BUSI 406: Principles of Marketing Lecture 2 Outline of Last Lecture I. Definition of MarketingII. Marketers’ and Marketing’s GoalIII. Customer Satisfaction/ Consumer orientationIV. Importance of MarketingOutline of Current Lecture I. What is Marketing & why it is importantII. Micro-marketing vs. macro-marketingIII. Marketing and economic developmentIV. Marketing concept – Customer value & satisfactionCurrent LectureMarketing is more than just selling and advertisingExample: Bicycles. You can’t just make a bicycle and advertise it. Being an effective producer of bicycles means understanding what people need in a bike, where they need it and how to/whento sell it to them. • Think about a manufacturer of bicycles o many different bicycles o many brand nameso many types of bicycles; various featureso prices range from low to very highMarketing Requires Marketers1. Analyze needs2. Predict Wants3. Estimate Demand4. Determine Where (where the demand is, how to get the bikes to customers, is it offline or online, profits etc)5. Estimate Price6. Decided Promotion7. Provide Service*sidenote: What is the difference between customer and consumer?Answer: the customer buys the product; the consumer uses the product\Ex: Walmart buys produce, Walmart shoppers use the produceThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Production versus MarketingSimply put: production is putting the product first while marketing is putting the consumer firstProduction involves the following:- making goods or performing services- making higher living standards possibleMarketing involves the following:- making sure the right goods and services are produced- creating customer satisfactiono the extent to which an organization fulfills a cutomer’s needs, desires andexpectationsBasic idea: Production and Marketing work together to form customer satisfactionThe Two Views of Marketing1. Micro View considers:- customers’ needs- direct flow of goods and services- individual organizationsMicro-marketing：activities that: anticipate customer needs; direct flows of goods and services to customers：are performed by organizations.2. Macro View considers:- objectives of society- supply and demand- how marketing affects society and vice versaMacro-marketing: social process that directs goods and services from producers to consumers, accomplishes the objectives of society, effectively matches supply and demand, and is concerned with how marketing activities affect society, and vice versa.Macro-Marketing and Economic System-macro-marketing systems govern the exchanges in an economic system. This is clear in simple and complex economic systems—people exchange something of value in order to gain something else of value• Pure subsistence economy: every family produces all it needs. • Market, a group of consumers with similar needs that is willing to exchange something of value to satisfy those needs, evolves when families : - produce more than they need; - develop new needs for things they do not produce. Central Markets facilitates exchanges.- Ex. In the small village example, each person has a complex system of keep track of who they have lent to/ borrowed from. A Central Market eliminates this headache. - Ex. Online market, or a Central Market of today, for instance, would be eBay.Mass Production and Consumption NeedsMarketing is needed to overcome the difference between maximizing production efficiency and the preferences people have for consuming products and services.- Maximizing production efficiency allows for: Economies of scale lower cost, or as production increased cost of each good decreases  Marketing helps companies find more outlets for products.- The wants of producers and consumers differ: Producers want to produce many, but consumers only want a few of something. Consumers’ needs and patterns of consumption differ from how production facilities operate effectively.  Marketing activities create more efficient links between consumers and producers and resolve the conflict between the wants of producers and wants of consumers.Marketing FunctionsThe universal marketing functions help the macro-marketing system overcome separations and discrepancies between those wishing to participate in an exchange—i.e. producers and consumers. How a particular country or culture fulfills these functions varies widely, but all the functions are needed in any macro-marketing system.Main Functions:1. Buying: looking for and evaluating goods and services.2. Selling: promoting the product to prospective buyers.3. Transporting: moving the goods from place to place.4. Storing: holding an inventory of goods until needed by customers.5. Standardization and grading: sorting products by size and quality.6. Financing: providing necessary cash and credit to produce, transport,store, promote, sell, and buy products.7. Risk taking: assuming responsibility for uncertainties.8. Market information: the collection, analysis, and distribution of all the information the marketer needs to plan, implement, and control need-satisfying marketing activities.*Side note: Note the difference between standardization vs. grading. Standardizations involves types while grading involves quality.Those involved in Market FunctionsIndividuals and organizations perform marketing functions. Producers, such as manufacturersof tangible products and providers of intangible services, are the most obvious examples. However, there are many other marketing performers.- Consumers:- needs drive the marketing responses of many organizations; - provide marketing information to organizations. - Marketing specialists: such as intermediaries, execute tasks related to buying and selling.- Facilitators: firms that provide marketing functions other than buying and selling. - advertising agencies, marketing research firms;- independent product-testing laboratories; - Internet service providers; transporting firms, etc.Bottomline: Universal functions of marketing need to be performed by someone. There can bespecialization in the performance of these functions. Functions can also be shared and shifted among the marketing performers. How Decisions are Made in an Economic SystemEvery society needs an economic system: the way an economy organizes to use scarce resources in production and