A Global Managerial Approach

William D. Perreault Jr.E. Jerome McCarthy

For use only with Perreault and McCarthy texts. © 2006 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

Essentials of MarketingEssentials of Marketing

www.mhhe.com/fourps

For use only with Perreault and McCarthy texts.© 2006 McGraw-Hill Companies, Inc.McGraw-Hill/Irwin

CHAPTER ONECHAPTER ONE

Marketing’s Value to Consumers, Firms, and Society

CHAPTER ONECHAPTER ONE

Marketing’s Value to Consumers, Firms, and Society

1. Know what marketing is and why you should learn about it.

2. Understand the difference between micro-marketing and macro-marketing.

3. Know the marketing functions and why marketing specialists—including intermediaries and facilitators—develop to perform them.

4. Understand what a market-driven economy is and how it adjusts the macro-marketing system.

5. Know what the marketing concept is—and how it should guide a firm or nonprofit organization.

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When we finish this lecture you should

6. Understand what customer value is and why it is important to customer satisfaction.

7. Know how social responsibility and marketing ethics relate to the marketing concept.

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When we finish this lecture you should

More than Selling and AdvertisingMore than Selling and Advertising

More than Selling and AdvertisingMore than Selling and Advertising

All Those All Those Bicycles!Bicycles!

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Marketing—What’s It All About?

Analyze NeedsAnalyze NeedsAnalyze NeedsAnalyze Needs

Predict WantsPredict WantsPredict WantsPredict Wants

Estimate DemandEstimate DemandEstimate DemandEstimate Demand

Predict WhenPredict WhenPredict WhenPredict When

Determine WhereDetermine WhereDetermine WhereDetermine Where

Estimate PriceEstimate PriceEstimate PriceEstimate Price

Decide PromotionDecide PromotionDecide PromotionDecide Promotion

Estimate CompetitionEstimate Competition

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Estimate CompetitionEstimate Competition

Provide ServiceProvide Service

Things a Firm Should Do in Producing a Bike

Creates Customer SatisfactionCreates Customer Satisfaction

Marketing

Makes sure right goods & services are produced

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Production

• Making Goods

• Performing Services

Production vs. Marketing

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Types of Utility and How They Are Provided

Provided by marketingProvided by production withguidance of marketing

Task

Time

Place

Possession

UtilityValue that comesfrom satisfyinghuman needs

Form

Exhibit 1-1

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Interactive Exercise: Utility

Important to every consumer!Important to every consumer!Important to every consumer!Important to every consumer!

Important to your job!Important to your job!Important to your job!Important to your job!

Affects economic growth and standard of living!

Affects economic growth and standard of living!

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Marketing Is Important to You!

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Marketing Stimulates New Ideas

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Affects Economic Growth

OR

MacroMacro

• Social process

• Matches supply with demand

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MicroMicro

• Set of activities

• Performed by organizations

What Is Marketing?

Profit and NonprofitProfit and NonprofitProfit and NonprofitProfit and Nonprofit

More than PersuasionMore than Persuasion

Begins with Needs

Begins with Needs

Doesn’t Go It Alone

Doesn’t Go It Alone

Involves ExchangesInvolves

Exchanges

Builds Relationships

Builds Relationships

Focus of Your TextFocus of Your Text

Involves ExchangesInvolves

Exchanges

More than PersuasionMore than Persuasion

Begins with Needs

Begins with Needs

Builds Relationships

Builds Relationships

Doesn’t Go It Alone

Doesn’t Go It Alone

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Micro-Marketing

KeyCharacteristics

KeyCharacteristics

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Building Customer Relationships

+

Every Economy Needs It

Every Economy Needs It

Emphasis on Whole SystemEmphasis on

Whole System

KeyCharacteristics

KeyCharacteristics

Matches Producers and

Consumers

Matches Producers and

Consumers

Emphasis on Whole SystemEmphasis on

Whole SystemEvery Economy

Needs It

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Macro-Marketing

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ProducersProducers ConsumersConsumersMarketingFunctionsMarketingFunctions

Marketing Bridges the Gap!Marketing Bridges the Gap!

Cost $

Output

Economies of Scale Lower CostEconomies of Scale Lower Cost

Can Mass Production Satisfy a Society’s Consumption Needs?

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Overcoming Spatial Separation

MarketingFunctions

BuyingBuying SellingSelling

TransportingTransporting

StoringStoring

Standardization& Grading

Standardization& GradingFinancingFinancing

Risk TakingRisk Taking

BuyingBuying SellingSelling

TransportingTransporting

StoringStoring

Standardization& Grading

Standardization& GradingFinancingFinancing

Risk TakingRisk Taking

MarketInformation

MarketInformation

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The Universal Functions of Marketing

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TransportFirms

ISP's

ProductTestingFirms

Ad Agencies

ResearchFirms Consumers

Producers Wholesalers OtherSpecialists

Retailers

Who Performs Marketing Functions?

OR

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Planned Economic System

Planned Economic System

• Government planners decide

• Can work well if:

• Simple economy

• Adverse Conditions

Market-Directed System

Market-Directed System

• Adjusts itself

• Price is value measure

• Freedom of choice

• Government’s role limited

How Decisions Are Made in an Economic System

Sell SurplusSell SurplusFocus:

Simple Trade EraSimple Trade Era

Increase SupplyIncrease Supply

Sell SurplusSell SurplusSimple Trade EraSimple Trade Era

Focus:Production EraProduction Era

Focus:

Increase SupplyIncrease Supply

Beat CompetitionBeat Competition

Production EraProduction Era

Focus:Sales EraSales Era

Focus:

Sales EraSales EraBeat CompetitionBeat Competition

Coordinate and ControlCoordinate and ControlFocus:Marketing Department

EraMarketing Department

Era

Focus:

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Marketing’s Role Has Changed Over Time

Marketing Department Era

Marketing Department Era Coordinate and ControlCoordinate and Control

Marketing Company EraMarketing Company Era Long-RunCustomer Satisfaction

Long-RunCustomer Satisfaction

Focus:

Focus:

TheMarketingConcept

Customer Satisfaction

Total Company Effort

Profit

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The Marketing ConceptExhibit 1-4

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Creating Customer Satisfaction

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Adoption of the Marketing Concept

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Take Customer’s Point of View

Take Customer’s Point of View

Take Customer’s Point of View

Take Customer’s Point of View

Customer May Not Dwell On

Value

Customer May Not Dwell On

Value

Customer May Not Dwell On

Value

Customer May Not Dwell On

Value

Where Does Competition Fit?

Where Does Competition Fit?

Where Does Competition Fit?

Where Does Competition Fit?

Customer Value Builds

Relationships

Customer Value Builds

Relationships© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The Marketing Concept and Customer Value

Costs Benefits

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Interactive Exercise: Customer Value

Superior Customer Value

Superior Customer Value

Total Company Effort to Satisfy

Customers

Total Company Effort to Satisfy

Customers

Superior Customer Value

Superior Customer Value

Total Company Effort to Satisfy

Customers

Total Company Effort to Satisfy

Customers

Customer AcquisitionCustomer Acquisition

Customer SatisfactionCustomer

SatisfactionCustomer

SatisfactionCustomer

Satisfaction

Customer RetentionCustomer Retention

Customer AcquisitionCustomer Acquisition

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Putting It All Together

Customer RetentionCustomer Retention

Profitable Relationships with

Customers

Profitable Relationships with

Customers

Support and “Satisfied

Customers”

Support and “Satisfied

Customers”

Support and “Satisfied Customers”

Support and “Satisfied Customers”

May Not Be Organized for

Marketing

May Not Be Organized for

Marketing

May Not Be Organized for

Marketing

May Not Be Organized for

Marketing

The Bottom Line

The Bottom Line

The Bottom Line

The Bottom Line

Characteristicsof Nonprofit

Organizations

Characteristicsof Nonprofit

Organizations

Newcomers to Marketing

Newcomers to Marketing

Newcomers to Marketing

Newcomers to Marketing

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The Marketing Concept Applies in Nonprofit Organizations

Marketing Concept

Provides Focus

Marketing Concept

Provides Focus

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Government Marketing

+

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Marketing Concept Use by Nonprofit Services

Social Responsibility

Social Responsibility

Social Responsibility

Social Responsibility

Should All Needs Be Satisfied?

Should All Needs Be Satisfied?

Should All Needs Be Satisfied?

Should All Needs Be Satisfied?

What if Profits Suffer?

What if Profits Suffer?

Micro-Macro Micro-Macro DilemmaDilemma

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The Marketing Concept, Social Responsibility, and Marketing Ethics

The Marketing Concept Guides EthicsThe Marketing Concept Guides Ethics

0

Group Needs Individual Needs

• Production

• Customer satisfaction

• Utility

• Form utility

• Task utility

• Time utility

• Place utility

• Possession utility

• Innovation

• Micro-marketing

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• Pure subsistence economy

• Macro-marketing

• Economies of scale

• Universal functions of marketing

• Buying

• Selling

• Transporting

• Storing

• Standardization and grading

Key Terms

• Financing

• Risk-taking

• Market information

• Intermediary

• Middleman

• Facilitators

• E-commerce

• Economic system

• Planned economic system

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• Market-directed economic system

• Simple trade era

• Production era

• Sales era

• Marketing department era

• Marketing company era

• Marketing concept

• Production orientation

• Marketing orientation

• Customer value

Key Terms

• Micro-macro dilemma

• Social responsibility

• Marketing ethics

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Key Terms