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

productThe added value is called UtilityUtilities 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 FormTimePlacePossessionInformation

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 TreeIn 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 UtilityHaving 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 UtilityThe 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 CardsChecksInstallment PlansLayaway

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 AssociatesPackaging Tags and LabelsAdvertisingOwner’s ManualsInternet SitesTelephone 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 Theodore Levitt proposed market definitions of a business are superior to product or of a business are superior to product or technological definitions.technological definitions.

• Target Markets/Groups and Marketing Needs.Target Markets/Groups and Marketing Needs.

• Every major industry was once a growth Every major industry was once a growth industry.industry.

• Railroads, Hollywood and othersRailroads, Hollywood and others..

Marketing Myopia

• No guarantee against product obsolescence. No guarantee against product obsolescence. Company’s own product research will, or Company’s own product research will, or another company will produce, product another company will produce, product obsolescence.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.

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Customer SatisfactionBuilding 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.”

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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.

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Customer RelationshipLevels 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

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The Changing Nature of Customer Relationships

• Relating with more Carefully Selected Customers

• Relating for the Long-Term• Relating Directly