Transcript for:
Principles of Marketing Lecture 1 Notes

hi everyone hi and welcome to principles of marketing um this is the book we're using all right just hit the microphone uh it's marketing eighth edition McGraw-Hill by gruel and Levy and you should have this already um this is in the bookstore um you can get it online we are going to be connecting to our learning management system so that there are some good exercises and things in there also please check the syllabus we are not going to be doing every single chapter but I will be doing lecture videos for every chapter and they'll be posted in the appropriate module or a week of the class for you um as uh as and as we're not going to be meeting every week but we um you know so please double check the syllabus also for the dates that we're going to be meeting in person and or the date step are going to be asynchronous online okay so chapter one this is our overview chapter okay so this is going to be kind of our most it's going to seem like our most disorganized chapter because it's really just a summary of everything um but I'm I've picked out the most important chapters that we're going to be diving a little bit deeper into uh so that because I feel like that's going to help you as you move forward through your marketing degree or your additional marketing classes okay so I would like to start off just by talking about how marketing as a whole has been evolving right and it's not just the products that have forced marketing to evolve it's society and the societal needs that have also changed how marketing is done including how products are developed because products are part of the marketing mix right so new product development all of those things is all part of marketing so new product development though these are important aspects these are important things that have now come about because of societal impacts okay so let's just kind of go back say 50 years to to who nobody walked around with a bottle of water nobody walked around drinking water all the time and thinking oh I have to stay hydrated nobody was doing that that wasn't that wasn't part of the societal format it just wasn't there nobody was worried about being dehydrated nobody you know if there were water fountains if we needed water you went to a water fountain hi all of a sudden then people started to become more health conscious we need to have water with us all the time I need to be drinking through my college classes I if I'm sitting in a classroom I need to be drinking more if I'm sitting in a meeting I need to be drinking water well okay new products developed to support that need and we ended up with the Disposable plastic water bottles okay great hey that worked because when you think about it those disposable plastic water bottles could also be reused but they're a little flimsy but okay rant it but technically it could be just refilled um you know just just thinking out loud that can happen um so all of a sudden we were concerned because there's all these plastic now just plastic waste it's floating in the oceans it's causing problems and now Society is aware of this and we need to change this okay how about a reusable plastic water bottle it's a little bit thicker than the disposable ones so it's a little bit sturdier um backpacks and bags now had a place a net to put a water bottle they didn't have that before right so that's an innovation um these these plastic water bottle reusable water bottles could come in different colors would they leak probably over time um because just a screw top is you know it is what it is um seals will get old over time people might not close them correctly you know so there's just a bunch of things all right good so that worked for a while and people can have their colored water bottles and they're running around running their errands with their water bottles okay um then a little bit more science came out a little bit more education a little bit more information and this reusable thicker plastic unfortunately has a chemical called BPA in it which leaches into the water and can cause health problems okay everybody's aware of this now now we don't want these water bottles do we go back to the disposable ones well that's when Hydro Flask came along and said let's do this with stainless steel a little heavier than plastic but not that heavy stainless steel can be manipulated so that it can be an insulator keep things really really cold um they came out with uh different they basically took an old idea it's not a brand new idea they took an old idea and they improved on it based on the customer needs and wants and what they found value in and you'll find that value is is the central aspect of all marketing um so Hydro Flask now they're like but we're just gonna do better we're gonna do a honeycomb pattern in the lid so that we can just avoid leaking issues uh we're gonna do a powder coating which is going to act as an insulator for both the inside to keep it cold and the outside so you don't freeze your hand when you go to take a drink that powder coating can be any color you want and it's going to protect it from damage right so this is really for the outdoor enthusiasts and people go rock climbing so that if it hits the rock or something it's not going to get dented or damaged or scraped right so Hydro Flask kind of thought of everything but what they didn't realize was that they don't just Market to a consumer they have to Market to the retailers to get them to give them shelf space for this brand new product that doesn't have a demand yet they have to prove to like say so Hydro Flask kind of has to go to Dick's Sporting Goods and say there is going to be demand for this you need to put this on your shelf and it's it was it's quite expensive compared to you know the Gatorade ones and things like that so they took a very unique approach to marketing to the retailers they took a Hydro Flask and they filled it with ice and they closed it and they shipped it to all the retailers to the Reps and they with a note they said email us when all of the ice is melted thus proving that the way they designed this thing was unbeatable that it worked kept things cold now did that actually convince all the retailers probably not at first but uh eventually they did get into the stores and Hydro Flask it's a little bit it's quite popular nowadays so here's what so that's really kind of how it starts because I think you see how over time societal needs change and marketing and products have to keep up with the demand because if you're not satisfying your customers they're not finding the value on your products you are not going to continue to sell products so um okay so I'm going to share my PowerPoint any minute now hold on let me just make sure that I have it in the right place I'm going to share a window PowerPoint show okay here we are chapter one or overview of marketing nothing I said is going to really be repeated but we're going to kind of get down into the basics now and I just want to kind of get through this because I don't want you to be sitting on here too long um and I do want you to um I don't want this to go more than you know longer longer than an hour so let's try to keep it to that so here's our learning objectives for this overall summary chapter we're going to define the role of marketing describe the evolution of marketing over time and describe how marketers create value for a product or service we've already talked about the water bottles so let's talk about the definition of marketing it is the activity set of Institutions and processes for creating capturing communicating delivering and exchanging offerings that have value for customers clients partners and Society at Large let me just give you a little heads up on that I have been teaching this class since 1999. I know I don't look that old but I haven't teaching it that long and Society at large was not a part of these textbooks the ethical the social considerations um that was not really a part of the marketing methoding until recently and I think Society kind of forced it on the industries and you know all the that if you know if you're not going to be concerned about where about society and how we're living then we don't want your products um so that's kind of how that that works but okay so that is the definition of marketing but there are some core aspects of marketing that get considered into what we're going to call our marketing plan marketing plan is basically what we use to specify the marketing activities for a specific period of time what you need to know is that good marketing does not happen by accident it um it's not random everything is planned out so marketing plans usually it's like a one year it could be it could be if you're launching it's a three month six month one year if it's a if it's a more mature product it could be a one year three year five year um you know just based on the life cycle of the product but what this does is it's broken down into various components right how the product or service will be conceived or designed how much it should cost where and how it will be promoted and how it will get to the consumer we're going to be talking more in depth about the marketing plan in just the next chapter chapter two but I do just want to introduce that that is where these directions and instructions on on how to proceed actually come from they are well thought out and they are they are documented so everything that can be controlled by the organization is put into this marketing plan and what I mean is by control meaning they actually know what they can control outside issues such as covid which kind of screwed people up that can't be considered in the marketing plan you can only do what you can control you can of course put caveats in there for things to happen but nobody actually ever saw the covet issue or the coveted Crisis coming so that was never actually put in here um but the core aspects of marketing really just kind of surround around this fight marketing will affect several various stakeholders it's about satisfying customer needs and wants it entails an exchange it creates value through products price place and promotion and it can be performed by individuals and organizations okay so where do we go from there marketing is truly about satisfying customer needs and wants right so we're going to start there Dove recently did um a promotional campaign for women that focused on being being perfect as you are um you know uh you are who you are and you're perfect and it actually was very very successful so what did they do when they decided to expand into a line for men is they took what they did for the women where they were just acknowledging them for who they were and what they were doing and everything that had that they had come from and then they went to the men care line and they said you know what men are becoming men have evolved over time into being more caregivers um being more nurturing in the home because all of our roles kind of shifted a little bit um and they wanted to acknowledge that so when they did their men plus Caroline they also then expanded that into products for babies but they but they kind of surrounded it with the men's care line so it actually was an acknowledgment um and it it was actually very successful so so here's where we're going to talk about the exchange so marketing is truly about an exchange the trade of things of value between the buyer and the seller so that each is better off as a result right so ever this is supposed to be a win-win this is never supposed to be about one one doing better than the other um if the marketing is done correctly and the the value is perceived then you know then we're all um you know then we're all good with that whole exchange but now look let's let's talk about it just a little bit closer so the seller provides products or services and then it communicates and facilitates the delivery of their offering to Consumers buyers will complete the exchange by giving money and information to the seller and the reason that it keeps that the arrows go back and forth is because it will keep coming around right so now the money and the information that's coming back from the from the customers will go back to the producers who now might make a better product or do something a little bit different so that because now they they know that their customer might want something different and then they'll communicate and deliver to the customer and it keeps going around so it is an exchange that does keep going um with feedback it's basically it's an end it's a feedback loop plus the producers are getting more information every time the customer buys something customer is getting uh perceived value for what they're buying and they're happy with that as well okay so let's talk about the marketing mix right we talked about this product price place and promotion they're all connected with a very specific action creating value is the product capturing value is the price delivering value is the place communicating value is the promotion okay so that's very specific and we're going to talk about that and I do have a couple of videos to share with you too through this uh so that you can kind of see some unique products that we're creating value and I'm going to show you a couple let me show you one for delivering value I might make sure you two for delivering value so let's just jump into this so like I said before the marketing mix which is all laid out it is laid out in the marketing plan along with a lot of other information this is the controllable set of decisions or activities that the firm uses to respond to the wants of its Target markets right product price promotion in place let's talk first about creating value it's the fundamental purpose of marketing is to create value because if there is no value there is no willing exchange with a customer okay so you want to create value by developing a variety of offerings including Goods services and ideas to satisfy customer needs right so it can be any of those things um but I'm going to actually jump over here to share a video to do a new window I don't know if I need to do a new window but I want to make sure I'm getting the right window for you [Music] yeah this is gonna be weird let's see this was elected to the White House the four business school buddies were hooking up an idea that would change an industry we've all at some point had that brilliant idea that was going to change the world and make us Millions but very few of us get past the dream stage the guys who started the game changing eyewear company Warby Parker with a simple question why did eyeglasses cost so much the answer took them from a classroom study group to a billion dollar company I remember vividly we were in the computer lab and Jeff and I were talking uh Andy and Dave came up and said hey like wire glass is so expensive or you worked at a non-profit that distributed eyeglasses and development world and I sort of positive there's really no reason Neil Blumenthal Dave gilboa Jeff Rader and Andy Hunt were classmates at the Wharton School of Business in 2008 when they asked their question The Story Goes David you left a pair of glasses and a seat back on an airplane I'd spend a few months traveling before business school and left a 700 pair of glasses on an airplane and I just bought a new iPhone that I paid 200 for that and it did all these magical things that um I couldn't have contemplated were possible even a few years earlier meanwhile the technology behind the pair of glasses is 800 years old your first mistake of course was only a 700. I think that was the last time I should take away from that one yeah exactly right we had this personal pinpoint and we built Warby Parker to solve that for ourselves and then lots of other people Blumenthal knew there was a better way because of his experience working for vision spring a non-profit that provides glasses to the poor in developing countries we were producing losses for people living less than four dollars a day and literally 10 feet away on the same thousand lines where some of the sort of most famous names in fashion were being produced what's the typical markup on a pair of glasses 10 to 12 times from what they've been manufactured for so just the markups in this industry are are crazy one company luxottica dominates the industry as the world's largest designer manufacturer distributor and retailer of eyeglasses most consumers don't realize that most eyewear brands that they've heard of including major fashion labels like Chanel products or chicken are manufactured by the same company so from a booth at nearby Roosevelt's Pub the four classmates plotted a shake-up of the entire glasses Street and Warby Parker was born what were some of the early reactions you guys got to the idea so I think lots of like a cool project guys when you're on this entrepreneurial Journey it's a roller coaster you have days where you're like oh this is awesome and then you have days where like we are the dumbest people on the planet introducing Parker they chose the name Warby Parker by combining two characters in Jack kerouac's novel The Dharma box and for every pair of the 95 glasses a customer buys from Warby Parker another pair is donated to someone in need do you guys think you could make more money if you weren't giving away after glasses or it's because you get after glasses that the business is doing wrong I think we certainly maximize short-term profits but we think we'd be making a mistake we really view it as a great long-term investment before Warby Parker had 20 Sleek retail stores with 20 more planned this year the guys sold their glasses exclusively online working out of meals Philadelphia apartment the feedback that we kept receiving from people is how am I gonna buy glasses online on touch and feel them I want to try the money what if we just sent people frames to try on at home that gets over this fit issue they'll touch the frames they'll look in the mirror and they'll be like this is great so this idea of a home try on really came from a moment of self-doubt and that gave us the confidence to keep moving forward everything changed one day in February of 2010 when GQ posted an article calling Warby Parker the Netflix of eyewear as soon as the GQ article hits I remember all of us are over in Yale's apartment and we have a mobile app that's showing us the orders as they come in it just kept going faster and faster and faster and you know there's a limited Supply we had a wait list of 20 000 customers wow we were out of inventory for about nine months um and is it a good problem to have but we were all terrified that we had all these early adopters that were really excited about our brand and we were leaving them with a disappointing early experience so they reached out to those customers personally every last one of them we need to take Jeff off the phones because he would just give everybody free care I'm out I'm really sorry we'd be sitting in a lecture all of us typing and you know the professor giving a lecture and we're answering customer service emails so when's the Breakthrough moment then what do you say we're done with the bootstraps this is not a mom-and-pop shop anymore I mean a company shot off like a rocket ship we hit our first year sales Targets in three weeks sold out of our top 15 Styles in in four weeks it was Mayhem last year Fast Company magazine named Warby Parker the most Innovative company in the world over the likes of Apple Google and Alibaba and just five years after it was born Warby was valued and well over one billion dollars the bigger we get and each one of those Milestones that we hit we realized that there's such a big opportunity motivated to grow and have more impact over time one of our very first frames of Roosevelts were named after that first bar that so we made the decision to start the business you ever stop and say wow I can't believe you pulled this off a couple years ago we announced that we distributed million pairs of glasses and just thinking about the scale that we had achieved in such a short time period forced us to take a step back and and um and realize that we've accomplished a lot foreign often ask as well aren't you afraid of the big optical companies it's like you know we're actually more afraid of four guys just like us you know sitting in a dorm room somewhere thinking of a better way to provide glasses to people um show of hands who actually needs the glasses they're wearing today oh man I hate this question 50 huh otherwise you're just walking Billboards is that right yeah that's what accessories yeah sorry guys had to ask Neil and Dave run the company while Andy has moved on to and I'm gonna do one more this is a very very cool this product it's a 3D laser printer that broke crowdfunding records again creating value the goldforge is a 3D laser printer that lets you take anything from a pen and ink drawing to something you created with Adobe Illustrator or photoshop and actually print it on wood fabric cardboard even chocolate by using a high-powered laser focus down to the width of a human hair it can cut and incline it very precisely which lets you take your design and actually print something that you can use or that you can sell something beautiful something useful something for your family or something for your business in traditional 3D printers or like a robot with a tiny hot glue gun they build things out of layer upon layer of melted plastic and as the plastic cools you wind up with something that's made out of plastic glowforge uses subtractive technology instead of attitude you start by putting in a piece of wood or leather fabric cardboard and then the laser cuts and engraves that material to produce the result what that means is the results aren't made of plastic they're made out of beautiful materials that you can use in everyday life when I set out to found I wanted to raise investment from professional investors to go take some of their research and development risk out of this project so we raise money from Foundry growth and true Ventures both investors with a solid background in Hardware companies then we launched a crowdfunding campaign because we didn't want to go any further until we were sure that we designed something that people would love and care about we were very nervous going into it I wasn't quite sure how successful it was going to be and I gone in and talked to my team and I said you know if we sell less than a million dollars in this the pre-order campaign that something's wrong and we may need to reconsider and on the high side I don't think we need to plan for selling more than 5 million of those because that seems wildly improbable so we were kind of shocked when it's on 27.9 million dollars worth of pre-orders in 30 days and that meant we had to get to a lot of work we actually brought in more money from our investors because we didn't want to operate the company with those pre-order funds we wanted to use those just for production and so we raised additional funds from the same investor so that we could produce a really fantastic product that we felt confident about putting in people's homes all over the world from the very start [Music] um we weren't really sure when we started selling it who was going to buy it was it the cosplayer who wanted to make costumes was it the woodworker who wanted to upgrade their work was it the family who wanted to give their kids a piece of the future and it was kind of all of them what we learned was this tool snapped into dozens of different uses and homes and hobbies and skills in ways that we'd never imagined we have a Pediatric Cardiologist who's using this to print a 50 fixture it's going to replace a 2500 training system so that cardiologists can try a surgery 20 times rather than just once or twice before trying it on a real patient some Hardware is built to become Obsolete and built to be replaced should we designed this product over the course of more than two years to be something that we could build on for years to come and one of the reasons we made the hardware so simple one button lots of sensors Cloud control because this is a platform that we're going to be building Innovations and releasing updates to from many years to come I imagine that we'll be building on this for many years to come in developing new and even more wild uses for the hardware that we're selling today for many years to come [Music] okay so let me go back to our PowerPoint but first let's just say okay what we just saw as far as the Warby Parker and the glowforge is these are Goods right goods are items that you can physically touch services are intangible customer benefits that are produced by people or machines and cannot be separated from the producer so these are things like tickets for airline travel um or a sporting event or the theater you're not paying for that ticket or that digital scan you are paying for the flight the experience of the flight getting from one place to another you are paying for the experience of going to that concert you are paying for the experience of going to that sport unit you that's a service right um because you're not just paying for a piece of paper or um or a code or a QR code and ideas these include thoughts opinions and philosophies um intellectual Concepts that you know these can be marketed as well bicycle safety environmental health and safety disposal plastic water bottles are bad that kind of thing these are ideas that have been marketed and have gone ahead and impacted how we Market procs how we develop End Market products Services things like that so um let me see if I can go back to that window uh so now we can go into price which is capturing value right price is everything a buyer gives up for what for for what they're getting in exchange for that product or service they're getting in exchange this can be money time or energy so to describe this is with uh Airlines um right most most carriers most Airline carriers say if you want to carry on is 25 bucks you want this that that you you're going to pay for what you get but they they have regular flights from their airports they have seating that you can upgrade they have things like that that's right but there are people who are willing to sacrifice certain things in their experience to get to pay less money right if you're willing to carry on less if you want to sit in the middle seat if you don't mind um maybe being stranded somewhere because there's no real regular flight schedule out of a certain airport so maybe you get stuck somewhere on a Sunday and their next flight is Wednesday um instead of most instead of the bigger carriers that might have a flight later that day or the next day um you know so the low-cost carriers you know they they offer value if you're willing to give some things up right so again it's all it's not what you're perceiving as value and what you're willing to give up for that um again money time and energy these are all very valuable um Commodities to us individuals um and US individual consumers so anytime we can we can connect value to those things is is a good thing so Place delivering the value proposition right place represents all the marketing processes necessary to get the product to the right customer when the customer wants it right so this is dealing with retailing marketing channel management this is how do we get the product to the place where the customer can get it um so this is also known as Supply Chain management um and what you will learn is that Supply Chain management is um and it's is it's a career in and of itself right um because it is it is basically it's not just Logistics Logistics is Supply Chain management within one company but Supply Chain management as a whole is every company that's involved in that value in that value stream that value chain that gets merchandise from one place to another not just but not just merchandise I'm going to say it's because I teach this class um it's all of the raw materials to the right manufacturing facility to the right place where it's produced in the right amount and then it's put in the right warehouse and then it's cross-docked and props the right places from there this is all Supply Chain management that um that is a big part of delivering on that value proposition um like I said earlier nobody saw Kobe coming covet totally blew up our supply chain management processes and this is something that a lot of companies are still recovering from there are other companies who kind of had it down that um they were able to ride the wave at least a little bit um but but mainly we've been trying to fix uh fix the issues still are a lot of companies um after after you know two years we're still trying to get ourselves out of that um but I do have an interesting some an interesting video uh from Amazon because Amazon is basically the leader in uh Supply Chain management and getting products where they need to be quickly um and I'm gonna stop sharing this and go back to sharing the other window so that you can see what that is give me one second to get there let me share this window again and here we go time now is a way to get all things that you need delivered to you in as fast as an hour we are in the middle of Midtown Manhattan at the center of all public transit and literally the center of New York right across from the Empire State Building What's Happening Here is all of our products that we have for sale are all around in this warehouse and as orders come in folks just we're satin Warehouse grab the products that are ordered put them in bags and then we hand them off to uh whoever Personnel to get them to customers do people deliver by bike is it by car is it all the above in New York we have it's kind of unique because we have people on foot on public transportation on bicycle and and by car so what is the secret sauce there it looks like almost a random amalgamation of products in some of these puppies yeah but um if you actually get a good look at the bins uh we call it organized chaos the way it works is we get all the products onto the shelves as quickly as possible we don't sort them in any particular way and then our algorithms tell people where to go to take them in the most efficient way and then we just get them straight into the bag and when it's one hour delivery it goes right out the door and uh it's really two customers what kind of products are people looking for well uh this week especially we're getting a lot of sales of products that are really intended for gifts so top of the list for a lot of people are Amazon devices Echoes and Echo dots have been super popular we're selling things like tissues and toilet paper and paper towels the everyday stuff is really our most popular sellers here in New York uh water is really popular because I think people have you know walk-up apartments and they like to get that stuff delivered when you think about instant delivery what is what is the larger strategy there do you think that's where retail is going more generally I think that customers have higher and higher expectations for what their shopping experience is going to be like they're used to all sorts of conveniences and I think this is a natural evolution of what Amazon's been doing for a really long time which is solving customers problems and getting the things fast you know a lot of people ask me well what do people do we need in an hour and um I think it's not the thing that you need it's the time that you need back and I think that that is really I think about the products that I think is best selling we're really trying to give people ways to unpack their lives to get a little bit more time back and it's especially important during these holiday times [Music] so so that so so the prime now was uh Amazon's answer to Walmart and Target now saying hey if you place an order we're going to just drive it to your house um and you know Prime uh Amazon has a has a big way of um you know they're they're above and beyond as far as Supply Chain management and marketing channel management so um so we're gonna definitely dive into that in in a future chapter but um I did also now I want to just jump into that fourth P which is promotion right um because if um if the value of a product cannot be I'm going to go back to my I'm gonna go back to this uh the PowerPoint if a product cannot be um if nobody knows about it um it's not things aren't communicated about it uh we need they need to be informed we need to be persuaded we need to be reminded about this product or service uh in order for these marketers to elicit a response of some sort uh whether they are going to the store to buy it or whether they are emailing a question about it whether they are going online to read about it um some sort of response to indicate that there is some interest and that is um the fourth p uh so moving on Okay so this is kind of a wrap up of marketing that can you know it was a little odd the statement that marketing can be performed by individuals and by organizations but when you look at what's happening today we have a manufacturer this this is like a very very simple simplified um exhibit a manufacturer will make a tablet they'll sell it they'll go business to business so it'll go to a retailer that will then sell the tablet and phone to a customer or a consumer which is b2c now that consumer uses that tablet for a little while maybe they don't like it maybe they've just gotten a new one so now they're going to put that they're going to reset that or do something and put that on eBay so it's going to be consumer to Consumer right so there's there's like three there's three main types of marketing that can happen there's actually four there's B to G which is business to government which we're not really going into in this class but just to let you know that there is that fourth one um but so so this is kind of a very simplified way of doing it of of talking about it but I think it makes a lot of sense this way so um so yeah so b2c C to C is actually uh becoming much more popular nowadays especially with Etsy and things like that because um we're kind of you know a lot of things on Etsy or it's like you're everybody thinks you're kind of crafting and you're sending so it you know you you are a business but Etsy is kind of crafting so yeah so so platforms like that where you can resell your items um Poshmark things like that um those are consumer to Consumer okay okay so marketing does impact various stakeholders and it's not just the ones you can think of right it's not just the business and it's not just the consumer although that is a part of it there are supply chain Partners like I said everybody in that supply chain or marketing channel is can be impacted by you know by things that are happening outside and inside your employees will be uh impacted Industries will be impacted in society will be impacted as a whole Okay so there is a progress check at this point because this is kind of the wrap up of learning objective one so make sure that you have the answers to these questions um somehow in a notebook or somewhere available because they could show up on a quiz um and the quizzes that we're going to be doing in classes when we meet so make sure that you are ready for that okay so let's talk about the importance of marketing over time right there are various the evolution is is is very interesting and then there are different marketing eras that we can talk about but first let's talk about how we really started right turn of the century we are in the production era production oriented era okay so turn the 20th century this is when um we were more manufacturing and we were very very focused on manufacturing a good product this is when Henry Ford the founder of Ford Motor Company um famously remarked customers can have any color they want so long as it's black because production lines assembly lines and mass production lines you didn't customize you didn't change things everything was the same and at this point they were they were they wanted to do some product Innovation but they were less concerned about customer needs they wanted to just kind of make things better but they weren't really reaching out to customers to say well what is it that you need in this product because it just wasn't happening then it wasn't there was no uh vehicle for that um at that point so retail stores were typically just considered places to hold merchandise until the customer wanted it and went to get it right there was no there's no reaching out to get customers to come in there were no sales there were nothing like that from there we went to the sales oriented era between 1920 and 1950. now if you think about that time frame there's certain things that happen in there that kind of impacted this um production distribution techniques became more sophisticated but during that time we had the Great Depression and then World War II not right on top of each other but obviously the years 1929 and then 1941. um so customers were kind of conditioned to consume less to need less to manufacture things themselves they made their own clothes they grew their Gardens they grew produce um they you know for they just got what they wanted that they didn't have to go out and buy but but then firms started to be overproducing or hey because they uh they still had capacity in their in their manufacturing facilities or in their farms and they had these extra these have products to sell and they needed to sell them so this is when they became more sales oriented and then so they started to depend more on personal selling and advertising to get customers and consumers back into the stores or back into their buying mode from there after World War II um soldiers returned home they got new jobs they started families they started to start at the the sprawl right outside of the Cities so we go into Suburban areas every house has a car every house has a yard needs stuff to take care of that yard you need stuff to clean that house you need Furniture to fill that house right we're outside of the city now we have more room so um so shopping centers began to come out um they began to replace City Central business district with retail uh centers um and some of the products that would be that were a little scarce during World War II because a lot of the manufacturing facilities switched over to making weapons uh for the soldiers switched back to what they were making before and so uh now consumers again had choices and then they were able to make purchasing decisions on the basis of factors quality convenience and price right so manufacturers and retailers had to now begin to focus on what consumers wanted and needed right this is when that shift happens um before they designed made or attempted to sell their products otherwise they would end up with products that were not going to sell what we're in now is the value-based marketing era um means that you know we General we've generally transcended the production of selling orientation and we attempt to discover and satisfy customer needs and wants before even going to the drawing board of a product um there's not a lot of brand new products anymore now they're just kind of evolving them um forward making them better improving upon them um so but this is where value comes in this is what member said value is Central to marketing well let's define value it reflects the relationship of benefits to costs or what you get for what you give now remember it's not just not always about money um but value is value is the central aspect of marketing like if you don't have value you do not have successful sales you don't have your marketing set up correctly okay um now what we're finding is that consumers want products and services that meet their specific needs and wants and are offered at a price that they believe is a good value now I did not say cheap or low priced I said it's a good value to that customer right because let's think about it there are a lot of very exclusive Brands out there that are not inexpensive they are very successful still because they provide a perceived value to those consumers right Hermes of Paris sells lipstick for 10 times more than what you can get at CVS is it really different probably not that different but um you know so so that's but that's the value some some people want or Miss others are fine with L'Oreal and and that's fine and and there's no judgment it's just you know that's that that's your value perception and it's really what's important to you as a consumer um so again your value-based marketing there's a lipstick option for those who dream of an Hermes bag right so if you can't afford the Hermes bag why not buy an Hermes lipstick for sixty seven dollars at this time um not something I would buy but you know to each his own and if that's value to you then that's great but so now that we're in the value-based marketing error we've defined what value is now let's talk about the other levels that we've gone through value co-creation this isn't really a level this is just another aspect of it but uh value co-creation is a creative way to provide value to customers in which customers act as collaborators to create a product or service that appeals to them right so this would be like working with your um working with your investment advisor to co-create a portfolio for yourself um there are some companies that will come out and let you vote on a material for a product or color for a product um you know some I know like even the ASPCA they let you vote on the on the cover picture for their yearly calendar um you know things like that uh it's that's value co-creation because you are involving the customer or consumer in the development of the product right so even if it's just for them they're involved um then we go to relational orientation this is when um the companies have realized that they need to start thinking of their customers in in um as more of a relationship rather than a transaction because there's something called lifetime value of a customer and if customers do not feel valued or um or like they're like the company has a relationship with them they will go elsewhere and you will not have that customer anymore that's where you know relationships are important um but to build those relationships firms focus on that lifetime profitability not how much money is made in each transactions and sometimes it's hard to get over for some companies because they're so focused on what they're making in each transaction so once they've gotten past that though they're now able to say KitchenAid puts their mixers out there in every color under the sun because they want their customer to be able to show their personality even in the kitchen appliance right and since those mixers are fairly expensive that's that's just another level of value that means somebody's going to buy those mixers right um so another level is a CRM customer relationship management um so this is a business philosophy and a set of strategies programs and systems that focus on identifying and building loyalty among the firm's most valued customers the firms that employ the CRM systematically are collecting information about their customer needs and then they're using that information to Target their best customers with the product services and special promotions that appear most important to them um so so this is when you get so so you are a a very special client to advert to to a company they're going to send you that special 30 off coupon right or they're going to give you early access to a sale or something like that and that is where um they can set they can start to differentiate their customers based on who is bringing it who is bringing more value back to the company by their relationship and the relationship that's been built okay um so that is the end of our learning objective two the progress check is really just what are the various areas of marketing you can look in the book you can go back in this video whatever you want to do just make sure you have that handy for the quizzes okay so let's talk about how marketing creates value and how do firms become more value driven these are basically the four steps they build relationships with their customers they gather and analyze information they balance benefits and costs and they connect with customers using social and meeting Mobile Media okay but let's now do a little deeper all of this value stems from four main activities right first of all we have to add value right the first element we describe appears frequently throughout this book and just so you know these four areas will have call outs in every single chapter that we look at and each one is going to kind of take a different product or a different service or a different company and they're going to explain how that company added value or a different company used marketing analytics and how these other things happened and I do want you to kind of take a look at those because they're very interesting and they're very insightful and um you're going to see marketing is marketing it's it's it's like an iceberg right we're just in the tip of the iceberg but all of the big stuff is below is below the surface and that is where this really comes in and that's where um a lot of these call-out boxes will become very valuable to you um so um adding value uh value oriented marketers will constantly be measuring the benefits that customers perceive against the cost of their offerings right uh they use this customer data to find Opportunities to satisfy their customers needs better keep the cost down and develop long-term loyalties okay so then using the marketing Analytics um modern marketers are relying on sophisticated data analytics to Define and then refine their approaches to their customers and their markets of course with the growth of Big Data there's some privacy issues that are constantly in flux um but this is um it's kind of inescapable uh in particular there are companies such as Starbucks CBS Amazon they collect massive amounts of information how when why where and what people buy this helps them to wear with their first of all with their logistic goals um decisions on what products need to be where to get to the customer faster um but it also uh gives them more information in which to sell more to you right obviously um even though Loyalty cards at the supermarkets um you scan it because you want the coupons and you want the discounts but what they're getting from you is you're buying behaviors they know exactly what brands you're buying how frequently you're buying them if you ever buy a competitors brand and then they have those Catalina coupons which are the store coupons that print out that's what they're called um to try to get you to jump off to a competitor but you know sometimes or they'll give you a discount if you're not buying as much as you usually do they'll try to say oh you know 10 off your next purchase of 200 or something um you know so they they they're tracking you and they're giving you immediate feedback uh to try to um to try to get you to buy more and to try to show that they are loyal to you and that they understand you um so embracing social and mobile marketing we are giving immense amounts of information to these companies all the we don't even know when we're doing it but marketers have steadily embraced new technologies such as social and Mobile Media to allow them to better connect with their customers and to serve their needs more effectively okay there are going to be also social and mobile marketing boxes that show up in these chapters that are actually pretty interesting as well so let's go ahead and do that and read that um ethical and societal dilemmas there's always been that question should marketing focus on factors other than financial profitability yes being good corporate citizens is important for all companies there's something called the triple bottom line um it I highly recommend that you go to YouTube If you have about 15-20 minutes look up triple bottom line there's a tedx talk about it it's extremely interesting and it kind of it makes you think about things a little bit more deeply um so that is definitely something that uh that should be considered right many of America's Best Known corporations are doing so they have undertaken various marketing activities such as developing Greener products making healthier food options safer products improving their supply chains to reduce their carbon footprint right that's something that's been important too um socially responsible firms do recognize that including a strong social orientation in business is sound strategy that is in both its own and its customers best interest it shows the consumer Marketplace that the firm will be around for the long run and can be trusted with the marketplaces business right there is uh an ethical and societal dilemma in chapter one for Starbucks and this is one that has always been a conundrum for me as well um if you get rid of your plastic straws why are you still using single-use plastic cups [Music] I have the same question with McDonald's because McDonald's used to use wax coated paper cups which is extremely biodegradable they were using plastic straws they got rid of the plastic straws and now they're using plastic cups with paper straws I'm still trying to figure that out and how that actually helps um but you know it it is what it is I mean there's not much you can figure out about that um so here um I'm going to put these slides up um in the module so that you can access these as well our last progress checked is providing the value means selling at low price these are uh these are questions that you should probably answer to make sure that you are covering yourself um that is um I'm going to stop sharing and go back to um my my window so I can see you and or so that is uh that is the biggest challenge the biggest chapter we're gonna have as far as number of topics uh every chapter we're going to be doing from now on is going to be more more focused on um a specific topic there is one week where we're going to be doing two chapters and I will do two separate videos for that for that module um so that we are well prepared for our first quiz and it might take you a little bit longer to get through them but um I want to make sure that everyone has what they need so please go ahead and make sure you're checking your learning management system modules for your assignments for this week and I will see you next week have a good one