Marketing Exam 1 Chapter 1 Marketing the activity set of institutions and processes for creating capturing communicating delivering and exchanging offerings that have value for customers clients partners and society at large All about understanding consumers needs and wants About exchanges the trade of things of value between the buyer and the seller Satisfying buyers and the exchange process marketing Identifying understanding and satisfying buyer demands through exchanges o All about figuring out how to satisfy your customers better than competition in a way you can still make money Marketing subject to these constraints o Satisfied vs Very Satisfied a huge difference 3 types of customers Customers who make you money 80 20 principle where money Repeat customers are crucial these are the people who will buy at regular price and don t need ads Customers who could make you money new customers Customers that are costing you money must either get rid or or is convert Marketing is important because it expands firms global presence it is pervasive across marketing channel members it enriches society and it can be entrepreneurial Common misconception marketing is the same thing as advertising Advertising and selling are the tip of the marketing iceberg are very visible and dramatic but only a small part of the whole Advertising is the start of the relationship repeat buys and marketing yourself keeps it going o We are exposed to over 3000 marketing methods per day In B2B For every 1 a company takes in they spend less than 1 on ads In B2C for every 1 a company takes in they spend 6 8 on ads If there is a voluntary exchange marketing is taking place not limited to monetary exchanges and for profit organizations Not for profit orgs have been forced to visit marketing consultants in recent decades ex Hospitals o Organizations that in the past were able to ignore customer s concerns re not discovering marketing compare to a child learning how we breathe Have always done it but are now being forced to learn how it works and develop it further upright and breathing voluntary exchange aka marketing is happening Instead of a business saying should we be doing marketing this is a fallacy asking if we should breathe Businesses need to ask Is the marketing done well Is it effective o Can measure by awareness satisfaction questionnaires what of business is repeat business Best measure is how customers are treated Does marketing matter Does it make a difference o Yes no maybe Dependent on the level of competition The more competition the more marketing is needed We re in a period of Hyper competition we like competition when it works for us and we don t like it when it works against us Ambiguous whether competition is good or bad Much of marketing is done by middlemen Facilitating and expediting exchanges Middlemen bringing buyers and sellers together ex Bars They can be important admirable and can speed up the process of getting goods Most common channels of distribution of consumer goods o M W R C manufacturer warehouse retail consumer 2 middlemen o M R C man retail consumer 1 middleman o Why do manufacturers do it They go through the middleman they think is the most profitable Manufacturers specialize in making things not getting people to buy them Manufacturers create value by making things they create form utility Marketing activities affect form utility only indirectly Example of Nike Nike outsources ALL production don t manufacture anything o Nike makes value because they have planned the production process They manage the distribution ads etc Middlemen don t make anything either but create value the same way Value adding activities can be planning designing branding and retailing Firms create value by sharing information with consumers competitors and within their own organizations by balancing customers benefits and costs by building relationships with consumers and by taking advantage of new technologies to connect with customers Relational orientation thinking about customers in terms of relationships rather than transactions Customer Relationship Management CRM set of strategies programs and systems that focus on identifying and building loyalty among the firms most valued customers Magnificent Marketing betting on a sure thing example of casinos Data Mining linking a person and their purchases to father oceans of data on customers Example of personalized coupons at Kroger o Investing in customer relations identifying your most profitable customers and creating brand loyalty with them Figuring out what incentives they respond to and how to develop their loyalty Total Rewards basis for freebies Development of rewards systems for loyal consumers o Predictor variables are constantly updated 3 variables Age Gender And Place of residence are the biggest predictors on who will buy what and what consumers will be the most profitable Based on Book What Happens in Vegas 80 of profits come from 20 of customers o 80 20 Principle Evolution of Organizational orientations the way organizations take care of and view their customers 4 orientations that relate to the role and importance of marketing in orgs Production Orientation used to be focused on production Stress on making products o Idea was to produce as quickly and as much of something as possible Was not customer oriented oriented around maximizing output o Not customer friendly Still socially appropriate in under developed countries o Example Ford s Model T assembly line no customization options USPS only post office can t go anywhere else so can get away with production orientation Product Orientation Different from production orientation o Know what s best more than customers do which is how they relate to customers Offer highest quality as expert producer sees it o Professionals professors performers doctors dentists etc Production and Product orientation are associated with excess demand looking what s important to producers not concerned about consumers Let s do it our way not your way Not much competition in these orientations which is how it can still exist Inward o After a certain level of economic development supply tends to grow faster than demand Organizations start to discover marketing Began in 1950s for profit 1980s not for profit Hospitals realized they needed to market to families insurance companies and employers Made beginner mistakes and original marketing was poorly done Made mistake of putting marketing budget into