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Chapter 1
An Overview of Marketing
What is Marketing?
A Philosophy
An Attitude
A Perspective
A Management
Orientation
A Set of Activities,
including:
Products
Pricing
Promotion
Distribution
What is Marketing?
American Marketing Association Definition
Marketing is the process of planning and
executing the conception, pricing, promotion,
and distribution of ideas, goods, and services
to create exchanges that satisfy individual and
organizational goals.
Marketing Management
Philosophies
Philosophy
Production
Sales
Market
Societal
Key Ideas
Focus on efficiency of internal operations
Focus on aggressive techniques for
overcoming customer resistance
Focus on satisfying customer needs and wants
Focus on satisfying customer needs and
wants while enhancing individual and
societal well-being
The Marketing Concept

Focuses on customer wants and needs to
distinguish products from competition

Integrates all organization’s activities to satisfy
customer wants and needs

Achieves organization’s long-term goals by
satisfying customer wants and needs
http://acsi.asqc.org
Customer Satisfaction is Key
How satisfied are your customers?
How do
you know?
What causes
different levels
of satisfaction?
What Customers Like - Q1/2000
Top: Nondurables - How can you screw up ketchup?
Middle: Durables - More complexity means more can go wrong
Bottom: Services - Stressed frontline workers/low wages
Most recent Results
Example Industry Satisfaction Score
Last Change
Beverage
84
+ 1.2%
Apparel
79
NC
Autos
78
- 1.3%
Police (suburban)
78
+ 9.8%
Commercial Banks
68
- 2.9
National News
64
+ 3.2%
Internal Revenue
51
- 3.8%
American Satisfaction Index Results http://acsi.asq.org/)
The American Customer Satisfaction Index
Customization & Reliability
Quality Relative to
the Price Paid
Perceived
Quality
Customer
Complaints
+
-
+
+
Perceived
Value
+
+
Overall
Customer
Satisfaction
(ACSI)
+
Customer
Expectations
Past Experiences,
Word-of-Mouth
Future Predictions
+
Customer
Loyalty
Ultimate Dependent
Variable (proxy for
profitability)
100%
Satisfaction/Retention Metrics
Apostles
zone of indifference
20
40
60
Retention
80
zone of affection
0
Terrorists
zone of defection
Extremely
Somewhat Slightly
Satisfied
Very
Dissatisfied Dissatisfied Dissatisfied
Satisfied
Satisfaction
“Putting the Service-Profit Chain to Work,” James L. Heskett, et al,
Harvard Business Review, March-April, 1994, PP 164-174.
The Profit Chain
Internal
Service
Quality
Employee
Satisfaction
Workplace design
Job design
Employee Selection
Employee development
Employee rewards
Employee recognition
Tools for serving
customers
Employee
Retention
External
Service Value
Employee
Productivity
Operations
designed and
delivered to meet
customer needs
Retention
Repeat business
Referral
Relationship Marketing
Customer
Satisfaction
Customer
Loyalty
Revenue
Growth &
Profitability
Sales vs. Market Orientations
Organization’s
Focus
Sales
Orientation
Market
Orientation
Firm’s
Business
For
Whom?
Primary
Profit Goal?
Tools to
Achieve
Inward
Selling goods Everybody Maximum Primarily
promotion
and services
sales
volume
Outward
Satisfying
wants and
needs
Specific Customer Coordinated
groups of satisfaction use of all
marketing
people
activities
The Organization’s Focus
Key Issues in
Developing
Competitive
Advantage
Create
Customer
Value
Maintain
Customer
Satisfaction
Build Long-Term
Relationships
Defining a Firm’s Business
“Benefits” instead of “goods/services”

Ensures a customer focus

Encourages innovation

Stimulates an awareness of customer change
Marketing Process Activities
Understand the organization’s mission
Set marketing objectives
Gather, analyze, interpret “SWOT” information
Develop a marketing strategy
Implement the marketing strategy
Design performance measures
Evaluate marketing efforts--change if needed