Transcript LESSON 3 Importance of Marketing

Fundamentals of Marketing
LESSON 3:
Importance of Marketing
Learning Objectives
After completing this lesson, students will be
able to:
1.Define the role of marketing within the
organization
2.Illustrate the Market Myopia
3.Describe the importance of customer
satisfaction
Marketing serves as a bridge between
the customer and the seller of
products and services.
Marketing makes buying easy for
customers.
Marketing creates new and improved
products at lower prices.
Utility
The functions of marketing add value to a
product
The added value is called Utility
Utilities are the attributes of a product or
service that make it capable of satisfying
consumer’s wants and needs
There are 5 utilities involved with all products
Form
Time
Place
Possession
Information
Form Utility
Involves changing
raw material or
putting parts
together to make
them more useful
Form Utility deals
with making or
producing things
An Example of Form Utility
A Tree
In its original state it has value as an
object of beauty, supplies oxygen,
prevents soil erosion, and provides a
home for animals.
When a tree is cut down and used in
making other products its usefulness
changes. The raw material becomes part
of a new product that has a different value
Form Utility takes place also when a
manufacturer assembles parts into a
product pieces of wood assembled
into furniture
Place Utility
Having a product where
customers can buy it
Businesses study
consumer shopping
habits to determine the
best sales outlets for their
products
Outlets include catalogs,
the internet, retail stores
Time Utility
Having the product available at
a certain time of the year or a
convenient time of day
The value of the product is
increased by having it available
when consumers want them
Time Utility requires the
marketer to plan ahead in order
to have the right product at the
right time
Toy companies introduce new
toys for Christmas every
February at the Toy Fair in New
York City
Possession Utility
The exchange of a product for some monetary
value
Alternatives to cash may be accepted these
include:
In business to business situations companies
also grant customers credit
Credit Cards
Checks
Installment Plans
Layaway
Possession Utility is involved every time legal
ownership of a product changes hands
Information Utility
Involves communication with the
consumer
Examples of sources of information:
Sales Associates
Packaging
Tags and Labels
Advertising
Owner’s Manuals
Internet Sites
Telephone Customer Service
Benefits of Product Utility
 Added value Increases demand, increased
demand allows manufacturers to produce in
larger quantities which reduces the cost of each
item
 When a product becomes popular the number of
merchants offering the product will increase, this
increases competition which reduces the price
 Competition also makes manufacturers improve
products to better satisfy customer wants and
needs
Marketing Myopia
• Theodore Levitt proposed market definitions
of a business are superior to product or
technological definitions.
• Target Markets/Groups and Marketing Needs.
• Every major industry was once a growth
industry.
• Railroads, Hollywood and others.
Marketing Myopia
• No guarantee against product obsolescence.
Company’s own product research will, or
another company will produce, product
obsolescence.
Marketing’s Role
• The chief executive has the inescapable
responsibility for creating this environment,
viewpoint, attitude and inspiration. Sets the
company’s style, direction and goals.
Marketing’s Role
• Marketing should try to mobilize the
company’s resources to develop customer
satisfaction. Requests from the marketing
department sometime increase product
design, material costs, disrupt production
schedules, increase finance and accounting
costs and create budget headaches.
Customer Satisfaction
Building Customer Relationships
• CRM – Customer relationship
management . . .
“is the overall process of building and
maintaining profitable customer
relationships by delivering superior
customer value and satisfaction. It deals
with all aspects of acquiring, keeping and
growing customers.”
1-16
Relationship Building Blocks:
Value and Satisfaction
• Customer Perceived Value
– The customers’ evaluation of the difference
between benefits and costs.
– Customers often do not judge values and
costs accurately or objectively.
• Customer Satisfaction
– Product’s perceived performance relative to
customers’ expectations.
1-17
Customer Relationship
Levels and Tools
• Basic relationships
– low margin customers
• Full partnerships
– key customers
• Frequency marketing programs
– Reward customers who buy frequently or in
large amounts
• Club marketing programs
– Offer members special discounts and create
member communities
1-18
The Changing Nature of
Customer Relationships
• Relating with more Carefully Selected
Customers
• Relating for the Long-Term
• Relating Directly
1-19