Chapter 1

Overview O i of f Marketing
Ajax Persaud Dhruv Grewal Shirley Lichti Michael Levy

Copyright 2012 McGraw-Hill Ryerson Limited

Chapter Objectives
LEARNINGOBJECTIVES

LO1 Define marketing g and explain p its core concepts LO2 Illustrate how marketers create value for a product or service LO3 Summarize the four orientations of marketing LO4 Identify the role of customer relationship management in creating value LO5 Explain the importance of marketing both within ithi and d outside t id th the fi firm
1-2

Chapter Roadmap

1-3

LO1,02

Building Value
z z z

z z

BlackBerry Bl kB l launched h di in 2000 available on 595 networks in over 175 countries sales of over $19.9 billion, 53% outside t id North N th America satisfies demand for information in real time fierce competition from Apple, Android and others
1-4

LO1

What is Marketing?
Marketing is a set of business practices designed to plan for and present an organizations products or services in ways that build effective customer relationships.

1-5

LO1

Marketing is NOT
Just about buyers and sellers exchanging g g money y for goods and services

or about making ap profit

1-6

LO1

Marketers Marketer s Responsibility

Marketers must address the ethical implications of their actions on society in general.
1-7

LO2

Value The fundamental purpose of marketing k ti is i t to create t value l for f both the firm and customer. Value is in essence what you get for what you give up.

1-8

Test Your Knowledge

Which of the A) B) C) D) following statements about marketing is NOT true? Marketing entails an exchange. Marketing is simply about making a profit. Good marketing requires thoughtful planning. Because marketing costs money, good marketers carefully seek potential customers who have both an interest in the p product and an ability y to buy. y

1-9

LO1

Marketings Marketing s Core Aspects

1-10

LO1

Core One: Satisfying Customer Needs and Wants

Begins with g their understanding needs and wants p gp products Developing and services

1-11

LO1

Satisfying Customer Needs and Wants

How does a company address the diverse needs and wants of consumers for dental care p products?

1-12

LO1

Case in Point: Crest

Challenge
Address the Add h di diverse needs d and d wants of consumers for dental care products. Develop a deep understanding of what benefits consumer are seeking g in their dental care products and develop brands designed to deliver those benefits. Crest provides a wide variety of dental care products to deliver the desired benefits benefits.

Answer

Results

1-13

LO1

Case in Point: Crest

1-14

LO1

Core Two: Marketing Entails Exchange

The exchange can occur between any two parties Not simply a buyer and seller exchanging money f a good for d or service i Can be an exchange of information for convenience
1-15

LO1

M k ti Entails Marketing E t il an E Exchange h

Communications/Delivery

CHAPTERS.ca

Money/Information Goods/Services G d /S i Producers (Sellers)

Customers/ Consumers (Buyers)

1-16

Test Your Knowledge

Which of the A) B) C) D) following is NOT part of a marketing exchange? Sellers provide products or services. Sellers communicate and facilitate delivery. Marketers assess the effectiveness of their advertising. Buyers complete the exchange by giving money and information to the seller.

1-17

Core Three: Marketing Requires Product Product, Price Price, Place, and Promotion Decisions

LO2

1-18

LO2

Product

1-19

LO2

Price
time Price is everything the buyer gives up in exchange for the product. d t

money

energy

1-20

LO2

Place
All activities necessary to get the product to the right customer when that customer wants it. Supply chain management is the field that examines these activities. Where would you find f this product in the store?

1-21

LO2

Place: Marketing Channels Distribution Strategy

How does a company get the p product to the right customer when and where they want it?

1-22

LO2

Case in Point: Country Grocer

Challenge
To expand T d di distribution ib i b beyond d the h Ottawa area.

Answer

Using an online distribution system to allow customers all over Canada to order directly y from its store in Ottawa. Canadian Federation of Independent Grocers award of merit for 8 consecutive years Awarded the National Silver Award as the best store in Canada in the small surface category.
1-23

Results

LO2

Case in Point: Country y Grocer

1-24

LO2

Promotion
The communication activities of marketing Used to inform, persuade and remind potential buyers Used to influence their opinions or elicit a response

1-25

Test Your Knowledge

Promotion is ____________ by a marketer that informs, informs persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response. A) smoke-and-mirrors smoke and mirrors B) coercion C) teasing D) ) communication

1-26

LO2

Marketing Shaped by External Forces

1-27

Core Four: Marketing Can Be Performed by Both Individuals and Organizations

B2B: Wholesaling is often only Business to Business B2C: All retailing B2C ili i is B Business i to Consumer selling

LO2

C2C: Swap Meets, EBay, yard sales, etc.

ETSY Website

1-28

LO2

Core Five: Marketing Occurs in Many Settings

z z z

Both profit and non-profit non profit entities Developing economies Entire industries

1-29

LO2

Social Media Marketing

Facebook social utility or marketing tool? > 46 million members used by TD Bank Bank, Molson, AOL Canada, Boston Pizza, LouLou magazine to reach target audiences privacy concerns?

1-30

LO2,03

Core Six: Marketing Helps Create Value

Production-oriented era Sales-oriented era

Market-oriented era Value-based marketing era

1-31

LO2,03

Value-Based Value Based Marketing

Firms must offer customers something in excess of that being g offered by y the competitors. p Firms must understand how each aspect of their product/service creates value for customers customers.

1-32

LO2,03

Value is in the Eye y of the Beholder

That movie was a waste of money. That movie was so worth seeing!

Discussion question If they saw the same movie, what could account for the difference in value derived from the experience?

1-33

LO2,03

How Firms Compete on the Basis of Value

Constantly y changing g g consumer perceptions Firms must constantly monitor the marketplace in order to create value

1-34

Test Your Knowledge

What must firms do to become value driven? A) Share information, balance benefits and costs, and build customer relationships. B) Set low prices, put profit above service, and use effective marketing strategies. C) Make logistics a priority, expand globally, and always y offer new goods g and services. D) Keep a vigilant eye on the market-place, undercut competitors, and provide competitive salaries.

1-35

LO2

E t Entrepreneurial i l Marketing M k ti
C Carmen C Creek kG Gourmet t Meats based in Calgary specializes in grade A Canadian bison distributes in Canada, US and Europe brings value to consumers, retailers and food service businesses

1-36

LO4

Becoming Value Driven: Sharing Information

Information technology such as Customer Relationship Management (CRM) programs are increasingly used by marketers to ensure that data is transmitted throughout the firm.

1-37

LO4

Sharing Information

Why i Wh is sharing h i and d coordinating di ti i information f ti such a critical success factor for any firm?

1-38

LO4

Case in Point: Zara

Challenge
How does the flagship brand of Europes fastest growing apparel retailer keep up with the latest trends? By implementing sophisticated information technology into its customer tracking g and supply pp y chain functions. Zara now has over 1500 womens clothing stores in 78 countries. Products move from design through the supply chain and onto the stores shelves in about two weeks.
1-39

Answer

Results

LO4

Zara: Conquering Fashion with IT

1-40

LO4

Becoming Value Driven: Balancing Benefits and Cost

Understand key benefits Focus on key y benefits Eliminate cost of less strategic benefits

1-41

LO4

Becoming Value Driven: Building Relationships With Customers

z z

Take a long g term view of customer relationships p Use data to assist in maintaining the relationship

1-42

LO5

Why is Marketing Important?

1-43

LO5

Marketing Expands Firms Global Presence

Starbucks often promotes the same product in different countries. What products do you see in common? Starbucks Canada Starbucks Germany

Starbucks Australia

Starbucks Taiwan
1-44

LO5

Marketing As Pervasive Across the Supply Chain

Each step p in the supply pp y chain involves marketing g All members in the chain must ultimately focus on creating value for their customer and the end user consumer

1-45

Test Your Knowledge

Which of the following would NOT be considered part of a supply chain? A) consumer B) retailer C) manufacturer D) customer service representative

1-46

LO5

Marketing Makes Life Easier and P id E Provides Employment l tO Opportunities t iti

z

Choices of p products and services choices as well as information about those choices Employment Emplo ment in di diverse erse fields such as research, sales, promotions, global marketing

1-47

LO5

Marketing Enriches Society

Discussion question Why do you think breast cancer is a good cause for Avon Foundation to support?

1-48

LO5

Marketing Can Be Entrepreneurial

Though important to large firms firms, marketing is equally important to the success of small venturesespecially p y new ventures.

1-49

8/17/2013

Chapter Objectives
LEARNINGOBJECTIVES

Chapter 1

Overview of Marketing
Ajax Persaud Dhruv Grewal Shirley Lichti Michael Levy

LO1 Define marketing and explain its core concepts LO2 Illustrate how marketers create value for a product or service LO3 Summarize the four orientations of marketing LO4 Identify the role of customer relationship management in creating value LO5 Explain the importance of marketing both within and outside the firm
1-2

Copyright 2012 McGraw-Hill Ryerson Limited

LO1,02

Chapter Roadmap

Building Value
z z z

z z

BlackBerry launched in 2000 available on 595 networks in over 175 countries sales of over $19.9 billion, 53% outside North America satisfies demand for information in real time fierce competition from Apple, Android and others
1-4

1-3

LO1

LO1

What is Marketing?
Marketing is a set of business practices designed to plan for and present an organizations products or services in ways that build effective customer relationships.

Marketing is NOT
Just about buyers and sellers exchanging money for goods and services

or about making a profit

1-5 1-6

8/17/2013

LO1

LO2

Marketers Responsibility

Value The fundamental purpose of marketing is to create value for b th th both the fi firm and d customer. t Value is in essence what you get for what you give up.

Marketers must address the ethical implications of their actions on society in general.
1-7 1-8

LO1

Test Your Knowledge

Which of the A) B) C) D) following statements about marketing is NOT true? Marketing entails an exchange. Marketing is simply about making a profit. Good marketing requires thoughtful planning. Because marketing costs money, good marketers carefully seek potential customers who have both an interest in the product and an ability to buy.

Marketings Core Aspects

1-9

1-10

LO1

LO1

Core One: Satisfying Customer Needs and Wants

Begins with understanding their needs and wants Developing products and services

Satisfying Customer Needs and Wants

How does a company address the diverse needs and wants of consumers for dental care products?

1-11

1-12

8/17/2013

LO1

LO1

Case in Point: Crest

Challenge
Address the diverse needs and wants of consumers for dental care products. Develop a deep understanding of what benefits consumer are seeking in their dental care products and develop brands designed to deliver those benefits. Crest provides a wide variety of dental care products to deliver the desired benefits.

Case in Point: Crest

Answer

Results

1-13

1-14

LO1

LO1

Core Two: Marketing Entails Exchange

The exchange can occur between any two parties

Marketing Entails an Exchange

Communications/Delivery

Not simply a buyer and seller exchanging money for a good or service Can be an exchange of information for convenience
1-15

CHAPTERS.ca

Money/Information Goods/Services Producers (Sellers)

Customers/ Consumers (Buyers)

1-16

LO2

Test Your Knowledge

Which of the A) B) C) D) following is NOT part of a marketing exchange? Sellers provide products or services. Sellers communicate and facilitate delivery. Marketers assess the effectiveness of their advertising. Buyers complete the exchange by giving money and information to the seller.

Core Three: Marketing Requires Product, Price, Place, and Promotion Decisions

1-17

1-18

8/17/2013

LO2

LO2

Product

Price
time Price is everything the buyer gives up i exchange in h f for the h product.

money

energy

1-19

1-20

LO2

LO2

Place
All activities necessary to get the product to the right customer when that customer wants it. Supply pp y chain management is the field that examines these activities. Where would you find this product in the store?

Place: Marketing Channels Distribution Strategy

How does a company get the product to the right customer when and where they want it?

1-21

1-22

LO2

LO2

Case in Point: Country Grocer

Challenge
To expand distribution beyond the Ottawa area.

Case in Point: Country Grocer

Answer

Using an online distribution system to allow customers all over Canada to order directly from its store in Ottawa. Canadian Federation of Independent Grocers award of merit for 8 consecutive years Awarded the National Silver Award as the best store in Canada in the small surface category.
1-23 1-24

Results

8/17/2013

LO2

Promotion
The communication activities of marketing Used to inform, persuade and remind potential t ti l buyers b Used to influence their opinions or elicit a response

Test Your Knowledge

Promotion is ____________ by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response. A) smoke-and-mirrors B) coercion C) teasing D) communication

1-25

1-26

LO2

LO2

Marketing Shaped by External Forces

Core Four: Marketing Can Be Performed by Both Individuals and Organizations

B2B: Wholesaling is often only Business to Business B2C: All retailing is Business to g Consumer selling

C2C: Swap Meets, EBay, yard sales, etc.

ETSY Website

1-27

1-28

LO2

LO2

Core Five: Marketing Occurs in Many Settings

z z z

Social Media Marketing

Facebook social utility or marketing tool? > 46 million members used by TD Bank, Molson, AOL Canada, Boston Pizza, LouLou magazine to reach target audiences privacy concerns?

Both profit and non-profit entities Developing economies Entire industries

1-29

1-30

8/17/2013

LO2,03

LO2,03

Core Six: Marketing Helps Create Value

Value-Based Marketing

Firms must offer customers something in excess of that being offered by the competitors. Firms must understand how each aspect of their product/service creates value for customers. Production-oriented era Sales-oriented era Market-oriented era Value-based marketing era

1-31

1-32

LO2,03

LO2,03

Value is in the Eye of the Beholder

That movie was a waste of money. That movie was so worth seeing!

How Firms Compete on the Basis of Value

Constantly changing consumer perceptions Firms must constantly monitor the marketplace in order to create value

Di Discussion i question ti If they saw the same movie, what could account for the difference in value derived from the experience?

1-33

1-34

LO2

Test Your Knowledge

What must firms do to become value driven? A) Share information, balance benefits and costs, and build customer relationships. B) Set low prices, put profit above service, and use effective marketing strategies. C) Make logistics a priority priority, expand globally globally, and always offer new goods and services. D) Keep a vigilant eye on the market-place, undercut competitors, and provide competitive salaries.

Entrepreneurial Marketing
Carmen Creek Gourmet Meats based in Calgary specializes in grade A Canadian bison distributes di t ib t i in C Canada, d US and Europe brings value to consumers, retailers and food service businesses

1-35

1-36

8/17/2013

LO4

LO4

Becoming Value Driven: Sharing Information

Information technology such as Customer Relationship Management g ( (CRM) )p programs g are increasingly used by marketers to ensure that data is transmitted throughout the firm.

Sharing Information

Why is sharing and coordinating information such a critical success factor for any firm?

1-37

1-38

LO4

LO4

Case in Point: Zara

Challenge
How does the flagship brand of Europes fastest growing apparel retailer keep up with the latest trends? By implementing sophisticated information technology into its customer tracking and supply chain functions. Zara now has over 1500 womens clothing stores in 78 countries. Products move from design through the supply chain and onto the stores shelves in about two weeks.
1-39

Zara: Conquering Fashion with IT

Answer

Results

1-40

LO4

LO4

Becoming Value Driven: Balancing Benefits and Cost

Understand key benefits Focus on key benefits Eliminate cost of less strategic benefits
z z

Becoming Value Driven: Building Relationships With Customers

Take a long term view of customer relationships Use data to assist in maintaining the relationship

1-41

1-42

8/17/2013

LO5

LO5

Why is Marketing Important?

Marketing Expands Firms Global Presence

Starbucks often promotes the same product in different countries. What products do you see in common? Starbucks Canada Starbucks Germany

Starbucks Australia
1-43

Starbucks Taiwan
1-44

LO5

Marketing As Pervasive Across the Supply Chain

Each step in the supply chain involves marketing All members in the chain must ultimately focus on creating value for their customer and the end user consumer

Test Your Knowledge

Which of the following would NOT be considered part of a supply chain? A) consumer B) retailer C) manufacturer D) customer service representative

1-45

1-46

LO5

LO5

Marketing Makes Life Easier and Provides Employment Opportunities

z

Marketing Enriches Society

Choices of products and services choices as well as information about those choices Employment in diverse fields such as research, sales, promotions, global marketing

Discussion question Why do you think breast cancer is a good cause for Avon Foundation to support?

1-47

1-48

8/17/2013

LO5

Marketing Can Be Entrepreneurial

Though important to large firms, marketing is equally important to the success of small venturesespecially new ventures.

1-49