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Chapter Questions Why is marketing important? What is the scope of marketing? What are some of the fundamental
marketing concepts? How has marketing management
changed?
What are the tasks necessary forsuccessful marketing management?
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Definition of MarketingDefinition of Marketing
Marketing: the process of planning andexecuting the conception, pricing,promotion, and distribution of ideas, goods,
services, organizations, and events to createand maintain relationships that will satisfyindividual and organizational objectives.
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American Marketing AssociationsAmerican Marketing Associations new officialdefinition of marketing released August 2004:
Marketing is an organizational function and a setof processes for creating, communicating anddelivering value to customers and formanaging customer relationships in ways thatbenefit the organization and its stakeholders.
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Why the change?Why the change?
From AMA 9/15/04 issue of Marketing News The impetus to examine and possibly revise theofficial definition came from AMA CEO DennisDunlap. Currently, marketers are nearly unanimous
in believing that the industry is rapidly changing,though that was not always the case.
The first official definition of marketing wasadopted in 1935 by the National Association of Marketing Teachers, a predecessor of the AMA. Itwas adopted by the AMA in 1948, and again in1960 when the AMA revisited the definition anddecided not to change it. This original definition
stood for 50 years, until it was revised in 1985. 1-5
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Both definitions also identify the marketingvariables that together provide customer
satisfaction ProductProduct PricePrice PromotionPromotion DistributionDistribution
Creating customers that want to stay withyou is all about identifying needs, providinggoods and services that meet those needs,
pricing, and follow-up service.
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Definition of Marketing
Marketing is a societal process by which individualsand groups obtain what they need and want through
creating, offering, and freely exchanging productsand services of value with others. (Philip Kotler) Marketing is the performance of business activities
that directs the flow of goods and services from producer to customer or user. (American MgtAssociation )
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Marketing
Marketing creates utility throughthe exchange process
Utility : Want-satisfying powerof a good or service
Form utility
Time utility Place utility Ownership utility
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Four Types of UtilityFour Types of Utility
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Type Description Examples
Organizational Function
Responsible
Form Conversion of rawmaterials andcomponents intofinished goods andservices
J.P. Morgan Chase checkingaccount; Lincoln Navigator; RamenNoodles (nutrition for students whoare hungry, broke, and cantorwontcook)
Production
Time Availability of goods andservices whenconsumers want them
Digital photographs; LensCrafterseyeglass guarantee; UPS Next DayAir
Marketing
Place Availability of goods andservices at convenientlocations
Soft-drink machines outside gasstations; on-site day care; banks ingrocery stores
Marketing
Owner-ship
Ability to transfer title togoods or services frommarketer to buyer
Retail sales (in exchange forcurrency or credit-card payment)
Marketing
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What is Marketed? Goods Services Events Experiences Persons
Places Properties Organizations Information Ideas
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What is MarketingManagement?
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Marketing management is theart and science
of choosing target marketsand getting, keeping, and growing
customers throughcreating, delivering, and communicating
superior customer value.
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Elements of a ModernMarketing System
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SuppliersSuppliers
End UserMarket
End UserMarket
MarketingIntermediaries
MarketingIntermediaries
CompetitorsCompetitors Company(Marketer)Company
(Marketer)
E n v
i r o
n m e n
t
E n v i r o n m e n t
Modern Marketing System
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Marketing Orientations or Concepts
1. The Production Concept2. The Product Concept
3. The Selling Concept4. The Marketing Concept5. The Customer Concept6. The Societal Marketing Concept
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Marketing Management
Philosophies
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Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept
Consumers favor products that areavailable and highly affordable.
Improve production and distribution.
Consumers favor products that offerthe most quality, performance, andinnovative features.
Consumers will buy products only if the company promotes/ sells these
products. Focuses on needs/ wants of target
markets & delivering satisfactionbetter than competitors.
Focuses on needs/ wants of targetmarkets & delivering superior value.
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Production EraProduction Era Prior to 1920s Production orientation Business success often defined solely
in terms of production victories
Sales EraSales Era Prior to 1950s Customers resist nonessential goods
and services Personal selling and advertisings task
is to convince them to buy
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Marketing EraMarketing Era Since 1950s Marketing Concept Emerges Satisfying customer needs
Emergence of the MarketingEmergence of the MarketingConceptConcept Shift from sellers to buyers market Companywide consumer orientation Objective of achieving longrun success
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Marketing and Sales
Concepts Contrasted
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Factory Existing
Products
Sellingand
Promoting
ProfitsthroughVolume
The Selling ConceptThe Selling Concept
StartingPoint Focus Means Ends
Market CustomerNeedsIntegratedMarketing
Profitsthrough
Satisfaction
The Marketing ConceptThe Marketing Concept
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Societal Marketing
Concept
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SocietalMarketingConcept
Company(Profits)
Consumers(Want Satisfaction)
Society(Human Welfare)
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Core Marketing Concepts
Needs, wants,and demands
Productsand services
Value,satisfaction,and quality
Exchange,transactions,
and relationships
Markets
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What are ConsumersNeeds, Wants and
Demands? NeedsNeeds - state of felt deprivation for basic items
such as food and clothing and complex needssuch as for belonging. i.e. I am hungry.
WantsWants - form that a human need takes asshaped by culture and individual personality.i.e. I want a hamburger, French fries, and a softdrink.
DemandsDemands - human wants backed by buyingpower. i.e. I have money to buy this meal.
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I want it, I need it..
5 Types of Needs
Stated needs Real needs
Unstated needs
Delight needs Secret needs
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Productsything that can be Offered to a Market to Satisfy a Need or Wan
ExperiencesExperiences PersonsPersons PlacesPlaces
OrganizationsOrganizations IdeasIdeasInformationInformation
What Will SatisfyConsumers Needs and
Wants?
ServicesActivities or Benefits Offered for Sale That Are EssentiallyIntangible and Dont Result in the Ownership of Anything
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ExchangesExchanges TransactionsTransactions
RelationshipsRelationshipsBuilding a MarketingNetwork Consisting of The Company and All
Its SupportingStakeholders
How Do Consumers Obtain
Products and Services?
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Who Purchases Products and
Services?People WhoExhibit Need
Resources toExchange
Willingness toExchange
U n e x p e c t e d S i t u a t i o n a l F a c t o r s
Attitudesof
Others
Ethical
PotentialBuyers
Market Buyers who
share a particularneed or want that
can be satisfiedthrough exchange
or relationships.
ActualBuyers
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For an exchange to occur.. There are at least two parties. Each party has something that might be of
value to the other party. Each party is capable of communication
and delivery. Each party is free to reject the exchange
offer.
Each party believes it is appropriate ordesirable to deal with the other party.
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Demand States Negative Nonexistent Latent Declining
Irregular Unwholesome Full Overfull
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Key Customer Markets Consumer markets Business markets
Global markets Nonprofit/Government markets
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Marketing Mix and theCustomer
Four Ps Product Price Place Promotion
Four Cs Customer
solution Customer cost Convenience Communication
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The Marketing Mix Variables
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Marketing Challenges in theNew Connected
MillenniumConnecting
TechnologiesComputer
InformationCommunication Transportation
Connections with CustomersConnecting more selectively
Connecting for lifeConnecting Directly
Connections withMarketing Partners
Connecting with othercompany departments Connecting withsuppliers and distributors Connecting throughstrategic alliances
Connections withthe world aroundus GlobalConnections Connectionswith values andresponsibilities Broadened
connections
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Learn About & Track CustomersWith Databases
Communicate WithCustomers in Groups
Or One-on-One
Create Products &Services Tailored to
Meet Customer Needs
Distribute ProductsMore Efficiently &
Effectively
Connecting Technologies inComputers,
Telecommunications,Information, & Transportation
Help To:
Technologies for
Connecting
What aspects of the Internetmake it a goodforum formarketing?
How do Webcompaniescompete withbrick and mortarcompanies?
Click or pressspacebar to return
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The Internet The Internet has been hailed as the technology
behind a new model for doing business. New applications include:
Internet connecting with customers, Intranets connecting with others in the company, and Extranets connecting with strategic partners, suppliers,
and dealers. Purchasing will be over $1.4 trillion in 2003. 400,000 companies are now using the Internet to
do business.
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Direct Connections With
Customers Many companies use technologies to let them connect
more directly with their customers. Products available via telephone, mail-order catalogs, kiosks
and e-commerce. Some firms sell only via direct channels (i.e. Dell Computer,
www.Amazon.com), others use a combination. Direct marketing is redefining the buyers role in
connecting with sellers. Buyers are active participants in shaping the marketing offerand process; some buyers design their own products online
such as at www.LandsEnd.com.
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Connections WithMarketings Partners
Connecting Inside theCompany
Every employee mustbe customer-focused
Teams coordinateefforts towardcustomers
Connecting WithOutside Partners
Supply ChainManagement
Strategic Alliances
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Connections With the World
Around UsGlobal
Connections
ValuesConnections
Social ResponsibilityConnections
BroadeningConnections
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From Transaction-Based Marketing to
Relationship Marketing Transactionbased
marketing (Simpleexchanges)
Relationship marketing Lifetime value of a customer Converting new customers to
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One-to-One MarketingOne-to-One Marketing Customized marketing program
designed to build long-termrelationships with individualcustomers.
Identifying a firms best customersand increasing their loyalty.
Developing Partnerships andDeveloping Partnerships and
Strategic AlliancesStrategic Alliances Strategic Alliances : partnershipsbetween organizations that createcompetitive advantages
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Costs and Functions of Marketing
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Ethics and Social Responsibility:Doing Well by Doing Good
Increased Employee Loyalty
Better Public Image
Market Place Success
Improved Financial Performance