Marketing – the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large
●Value – a customer’s estimation of the worth of a product based on a comparison of its costs
and benefits, including quality, relative to other products
Exchange functions: All companies—manufacturers, wholesalers, and
retailers—buy and sell to market their merchandise.
1. Buying includes obtaining raw materials to make products, knowing how much
merchandise to keep on hand, and selecting suppliers.
2. Selling creates possession utility by transferring the title of a product from seller to
customer.
Physical distribution functions: These functions involve the flow of goods from
producers to customers.
3. Transporting involves selecting a mode of transport that provides an acceptable
delivery schedule at an acceptable price.
4. Storing goods is often necessary to sell them at the best selling time.
Facilitating functions: These functions help the other functions to take place.
5. Financing helps at all stages of marketing. To buy raw materials, manufacturers
often borrow from banks or receive credit from suppliers. Wholesalers may be financed
by manufacturers, and retailers may receive financing from the wholesaler or
manufacturer. Finally, retailers often provide financing to customers.
6. Standardization sets uniform specifications for products or services. Grading
classifies products by size and quality, usually through a sorting process. Together,
standardization and grading facilitate production, transportation, storage, and selling.
7. Risk taking—even though competent management and insurance can minimize
risks—is a constant reality of marketing because of such losses as bad-debt expense,
obsolescence of products, theft by employees, and product-liability lawsuits.
8. Gathering market information is necessary for making all marketing decisions
Relationship marketing
– establishing long-term, mutually satisfying buyer–seller relationships
●Customer relationship management (CRM) – using information about customers to
create marketing strategies that develop and sustain desirable customer
relationships
●Managing customer relationships requires identifying patterns of buying behavior and
using this information to focus on the most promising and profitable customers.
•It may be more profitable for a company to focus on satisfying a valuable existing
customer than to attempt to attract a new one.
●Customer lifetime value – a measure of a customer’s worth (sales minus
costs) to a business over one’s lifetime
Utility: The Value Added by Marketing
●Utility – the ability of a good or service to satisfy a human need
●There are four kinds of utility.
1. Form utility – utility created by converting production inputs into finished
products
2. Place utility – utility created by making a product available at a location
where customers wish to purchase it
●Example: A pair of shoes shipped from a factory to a department store
3. Time utility – utility created by making a product available when customers
wish to purchase it
, ●Example: Halloween costumes that are manufactured in April but not
displayed until September, when consumers start buying them
4. Possession utility – utility created by transferring title (or ownership) of a
product to a buyer
●Marketing concept
– a business philosophy that a firm should provide goods and services that satisfy
customers’ needs through a coordinated set of activities that allow the firm to
achieve its objectives
●Process:
1.The firm communicates with potential customers to assess their product needs.
2.The firm develops a good or service to satisfy those needs.
3.The firm continues to seek ways to provide customer satisfaction.
Evolution of the Marketing Concept
●From the start of the Industrial Revolution until the early 20th century, business effort
was directed mainly toward producing goods.
•Business had a strong production orientation, which placed a strong emphasis
on increased output and production efficiency.
●In the 1920s, producers had to direct their efforts toward selling goods rather than
just producing them.
•This new sales orientation was characterized by increased advertising, enlarged
sales forces, and, occasionally, high-pressure selling techniques.
●During the 1950s, business managers recognized that they were not primarily
producers or sellers, but were in the business of satisfying customers’ needs.
•Marketers adopted a customer orientation—in other words, the organization had
to first determine what customers need and then develop goods and services
to fill those particular needs.
Implementing the Marketing Concept
●To implement the marketing concept:
1.The firm must obtain information about its present and potential customers.
●The firm must determine not only what customers’ needs are, but also how
well these needs are satisfied by products currently in the market—both
its own products and those of competitors.
●It must ascertain how its products might be improved and what opinions
customers have about the firm and its marketing efforts.
2.The firm must use this information to pinpoint the specific needs and potential
customers toward which it will direct its marketing activities and resources.
3.The firm must mobilize its marketing resources to:
●Provide a product that will satisfy its customers
●Price the product at a level that is acceptable to buyers and will yield a profit
●Promote the product so that potential customers will be aware of its existence
and its ability to satisfy their needs
●Ensure that the product is distributed so that it is available to customers
where and when it is needed
4.The firm must obtain marketing information regarding the effectiveness of its
efforts and be ready to modify any or all of its marketing activities based on
information about its customers and competitors.
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large
●Value – a customer’s estimation of the worth of a product based on a comparison of its costs
and benefits, including quality, relative to other products
Exchange functions: All companies—manufacturers, wholesalers, and
retailers—buy and sell to market their merchandise.
1. Buying includes obtaining raw materials to make products, knowing how much
merchandise to keep on hand, and selecting suppliers.
2. Selling creates possession utility by transferring the title of a product from seller to
customer.
Physical distribution functions: These functions involve the flow of goods from
producers to customers.
3. Transporting involves selecting a mode of transport that provides an acceptable
delivery schedule at an acceptable price.
4. Storing goods is often necessary to sell them at the best selling time.
Facilitating functions: These functions help the other functions to take place.
5. Financing helps at all stages of marketing. To buy raw materials, manufacturers
often borrow from banks or receive credit from suppliers. Wholesalers may be financed
by manufacturers, and retailers may receive financing from the wholesaler or
manufacturer. Finally, retailers often provide financing to customers.
6. Standardization sets uniform specifications for products or services. Grading
classifies products by size and quality, usually through a sorting process. Together,
standardization and grading facilitate production, transportation, storage, and selling.
7. Risk taking—even though competent management and insurance can minimize
risks—is a constant reality of marketing because of such losses as bad-debt expense,
obsolescence of products, theft by employees, and product-liability lawsuits.
8. Gathering market information is necessary for making all marketing decisions
Relationship marketing
– establishing long-term, mutually satisfying buyer–seller relationships
●Customer relationship management (CRM) – using information about customers to
create marketing strategies that develop and sustain desirable customer
relationships
●Managing customer relationships requires identifying patterns of buying behavior and
using this information to focus on the most promising and profitable customers.
•It may be more profitable for a company to focus on satisfying a valuable existing
customer than to attempt to attract a new one.
●Customer lifetime value – a measure of a customer’s worth (sales minus
costs) to a business over one’s lifetime
Utility: The Value Added by Marketing
●Utility – the ability of a good or service to satisfy a human need
●There are four kinds of utility.
1. Form utility – utility created by converting production inputs into finished
products
2. Place utility – utility created by making a product available at a location
where customers wish to purchase it
●Example: A pair of shoes shipped from a factory to a department store
3. Time utility – utility created by making a product available when customers
wish to purchase it
, ●Example: Halloween costumes that are manufactured in April but not
displayed until September, when consumers start buying them
4. Possession utility – utility created by transferring title (or ownership) of a
product to a buyer
●Marketing concept
– a business philosophy that a firm should provide goods and services that satisfy
customers’ needs through a coordinated set of activities that allow the firm to
achieve its objectives
●Process:
1.The firm communicates with potential customers to assess their product needs.
2.The firm develops a good or service to satisfy those needs.
3.The firm continues to seek ways to provide customer satisfaction.
Evolution of the Marketing Concept
●From the start of the Industrial Revolution until the early 20th century, business effort
was directed mainly toward producing goods.
•Business had a strong production orientation, which placed a strong emphasis
on increased output and production efficiency.
●In the 1920s, producers had to direct their efforts toward selling goods rather than
just producing them.
•This new sales orientation was characterized by increased advertising, enlarged
sales forces, and, occasionally, high-pressure selling techniques.
●During the 1950s, business managers recognized that they were not primarily
producers or sellers, but were in the business of satisfying customers’ needs.
•Marketers adopted a customer orientation—in other words, the organization had
to first determine what customers need and then develop goods and services
to fill those particular needs.
Implementing the Marketing Concept
●To implement the marketing concept:
1.The firm must obtain information about its present and potential customers.
●The firm must determine not only what customers’ needs are, but also how
well these needs are satisfied by products currently in the market—both
its own products and those of competitors.
●It must ascertain how its products might be improved and what opinions
customers have about the firm and its marketing efforts.
2.The firm must use this information to pinpoint the specific needs and potential
customers toward which it will direct its marketing activities and resources.
3.The firm must mobilize its marketing resources to:
●Provide a product that will satisfy its customers
●Price the product at a level that is acceptable to buyers and will yield a profit
●Promote the product so that potential customers will be aware of its existence
and its ability to satisfy their needs
●Ensure that the product is distributed so that it is available to customers
where and when it is needed
4.The firm must obtain marketing information regarding the effectiveness of its
efforts and be ready to modify any or all of its marketing activities based on
information about its customers and competitors.
