Chapter 1

Review and Applications
1.1 – What is the AMA? What does it do? How do its services benefit marketers? The American Marketing Association (AMA) is a professional association for individuals and organizations that are involved in the practice, teaching and studying of marketing worldwide. It benefits marketer’s everyday by allowing them to turn to the AMA for information, resources, education, training, and networking. The AMA stays current with the future market trends and is also a source for the field’s top magazines and journals.
2.2 – Donald E. Peterson, former chairman of the board of Ford Motor Company, remarked, “If we aren’t customer driven then our cars won’t be either.” Explain how this statement reflects the marketing concept.
The marketing concept says the justification for an organization’s existence is the satisfaction of customer’s wants and needs while meeting organizational objectives. I think Donald Peterson was saying that if his company isn’t customer driven, looking for the customer’s needs and wants, then they won’t be selling the cars leading to the company not making a profit and probably not existing anymore. The company needs to focus on the customer and their perceived value of the product versus what the company thinks is important.
2.3 – Give an example of a company that might be successfully following a production orientation. Why might a firm in this industry be successful following such an orientation?
An example of a company that would be product oriented would be a gas company like BP. This kind of company knows that they can produce a product that customers need no matter what other types of product they have. This industry is very successful with product orientation because they have a product that customers will always have a need for.

Case Studies/Application Exercises
Netflix Case
1. Describe the elements of the exchange process as they occur between Netflix and its customers.
For an exchange to take place there has to be five conditions that are met. The first one is that they must be at least two parties. In this case it would be the company Netflix and the customers. Second each party must have something that would be of value to the other party. Netflix has the DVDs that customers want to watch and the customers have money to pay for them. They also have DVDs that need to be returned to Netflix after watching them. Each party has to be capable of communication and delivery. Netflix has 34 strategically placed warehouses it uses to ship out the DVDs. They also have live operators to help out if there are any questions. The customers receive a paid packaging from Netflix to return the DVDs to the company. Each party has to be free to accept or reject the exchange offer. The customers can call the operators if they feel they haven’t received good service. The customers also have a choice of which subscription plan they would like to choose. Finally each party believes it’s desirable to deal with the other party. Netflix has a lot of options for their customers making them easy to work with.
2. Which marketing management philosophy does Netflix subscribe to?
I think Netflix uses empowerment as a management philosophy. They give a number of operators the ability to call the customers back and find out about the problem that occurred and how they can fix the problem. This gives the customers a feeling of customer satisfaction because of the attention they received from the company.
3. How does Netflix’s approach to relationship marketing increase customer satisfaction?
Netflix focuses on improving relationships with current customers by coming out with new features that the customers have requested. Customers can generate multiple lists for one address and can also share their lists with friends that they choose to be in their network. Netflix is also looking toward the future and different features that might be popular.