EBP 1014 Ch. 01


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Principles of Marketing Chapter 1

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EBP 1014 Ch. 01

  1. 1. Welcome to the World of Marketing Creating and Delivering Value
  2. 2. Chapter Objectives <ul><li>Understand who marketers are , where they work , and marketing’s role in the firm </li></ul><ul><li>Explain what marketing is and how it provides value to everyone involved in the marketing process </li></ul><ul><li>Understand the range of services and goods that are marketed </li></ul><ul><li>Understand value from the perspectives of customers , producers , and society </li></ul><ul><li>Explain the basics of marketing planning and the marketing mix tools used in the marketing process </li></ul><ul><li>Explain the evolution of the marketing concept </li></ul>
  3. 3. Welcome to a Branded World <ul><li>“ Brand You” </li></ul><ul><li>You are a product and have “market value” as a person </li></ul><ul><li>You “position” yourself for a job </li></ul><ul><li>Don’t “sell yourself short” </li></ul><ul><li>You package & promote yourself </li></ul>
  4. 4. The Who & Where of Marketing <ul><li>Marketers: </li></ul><ul><ul><li>Are real people who make choices that affect themselves, their companies, & millions of consumers (see “Real People, Real Choices”) </li></ul></ul><ul><ul><li>Work cross-functionally within the firm </li></ul></ul><ul><ul><li>Enjoy exciting, diverse careers </li></ul></ul>
  5. 5. The Value of Marketing <ul><li>Definition of marketing (AMA, 2004) </li></ul><ul><ul><li>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 </li></ul></ul>
  6. 6. Marketing is about Meeting Needs <ul><li>Meeting the needs of diverse stakeholders </li></ul><ul><ul><li>Buyers, sellers, investors, community residents, citizens </li></ul></ul><ul><li>Marketing concept </li></ul><ul><ul><li>Identifying consumer needs and providing products that satisfy those needs </li></ul></ul>
  7. 7. Marketing Is about Meeting Needs (cont’d) <ul><li>The modern marketplace may take the form of a mall, a mail-order catalog, a TV shopping network, an eBay auction, or an e-commerce Web site </li></ul>
  8. 8. Marketing Is about Creating Utility <ul><li>Utility: the sum of the benefits we receive from using a product/service </li></ul><ul><ul><li>Form utility </li></ul></ul><ul><ul><li>Place utility </li></ul></ul><ul><ul><li>Time utility </li></ul></ul><ul><ul><li>Possession utility </li></ul></ul>
  9. 9. Marketing Is about Exchange Relationships <ul><li>An exchange occurs when something is obtained for something else in return, like cash for goods or services </li></ul><ul><ul><li>Buyer receives product that satisfies need </li></ul></ul><ul><ul><li>Seller receives something of equivalent value </li></ul></ul>
  10. 10. The Evolution of Marketing <ul><li>The Production Era </li></ul><ul><li>The Selling Era </li></ul><ul><li>The Consumer Era </li></ul><ul><li>The New Era </li></ul>
  11. 11. The Production Era <ul><li>Focus on the most efficient ways to make and distribute products, like Henry Ford’s Model T & Ivory soap </li></ul><ul><li>Marketing plays an insignificant role </li></ul>
  12. 12. The Selling Era <ul><li>Focus on one-time sales of goods rather than repeat business </li></ul><ul><li>Marketing viewed as a sales function </li></ul>
  13. 13. The Consumer Era <ul><li>Focus on satisfying customers’ needs and wants </li></ul><ul><li>Marketing becomes more important in the firm </li></ul><ul><li>Total Quality Management (TQM) widely followed in marketing community </li></ul>
  14. 14. The New Era: Make Money and Act Ethically <ul><li>Focus on building long-term bonds with customers. </li></ul><ul><li>Marketing uses customer relationship management (CRM) to track consumers’ preferences and tailor the value proposition to each individual </li></ul>
  15. 15. The New Era: Focusing on Social Benefits <ul><li>Social marketing concept : satisfy customers’ needs and also benefit society </li></ul><ul><li>Sustainability : meeting present needs and ensuring that future generations can meet their needs </li></ul>
  16. 16. The New Era: Focusing on Accountability <ul><ul><li>* Measuring how much value is created by marketing activities </li></ul></ul><ul><li>ROI (Return on Investment) is the direct financial impact of a firm’s expenditure of resources such as time or money </li></ul>
  17. 17. Measuring Value <ul><li>Scorecard : marketing department’s report card on how company/brand is actually doing in achieving various goals </li></ul>Table 1.3 (Abridged) Quarterly Scores 2003 Item Text 1 st Qtr. 2 nd Qtr. 3 rd Qtr. Satisfaction with C1 Employee responsiveness 60% 65% 68% C2 Product selection 60% 62% 63% C3 Service quality 60% 62% 55%
  18. 18. What Can Be Marketed? <ul><li>From serious goods and services to fun things </li></ul><ul><ul><li>Goods and services mirror changes in popular culture </li></ul></ul><ul><ul><li>Marketing messages may communicate myths of a culture </li></ul></ul><ul><li>Product: any good, service, or idea </li></ul><ul><ul><li>Consumer goods/services </li></ul></ul><ul><ul><li>Business-to-business goods/services </li></ul></ul><ul><ul><li>Not-for-profit marketing </li></ul></ul>
  19. 19. The Marketing of Value <ul><li>Value : the benefits a customer receives from buying a good or service </li></ul><ul><li>Marketing communicates the value proposition : a marketplace offering that fairly and accurately sums up the value that the customer will realize if he/she purchases product/service </li></ul>
  20. 20. Value from the Customer’s Perspective <ul><li>The ratio of costs to benefits </li></ul><ul><li>Value proposition includes the whole bundle of benefits the firm promises to deliver , not just the benefits of the product itself </li></ul>
  21. 21. Value from the Seller’s Perspective <ul><li>Value for the seller takes many forms </li></ul><ul><ul><li>Making a profitable exchange </li></ul></ul><ul><ul><li>Earning prestige among rivals </li></ul></ul><ul><ul><li>Taking pride in doing what a company does well </li></ul></ul><ul><ul><li>Nonprofits: motivating , educating , or delighting the public </li></ul></ul>
  22. 22. Calculating the Value of a Customer <ul><li>Single transactions don’t provide companies with the value they desire </li></ul><ul><li>Lifetime value of a customer : How much profit a company expects from a customer’s purchases now and in the future </li></ul>
  23. 23. Providing Value to Stakeholders <ul><li>Competitive advantage : The ability of a firm to outperform the competition by providing customers with a benefit the competition cannot provide. </li></ul>
  24. 24. Adding Value through the Value Chain <ul><li>Value chain: a series of activities involved in designing, producing, marketing, delivering, and supporting any product </li></ul><ul><ul><li>Inbound logistics </li></ul></ul><ul><ul><li>Operations </li></ul></ul><ul><ul><li>Outbound logistics </li></ul></ul><ul><ul><li>Marketing final product </li></ul></ul><ul><ul><li>Service </li></ul></ul>
  25. 25. Figure 1.2: Making & Delivering Value
  26. 26. Value from Society’s Perspective <ul><li>How marketing transactions add or subtract value from society </li></ul><ul><li>Stressing ethics/social responsibility is often good business in the long run </li></ul>
  27. 27. The Dark Side of Marketing <ul><ul><li>* Marketers </li></ul></ul><ul><ul><ul><ul><li>Illegal activities such as “bait and switch” </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Products that encourage antisocial behavior </li></ul></ul></ul></ul><ul><ul><li>*Consumers </li></ul></ul><ul><ul><ul><ul><li>Terrorism </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Addictive consumption </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exploited people </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Illegal activities </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Shrinkage </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Anticonsumption </li></ul></ul></ul></ul>
  28. 28. Marketing as a Process <ul><li>Marketing planning </li></ul><ul><ul><li>Analyzing the marketing environment </li></ul></ul><ul><ul><li>Developing a marketing plan </li></ul></ul><ul><ul><li>Deciding on a market segment </li></ul></ul><ul><ul><li>Choosing the marketing mix -- product, price, promotion, and place </li></ul></ul>
  29. 29. Group Discussion <ul><li>Think of any brands in the current market that are not marketed well or lack of marketing. </li></ul><ul><li>List down at least 10 brands (they can be goods/services). </li></ul>