978-0136074892 Solution Manual Chapter 01 Part 1

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Chapter 1:

Chapter Objectives

After reading this chapter, students should understand:

·The marketing concept

·Different organizational philosophies about marketing

·The importance of being customer focused

·The job of the marketing manager

·Typical marketing organizational forms

·How marketing is changing

Chapter Overview

This chapter provides an overview to the fundamentals of marketing and the role

of the marketing manager. Key concepts covered include: The definition of marketing,

the marketing concept, organizational differences, customer orientation, the marketing

value chain, the marketing plan, and the role of the marketing manager in the marketing

process.

Chapter Outline and Key Terms

Marketing Philosophies

Key Terms:

·The Marketing Concept

·Organizational Philosophies:

·Sales Driven Organization

·Technology/Product Driven Organization

·Marketing Driven Organization

·Customer Driven Organization

Definition: The Marketing Concept emphasizes a customer focus or organizing the

resources of the firm toward understanding customers’ needs and wants and offering

products and services that meet those needs.

·The purpose of a business is to create and keep a customer (Peter Drucker)

·It is also about being competitor focused and making a profit

·Consistent with serving specific customer segments and turning away or not

serving unprofitable segments

·Marketing concept and customer focus are not only key marketing concepts

but core business concepts as well.

Illustration: ING Direct (www.ingdirect.com)

Online banking, investment, and mortgage lending. Select number of on-site

locations called “cafes:” New York, Philadelphia, Los Angeles, Wilmington, DE,

Chicago, St. Cloud, MN, and Honolulu. Serves specific profitable customer

segments only.

Checking: 35,000 free ATMS, free person-to-person payments

Investing: No account minimum; choose from stocks, mutual funds, and ETFs,

instant transfers between bank and brokerage accounts

Mortgage Lending: No points or rate buy downs, free bi-weekly payments, low

closing costs

Organizational Philosophies: Four different strategic approaches to the marketplace.

Three are not consistent with the customer-focused marketing concept. The four concepts

are:

·Sales Driven

·Technology or Product Driven

·Marketing Driven

·Customer Driven

Characteristics of each approach include:

Sales Driven

·Aggressive sales orientation.

·Marketing acts in a supporting role such as marketing communications and

promotion.

·Little emphasis on listening to the customer or customer’s wants and needs.

·Interested in volume, not profits.

·Sells to all comers.

·Flexible price, credit, and service policies to “close the deal.”

·Give the customer everything they want; even if not in customer’s best interest.

Technology or Product Driven

·Focus on R&D and sales.

·Temptation by engineering to over-engineer a product rather than meet the

customer’s need with a simple solution.

·Little regard to the role of marketing and sales teams.

·Technology may not be solution to anyone’s problem.

Marketing Driven

·Embraces marketing, but to the excess.

·Much money spent on marketing research and test marketing so product is

extremely well fine-tuned.

·Rely on customers to tell them what they want rather than taking risks and

anticipating customer needs.

·Multiple layers of marketing management including brand managers, associate

brand managers, assistant brand managers.

·Multiple layers of decision makers.

Illustration: Sony Betamax (www.sony.com)

·Did not meet customer needs.

·Better picture quality but consumers questioned whether or not it the difference

could be detected.

·Key difference was playing time. Betamax had only one hour of capacity.

·Discovered consumers wanted minimum of two hours of play time.

·Sony’s attempt at finding a strategic partner who could produce the two-hour

format failed.

Customer Orientation

Key Terms:

·Customer-orientation

·Value Chain

·Valued-added Activities

Definition: Customer Orientation. Customers do not inherently want to buy products.

Products cost money, for corporate buyers, reduce profits. Customers buy products for

the benefits that the product features provide.

The Customer-Oriented Organization

·Customer-oriented organizations understand: There is a difference between the

physical products engineers often describe and the products customers buy.

·Marketing’s role:

·Understand what benefits customers are seeking.

·Translate them into products.

·Retranslate the physical products or services back into benefit terms

customers can understand.

·Customer-oriented organization can be described in terms of whether or not it

views customer relationships as long or short term.

·Short-term relationships are not consistent with customer-orientation.

·Customer-oriented organizations make their key investments in their

customers and long-term satisfaction.

How to Create a Customer-Oriented Organization

·Information on buying influences distributed to every corporate function.

·Strategic and tactical decisions made cross-functionally and cross-divisionally.

·Divisions and functions make coordinated decisions and execute them with

commitment.

The Marketing Value Chain (Figure 1.2)

Traditional Value Chain:

·Dictates that companies start with core competencies and assets to decide

what products to make or services to sell.

·Dictates selection of inputs and raw materials, which are then made into

products and sold through channels of distribution to the customer.

·The traditional value chain is a “company-centric approach.”

The Alternative Approach or Reverse Value Chain

·This is the traditional value chain reversed

·Start with the customer rather than the firm

·Focus on marketing programs, product/service offering, inputs/raw

materials and assets/core competencies.

Marketing as a Value-Added Activity

Marketing takes the basic physical attributes of a product or service and adds

value to some segment(s).

·Examples of value-added activities include:

·Branding.

·Customer service.

·Packaging.

·Anything that differentiates the product or service in the marketplace.

·Not only about creating value but find customers who appreciate the value-

added benefits.

Marketing Manager’s Role

·Differs from organization to organization

·Typical marketing manager interactions (Figure 1.7)

Internal Interactions

·Marketing research

·Sales

·Public relations

·Purchasing

·Manufacturing/distribution

·Research and development

·Legal

·Finance

·Board

·Senior Management

External Interactions

·Advertising agency

·Suppliers

·Channels

·Media

·Government

Illustration: Motorola (www.motorola.com)

Motorola’s problems in the cell market were a direct result of the

interactions as shown in Figure 1.7

They failed in:

Customer-manager interaction.

·Technology-customer interaction.

·Manufacturing interaction.

·The marketing manager can control some of these interactions

and others cannot.

·Mechanism for improving the interactions is the marketing plan.

The Marketing Plan

Key Terms:

·Marketing plan

Definition: Marketing Plan. A written document containing the guidelines for the

product’s marketing programs and allocations over the planning period.

Marketing Involvement

All marketing managers should be aware and become involved in marketing

planning.

Key Features

·It is a written plan.

·Because it is written, it becomes easier to communicate throughout the

organization.

·Provides a concrete history of the product’s strategies over time.

·Helps educate new managers and pinpoints responsibilities.

Key Benefits

·Forces marketing managers to analyze the internal and external environments.