Chapter 1

Marketing:
Creating
Satisfaction
through Customer
Relationships
 Chapter Objectives
1. Explain how marketing creates utility through the exchange process.
2. Contrast marketing activities during the four eras in the history of
marketing.
3. Define the marketing concept and its relationship to marketing myopia.
4. Describe the characteristics of not-for-profit marketing.
5. Describe the five types of nontraditional marketing.
6. Outline the changes in the marketing environment due to technology.
7. Explain the shift from transaction-based marketing to relationship
marketing.
8. Identify the universal functions of marketing.
9. Demonstrate the relationship between ethical business practices and
marketplace success.
What is Marketing?
 What is Marketing?
Three Mistaken Views
Marketing is Selling
No, because:
 Selling is part of Marketing
 Marketing starts long before the company has a product or
service
 Marketing involves homework to asses needs, measure
their extent, and determine if a profitable opportunity exists
 Selling only occurs only after a product is manufactured or
a service is created
 Marketing continues throughout a product’s life, finding
new customers, improving product appeal and
performance, and managing repeat sales
Philip Kotler “On Marketing”
 What is Marketing?
Three Mistaken Views
Marketing is Advertising
No, because:
 Advertising is part of Marketing
 Marketing starts long before the company places
and ad or develops an advertising strategy
 Advertising becomes part of an over-all Marketing
Plan
 Advertising only occurs only after a product is
manufactured or a service is created

John Eichenberger “Personal Experience”

 What is Marketing?
Three Mistaken Views
Marketing is Mainly a Department
No, because:
 Yes, companies do have Marketing Departments,
but,
 All departments should be at least customer
oriented if not customer driven
 In highly competitive markets, all departments
must focus on winning customer preference
 “Companies can’t give job security. Only
customers can” – Jack Welch, General Electric CEO

Phillip Kotler “On Marketing”

  Four Types of Utility
Organizatio
nal Function
Responsible
Type Description Examples
Form Conversion of raw J.P. Morgan Chase checking Production
materials and account; Lincoln Navigator;
components into Ramen Noodles (nutrition for
finished goods and students who are hungry, broke,
services and can’t—or won’t—cook)
Time Availability of goods Digital photographs; LensCrafters Marketing
and services when eyeglass guarantee; UPS Next
consumers want them Day Air
Place Availability of goods Soft-drink machines outside gas Marketing
and services at stations; on-site day care; banks
convenient locations in grocery stores
Owner- Ability to transfer title Retail sales (in exchange for Marketing
to goods or services currency or credit-card payment)
ship
from marketer to
buyer
 What is Marketing?

 Marketing creates utility through the exchange

process
Utility: Want-satisfying power of a good or
service
 Form utility
 Time utility
 Place utility
 Ownership utility
 What is Marketing?

Marketing is the art of finding,

developing, and profiting from
opportunities.

Philip Kotler, “On Marketing”

 MOTTS
 Ad Promotes the
Creation of Form
Utility. The copy
reads: “Same
ingredients. Ours just
fits through a straw.”
and
“MOTTS MEANS
FRUIT”
 How to Create Customers
Identifying customer needs
Designing goods and services that meet
those needs
Communicating information about those
goods and services to prospective buyers
Making the goods or services available at
times and places that meet customers’ needs
Pricing goods and services to reflect costs,
competition, and customers’ ability to buy
Providing for the necessary service and
follow-up to ensure customer satisfaction
after the purchase
 A Definition of Marketing
Marketing: the process of planning and
executing the conception, pricing,
promotion, and distribution of ideas, goods,
services, organizations, and events to
create and maintain relationships that will
satisfy individual and organizational
objectives.
 American Marketing Association’s new official
definition of marketing released August 2004:

Marketing is an organizational function and a

set of processes for creating, communicating
and delivering value to customers and for
managing customer relationships in ways that
benefit the organization and its stakeholders.
 Both definitions also identify the marketing
variables that together provide customer
satisfaction through:
Product
Price
Promotion
Place [Distribution]
 Creating customers that want to stay with you
is all about identifying needs, providing goods
and services that meet those needs, pricing,
and follow-up service.
 Can you think of examples?
 How would you get customers to stay with you
in your business?
 Today’s Global
Marketplace
 International
agreements increase
trade among nations
 Growth of electronic
commerce and related
computer technologies
 Interdependence of the
world’s economies
 “Countries like India
are now able to
compete for global
knowledge like never
before” The World is
Flat by Thomas L.
Friedman
 EVIAN
International Trade
Involves Exporting
and Importing
 This Evian ad, taken
from a U.S.
magazine, shows the
U.S. Market is
attractive to
International
Marketers like Evian
of France
 [Is this still true?]
 Figure 1.2
 Marketing of Services: A Major Component of the
Global Marketplace P.9
Four Eras in the History of Marketing
 Production Era
Prior to 1920s
Production orientation
Business success often defined solely in
terms of production victories

 Sales Era
Prior to 1950s
Customers resist nonessential goods and
services
Personal selling and advertising’s task is to
convince them to buy
 Marketing Era
Since 1950s Marketing Concept Emerges
Satisfying customer needs

 Emergence of the Marketing Concept

Shift from seller’s to buyer’s market
Company–wide consumer orientation
Objective of achieving long–run success
 Relationship Era
Began in 1990s
Carried customer orientation even further
Focuses on establishing and maintaining
relationships with both customers and
suppliers
Involves long–term, value–added
relationships
 Converting Needs
to Wants
The need for a
vacation becomes
a desire to take
Caribbean Holiday
The need for
fitness becomes a
desire for exercise
classes
 Brooks Focuses on
the Benefit of Comfort
in Marketing Its
Running Shoes
 Figure 1.4
 Symantec: Fulfilling the Need for Privacy Protection
 Easier to use software moves computers into homes.
 The Apple iMacs and now the iPod:
Converting needs to wants
 Avoiding Marketing Myopia
 Marketing Myopia is management’s failure
to recognize the scope of its business.
To avoid marketing myopia, companies
must broadly define organizational goals
toward consumer needs
Focus on benefits
 Extending the Traditional Boundaries
of Marketing

 Marketing in not-for-profit organizations

 Characteristics of not-for-profit marketing
The bottom line is not the main objective
Still need to generate revenue – need donors
May market both goods and services
Customer or service user may wield less
control over the organizations destiny than
customers of profits seeking firms
Resource contributor may interfere with the
marketing program
 Nontraditional Marketing

 Person Marketing

 Place Marketing

 Cause Marketing

 Event Marketing

 Organization Marketing
 Nontraditional Marketing
 Person Marketing
Efforts to cultivate the attention, interest, and
preferences of a target market toward a
celebrity or authority figure
 Place Marketing
Attempt to attract
people and
organizations to
a particular
geographic area.
 Cause Marketing
Identification
and marketing of
a social issue,
cause, or idea to
selected target
markets
 Event Marketing
The marketing of sporting, cultural, and
charitable activities to selected target
markets
Visa, one of many sponsors of the
Summer 2004 Olympic Games
 Organization Marketing
Involves attempts to
influence others to
accept the goals of,
receive the services
of, or contribute in
some way to an
organization.
 Creativity and Critical Thinking
 Challenges presented by today’s complex and
technologically sophisticated marketing
environment require critical-thinking skills and
creativity from marketing professionals

 Critical Thinking refers to the process of

determining the authenticity, accuracy, and worth
of information, knowledge, claims and arguments

 Creativity helps to develop novel solutions to

perceived marketing problems
 Creative
communication of
Armstrong
Quality

 Critical-thinking
skills used to
develop
Rap Snacks
pp.21,22
 The Technology Revolution in Marketing

 Technology: Application to business of knowledge

based on scientific discoveries, inventions, and
innovations
 Technological advances are revolutionizing
marketing – WSJ articles

 Interactive marketing: refers to buyer-seller

communications in which the customer controls the
amount and type of information received from a
marketer
 The Internet is an all-purpose global network
composed of more than 50,000 different networks
around the globe that allows those with access to a
computer send and receive images and text
anywhere
 World Wide Web is an interlinked collection of
graphically rich resources within the larger Internet
 Broadband technology is extremely high speed,
always-on Internet connection
 Wireless Internet connections for laptops and PDA’s
 Interactive Television Service (iTV) allows
consumers to interact with programs or commercials
through their remote controls
 How Marketers Use
the Web
Interactive
brochures
Online newsletters
Virtual storefronts
Information
clearinghouses
Customer service
tools
 What other ways can
you think of?
 Internet Questions – p.26
 What types of goods and services can be
successfully marketed on the Web?
 What types of goods and services would not
benefit from Web marketing?
 How secure do you feel the Web is for
processing your order?
 How will the Internet affect traditional retail
stores?
 From Transaction-Based
Marketing to Relationship
Marketing

 Transaction–based marketing
(Simple exchanges)

 Relationship marketing
Lifetime value of a customer
Converting new customers to
advocates
 Holiday Inn
building a
relationship beyond
selling a place to
sleep
 One-to-One Marketing
 Customized marketing program designed
to build long-term relationships with
individual customers.
 Identifying a firm’s best customers and
increasing their loyalty.
 Sbarro Pizza chain
reaches teens with
LidRock.
One-to-one
Marketing:
Sip and Spin with
personalized
entertainment
 Developing Partnerships and Strategic Alliances
Strategic Alliances: partnerships between
organizations that create competitive advantages
Costs and Functions of Marketing
 Ethics and Social Responsibility
 Ethics are the moral standards of behavior
expected by a society.
 Social Responsibility involves marketing
philosophies, policies, procedures, and
actions whose primary objective is the
enhancement of society.
 Ethics and Social Responsibility: Doing
Well by Doing Good

 Increased Employee Loyalty

 Better Public Image
 Market Place Success
 Improved Financial
Performance
 Shell Oil Promotional
Message Recruiting Mentors
for Inner City Youth
 Figure 1.12
Anheuser-
Busch:
Persuasive
message aimed
at Reducing the
incidence of
underage drinking
 Ethics and Social Responsibility
 Some companies fall way short of their ethical
and social responsibilities –
Enron
Tyco
 But most companies do follow ethical
practices
Many offer ethics training to employees
Companies of all types sponsor community
based programs
 Next Class
 January 17
 Chapters 2, 2A, Addendum 3, 22