The Essentials of Marketing: Concepts and Examples

1. Introduction to MarketingSection 1: What is Marketing? • .

2. Section 1: Introduction to Marketing • Topics To Discuss and Learn • What is marketing? • Why study marketing? • Examples of effective/ineffective marketing • Marketing: The 7 functions of marketing • History: The 4 marketing philosophies • Today’s primary philosophy: The “Marketing Concept” • How Marketing fits into the rest of the business

3. Section 1: Introduction to Marketing • Marketing: What is it? The “short answer”: • The “4 Ps” of Marketing • Product (develop an effective one!) • Place (distribution of the product) • Price (affordable but profitable) • Promotion (advertising, selling, direct mail) • The “4Ps” are called the “marketing mix” • The “mix” of marketing choices taken • Each company’s “mix” is unique!

4. Section 1: Introduction to Marketing • Why Study Marketing? • About 30% of CEOs today have a Marketing background (25% Finance, 20% Operations & Manufacturing) • Effective marketing is critical if businesses are to be financially successful • Marketing (which includes “Sales”) usually accounts for the most jobs in a company • Knowledge of marketing helps one to be a smarter consumer • Marketing is a potential major and career

5. The Formal Definition Of Marketing American Marketing Association (AMA): • “Marketing is the process of planning and executing the conception, pricing, distribution, and promotion of ideas, goods, and services to create exchanges that satisfy both individual and organizational objectives” • Note the “4 Ps” directly referenced in the above definition (they are underlined). • Note the definition emphasizes a “win-win” between the company and customer.

6. Examples Of Effective Marketing • Effective Marketing Hall of Fame (Remember the “4Ps”) • Dominoes: “Place” (Distributing Pizza to home) • Miller Lite: “Promotion” (Great Taste, Less Filling). Made it cool for young men to drink low-cal beer. • GEICO: “Promotion” (15 Minutes Could Save you 15%) • Apple: “Product” • KFC/IBM/ATT: Repositioning Brand Name • Wal-Mart: Price • Amazon: Distribution • Nike: “Promotion” (“Just Do it”) • Charmin and Crest Toothpaste: “Promotion”

7. Examples Of Effective Marketing: Master Brands • Marketing so effective that patented brandnames are used by consumers as generic names • Rollerblades (In-line skates) • Band-aid (self-adhesive bandages) • Jello (gelatin) • Kleenex (tissues) • Q-Tip (cotton swabs) • I-Pod (MP 3 player) • Discuss companies that dominate their market. • Examples: salt, ketchup, software, etc.

8. Ineffective Marketing Examples • Ineffective Marketing (Remember the “4Ps”) • New Coke fiasco: “product” (misunderstanding of customer, lack of up-front market research) • Hardees buys and eliminates Roy Rogers: (failed research on mid-Atlantic customer’s identity with Roy Rogers brand) • Blockbuster: earning money on penalizing customers (pricing) and failure to plan ahead • JC Penny At Tysons: Place (Tysons shopper more upscale, JC Penny targets middle class)

9. Marketing Quiz • What are two reasons to study marketing? • How would you describe what marketing is to a friend? Use what we just learned. • List the “4Ps” of marketing in their logical sequence. Explain your rationale for the order. This question will be asked on a quiz! • Which organization has put forth the definition of marketing to be used in this class? What key points are included in the formal definition? • What is the marketing mix?

10. Marketing Quiz • Company Profiles • How did Miller Brewing get young males to start drinking “light beer”? • Name two companies discussed under “ineffective marketing” • Which company closed their Tysons’ corner mall site due to “ineffective marketing” • Kleenex, Jello, and Rollerblade are all ______ names.

11. Marketing: A More Comprehensive Look • The 7 Functions Of Marketing • Product “4 Ps” • Place (Distribution) • Price • Promotion • Selling • Financing • Marketing Information Management

12. The 7 Functions Of Marketing: A Closer Look • Product (Planning & Design) • Design and/or enhancement of product • “Product” assumes “product” or “service” • Assumes research completed first to determine customer specific needs: see “marketing information management” • A company cannot be successful if they do not have an effective, reliable product (promotion won’t beat a poor product) • Discuss TV “infomercials”

13. The 7 Functions Of Marketing • Place (called “distribution” also) • Refers to how the customer obtains the product • Customer comes to “place” • Store, car wash, or dentist • Product delivered to customer “place” • Mailed to customer • Delivered (shipped, downloaded) • Many marketing breakthroughs are made via “place” (Amazon, Netflix, Spotify, etc.)

14. The 7 Functions Of Marketing • Price • Refers to the selling price of the product • Not the “cost” to make the product • Has to be a “win-win” for business & customer • “Customer Value”: the difference between the benefits perceived by the customer and the price the customer pays. • Profitable to business (Sell at high enough price and quantity to make a profit) • Involves strategies (discounts, rebates, etc.)

15. The 7 Functions Of Marketing • Promotion • Communicating information about product to potential and existing customers • Includes • Advertising (Online or Print) • Personal Selling (Salesperson) • Direct Mail (Email or US Mail) • Sales Promotions • Promotion plan should be determined after Product, Place, and Price determined

16. The 7 Functions Of Marketing • Selling • “Direct personal communication with a customer” (the salesperson) • Financing • Determining if and how customers will pay for products over a period of time • Examples: Autos, Jewelry, Furniture, Housing, Insurance or other high dollar items are “financed” (paid over time) • Discuss “0% financing” as strategy

17. The 7 Functions Of Marketing • Marketing Information Management • Obtaining, managing, and using mkt. information • Critical to effective “market research” to acquire and maintain customers • Acquire Customers • Surveys, interviews, consumer panels, research • Analyze Information on customerdemographics(age, income, sex, race, culture education, marital status, etc) in order to develop more effective marketing mixes • Maintain Customers: Capturing customer feedback (complaints, returns, surveys, etc.) to improve

18. Marketing Quiz • Name two of the 7 marketing functions other than the 4ps. • What is financing? • What is marketing information management? Is it used to acquire or retain customers? Or both? Name two examples • What are demographics? Why are they so important to marketers? • What is “customer value”?

19. Evolving Marketing Management Philosophies: A Brief History • The Production Concept • The Product Concept • The Selling Concept • The Marketing Concept

20. The Evolution of Marketing Philosophies • The Production Concept (little/no marketing). 1920s-1940s • “Consumers will purchase products that are available and affordable” • Management’s primary focus is on improving production and distribution efficiency • Useful today only in two types of situations: • Demand for product exceeds supply • The product’s cost is too high

21. 4 Marketing Management Philosophies • The Product Concept. 1950s and 1960s. • Primary focus on developing products that management believes will offer most in quality, performance, and innovative features • “Build A Great Product And They Will Buy” • Philosophy associated with “inside-out” approach or company can predict what is best for consumers • Inside = Company, Outside = Customer Needs • Often underestimates the importance of distribution, price, and promotion.

22. 4 Marketing Management Philosophies • The Selling Concept. 1970s through 1980s. • Perspective that companies products are “good enough” and that prospective buyers must be tracked down and sold to. • Focuses on creating “transactions” rather than long term profitable relationships or “customer satisfaction” • Emphasizes advertising & selling the most product as the primary marketing objective.

23. 4 Marketing Management Philosophies • The Marketing Concept. 1990s until Present • Holds that achieving organizational goals depends on determining the needs and wants of “target markets” and delivering customer value • An “outside-in” approach (starts w/ customer needs). This is the key for effective marketing! • Southwest Airline CEO: “We don’t have a marketing department, we have a Customer Department” • Discuss differences with The Selling Concept

24. The Marketing Concept: A Closer Look • The Marketing Concept: A Closer Look • Starts with determining customer needs • An “outside-in” approach to business • Aims to build profitable customer relationships • Creates long-term customer relationships based on creating Customer Value • Customer Value: the difference between the benefits perceived by the customer and the price the customer pays

25. The Marketing Concept: A Closer Look • The Marketing Concept At Work: L.L. Bean (highly successful catalog retailer) • “ A sale is not complete until the goods are worn out and the customer is still happy” • “A customer is the most important person ever in this company” • “A customer is not the interruption of our work, he is the purpose of it” • “A customer should never be argued with, nobody has ever won an argument with a customer”

26. The Marketing Concept: A Closer Look Marketing Concept: Do What’s Right! • Evolution of Fast Food Industry • Migration to healthier products • Packaging for the environment • Johnson & Johnson & Tylenol Deaths • Recalled all products even though evidence of select cyanide tampering • Point: “Do what’s right (customer-focused) and the market should reward us”

27. Marketing Concept: From 4 Ps to 4Cs • Marketing: “From The 4Ps to the 4Cs? • The “4 Cs” of Marketing (a change of perspective) • Customer Solution (Product) • Convenience (Place or Distribution) • Customer Cost (Price) • Communication (Promotion) • Key Point: The 4Cs represent the continued shifting of marketing as being totally driven by providing customer satisfaction! 4Ps may still imply company is determining what customers need

28. Implementing The Marketing Concept • Step 1: Identifying and understanding the needs and demands of the target market • Market: All possible prospects interested in the product • Market Segment: Dividing the market into parts or segments that have unique variables (demographics, behavior, etc.) • Target Market(s): The specific market segments the company will serve.

29. Implementing The Marketing Concept • Step 2: Develop a marketing mix • Determine: • Product (design to meet needs) • Place (Distribution method(s)) • Price (Affordable?, Financing?) • Promotion (method(s)) • Note: the 4 Ps are listed in the logical marketing order!

30. Marketing Quiz • What are the 4 marketing philosophies? Can you name all 4 in their historical order? • How does the Sales concept differ from the Marketing Concept? • Which philosophy would say that “a sale is not complete until the product is worn out and the customer is still satisfied”? • What is the “outside-in” approach mean when talking about the marketing concept? • What is the two-step process of implementing the marketing concept • Distinguish between a market, market segment, and target market.

31. Marketing’s Position In The Business • .

32. Marketing’s Positioning In The Business

33. Marketing’s Positioning In The Business • Board Of Directors (often 5-15 individuals) • Elected By Owners (the “shareholders”) • Responsible For The Company • Hire and fire CEO • Make or Approve “strategic decisions” • Company Strategy (“Strategic Plan”) • Annual Budget & “5 Year Plan” • Merge or Acquire? • New Lines Of Business, New Markets

34. Marketing’s Positioning In The Business • Chief Executive Officer (“CEO”) • Hired and fired by Board of Directors (BOD) • Accountable for running the business in accordance with BOD guidelines • Often called the “president” of the company • Has “direct reports” which are responsible for the functions of the business • More CEOs have marketing backgrounds vs. other backgrounds

35. Marketing’s Positioning In The Business • Chief Marketing Officer (“CMO”) • In Charge of Marketing Functions (7 Functions) • Responsible for successful implementation of the marketing mix • “Sales” (the “selling function”) sometimes has a separate leader reporting directly into the CEO (since sales is usually a large organization) • Must work closely with other CEO “direct reports” (COO, CFO, CIO, VP-Mfg.)

36. Marketing’s Positioning In The Business • Chief Operations Officer (“COO”) • Runs the “operations” of the business • Operations: the primary function of the business or “what it does” • Runs the day-to-day business • Ensures product is available timely • Stocks and shelves inventory • Determines layout of operation • Examples To Discuss: Verizon Telephone Service, Federal Express, Top Golf

37. Marketing Quiz • Who are the owners of a corporation? How do the owners “run their business”? • Who is ultimately responsible for the successful running of the business? • What is a “CEO”? Who is the CEO directly accountable to? • Name three functions that would typically report to a CEO. • What is a “CMO”? What is a CMO responsible for?

38. Marketing Quiz • What are some of the “strategic decisions” that a Board of directors makes? What is their “end goal” of any strategic decision? • What is a COO? What function is a COO responsible for and what is the nature of that function? • What would fall under the “operations” function at “Dick’s Sporting Goods”? Compare this to the “marketing function for this company.

39. Marketing’s Positioning In The Business • Chief Financial Officer (“CFO”) • In charge of the “Finance” function • Accounting (tracking revenue and costs) • Billing (billing the customer) • Payroll (paying employees) • Accounts Payable (paying “vendors”) • Budgeting (setting the “annual plan”) • Paying Taxes • And several others……

40. Marketing’s Positioning In The Business • Chief Information Officer (“CIO”) • In charge Of “IT”: Information Technology • Sometimes called “IS” or Information Services • Covers running of “internal” computer network hardware, software, and communication lines • Manages both externally purchased software applications and in-house developed applications • Supports systems used by other functions

41. Marketing’s Positioning In The Business • Head of Production or Manufacturing • Title of Leader varies (VP of Mfg, for example) • Responsible for timely production (“making”) of product • Company would not have this function if it purchased its products from others • Production quantity driven by approved “sales forecasts” under marketing function • Finished products go into “inventory”: products made but not sold

42. Marketing Quiz • What is a CFO? Who does a CFO report to? Name three specific functions that a CFO is responsible for? • Distinguish between Payroll and Accounts Payable? • What is the annual budget? Who is responsible for rolling-up the annual budget? Does Finance give the “sales targets” to marketing/sales?

43. Marketing Quiz • What is a CIO? Who does the CIO report to? In general terms, what is a CIO responsible for? • What would a CIO’s responsibility be if marketing wanted to develop a new Marketing Management Information Database to track customer information? • You are the CMO and your internal e-mail system and your PCs are not working? Who do you call? • What is the production function? Does the head of manufacturing determine production?

44. Marketing’s Positioning In The Business • Administration (Other Business Functions) • Human Resources (“HR”) • Title of Leader varies (VP of HR, etc.) • Establishes company policy on: • Hiring, Firing, and Layoffs • Promotions and Titles • Compensation of employees • Responsible for helping other business functions recruit candidates for open positions (an aid in hiring process)

45. Marketing’s Positioning In The Business • Administration (Other Business Functions) • Legal • Leader is called “General Counsel” • Generally, three key areas of responsibility • Regulatory Law (compliant with industry) • Commercial Law (contracts, collections, competition) • Employee Law (issues arising from employment)

46. Marketing’s Positioning In The Business • Administration (Other Business Functions) • Public Relations (“PR”) • Communicating with press, media, and community • Part of marketing’s “promotion” plan • Key Functions Include • Writing articles for press • Spokesperson for company on both positive and negative issues • Try always to have a “positive spin”

47. Marketing’s Positioning In The Business • Administration (Other Business Functions) • All Other • Building & Grounds Maintenance • Telephone Service (PCs usually IT resp.) • Supplies and Forms • Mailroom • Cafeteria and coffee service • Furniture and office layout • ETC. • Often above functions “outsourced” to other companies (better service and lower costs)

48. Marketing Quiz • What types of responsibilities fall under the HR function? • Why is it important that HR review and approve all business employees’ titles and compensation packages? • Why is it important that HR be involved with firings and layoffs? • Who does marketing coordinate with if they are interested in hiring marketing graduates out of college?

49. Marketing Quiz • Who is the General Counsel of a company? • Distinguish between these three types of law: regulatory, commercial, and employee. • What is “outsourcing”? Name two examples of things companies outsource. Why do they outsource?