McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.

Marketing

Dhruv Grewal Michael Levy

Chapter 1

Overview of Marketing

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Building Value Online

Each of these innovative marketing companies succeeds because it provides good value to its customers.

Prioritized searchesCustomized ads

Customized searches

Benefits buyers and sellers

AIM, music, expanded communication options

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What is Marketing?

Marketing is an organizational function and a set of processes for

creating, capturing*,

communicating, and delivering value to customers and for

managing customer relationships in ways that benefit the

organization and its stakeholders.

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Missing capturing value Value capture is essential to successful

marketers

Missing Component

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Simply about buyers and sellers exchanging money

for goods and services

Simply about making a profit

Marketing is NOT

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Marketers must address the ethical implications of their actions on society in general.

Marketer’s Responsibility

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Value

The fundamental purpose of marketing is to create value for both the firm and customer.

Value is in essence what you get for what you give up.

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Test Your Knowledge

Which of the following statements about marketing is NOT true? A) Marketing entails an exchange. B) Marketing is simply about making a profit. C) Good marketing requires thoughtful planning. D) Because marketing costs money, good marketers

carefully seek potential customers who have bothan interest in the product and an ability to buy.

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Marketing’s Core Aspects

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Core One: Satisfying Customer Needs and Wants

• Begins with understanding their needs and wants• Developing products and services

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Satisfying Customer Needs and Wants

How does a company address the diverse needs and wants of consumers for dental care

products?

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Case in Point: Crest

Challenge

Answer

Results

Address the diverse needs and wants of consumers for dental care products.

Develop a deep understanding of what benefits consumer are seeking in their dental care products and develop brands designed to deliver those benefits.

Crest provides a wide variety of dental care products to deliver the desired benefits.

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Core Two: Marketing Entails Exchange

• The exchange can occur between any two parties

• Not simply a buyer and seller exchanging money for a good or service

• Can be an exchange of information for convenience

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Marketing Entails an Exchange

Communications/Delivery

Money/Information

Customers/Consumers

(Buyers)Goods/Services Producers (Sellers)

BARNES&NOBLE.com

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Test Your Knowledge

Which of the following is NOT part of a marketing exchange? A) Sellers provide products or services. B) Sellers communicate and facilitate delivery. C) Marketers assess the effectiveness of their

advertising. D) Buyers complete the exchange by giving money

and information to the seller.

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Core Three: Marketing Requires Product, Price, Place, and

Promotion Decisions

Promotion

Place

Price

Product

4P’s

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Product

Goods

Services

Ideas

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Price is everything the buyer gives up in exchange for the

product.

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Price

money energy

time

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Place

All activities necessary to get the product to the right customer when that customer wants it.

Supply chain management is the field that examines these activities.

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Place: Supply Chain Management

How does a company get the product to the right customer when and where they want it?

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Case in Point: H&H Bagels

Challenge

Answer

Results

To expand distribution beyond the New York area.

Using an online distribution system to allow customers all over the world to order directly from stores in New York City.

•H&H now ships bagels to over 20 different countries directly from the shops in New York City.

•The product has become so popular that it has been featured in popular TV shows and movies.

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Promotion

• The communication activities of marketing

• Used to inform, persuade and remind potential buyers

• Used to influence their opinions or elicit a response

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Test Your Knowledge

Promotion is ____________ by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response.

A) smoke-and-mirrors B) coercion C) teasing D) communication

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Entrepreneurial Marketing

RBK from Reebok Sports, entertainment

and fashion Competitiveness +

cutting edge style + entertainment

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Individuals and Organizations

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B2B: Wholesaling is often only Business to Business

B2C: All retailing is Business to Consumer selling

C2C: Swap Meets, EBay, yard sales, etc.

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Core Five: Marketing Occurs in Many Settings

Both profit and non-profit entities

Developing economiesEntire industries

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Core Six: Marketing Helps Create Value

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Production-oriented era

Sales-oriented era

Market-oriented era

Value-based marketing era

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Adding Value

Harrods = extreme luxury “By Invitation” loyalty program Tied to level of spending with $88K or more

qualifying for the Chairman’s Club

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Firms must offer customers something in excess of that being offered by the competitors.

Firms must understand how each aspect of their product/service creates value for customers.

Discussion question #2How do the keys features vary depending on the segment of traveler?

Discussion question #1What do you think are the key features of a hotel that create value?

Value-Based Marketing

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Examples of Value Keys for Hotels

Service Quality

Hotel Personnel

Convenience of Booking

Room Comfort

Restaurant Quality

Location Rewards Program

Free Internet Service

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Value for a Business Traveler

Service Quality

Room Comfort

Location

Rewards Program

Free Internet Service

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Value for a Leisure Traveler

Service Quality

Hotel Personnel

Room Comfort

Restaurant Quality

Location

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Value is in the Eye of the BeholderThat movie was a waste of money.

That movie was so worth seeing!

Discussion question

If they saw the same movie, what could account for the difference in value derived from the experience?

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How Firms Compete on the Basis of Value

• Constantly changing consumers perceptions

• Firms must constantly monitor the marketplace in order to create value

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Test Your Knowledge

What must firms do to become value driven? A) Share information, balance benefits and costs,

and build customer relationships. B) Set low prices, put profit above service, and use

effective marketing strategies. C) Make logistics a priority, expand globally, and

always offer new goods and services. D) Keep a vigilant eye on the market-place,

undercut competitors, and provide competitive salaries.

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Becoming Value Driven: Sharing Information

Information technology such as Customer Relationship Management (CRM) programs are increasingly used by marketers to ensure that data is transmitted throughout the firm.

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Sharing Information

Why is sharing and coordinating information such a critical success factor for any firm?

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Case in Point: Zara

Challenge

Answer

Results

How does the flagship brand of Europe’s fastest growing apparel retailer keep up with the latest trends?

By implementing sophisticated information technology into its customer tracking and supply chain functions.

•Zara now has over 760 women’s clothing stores in 55 countries.

•Products move from design through the supply chain and onto the stores shelves in about two weeks.

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Becoming Value Driven: Balancing Benefits and Cost

• Understand key benefits

• Focus on key benefits

• Eliminate cost of less strategic benefits

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Becoming Value Driven: Building Relationships With Customers

Take a long term view of customer relationships Use data to assist in maintaining the relationship

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Why is Marketing Important?

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Marketing Expands Firms Global Presence

Starbucks often promotes the same product in different countries. What products do you see in common?

Starbucks US Starbucks Germany

Starbucks TaiwanStarbucks Australia

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Pervasive Throughout the Organization

Discussion question

How did Toyota use the Scion Road Trip to ensure that all firm activities were focused on creating value for the Scion customer?

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Marketing As Pervasive Across the Supply Chain

Each step in the supply chain involves marketing All members in the chain must ultimately focus on

creating value for their customer and the end user consumer

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Test Your Knowledge

Which of the following would NOT be considered part of a supply chain?

A) consumer B) retailer C) manufacturer D) customer service representative

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Marketing Makes Life Easier and Provides Employment Opportunities

Choices of products and services choices as well as information about those choices

Employment in diverse fields such as research, sales, promotions, global marketing

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Marketing Enriches Society

Discussion questionWhy do you think breast cancer is a good cause for Avon Foundation to support?

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Marketing Can Be Entrepreneurial

Though important to large firms, marketing is equally important to the success of small ventures—especially new ventures.

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Customer relationship management: A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm’s most valued customers.

Goods: Items that you can physically touch. Ideas: Include thoughts, opinions, and philosophies, and intellectual

concepts such as these also can be marketed. Services: Intangible customer benefits that are produced by people or

machines and cannot be separated from the producer. Supply chain: The group of firms that make and deliver a given set of

goods and services. Supply chain management: Refers to a set of approaches and

techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction into a seamless value chain.

Chapter 1 Glossary