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Marketing Chapter 1 Book Notes

by: Marilyn Jackson

Marketing Chapter 1 Book Notes MKT 3010

Marketplace > Clemson University > Marketing > MKT 3010 > Marketing Chapter 1 Book Notes
Marilyn Jackson
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These notes outline the first chapter in the Marketing textbook, but Grewal/Lewy, 4th edition.
Principles of Marketing
James G. Gaubert
Class Notes
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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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