Econ 101 1st EditionFinal Exam Study Guide Lectures: 1 - 23Lecture 1 (January 8)What is marketing? Marketing is an organization function and a set of processes for creating, capturing, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders Marketing is also defined as Anticipating and determining needs/ wants of consumers and satisfying those needs through use of the 4P’s (product, price, promotion, place) to create long-term exchange of value What is the main goal of marketing? Marketing is about satisfying customer needs and wants Marketing entails an exchange: trade of things of value between buyer and seller so that each is better off as a result What is Value? Value is equal to the ratio of what is given up for what is obtained Both parties must feel that they are getting value in order for an exchange to take place The Marketing mix is what creates value What are the aspects of the Marketing mix? Marketing mix includes product, price, place and promotion. Product: Creating value - Through a variety of offerings, including goods, services, and ideasPrice: Capturing Value - Price includes everything that a buyer gives up (includes money, time energy) in exchange for the product - Not limited to only money - Has to be an amount which both the customer is willing to pay and the seller is willing to receive (seller makes a profit) Place: Delivering the value proposition - Place or supply change management - Deals with Marketing channel management: set of approaches and techniques that firms employto efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores and other firms involved in the transaction into a seamless value chain in which merchandise is produced and distributed in the right quantities to the right locations at the right time minimizing costs and satisfying service levels of customers - All the activities associated with getting the product to the ideal customer when the customer wants it Promotion: Communicating value proposition- Communication that informs, persuades, and reminds potential buyers about a product or service- Used to influence the opinions of customers or elicit a response What are the different types of marketing? B2C (business to consumer marketing): the process by which businesses sell to consumers. B2B (business to business marketing): The process by which businesses sell to other businesses C2C (consumer to consumer): consumers sell to other consumers (eBay) Production oriented area: turn of 20th century, Believed that a good product would sell itself What are the different types of orientation? Production-Oriented Area - Turn of 20th century, Believed that a good product would sell itself - Not much concerned with the needs of individual customers - Focus on the internal capability and on technology - The key question they address is: What does the firm do best? - Use this question to resolve which projects the firm should produce and devote more time/money towards Sales-Oriented Era: 1920-1950- Had capacity to produce more than what customers wanted so depended on heavy doses of advertising and personal selling - Focus on aggressive sales techniques - Key question: how can we sell more of what we have Market Orientation: After WWII- Customer was king - Focus on what customer wanted - Is the approach of focusing on identifying and meeting the stated or unstated needs or wants of the customer - Key question: What does the customer want? - Value based marketing orientation: Purpose of satisfying customers wants and needs while also meeting organizational objectives Value Based Marketing Era: - Most firms today are market oriented - In order to compete successfully firms have to give their customers greater value than their competitors - Value co creation: customers act as collaborators with a manufacturer or retailer to create a product What is the market concept? Market concept is the idea that firms should understand the needs of their customers and then make decisions to satisfy those needs, better than their competitors.- “Make what you sell rather than selling what you make” Ford Case study- In 2006, Ford saw a decline in market share most likely due to the reliance on production of SUV’s and not realizing that the consumers did not want SUV’s but rather wanted fuel efficient vehicles - CEO of Ford regretted the ideology of the company which was, “If you build it, they will buy it” - He committed to manufacturing cars that were demanded by the consumers and he even said, “We’re going to figure out what people want before they know it” - Ford saw a revolutionary break through as it became the 2010 car and truck of the year and also became on the only big 3 auto producer in the US to not declare bankruptcy - All this was due to Ford looking for innovating technology and applying the Market Orientation approach How do marketing firms become more value driven? 1. Share information about their customers and competitors across own organization and even with other firms a. Share the information and integrate it across departments 2. Strive to balance their customers’ benefits and costs a. Use available customer data to find opportunities to satisfy their customers need better and keep costs down and develop loyalties 3. Concentrate on building relationships with customers a. Relational orientation: building long term relationship with customers b. Customer relationship management (CRM): philosophy and set of programs strategies and systems that focus on identifying and building loyalty among customers 4. Take advantage of new technologies and connect with customers by using social media What are the reasons that Marketing is important?- Marketing Enriches society: many of America’s corporations undertake various marketing activities to focus on good citizenry such as promoting greener products or safer products, healthier food options o Socially responsible firms recognize that including a strong social orientation is important for both the firm and the customer • Marketing can be entrepreneurial: Marketing is the center of success of numerous new ventures initiated by entrepreneurs o Entrepreneurs usually launch ventures to satisfy unfilled needs o Great entrepreneurs find and understand a marketing opportunity, conduct a thorough examination of the marketplace and develop and communicate the