time both buyers and sellers must spend to complete an exchange, prices can be lowered. Central market middleman Pots Baskets Hats Knives Hoes
10. Exchange and Marketing Exhibit 1-2 1-9 Central market middleman Pots Baskets Hats Knives Hoes Five exchanges required with central market Ten exchanges required without central market Pots Baskets Hats Knives Hoes
11. Marketing in Economic Development 1-10 Self-supporting agriculture Preindustrial or commercial Primary manufacturing Nondurable consumer products Capital equipment and durable consumer products Exporting manufactured products Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6
12. Marketing Facilitates Production and Consumption Exhibit 1-3 1-11 Production Sector Specialization and division of labor = heterogeneous supply capabilities Consumption Sector Heterogeneous demand for form, task, time, place, and possession utility Discrepancies of Quantity Discrepancies of Assortment Spatial Separation Separation in Time Separation of Information Separation in Values Separation of Ownership Marketing needed to overcome discrepancies and separations
13. Model of Market-Directed Macro-Marketing System Many Individual Consumers To create utility and direct flow of need-satisfying goods and services To overcome discrepancies and separations Perform universal marketing functions Middlemen intermediaries Many Individual Producers Facilitators Exhibit 1-4 1-12 Monitoring by government(s) and public interest groups
14. Key Terms Micro-Macro Dilemma Pure Subsistence Economy Market Central Markets Middleman Intermediary Tariffs Quotas Countertrade WTO GATT Economies of Scale Production Customer Satis- faction Utility Form Task Possession Time Place Micro-Marketing Macro-Marketing Economic System Planned Economy Market-Directed Economy Universal Functions of Marketing Buying Selling Transporting Storing Standardization and Grading Financing Risk-Taking Market Information Facilitators Innovation Marketing Ethics 1-13
Editor's Notes
This slide relates to the material on pp. 8-11 and Overhead 2. The next two slides provide bullet points related to the issues discussed below. Summary Overview The text points out the existence of, and sometimes conflict between, both a micro (individual company) level of marketing and a macro (society as a whole) level of marketing. The key point is that marketing includes both perspectives. Most of the text focuses on micro-marketing--the managerial perspective--as this is the level most students encounter everyday and in their careers. But decisions made at this level must be aware of the influences, opportunities, and constraints of the macro-level of marketing, both domestically and in international settings. So the first chapter focuses on macro-marketing. Micro-Marketing Micro-marketing is the performance of activities that seek to accomplish an organization’s objectives by anticipating customer or client needs and directing a flow of need-satisfying goods and services from producer to customer or client. Key elements include: Applies to profit and nonprofit organizations. Goes beyond just persuading customers to buy. Begins with customer needs. Marketing only one of many key management functions. Builds a relationship with the customer. Macro-Marketing Macro-marketing is a social process that directs an economy’s flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society. Key elements include: Identifying the kind of macro-marketing system in place Assessing its effectiveness and fairness (recognizing that "fair" is culturally determined)
This slide relates to the material on pp. 5-6 and corresponds to Exhibit 1-1 on p. 6 and Transparency 1. Summary Overview Utility is the power to satisfy human needs. All aspects of business are focused to either create utility or support specialists who do. The five types of utility illustrated on the slide underscore the importance of different functional areas (production and marketing) working together to create utility. Types of Utility Created by Production with Guidance from Marketing Form . Form utility is provided when someone produces something tangible. Task . Task utility is provided when someone performs a task for someone else. Teaching Tip: You may want to link form to goods and task to services on the product-type continuum here. Types of Utility Created by Marketing Time . Time utility involves providing goods and services when consumers want them. Place . Place utility involves providing goods and services where consumers want them. Example: A convenience store offers 24 hour shopping (time utility), close to home (place utility). Possession . Possession utility involves having ownership (possession) or the right to use and/or consume a good or service. Teaching Tip: Time and Place utility create a convenience for consumers. Possession can also create convenience but may have symbolic dimensions as well. Example: The possession of a Mercedes-Benz may make the owner feel good about her accomplishments, and ultimately, herself.
This slide relates to the material on pp. 14-17 and corresponds to Exhibit 1-2a on p. 16 and Transparency 2. Summary Overview It is important for students to realize that marketing does in fact “make something.” It’s just that our “something” is often intangible or at least not as visible (like a distribution system) to the customer as the product on the shelf. In mature economies, “something” includes product information, research, need-based changes, convenience, and a host other value-added activities often taken for granted. But more fundamentally, marketing is the vehicle by which all economies evolve Key Concepts of Macro-Marketing Systems Development Pure Subsistence Economy . Under this system, every family produces all they need. No exchanges occur and no macro-marketing system exists. Markets . When families begin to produce more than they need of some things and develop new needs or wants for things they do not produce, the concept of a market evolves. Initially, the family simply trades, or barters, some of their excess items for the excess items offered by another family. Later, a central market develops where the families go to barter more conveniently. Middlemen . Central markets still take time. Among the first macro-marketing system elements to emerge is the middleman - a person who specializes in trade rather than production. Because of the expertise of this person, a “something” is added to the exchange process. More formally, by bringing buyers and sellers (or traders) together more efficiently, middlemen (intermediaries) contribute time and place utility. Monetary System . Very quickly now, people realize the need to standardize trade. Bartering takes a lot of time and limits exchanges to specific product forms for both buyer and seller. The introduction of money allows the middleman to expand services, create inventories, and offer inducements for even greater choice in the central market.
Summary Overview It is important for students to realize that marketing does in fact “make something.” It’s just that our “something” is often intangible or at least not as visible (like a distribution system) to the customer as the product on the shelf. In mature economies, “something” includes product information, research, need-based changes, convenience, and a host other value-added activities often taken for granted. But more fundamentally, marketing is the vehicle by which all economies evolve since even the need for monetary exchange is based upon the needs of the middlemen to simplify the exchange process illustrated here. Key Concepts of Macro-Marketing Systems Development Pure SubsistenceEconomy . Under this system, every family produces all they need. No exchanges occur and no macro-marketing system exists. Markets . When families begin to produce more than they need of some things and develop new needs or wants for things they do not produce, the concept of a market evolves. Initially, the family simply trades, or barters, some of their excess items for the excess items offered by another family. Later, a central market develops where the families go to barter more conveniently. Middlemen . Central markets still take time. Among the first macro-marketing system elements to emerge is the middleman - a person who specializes in trade rather than production. Because of the expertise of this person, a “something” is added to the exchange process. More formally, by bringing buyers and sellers (or traders) together more efficiently, middlemen (intermediaries) contribute time and place utility. Monetary System . Very quickly now, people realize the need to standardize trade. Bartering takes a lot of time and limits exchanges to specific product forms for both buyer and seller. The introduction of money allows the middleman to expand services, create inventories, and offer inducements for even greater choice in the central market. This slide relates to the material on pp. 14-17 and corresponds to Exhibit 1-2b on p. 16 and Transparency 2.
Summary Overview It is important for students to realize that marketing does in fact “make something.” It’s just that our “something” is often intangible or at least not as visible (like a distribution system) to the customer as the product on the shelf. In mature economies, “something” includes product information, research, need-based changes, convenience, and a host other value-added activities often taken for granted. But more fundamentally, marketing is the vehicle by which all economies evolve since even the need for monetary exchange is based upon the needs of the middlemen to simplify the exchange process illustrated here. Key Concepts of Macro-Marketing Systems Development Pure SubsistenceEconomy . Under this system, every family produces all they need. No exchanges occur and no macro-marketing system exists. Markets . When families begin to produce more than they need of some things and develop new needs or wants for things they do not produce, the concept of a market evolves. Initially, the family simply trades, or barters, some of their excess items for the excess items offered by another family. Later, a central market develops where the families go to barter more conveniently. Middlemen . Central markets still take time. Among the first macro-marketing system elements to emerge is the middleman - a person who specializes in trade rather than production. Because of the expertise of this person, a “something” is added to the exchange process. More formally, by bringing buyers and sellers (or traders) together more efficiently, middlemen (intermediaries) contribute time and place utility. Monetary System . Very quickly now, people realize the need to standardize trade. Bartering takes a lot of time and limits exchanges to specific product forms for both buyer and seller. The introduction of money allows the middleman to expand services, create inventories, and offer inducements for even greater choice in the central market. This slide relates to the material on pp. 14-17 and corresponds to Exhibit 1-2 on p. 16 and Transparency 2. There are several slides that build up to this slide
This slide relates to the material on pp. 18-20 and Overhead 5. Summary Overview Just as the emergence of central markets, middlemen, and money mark changes in macro-marketing systems, the stage of economic development a society is going through provides insights concerning marketing functions appropriate for meeting the needs of consumers at that stage. Stages of Economic Development Stage 1 - Self-supporting agriculture . Here most people are subsistence farmers, growing only what they need. Markets typically do not exist. Stage 2 - Preindustrial or commercial . Market activities emerge as raw materials are exported for sale. Imports include equipment and skills needed to process exports. Money system develops but may be unrelated to subsistence agriculture system in place. Stage 3 - Primary manufacturing . Here at least some of the raw materials of the host country are processed prior to export. Use of local labor, even by a foreign firm, expands consumer income and creates demand for more kinds of goods. Stage 4 - Nondurable and semidurable consumer products manufacturing . Here more small producers start to make items for sale to the growing market base of workers from stage 3. Stage 5 - Capital equipment and consumer durable products manufacturing . Here the shift to an industrial economy begins as local producers make cars and other durable goods. Dependence is still on raw material exports but consumer demand is increasing as more rural dwellers enter the industrial labor force and incomes grow. Stage 6 - Exporting manufactured products . Here the country both produces finished products for domestic consumption and exports manufactured goods to other countries for sale.
This slide relates to the material on pp. 22-24 and corresponds to Exhibit 1-3 on p. 23 and Transparency 3. See also Overheads 7 and 8. Summary Overview Marketing is needed to overcome the difference between how production is set up to be most efficient and how people in general prefer to consume products. How Marketing Facilitates Production and Consumption Low Cost . As production increases, the cost of each good produced decreases. Marketing helps companies move in this direction by finding a larger number of outlets for products than would likely occur if the company had no marketing effort. Linking Production to Consumption . Because consumers’ needs and patterns of consumption differ greatly from how production facilities operate most effectively, marketing activities create more efficient links between consumers and producers than can be achieved without marketing. Universal Functions . The “how” and “by whom” aspects of marketing vary by economic systems, customs, and individual industries. But the universal marketing functions that must occur can be identified. These are covered in greater detail on the following slide. Facilitators . These are firms that provide one or more of the marketing functions other than buying and selling. They include advertising agencies, marketing research firms, independent product-testing laboratories, Internet service providers, transporting firms, to name a few.
This slide relates to the material on pp. 24-26 and corresponds to Exhibit 1-4 on p. 25 and Transparency 6. See also Transparency 4. Summary Overview The universal marketing functions shown here help the macro-marketing system overcome separations and discrepancies between those wishing to participate in an exchange. How a particular country or culture fulfills these functions varies widely, but all the functions are needed in any macro-marketing system. Key Marketing Functions Buying . This involves looking for and evaluating goods and services. Selling . This involves promoting the product to prospective buyers. Transporting . This involves moving the goods from place to place. Teaching Tip: This creates time and place utility for consumers but isn’t always remembered as a marketing activity. Critics who say marketing only raises the cost of goods typically don’t think about the transport function as part of marketing. Storing . This involves holding an inventory of goods until needed by customers. Standardization and grading . This involves sorting products by size and quality. Financing . This involves providing necessary cash and credit to produce, transport, store, promote, sell, and buy products. Risk taking . This involves assuming responsibility for uncertainties. Teaching tip: The willingness to take risks is a fundamental component of capitalism. Critics of business in general and marketing in particular, seeing a hugely profitable enterprise often forget that before profits are taken, marketers spend a lot of money that they might lose if the product is not adopted. Market information function . This involves the collection, analysis, and distribution of all the information the marketer needs to plan, implement, and control need-satisfying marketing activities.
