Chapter 1

Marketing’s Value
to Consumers,
Firms, and Society

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 At the end of this presentation, you
should be able to:
1. know what marketing is and why you should
learn about it.
2. understand the difference between marketing
and macro-marketing.
3. know the marketing functions and why
marketing specialists—including intermediaries
and collaborators—develop to perform them.
4. understand what a market-driven economy is
and how it adjusts the macro-marketing system.
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1-2
 At the end of this presentation, you
should be able to:
5. know what the marketing concept is—and how
it should guide a firm or nonprofit organization.
6. understand what customer value is and why it is
important to customer satisfaction.
7. know how social responsibility and marketing
ethics relate to the marketing concept.
8. understand important new terms.

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1-3
 Marketing—What’s It All About?
All Those
Bicycles!

More Than Selling and Advertising

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Things a manager should do before and
after deciding to produce and sell a bike
Analyze Needs

Determine Wants

Identify Competition
Predict Designs
Determine Where

Decide Promotion

Estimate Price
Provide Service
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1-5
 Marketing Is Important to You

Important to every consumer!

Important to your job!

(and your next job, too)

Affects innovation and

standard of living
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 Marketing Affects Innovation

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1-7
 How should we define marketing?
Performance of
activities that
accomplish
objectives…

…by anticipating
…from producer to a Defining
customer or client
customer or client. marketing needs…

…and directing a
flow of need-
satisfying goods and
services…

1-8
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 Marketing
Profit and More Than
Nonprofit Persuasion

Builds Key Begins with

Relationships Characteristics Needs

Involves Doesn’t Do It
Exchanges Alone
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 Identify Customer Needs

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 Macro-Marketing
Emphasis Is on Every Society
Whole System Needs It

Key
Characteristics

Matches
Producers and
Consumers
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 Marketing Facilitates Production
and Consumption (Exhibit 1-1)
Production Sector
Spatial Separation

Separation in Time
Discrepancies of Quantity Marketing needed
to overcome Separation of Information
discrepancies and
Discrepancies of separations
Separation in Values
Assortment

Separation of Ownership

Consumption Sector
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 Separation Between Producers and
Consumers
Economies of Scale - Lower Unit Cost

Unit
Cost
$

Output
Marketing Bridges the Gap!

Marketing
Producers Consumers
Functions
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 Universal Functions of Marketing

Buying Selling

Market
Transporting
Information
Marketing
Functions
Risk Taking Storing

Standardization
Financing
& Grading
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 Overcoming
Spatial Separation

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Who Performs Marketing Functions?

Producers Wholesalers Other

Specialists

Transport
Firms Retailers
Ad Agencies
ISP's

Product
Testing Research
Firms Firms Consumers
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1-16
 Economics Systems
Command Market-Directed
Economy Economy
• Government officials • Adjusts itself
decide about • Price is value
production and measure
distribution OR
• May work well if:
• Freedom of choice
• Simple economy • Government’s role
• Little variety limited
• Adverse conditions • Public interest
groups

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Model of a Market-Directed Macro-Marketing
System (Exhibit 1-2)
Many Individual Producers
(heterogeneous supply)

Intermediaries Collaborators

Perform universal marketing functions

To overcome discrepancies and Monitor by government(s)

separation of producers / consumers & public interest groups

To create value and direct flow of

need-satisfying goods and services

Many Individual Consumers

(heterogeneous demand)
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 Producers,
consumers,
and
marketing
specialists
perform
functions

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 Marketing’s Role Has Changed a Lot Over
the Years
Focus:
Simple Trade Era
Sell Surplus

Focus:
Production Era
Increase Supply

Focus:
Sales Era
Beat Competition

Focus:
Marketing Department Era
Coordinate & Control

Marketing Company Era Focus: Long-Run

Customer Satisfaction
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 Discovering Customer Needs

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 The Marketing Concept
(Exhibit 1-3)
Customer Total company
satisfaction effort

The
Marketing
Concept

Profit (or another measure of

long-term success) as
an objective
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 Checking Your Knowledge
A store that is popular with newlyweds runs a wedding gift registry.
Five minutes before closing time on a Sunday, a young couple enters
the store and wants to register—a process that usually takes 30
minutes or more. A sales associate advises the couple to come back
when they have more time, even though a recent memo from the
store’s regional manager specifically instructed store personnel to
stay after closing time to help such customers. Which key element
of the marketing concept is the main problem area in this situation?
A. Customer need
B. Total company effort
C. Customer satisfaction
D. Marketing orientation
E. Product orientation

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 Some Differences in Outlook between Adopters of the Marketing
Concept and Production-Oriented Managers (Exhibit 1–4)

Topic Marketing Orientation Production Orientation

They should be glad we

Attitudes toward Customer needs determine exist, trying to cut costs
customers company plans. and bringing out better
products.
Company makes what it Company sells what it can
Product offering
can sell. make.
To determine customer
Role of marketing needs and how well To determine customer
research company is satisfying reaction, if used at all.
them.

Focus is on locating new Focus is on technology

Interest in innovation
opportunities. and cost cutting.

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 Some Differences in Outlook between Adopters of the Marketing
Concept and Production-Oriented Managers (Exhibit 1–4)

Topic Marketing Orientation Production Orientation

Satisfy customers after the An activity required to

Customer service sale and they’ll come back reduce consumer
again. complaints.

Need-satisfying benefits of Product features and how

Focus of advertising
goods and services. products are made.

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

Eliminate costs that do not Keep costs as low as

Costs
give value to customer. possible.
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 The Marketing Concept and
Customer Value Take Customer’s Point
of View

Customer Value Reflects

Benefits and Costs

Customer May Not

Dwell on Value
Costs Benefits
Where Does
Competition Fit?

Customer Value Builds

Relationships
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 Costs, Benefits, and Customer Value
(Exhibit 1-5)
High
Perceived
superior
value e
Benefits target e lin
customer sees in a
v al u
firm’s goods and
f ai r
services
ed
e iv
rc
p e
’s
er
m
ts o Perceived
Cu inferior
Low value
Low Costs target customer sees to High
1-27
obtain benefits
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 Checking Your Knowledge
Which of the following statements, made by marketing managers,
illustrates an understanding of the concept of customer value?
A. “It’s more important to acquire new customers than to retain
old ones.”
B. “The only time it’s really necessary to demonstrate superior
customer value is right before the actual sale.”
C. “My main concern is with meeting this month’s sales quota—I’ll
worry about relationship building later.”
D. “I might think my product is a good value, but what really counts
is if the customer thinks it’s a good value.”
E. “Customer value really boils down to which product is the least
expensive.”

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 Checking Your Knowledge
A computer manufacturer is attempting to increase the
customer value associated with purchases of its products.
Which of the following might be a way to achieve this
increase in value?

A. Reduce price.
B. Increase technical support for customers.
C. Increase warranty coverage.
D. Offer free shipping.
E. Any of the above, depending on the needs of the target
market.

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Putting It All Together (Exhibit 1-6)
Total Company
Effort to Satisfy
Customers
Build Profitable
Offer Superior
Customer
Customer Value
Relationships

Increase Sales to Attract

Customers Customers

Satisfy
Retain Customers
Customers
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 The Marketing Concept Applies in
Nonprofit Organizations
Will “Satisfied
Newcomers to
Customers”
Marketing
Offer Support?

Characteristics
of Nonprofit
Organizations

May Not Be
The Bottom
Organized for
Line?
Marketing
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 Marketing Concept Used by
Nonprofit Services
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 The Micro-
Macro
Dilemma

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 Society’s needs must be considered

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 The Marketing Concept, Social
Responsibility, and Marketing Ethics
Micro - Macro
Group Needs Individual Needs
Dilemma

Society’s needs Should all Do all

What if it cuts
must be consumer needs marketers act
into profits?
considered be satisfied? eesponsibly?

The Marketing Concept Guides Ethics

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 Social Responsibility

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 Sample Criticisms of Marketing
(Exhibit 1-8)
Advertising is everywhere

Easy consumer credit Poor quality and unsafe

products

Makes people materialistic Too many unnecessary

products
Criticisms
Misuse of private Retailers raise prices
information of consumers without providing anything
in return

Interest in polluting Serves the rich and exploits

products the poor

Overpromise service
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 Key Terms

1. production 11. transporting function

2. customer satisfaction 12. storing function
3. innovation 13. standardization and grading
4. marketing 14. financing
5. pure subsistence economy 15. risk taking
6. macro-marketing 16. market information function
7. economies of scale 17. intermediary
8. universal functions of 18. collaborators
marketing 19. e-commerce
9. buying function 20. economic system
10. selling function

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 Key Terms

21. command economy 31. triple bottom line

22. market-directed economy 32. customer value
23. simple trade era 33. micro-macro dilemma
24. production era 34. social responsibility
25. sales era 35. marketing ethics
26. marketing department era
27. marketing company era
28. marketing concept
29. production orientation
30. marketing orientation
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