Chapter 1

Marketing’s Value
to Consumers,
Firms, and Society
At the end of this presentation, you
should be able to:
1. Know what marketing is and why you should
learn about it.
2. Understand the difference between marketing
and macro-marketing.
3. Know the marketing functions and why
marketing specialists—including intermediaries
and collaborators—develop to perform them.
4. Understand what a market-driven economy is
and how it adjusts the macro-marketing system.
At the end of this presentation, you
should be able to:
5. Know what the marketing concept is—and how
it should guide a firm or nonprofit organization.
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.
8. Understand the important new terms
Marketing—What’s It All About?
More than Selling or Advertising

More than Selling and Advertising

All Those
Bicycles!
Things a Firm Should Do
in Producing a Bike
Analyze Needs

Predict Wants
Estimate Demand
Determine Where
Estimate Price
Decide Promotion
Estimate Competition
Provide Service
Production vs. Marketing

Marketing
Makes sure right goods &
services are produced

Production
• Making Goods
• Performing Services

Creates Customer Satisfaction

Marketing Is Important to You

Important to every consumer!

Important to your job!

(and your next job, too)

Affects innovation and

standard of living
Marketing Affects Innovation

© 2014 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

How Should We Define Marketing?

Micro View Macro View

• Set of activities • Social process

and
• Performed by • Matches supply
individual with demand
organizations
Identify Customer Needs
 Marketing
Profit and More than
Nonprofit Persuasion

Builds Key Begins with

Relationships Characteristics Needs

Involves Doesn’t Go It
Exchanges Alone
Building Customer
Relationships
Macro-Marketing

Emphasis Is on Every Economy

Whole System Needs It

Key
Characteristics

Matches
Producers and
Consumers
Universal Functions of Marketing

Buying Selling

Market
Transporting
Information
Marketing
Functions
Risk Taking Storing

Standardization
Financing
& Grading
Who Performs Marketing Functions?

Producers Wholesalers Other

Specialists

Transport
Firms Retailers
Ad Agencies
ISP's

Product
Testing Research
Firms Firms Consumers
Economics Systems
Command Market-Directed
Economy Economy
• Government • Adjusts itself
officials decide • Price is value
• May work well if: measure
OR
• Simple • Freedom of choice
economy • Government’s role
• Little Variety limited
• Adverse • Public Interest
Conditions Groups
Model of a Market-Directed Macro-
Marketing System (Exhibit 1-2)
Many Individual Producers
(heterogeneous supply)

Intermediaries Collaborators

Perform universal marketing functions

To overcome discrepancies and Monitoring by government(s)

separation of producers and consumers and public interest groups

To create value and direct flow of

need-satisfying goods and services

Many Individual Consumers

(heterogeneous demand)
Marketing’s Role Has Changed a Lot
Over the Years
Focus:
Simple Trade Era
Sell Surplus

Focus:
Production Era
Increase Supply

Focus:
Sales Era
Beat Competition

Marketing Department Focus:

Era Coordinate and Control

Marketing Company Era Focus: Long-Run

Customer Satisfaction
The Marketing Concept
(Exhibit 1-3)
Customer Total
satisfaction company
effort
The
Marketing
Concept

Profit (or another measure

of long-term success) as
an objective
Creating
Customer
Satisfaction

Prestige Brands Holdings, Inc.

 Some Differences in Outlook between Adopters of the Marketing
Concept… (Exhibit 1–4)

Topic Marketing Orientation Production Orientation

They should be glad we

Attitudes toward Customer needs determine exist, trying to cut costs
customers company plans. and bringing out better
products.

Company makes what it Company sells what it

Product offering
can sell. can make.

To determine customer
Role of marketing needs and how well To determine customer
research company is satisfying reaction, if used at all.
them.

Focus is on locating new Focus is on technology

Interest in innovation
opportunities. and cost cutting.
 Some Differences in Outlook between Adopters of the Marketing
Concept… (Exhibit 1–4)

Topic Marketing Orientation Production Orientation

Satisfy customers after the An activity required to

Customer service sale and they’ll come back reduce consumer
again. complaints.

Need-satisfying benefits of Product features and how

Focus of advertising
goods and services. products are made.

Customer satisfaction
Relationship with before and after sale leads Relationship ends when a
customer to a profitable long-run sale is made.
relationship.

Eliminate costs that do not Keep costs as low as

Costs
give value to customer. possible.
Adopting the
Marketing
Concept
The Marketing Concept and
Customer Value Take Customer’s
Point of View

Customer Value
Reflects
Benefits and Costs

Customer May Not

Dwell on Value
Costs Benefits
Where Does
Competition Fit?

Customer Value
Builds Relationships
 Costs, Benefits, and Customer Value
(Exhibit 1-5)
High
Perceived
superior e
value il n
Benefits target lue
v a
customer sees air
f
in a firm’s ed
i v
goods and ce
e r
services p
r ’s
e
t om Perceived
s
Cu inferior
Low value
Low Costs target customer High
sees to obtain benefits
Putting It All Together (Exhibit 1-6)
Total
Total Company
Company
Effort
Efforttoto Satisfy
Satisfy
Customers
Customers
Build Profitable
Offer Superior
Customer
Customer Value
Relationships

Increase Sales to Attract

Customers Customers

Retain Satisfy
Customers Customers
Government
Marketing
The Marketing Concept Applies in
Nonprofit Organizations
Will “Satisfied
Newcomers to Customers”
Marketing Offer
Support?

Characteristics
of Nonprofit
Organizations

May Not Be
The Bottom
Organized for
Line?
Marketing
Marketing Concept Used by
Nonprofit Services

© 2014 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The Micro-
Macro
Dilemma
 The Marketing Concept, Social
Responsibility, and Marketing Ethics
Micro - Macro
Group Needs Individual Needs
Dilemma

Should All
Do All
Social Consumer What if Profits
Marketers Act
Responsibility Needs Be Suffer?
Responsibly?
Satisfied?

The Marketing Concept Guides Ethics

Social Responsibility

© 2014 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

You should now be able to:

1. Know what marketing is and why you should

learn about it.
2. Understand the difference between marketing
and macro-marketing.
3. Know the marketing functions and why
marketing specialists—including intermediaries
and collaborators—develop to perform them.
4. Understand what a market-driven economy is
and how it adjusts the macro-marketing system.
You should now be able to:

5. Know what the marketing concept is—and how

it should guide a firm or nonprofit organization.
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.
8. Understand the important new terms.
THE END