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Chapter 1

An Overview of
Contemporary Marketing

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McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 Marketing

“The process of planning and executing

the conception, pricing, promotion, and
distribution of ideas, goods, and
services to create exchanges that
satisfy individual and organization
goals.”
American Marketing Association

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 The Importance of Marketing

Marketing is Valuable to a
Variety of Organizations:
• Corporate For-Profit
• Nonprofit
• The Military
• Religious & Ethnic Groups
• Small Firms
• Individual Marketers

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 Marketing as an Organizational Philosophy

Can be Stated Formally

as a Mission Statement

Can be Established Informally through

The Communications and Actions
of Top Management

Indicates the Types of Activities

the Organization Values
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 Three Marketing Philosophies

1. Production Philosophy

2. Selling Philosophy

3. Marketing Philosophy
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 The Marketing Concept

• The purpose of an
organization is to satisfy
customer needs.

• Satisfying needs requires

integrated and coordinated
efforts through out the
organization.

• Organizations should focus

on long-term success.
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 Building Customer Equity

Customer Equity is the Financial

Value of a Firm’s Customer
Relationships and Consists Of:

1. Profits from first-time customers,

and,

2. Expected profits from all future

sales.

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 Three Ways to Increase Customer Equity

1. Decrease the cost of

acquiring new customers.

2. Retain more customers

longer.

3. Increase profits from retained

customers by selling them
more at higher margins and
with lower marketing
expenses.

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 Building Customer Equity Integrates:

Short-term
Short-term New
New
Orientations
Orientations Customers
Customers

Long-term
Long-term Existing
Existing
Orientations
Orientations Customers
Customers

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 3 Keys to Building Customer Equity

1. High loyalty levels lead to

increased sales growth, higher
profitability & higher customer
equity.

2. Completely delighted & satisfied

customers are best for earning
customer loyalty.

3. Exceptional value is needed to

delight & completely satisfy
customers.

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 Customer Value

The Calculation:

The revenue stream from repeat

purchases
+ The revenue stream from referrals
= The Lifetime Value of a Loyal Customer

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 Marketing as a Societal Process

• Defined as “a process that facilitates the flow

of goods and services from producers to
consumers in a society.”

Producers of Consumers of
Goods & Services Goods & Services

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 Marketing as a Societal Process

• Issues to Consider:
– What institutions are involved in the system?

– What activities do these institutions perform?

– How effective is the system at satisfying

customer needs?

– How efficiently can the system provides desired

goods and services?
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 Marketing as a Societal Process

• A society’s marketing system is closely related to

its political and economic systems.

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 Marketing Concerns in Eastern Europe

How to:
1. Become more market-oriented and consumer-
responsive?
2. Improve product quality?
3. Change product design, assortment, finishing &
packaging?
4. How to increase communications efforts?
5. Increase merchandising efforts?
6. Use competitive pricing?
7. Institute promotional pricing & price discounts
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 Marketing is a Process
Consisting Of:

Marketing Exchanges
Marketing Strategies
Marketing Activities
Marketing Positions
Marketing Institutions

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 Marketing Exchanges
• EXCHANGE is the • Transactions in
“transfer of something marketing exchanges
tangible or intangible, can use:
actual or symbolic • Money
between 2 or more • Barter
• Time & Money
social actors.”
• Votes

Marketer’s Goods Buyer’s

Or Services Exchange

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 Marketing Strategies

Select a Develop a
Target Market Marketing Mix

To Satisfy
Market Needs

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 Marketing Mix Decisions

Product Decisions

Integrated Marketing Marketing Price Decisions

Communications Decisions Mix

Distribution Decisions

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 Marketing Activities
Buying

Selling

Transporting

Storing
Producers End Users
Financing

Risk Taking

Standardizing &
Grading

Obtaining Marketing
Information
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 Marketing Positions
• Marketing Manager
• Product Manager
• Advertising Manager
• Distribution Manager
• Purchasing Manager
• Marketing Research Manager
• Public Relations Manager
• Customer Service Manager
• Sales Manager

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 Marketing Institutions
• Retailers

• Wholesalers

• Marketing Research
Firms

• Advertising Agencies
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 A Contemporary Marketing Framework

Marketing
Environment

Entrepreneurship

Global
Ethics
Marketing
Marketing
Productivity Customer
Value
Relationship
Technology

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