Chapter One: Overview of Marketing Chapter Objectives: Define marketing and explain its core concepts Discuss how marketers create value for a product or service Explain the four orientations of marketing Discuss the role of customer relationship management in creating value Discuss the importance of marketing both within and outside the firm Annotated Chapter Outline PowerPoint Slides Instructor’s Notes The chapter objectives and roadmap are intended to help students understand the content to be discussed. Opening Vignette: BlackBerry RIM’s BlackBerry is one of Canada’s successful and innovative products. The BlackBerry is more than just a cool gadget; it is a truly innovative service that not only changed the way business executives, managers, professionals and sales people globally communicate and work but also the speed and timeliness with which crucial business decisions are made and implemented. Ask students: Describe the value RIM’s BlackBerry provides users. What do you consider are the main reasons for RIM’s growth and success? Answer: (1) It enables access key corporate information and connects with their coworkers in real time from anywhere, anytime; (2) efficiency of decision-making through timeliness of information access; (3) excellent customer service; and (4) it is a sleek all-in-one device – mail, phone, organiser, GPS, Internet browser, and media player. Its growth and success lies in its extraordinary value of its service to customers. Topic One: What is Marketing? Marketing is a set of business practices designed to plan for and present an organization’s products or services in ways that build effective customer relationships (The Canadian Marketing Association A. The marketing plan specifies marketing activities for a specific period of time. Point out that the Canadian Marketing Association definition differs from the American Marketing Association which says “Marketing is an organizational function and a set of processes for creating, capturing*, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” Some people feel that the AMA definition is controversial, because it includes everything within marketing. Ask students: Do you agree? The Canadian definition notes that good marketing is not a random activity; it requires thoughtful planning with an emphasis on the ethical implications of any of those decisions on consumers and society in general. ***Extension of textbook material. Group activity: The chapter opens by pointing out that people engage in marketing every day as both buyers and sellers. Have students make a list of all marketing transactions in which they were involved today. List the types of activities on the board and categorize them as buy or sell. *** There is a strong ethics orientation in this book. At the start of the semester, stress that marketers’ actions have ethical implications that must be understood and addressed. ***This discussion occurs later in the chapter but is introduced here because value is the theme of the text. Discuss how the same product can provide lots of value to one consumer but little or no value to another. Use the example of a recent movie that split the audience (e.g., people either loved or hated Will Farrell’s Talladega Nights: The Legend of Ricky Bobby. Why?) Answer B. B. Marketing consists of six core aspects that work together to create value for customers and the firm. For a shorter lecture, just review the pieces of this slide. More detailed slides follow. Marketing Is About Satisfying Customers’ Needs and Wants The marketplace can be defined as the world of trade or more narrowly defined by segments. It is often not practical to sell the firm’s product to everyone, so marketers focus on the groups or segments that are most profitable. Ask students if they have ever thought about the number of brands and types of toothpaste available. Group activity: Ask students to list the types and brands of toothpaste they know. Then ask: Why do you think there are so many? Point out that the benefits of each one differ. Ask: Are these differences based on needs or wants or a combination of both? Case in Point Series: Firms must first understand how customers vary in their purchase behaviour. What motivates purchase? Fresh breath? Sensitive teeth? The next slide considers a specific firm that must meet this challenge. Crest designs products on the basis of consumers’ needs and positions them in multiple segments: children’s dental needs, sensitive teeth, whitening, fresh breath, denture care, and so forth. Are all these needs met through the products offered? This image shows a wide array of Crest products designed to fill the needs of different segments in the marketplace. To extend this discussion, click on the hyperlink and visit the Crest Web site. Marketing Entails an Exchange. Exchange refers to the trade of things of value between the buyer and seller so that each is better off as a result. Ask students to discuss how these exchanges occur in nonprofit settings. What is the exchange at a museum or a lecture? You might also use the example of a swap or barter page. (An excellent example of swaps can be found on the First Canadian Barter Exchange website http://www.barterfirst.com/page121.htm). Each party to the exchange gives up something of value: The customer gives up not only money but also time and information, and the firm gives up the good or service. The exchange in the end is mutually beneficial. Note: click on CHAPTERS.ca in the photo at the left to link to the website. (http://www.chapters.indigo.ca/) Answer C IV. Marketing Requires Product, Price, Place and Promotion Decisions The marketing mix (4Ps) of product, price, place, and promotion refers to the controllable set of activities the firm uses to respond to the wants and needs of its target market. Stress that the concept of the 4Ps is fundamental to marketing. Remind students that “4Ps” and “the marketing mix” may be used interchangeably to refer to product, price, place, and promotion. Products: Creating value The fundamental purpose of the firm is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy consumer needs. Goods are items that you can physically touch. Services are intangible customer benefits produced by people or machines that cannot be separated from the producer. Ideas include thoughts, opinions, philosophies, and intellectual concepts that also can be marketed. Students often can relate to goods and services, but the marketing of ideas is a new concept to them. Use the example of drunk driving prevention; ask: How is that idea marketed? Organizations such as Mothers Against Drunk Driving or Students Against Drunk Driving often receive support from brewers and distillers in promoting responsible drinking and safe driving. Ask students: What is the exchange these groups are asking consumers to enter? Answer: They want you to consume alcohol in a manner that is consistent with safety, which means giving up some consumption or drinking responsibly – do not get behind the wheel if you drink. Price: Transacting value Price refers to everything the buyer gives up—money, time, and energy— in exchange for the product. This is a good opportunity to remind students that the price paid is more than cash. Also tell them that later in the semester, you will look at how marketers view price, which often differs from the conceptions they may have been taught in finance courses about how to determine price. Place: Delivering value. Place includes all activities undertaken to get the product to the right customer when that customer wants it. Of all the areas in marketing, place is the least recognizable in relation to marketing. Students tend not to think about the importance of getting goods from manufacturers to consumers, which currently requires global approaches. This semester, they will learn about marketing’s role in this crucial process. Distribution strategy can be complex and requires consideration of many factors, as well as a high level of coordination. This topic appears in greater detail later in the chapter, but we provide a “Case in Point” now. Case in Point Series This example from the text illustrates how distribution management can assist a firm in growing its market. Country Grocer reaches remote northern communities with its online website. The Internet has allowed Country Grocer to reach the market outside Ottawa, but without efficient distribution systems for its product, it could not make a sale. The product must remain fresh, which means fast delivery. Promotion: Communicating value Promotion is communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response. Ask students to identify the target audience for this advertisement for Jet Blue. What value proposition is it offering and to which audience? Answer: This ad is targeted at frequent business travelers. Jet Blue adds value by promising travelers they will never miss a game. Answer D. F. Marketing is Shaped by Forces and Players External to the Firm Marketing is shaped by external forces such as social, technological, economic, competitive, and regulatory changes. The firm’s relations with suppliers, distributors, other intermediaries, and advocacy groups influence its marketing activities. VI. Marketing Can Be Performed by Both Individuals and Organizations B to C: Business-to- consumer marketing. B to B: Business-to-business marketing. C to C: Consumer-to-consumer marketing. Students often fail to consider that the products they purchase have changed hands before. Offer them the following example: The computer you recently purchased from Best Buy (B to C) was purchased by Best Buy from the manufacturer (B to B). If you sell your computer to your roommate, you have engaged in C to C selling. Thus, the same product might be a part of all three types of marketing. Marketing Occurs in Many Settings Both for-profit and not-for-profit entities use marketing. Developing economies can benefit from marketing. Entire industries can benefit from marketing. An interesting example of a nonprofit that makes extensive use of marketing is Heifer International (http://www.heifer.org/site/c.edJRKQNiFiG/b.183217/). Consumers choose from a series of options, ranging from a goat to an ark full of animals, to donate to a family in need, who uses the donation as a source of both income and food, which means the recipients have access to new marketing opportunities. Sustainable Marketing 1.1 Greening your Marketing Practices Sustainability is becoming an important aspect of business and marketing practices. However, it seems to mean different things to different people. Ask students what sustainability means to them and to indicate 2 practices that they observe companies are doing. Marketing Helps Create Value Production-oriented era: Belief that the product would sell itself. Sales-oriented era: Overcapacity led to a focus on personal selling and advertising. Market-oriented era: Manufacturers focus on what consumers want and need before design or production. Value-based marketing era: Value entails the relationship of benefits to costs, or what you get for what you give up. Ask students to consider each incarnation of the telephone presented in the slides. How has each been an improvement? Walk students through the eras and discuss how the firm’s focus went from the needs of the firm to the needs of the market. Topic Two: What is Value-Based Marketing? Consumers make trade-offs between the perceived benefits of a product or service and their costs. Customers seek options that provide the greatest benefits at the lowest costs. Firms must understand what customers view as the key benefits of a given product or service. Hotels provide a great example for a discussion of how firms create value. These two discussion questions set up general value keys plus how these keys differ for two different segments. General Value Keys for hotels include: service quality, hotel personnel, convenience of booking , room comfort, restaurant quality, location, rewards program, free internet service Value Keys for Business Travellers: location, service quality, room comfort, rewards program, free internet service. A business traveller might value the business centre, the proximity to a meeting location, and so on. Value Keys for Vacationers: service quality, hotel personnel, room comfort, restaurant quality, location. A family on vacation might value a pool, family suites, proximity to tourist attractions, and so on. This slide provides an opportunity to discuss the subjective nature of value. Each person has his or her own perception. How Do Firms Compete on the Basis of Value? Marketers must keep a vigilant eye on the marketplace so they can adjust their offerings to meet customer needs and keep ahead of the competition. For firms to compete, they must constantly assess consumers’ perceptions of value. The advent of sophisticated databases has made it easier for firms to track consumers. Answer: A Entrepreneurial Marketing 1.1 Carmen Creek Gourmet brings value to consumers, retailers, and food service businesses by providing each group with different services in addition with their special Canadian Grade A Bison meat. In so doing, the firm creates value for itself as witnessed by its growth – revenues and markets. How Do Firms Become Value Driven? Share information about customers and competitors across the organization and supply chain. The ability to collect, store, and classify customer data has been a primary contributor to the growth of value-based marketing. The example of Circuit City and Best Buy demonstrates how a market leader can lose position and then struggle to get it back. Playing catch up to Best Buy, Circuit City relied on extensive IT: “Circuit City's strategy hinges on a robust IT infrastructure that makes information readily accessible to decision-makers who need it. In fact, everything the company is currently doing to improve its business—from developing more effective promotions to deciding which products should be displayed at the ends of aisles in stores—hinges on data. ‘This is heavy analytical work. It's fact-based, data-driven,’ says Philip Schoonover, Circuit City's new president who was hired in October 2004, ironically, came from Best Buy” (http://www.cio.com/archive/070105/circuit.html). How can sharing and coordinating information transmit into success? For Zara, information is crucial to being able to meet the needs and wants of customers. Case in Point Series Ask students: How many of you have shopped at Zara? Zara is a Spanish clothing retailer that has aggressively expanded in recent years. Zara has been able to offer customers the latest fashions in a timely manner by reducing the time it takes to get goods from the manufacturer to stores. The retailer’s methods allow for quick replenishment of fast moving items. Balance customers’ benefits and costs. Use customer data to find opportunities to serve customers better and develop long-term loyalties. With information the firm can understand what are the key benefits customers seek, focus on those and eliminate the cost of providing other less strategic benefits. To follow up on the Zara example, note that its ability to meet the needs of the market consistently has created loyal customers, because customers know they can always find the latest fashions at Zara. 1. Build relationships with customers A transactional orientation regards the buyer–seller relationship as a series of individual transactions. A relational orientation suggests buyers and sellers should develop long-term relationships. Customer relationship management (CRM) is a business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm’s most valued customers. In early conceptions of marketing (before value-based marketing), firms often viewed the closing of the sale as the termination of their relationship with the customer. Today, firms strive to create lifetime value among customers, hoping they will return to the firm for all their future needs. Topic Three: Why is Marketing Important? Marketing has evolved into a major business function that crosses all areas of a firm or organization. This slide introduces the next series of slides or can be used as in or shortened lecture. Marketing Expands Firms’ Global Presence The same skills for understanding customers that allow marketing to be successful in the home country market may allow for global expansion as well. Group activity: Starbucks is one of the fastest expanding global firms. Ask students to brainstorm why Starbucks has been so successful globally. Then click through the links on the slides and identify products being promoted in all of the identified markets. (NOTE: This list varies by season.) Ideas include type of product (beverages are universal), customer need (luxury and convenience items), local product adaptations, etc. Ideas include type of product (beverages are universal), customer need (luxury and convenience items), local product adaptations, etc. Power of Internet 1.1. Internet Marketing: Past, Present and Future The internet has evolved from static websites to a dynamic platform for personalized, multi-channel and mobile marketing that is integrated with a wide range of information and communications technologies. Marketing Is Pervasive Throughout the Organization The marketing department must work seamlessly with other functional areas of the company to design, promote, price, and distribute products. http://www.scion.com/#home The success of Toyota’s Scion relied on the ability of the company’s various departments to work together. For example, engineering had to focus on creating a car that met the target market’s expectations for style yet still remained affordable. Marketing Is Pervasive Across the Supply Chain. Supply chain refers to a group of firms that make and deliver a given set of goods and services. To provide value, the members of the supply chain must establish long-term relationships and cooperate to share data, make forecasts, and coordinate shipments. Ask students: Have you ever considered how products from all over the world get to your home town? Each step in the supply chain takes the good and increases its value by either improving it or delivering it to the end consumer. Remind students that each step involves an exchange. Answer D IV. Marketing Makes Life Easier and Provides Employment. Consumers obtain product and service choices, as well as information about those choices. Employees must possess a variety of skills, including creative talents, analytical skills, and communication abilities. Remind students to visit career services available on campus to get more information about careers in marketing as well as internship opportunities and so forth. V. Marketing Enriches Society Many firms now recognize that their business’s strong social orientation provides a sound strategy in the best interests of both themselves and their customers. The Avon Breast Cancer Crusade is an excellent example of how a firm uses its knowledge of marketing to benefit society. Avon has long supported breast cancer awareness and prevention and, through its distributor network, has been able to educate women about the importance of early detection. Because of its primarily female sales force, Avon’s work was truly women helping women. VI. Marketing Can Be Entrepreneurial Marketing sits at the centre of the successes of numerous ventures initiated by entrepreneurs, or those people who organize, operate, and assume the risk of a business venture. Ask students: Why is marketing so important for entrepreneurs? How has Oprah Winfrey used marketing in her career? Oprah is a great example of how an entrepreneur can use marketing to create value. She introduces new products—a magazine, a TV production company, a Broadway company, films, and so on—and extends her brand through good marketing practices. Instructor Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9780071320382, 9780070984929
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