Marketing’s Role in the Global Economy

Chapter OneChapter One

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Types of Utility and How They Are ProvidedExhibit 1-1

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Universal Functions of Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Marketing Facilitates Production and ConsumptionExhibit 1-3

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Facilitators

• Ad agencies

• Marketing research firms

• Information technology suppliers

• Product testing labs

• Public warehouses

• Transporting specialists

• Financial institutions

• . . . and others

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Economics Systems

Marketing-DirectedEconomic Systems

PlannedEconomic Systems

Consumer choices are the invisible hand that

guides the economy

Government plannersdecide what consumers

should get

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

What is Marketing

• MICRO-MARKETING:– the performance of activities that seek to accomplish an

organization's objectives by anticipating customer or client needs and directing a flow of need-satisfying goods and services from producers to customer or client

• MACRO-MARKETING:– a social process that directs an economy's flow of goods and

services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society

Marketing Orientation

• Trying to carry out the marketing concept

• Maintaining a customer orientation

– All departments work together guided by customer needs

– Focus on profit objective (or other overall objective)

– NOT just trying to "unload" what the firm has produced

Some Differences in Outlook Between Adopters of the Marketing Concept and the

Typical Production-Oriented ManagersTopic Marketing Orientation Production Orientation Attitudes toward customers Customer needs determine company

plans They should be glad we exist, trying to cut costs and bringing out better products

An Internet website A new way to serve customers If we have a website, consumers will flock to it

Product Offering Company makes what it can sell Company sells what it can make

Role of marketing research To determine customer needs and how well company is satisfying them

To determine customer reaction, if used at all.

Interest in innovation Focus on locating new opportunities Focus is on technology and cost cutting

Importance of profit A critical objective A residual, what’s left after all costs are covered

Role of packaging Designed for customer convenience and as a selling tool

Seen merely as protection for the product

Inventory Levels Set with customer requirements and costs in mind.

Set to make production more convenient.

Focus of advertising Need-satisfying benefits of products and services

Product features and how products are made

Role of sales force Help the customer to buy if the product fits customer’s needs, while coordinating rest of firm

Sell the customer, don’t worry about coordination with other promotion efforts or rest of firm.

Relationship with customer Customer satisfaction before and after sale leads to a profitable long-run relationship.

Relationship is seen a short term--- ends when a sale is made

Costs Eliminate costs that do not give value to the customer

Keep costs as low as possible.

The Marketing Concept and Customer Value

• Customer value concerns the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits

• Customer value takes the customer’s point of view– But customer may not explicitly think in terms of

costs and benefits• Costs and benefits are not just limited to economic

considerations– Examples: Convenience in purchasing– Emotional reactions (status needs, etc.)

• In a competitive market, the firm that offers superior value is likely to win business and get repeat customers

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Organizations with a Marketing Orientation Carry Out the Marketing Concept

Customer Satisfaction• Customer satisfaction is the extent to which a firm

fulfills a consumer’s needs, desires, and expectations• As some needs are met, others may become more

important• Expectations may change based on experiences

– Satisfying experiences may lead to increasing expectations

– Disappointing experiences may reduce expectations

– Expectations may be realistic or unrealistic

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Micro-Macro Dilemma

• Micro-macro dilemma: what is "good" for some producers and consumers may not be good for society as a whole.

• Examples:– some consumers want handguns, but guns can be

dangerous

– all terrain vehicles are fun for some people, but may result in injuries or damage to wilderness areas

– non-returnable soft drink bottles are convenient, but sometimes result in litter and dangerous broken glass along highways.

– repairing an old air-conditioning system might save the owner money, but might require continued use of ozone depleting fluorocarbons (used as coolant)

Nonprofit Organizations and the Marketing Concept

• Both public and private nonprofit organizations are turning to marketing concepts

• Some nonprofits differ from business in important ways:

– those who get benefits may not provide the support

– may be difficult to agree on basic objective

– each volunteer tends to do what he or she wants to do!

Social Responsibility and Marketing Ethics

• Social responsibility concerns a firm's obligation to improve its positive effects on society and reduce its negative effects

Marketing ethics are the moral standards that guide marketing decisions and actions

Excerpt from the Code of Ethics of the American Marketing Association

“ ...Participants in the marketing exchange process should be able to expect that:

1. Products and services offered are safe and fit for their intended uses;

2. Communications about offered products and services are not deceptive;

3. All parties intend to discharge their obligations, financial and otherwise, in good faith; and

4. Appropriate internal methods exist for equitable adjustment and/or redress of grievances concerning purchases…”

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Sample Criticisms of MarketingExhibit 1-5

• Advertising is often annoying, misleading, or wasteful.

• Product quality and safety are poor.

• There are too many unnecessary products.

• Packaging and labels are often confusing and deceptive.

• Middlemen just add to the cost of distribution.

• Marketing serves the rich and exploits the poor. 

• Service often stinks, and nobody cares when a consumer has a problem.

• Marketing creates interest in products that pollute the environment.

• Private information about consumers is collected to sell them things they don’t want.

• Marketing makes people too materialistic.

• Easy credit makes people buy things they can’t afford.