Marketing Chapter 1 Book Notes
Marketing Chapter 1 Book Notes MKT 3010
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This 4 page Class Notes was uploaded by Marilyn Jackson on Monday January 18, 2016. The Class Notes belongs to MKT 3010 at Clemson University taught by James G. Gaubert in Winter 2016. Since its upload, it has received 105 views. For similar materials see Principles of Marketing in Marketing at Clemson University.
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Date Created: 01/18/16
Chapter 1: Overview of Marketing Learning Objectives • Define the role of marketing in organizations. • Describe how marketers create value for a product or service. • Understand why marketing is important, both within and outside the firm. Chapter Example: Choices within a frozen dessert market; In order to build and maintain a loyal customer base, each frozen dessert brand must distinguish itself from its competitors by offering products, services, and ambiance that are so appealing that customers shun competitors. Already established businesses must grow and change their product offerings and corporate citizenry to keep pace with customer needs and tastes. This also provides competition with newcomers to the industry who continue to find a foothold in the market. Regardless of it the company is established or just starting, the marketing approach remains the same: each company succeeds because it provides good value to its customers. What is Marketing? • The activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. o Marketing is not a random activity-‐ requires thoughtful planning with an emphasis on ethical implications of any decision. • Marketing plan: created by a firm that specifies marketing activities for a given period. Includes o Design o Cost o Promotion location and method o Distribution to consumer Core Aspects of Marketing 1. Marketing is about satisfying customer needs and wants. o Marketplace = world of trade. It can be broken down into further categories depending on the product. o It is not practical for marketers to sell products to everyone-‐ seeking out consumers with interest in the product and the ability to buy it saves the firm advertising costs, time, etc. 2. Marketing entails an exchange. o Exchange: trade of things of value between the buyer and the seller so that each is better off as a result. o Delivery of goods/services in exchange for money and information. o The more efficient the facilitation of goods to a consumer, the stronger the relationship (Ex. Apple iTunes, pg 7). 3. Marketing requires the 4 P’s (aka Marketing Mix) Product: Creating Value o The fundamental purpose of Marketing is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs. o Goods are tangible objects; services are intangible customer benefits that cannot be separated from producer. Ideas are also intangible, but can be marketed. Price: Capturing Value o Price is not always monetary; includes everything the buyer gives up in exchange for the product. o Marketer’s key to determining prices is figuring out how much customers are willing to pay so that they are satisfied with the purchase and the seller achieves a reasonable profit. Place: Delivering the Value Proposition o All activities necessary to get the product to the right customer when the customer wants it. o Place more commonly deals with retailing and marketing channel management-‐ also known as supply chain management. This is a set of approached and techniques that firms employ to efficiently and effectively integrate all firms that are involved in the transactions-‐ manufacturers, warehouses, etc.-‐ into a seamless value chain in which merchandise is produced and distributed correctly while minimizing systemwide costs while maintaining customer service. Promotion: Communicating the Value Proposition o Promotion is communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions and choices. 4. Marketing can be performed by both individuals and organizations o B2C, Business to Consumer Marketing: Marketing intermediaries, such as retailers, sell products to consumers in smaller amounts that were accumulated from manufacturers. o B2B, Business to Business Marketing: The sale of goods from manufacturers to intermediaries. o C2C, Consumer to Consumer Marketing: occurs with social media and Internet sites to allow sale of used items to other consumers. o Marketing of an Individual 5. Marketing affects various stakeholders o Partners in supple chain: wholesalers, retailers, transportation or warehousing companies. All are involved in marketing to each other. o Marketing may be aimed to benefit an entire industry (ex: Got Milk-‐ benefits the entire dairy industry and promotes health benefits of milk). 6. Marketing helps create value o Production-‐Oriented Era: believed that a good product would sell itself; manufacturers were more concerned with product innovation than satisfying individual needs (ex: Henry Ford). o Sales-‐Oriented Era: production techniques became more sophisticated, and manufacturers had the capacity to produce more than customers could consume; sales orientation-‐ depended on heavy personal sales and advertising. o Market-‐Oriented Era: manufacturers turned to making consumer products; customer became king in a buyers’ market; customers could select products based on quality, convenience, and price. o Value-‐Based Marketing Era: firms attempt to discover and satisfy customers’ needs and wants; value must be higher than competitors. o Value: reflects the relationship of benefits to costs, or what you get for what you give. Customers seek fair return in goods/services for money paid. o Engaging in value cocreation provides value to customers by allowing them to act as collaborators on product creation (ex: Nike custom shoes). How do Markets become more Value Driven? 1. Share information about their customers and competitors across their organization and with other collaborating firms. o Sharing and coordinating information gathered from customers represents a critical success factor for a firm. 2. Strive to balance customers’ benefits and costs. o Using available customer data allows firm to find opportunities to satisfy customer needs better, keep costs down, and develop long-‐term loyalties. 3. Concentrate on building relationships with customers. o Relational orientation: focus on lifetime profitability of relationship instead of money being made per transaction. o CRM, Customer Relationship Management: business philosophy that focuses on identifying and building loyalty among valued customers. Firms that use CRM collect information about customers and advertise products, services, and special promotions that appeal most. 4. Take advantage of new technologies and connect with customers using social or mobile media. o ¾ of U.S. companies use social media tools for marketing, and 46% of Internet users interact with social media daily. However, by limiting marketing to only social media, there is a large portion of the world’s population that is excluded. o Mobile applications and travel websites are increasing in popularity and convenience for consumers. Why is Marketing Important? Marketing used to be an afterthought to production. Now it is an essential business function that crosses all areas of a firm or organization (Exhibit 1.6). Marketing advises production about amount of product and logistics of shipping, creates relationships between company and firms buying the product, identifies elements valuable to customers. 1. Marketing Expands Firms’ Global Presence o Enhances career opportunities for marketing professionals also. 2. Marketing is Pervasive across Marketing Channel Members o Since firms do not work in isolation, a supply chain or marketing channel is necessary. Maintaining these relationships has an impact on the firm’s ability to satisfy consumers, resulting in increased profitability for both parties. 3. Marketing Enriches Society o Focus has shifted to other factors besides financial profitability. Firms are making socially responsible activities an integral component to business. o Strong social orientation in business is a sound strategy that is in its own and its customers’ best interest. o Good corporate citizenship through socially responsible actions should be a priority. 4. Marketing can be Entrepreneurial o Entrepreneur: people who organize, operate and assume the risk of a business venture. o Usually success comes to entrepreneurs who target an unfulfilled need. (Ex: Netflix, Amazon) o Find and understand a marketing opportunity, conduct thorough examination of marketplace, and develop/communicate the value of their product/service to potential customers.
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