Introduction to Marketing Management

Professor Charles D. Schewe

The Nature of Marketing

• What is the Purpose of Marketing?Satisfaction

Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.

The Nature of Marketing

• What is the Purpose of Marketing?Satisfaction

• Functional Satisfaction

The Nature of Marketing

– What is the Purpose of Marketing?Satisfaction

• Functional Satisfaction

• Psychological Satisfaction

The Nature of Marketing

• What is the Purpose of Marketing?Satisfaction• Functional Satisfaction • Psychological Satisfaction

• The Four Utilities

Adding Degrees of Satisfaction

Total Satis

faction Total Satisfaction

Possession utility

Place utility

Time utility

Form utility

Oriental rug

Store has it in stock

Delivered to your home

Pay with your VISA card

The Nature of Marketing

• What is the Purpose of Marketing?Satisfaction• Functional Satisfaction • Psychological Satisfaction• The Four Utilities• Consumer Problems• Providing Benefit Bundles• Offering a Total Consumption System

The Nature of Marketing

• What is the Purpose of Marketing?Satisfaction

• Facilitating Exchanges

• Increments of Satisfaction

Simple Marketing System

Industry(a collection

of sellers)

Market(a collection

of Buyers)

Goods/services

Money

Information

Communication

The Nature of Marketing

• What is the Purpose of Marketing?Satisfaction• Increments of Satisfaction• Facilitating Exchanges

–Conditions for Exchange

Conditions of Exchange

• There are at least two parties• Each party has something of value to the other

party• Each party is capable of communication and

delivery• Each party is free to accept or reject the exchange

offer• Each party believes it is appropriate or desirable to

deal with the other party

The Nature of Marketing

• What is the Purpose of Marketing?Satisfaction• Increments of Satisfaction• Facilitating Exchanges

–Conditions for Exchange

•Systems of Exchanges

A Three-Way Exchange

College

or

University

College

or

University

ParentParent

StudentStudent

Appreciation, grades, feeling of accomplishment

Money, encouragement

Parental recognition, Sense of pride

Tuition, donations

Tuition, labor (work study), class attendance

Education, personal growth, sense of

independence and spirit

Levi Strauss’ Value-Delivery Network

Competition is between Competition is between networksnetworks, not companies., not companies.The winner is the company with the better network.The winner is the company with the better network.

Delivery

Sears(Retail)Sears

(Retail)Levi’s

(Apparel)Levi’s

(Apparel)

Order

Delivery

Order

CustomerCustomer

Delivery

Du Pont(Fibers)Du Pont(Fibers)

Order

Delivery

Order

Milliken(Fabric)Milliken(Fabric)

The History of Marketing

• The Three Eras– The Production Era– The Sales Era– The Marketing Era

• The New Eras– Non-Business Marketing– Strategic Marketing– Social Responsibility– International– e-Commerce

A Chronological Evolution of Marketing Definitions

• 1947: The delivery of a standard of living to society

• 1960: The performance of business activities that direct the flow of goods and services from producer to consumer or user

A Chronological Evolution of Marketing Definitions

• 1971: A total system of interacting business activities designed to plan, price, promote, and distribute want-satisfying goods and services to present and potential customers

• 1977: Exchange activities conducted by individuals and organizations for the purpose of satisfying human wants

A Chronological Evolution of Marketing Definitions

• 1985: The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

A Chronological Evolution of Marketing Definitions

• 1987: Strategically managing human and organizational exchange relationships to provide socially responsible want and need satisfaction throughout the world

The Marketing Management Exchange Equation

$ ≤-Product

-Place

-Promotion

The Marketing Mix

The Four Ps The Four Cs

Product

Price Promotion

Place

CustomerSolution

CustomerCost

Communication

Conven-ience

MarketingMix

Marketing Management in the Organization

AccountingFinanceHuman ResourcesMarketingResearch & Development/Production

• Marketing and the Organizational System– What Are the Functions in the Organizational

Profit Pipeline?

Marketing Management in the Organization

• Which Organizational Function is the Most Important?

– None is More Important

• Which Organizational Function Comes First?

– Marketing…and It Comes Last as Well

The Processing Pipeline

OutputsInputs

Marketing MarketingFina

nce

Pers

onal

Prod

uctio

nA

ccou

ntin

g

Capital, Machines, Raw Materials, Labor, Technology, Information, Time, Effort

Goods/ Services, Sales (revenue),

Market share, Profits, Information

The Marketing Concept

• Customers are the Lifeblood of the Organization

• “Customer is King”

Evolving Views of Marketing’s Role

The customer as the controllingfunction and marketing as the

integrative function

Customer

Marketing

Production

Hum

an

resources

Finance

Customers

Front-line people

Middle Management

TopManagement

Traditional Organization Chart

Customer-Oriented Organization ChartCustomers

Front-line people

Middle management

Topmanage-

ment

Customers

Custo

mer

s

Inactive orex-customers

Customer Development

PartnersAdvocatesClientsRepeat

customersFirst-timecustomers

Suspects

Prospects

Disqualifiedprospects

The Marketing Concept

• Marketing Has Veto Power

The Profit TriangleVa

lue

crea

tion

Competitive advantage

Internal operations

ProfitProfit

Quality

• Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

#1

Marketing Management and the Economy

Manufacturermarkets

Services,money

Services,money

ServicesServices,

money

Taxes

Taxes,goods

Taxes,goods

Taxes,goods

Money Money

Consumermarkets

IntermediarymarketsGoods, services Goods, services

Resources ResourcesResourcemarkets

Money Money

Structure of Flows of Flows

Governmentmarkets

Core Concepts of Marketing

Product or Offering

Value and Satisfaction

Needs, Wants, and Demands

Exchange and Transactions

Relationships and Networks

Target Markets & Segmentation

Marketing Channels

Supply Chain

Competition

Marketing Environment