Chapter 1

Marketing: Developing Customer Relationships and Value through Marketing

AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
  • •Define marketing and explain the importance of (1) discovering and
    (2) satisfying consumer needs and
    wants.
•
  • •Distinguish between marketing mix elements and environmental factors.
  • •Understand how organizations build strong customer relationships using current thinking about customer value and relationship marketing.
•
  • •Describe how today’s market orientation differs from prior eras oriented to production and selling.
 
  • •Understand the meaning of ethics and social responsibility and how they relate to the individual, organizations, and society.
•
  • •Know what is required for marketing to occur and how it creates customer  value and utilities for  customers.
 

 

 

DEVELOPING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING
•FUSION, CORE, AND LIGHTNING!  PHYSICS 101?
  • •The Three-Century Old Innovation
  • •Understanding the Consumer
  • •What a Difference a Decade Makes
 
  • •Rollerblade Skates, Marketing, and You
www.rollerblade.com

 

 

 

FIGURE 1 -1  Number of in-line skaters in
the United States

WHAT IS MARKETING?
•Being a Marketing Expert: 
Good News-Bad News
  • •The Good News:  You Already Have Marketing Experience
  • •The Bad News:  Surprises About
    the Obvious
 

 

 

FIGURE 1-2  The see-if-you’re-really-a-marketing-expert test.

 

WHAT IS MARKETING?
  • •Marketing:  Using Exchanges to
    Satisfy Needs
  • •The Diverse Factors Influencing Marketing Activities

 

 

Marketing
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
 

 

 

Exchange
Exchange is the trade of things of value between buyer and seller so that each is better off after the trade.
 

 

 

FIGURE 1-3  An organization’s marketing department relates to many . . .

WHAT IS MARKETING?
•Requirements for Marketing to Occur
  • •Two or More Parties with Unsatisfied Needs
  • •Desire and Ability to Satisfy These Needs
  • •A Way for the Parties to Communicate
  • •Something to Exchange
 

 

 

 

Concept Check
1. What is marketing?

 

A:  Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

 
2.  Marketing focuses on
               discovering

                             and

                                   satisfying

                                                    consumer needs

 
3.  What four factors are needed for marketing to occur?
 
A:  (1) Two or more parties with unsatisfied needs, (2) A desire and ability on their part be satisfied, (3) A way for the parties to communicate, and (4) Something to exchange.

 

 

HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS
•Discovering Consumer Needs
  • •The Challenge of Launching Winning
    New Products
  • •Consumer Needs and Consumer Wants
 

 

 

FIGURE 1-4  Environmental forces affecting the organization,
as well as its suppliers and customers

HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS
•Satisfying Consumer Needs
 

 

 

Market
A market is people with the desire and with the ability to buy a specific product.

 

 

Environmental Factors
Environmental factors are the uncontrollable factors involving social, economic, technological, competitive, and regulatory forces.
 

 

 

Target Market
One or more specific groups of potential customers toward which an organization directs its marketing program.

 

 

Marketing Mix
The marketing mix is product, price, promotion, and place.
 

 

 

THE MARKETING PROGRAM:  HOW CUSTOMER RELATIONSHIPS ARE BUILT
  • •Relationship Marketing and the Marketing Program
 

 

 

Customer Value
Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-timer delivery and both before-sale and after-sale service.

 

Relationship Marketing
The hallmark of developing and maintaining effective customer relationships is today called relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their long term benefit.
 

 

 

Marketing Program
The marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers.
 

 

 

FIGURE 1-5  Marketing’s second task:  satisfying consumer needs

 

 

THE MARKETING PROGRAM:  HOW CUSTOMER RELATIONSHIPS ARE BUILT
•A Marketing Program for Rollerblade
  • •Expanding the Market for Rollerblade Skates
  • •Exploiting Strengths in Technology
•Staying Ahead of the Trends
 
 

 

FIGURE 1-6  Marketing programs for two of Rollerblade’s skates, targeted at two distinctly different customer segments:  fast-growing kids and fitness skaters.

 

Concept Check
1.  An organization can’t satisfy the needs of all consumers, so it must focus on one or more subgroups, which are its ____________.
 

A: Target Markets

2.  What are the four marketing mix elements that make up the organization’s marketing program?
A:  product, price, promotion, place
3.  What are uncontrollable variables?
A:  Environmental factors the organization’s marketing department can’t control.  These include social, economic, technological, competitive, and regulatory forces.

 

 

 

HOW MARKETING
BECAME SO IMPORTANT
•Evolution of Market Orientation
  • •Production Era
  • •Sales Era
 

 

 

 

Marketing Concept
The marketing concept is the idea that an organization should strive to satisfy the needs of consumers, while also trying to achieve the organization’s goals.
 

 

 

 

Market Orientation
An organization that has a market orientation focuses its efforts on continuously collecting information about customers’ needs and competitors capabilities, sharing this information across departments, and using the information to create customer value.
 

 

 

 

Customer Relationship Management (CRM)
Customer relationship management is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace.
 

 

 

 

FIGURE 1-7  Four different orientations in the history of American business

HOW MARKETING
BECAME SO IMPORTANT
•Ethics and Social Responsibility:
Balancing the Interests of Different Groups
 

 

 

Societal Marketing Concept
The societal marketing concept is the view that an organization should discover and satisfy the needs of its consumer in a way that also provides for society’s well-being.
 

 

 

Macromarketing
Macromarketing looks at how the aggregate flow of a nation’s goods and services benefits society.

 

 

Micromarketing
Micromarketing is how an individual organization directs its marketing activities and allocates its resources to benefit its customers.

 

 

HOW MARKETING
BECAME SO IMPORTANT
•The Breadth and Depth of Marketing
  • •Who Markets?
  • •What is Marketed?
  • •Who Buys and Uses What is Marketed?
  • •Who Benefits?
  • •How Do Consumers Benefit
  • §Utility
 

 

 

Ultimate Consumer
Ultimate consumers are the people who use the goods and services purchased for a household.
 

 

Organizational Buyers
Organizational buyers are units such as manufacturers, retailers, or government agencies that buy goods and services for their own use of for resale.

 

 

Utility
Utility is the benefit or customer value received by uses of a product.
 

 

Concept Check
1.  Like Pillsbury and General Electric, many firms have gone through four distinct orientations for their businesses:  starting with the __________ era and ending with today’s ________________ era. 

A: Production era     market orientation era

2.  What are the two key characteristics of the marketing concept?
A:  An organization should (1) Strive to satisfy the needs of consumers (2) While also trying to achieve the organization’s goals.

 

3.  In this book the term product refers to what three things?
A:  Goods (physical products), services, and ideas
 

 

Chapter 1 - Summary

 

  1. Combining personal experience with more formal marketing knowledge will enable us to identify and solve important marketing problems.
  2. Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. This definition relates to two primary goals of marketing: (a) assessing the needs of consumers and (b) satisfying them.
  3. For marketing to occur, it is necessary to have (a) two or more parties with unmet needs, (b) a desire and ability to satisfy them, (c) communication between the parties, and (d) something to exchange.
  4. Because an organization doesn't have the resources to satisfy the needs of all consumers, it selects a target market of potential customers-a subset of the entire market-on which to focus its marketing program.
  5. Four elements in a marketing program designed to satisfy customer needs are product, price, promotion, and place. These elements are called the marketing mix, the four Ps, or the controllable variables because they are under the general control of the marketing department.
  6. Environmental factors, also called uncontrollable variables, are largely beyond the organization's control. These include social, technological, economic, competitive, and regulatory forces.
  7. Building on customer value and relationship marketing concepts, successful firms develop mutually beneficial long-term relationships with their customers.
  8. In marketing terms, U.S. business history is divided into four periods: the production era, the sales era, the marketing concept era, and the current market orientation era.
  9. Marketing managers must balance consumer, organizational, and societal interests. This involves issues of ethics and social responsibility.
  10. Both profit-making and nonprofit organizations perform marketing activities. They market products, services, and ideas that benefit consumers, organizations, and countries. Marketing creates utilities that give benefits, or customer value, to users.

 

 

 

News, Articles & Links

Quizzes

Multiple Choice Quiz 1
Multiple Choice Quiz 2
 

Interactive Exercises

PowerPoint Presentation Chapter 1 (10971.0K)       Chapter 1
 

Flashcards
Internet Exercises
Interactive Exercises
 

More Resources

Learning Objectives

Web Links
 www.lowermybills.com

www.nelliemae.com

www.wal-mart.com

www.landsend.com

www.hermitagemuseum.org/html_en/index.html

www.segway.com

www.rollerblade.com


Video Cases