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CHAPTER 1
DEFINING MARKETING FOR THE 21ST
CENTURY
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LEARNING OBJECTIVES
After reading this chapter, as a student you should:
Know why marketing is important
Know what is the scope of marketing
Know some fundamental marketing concepts
Know how marketing management has changed
Know what the necessary tasks are for successful marketing management
CHAPTER SUMMARY
From a managerial point of view, 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 is the art and science of choosing target
markets and getting, keeping, and growing customers through creating, delivering, and
communicating superior customer value.
Marketers are skilled at managing demand. They seek to influence the level, timing, and composition
of demand. Marketers are involved in marketing many types of entities: goods, services, events,
experiences, persons, places, properties, organizations, information, and ideas. They also operate in
four different marketplaces: consumer, business, global, and nonprofit.
Businesses today face a number of challenges and opportunities including globalization, the effects of
advances in technology, and deregulations. They have responded by changing how they conduct
marketing in very fundamental ways.
There are five competing concepts under which organizations can choose to conduct their business:
the production concept, product concept, selling concept, marketing concept, and the holistic
marketing concept. The first three are of limited use today.
The holistic marketing concept is based on the development, design, and implementation of marketing
programs, processes, and activities, that recognizes their breadth and interdependencies. Holistic
marketing recognizes that “everything matters” with marketing and that a broad, integrated
perspective is often necessary. Four components of holistic marketing are relationship marketing,
integrated marketing, internal marketing, and social marketing.
Marketing management has experienced a number of shifts in recent years as companies seek
marketing excellence.
The set of tasks necessary for successful marketing management include developing marketing
strategies and plans, connecting with customers, building strong brands, shaping the market offerings,
delivering and communicating value, capturing marketing insights and performance, and creating
successful long-term growth.
What Is Marketing?
Marketing deals with identifying and meeting human and social needs. One of the shortest
definition of marketing is “meeting needs profitably.”
A) The American Marketing Association offers the following formal 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.”
B) Marketing management is the art and science of choosing target markets and getting,
keeping, and growing customers through creating, delivering, and communicating superior
customer value.
C) A social definition of marketing is that “marketing is a societal process by which individuals
and groups obtain what they need and want through creating, offering, and freely exchanging
products and services of value with others.”
Review Key Definitions here: marketing and marketing management
a. Companies that practice both reactive and proactive marketing orientation are
implementing a total market orientation.
Holistic Marketing Concept
Holistic marketing can be seen as the development, design, and implementation of marketing
programs, processes, and activities that recognizes the breath and interdependencies of their
efforts. Holistic marketing recognizes that “everything matters” with marketing—the
consumer, employees, other companies, competition, as well as society as a whole.
Review Key Definition here: holistic marketing
Figure 1.3 provides a schematic overview of the four broad themes characterizing holistic
marketing.
Relationship Marketing
)A Relationship marketing has the aim of building mutually satisfying long-term relationships
with key parties—customers, suppliers, distributors, and other marketing partners.
Relationship marketing builds strong economic, technical, and social ties among the parties.
)1 Marketing must not only do customer relationship management (CRM) but also
partnership relationship management (PRM).
)2 Four key constituents for marketing are:
.a Customers.
.b Employees.
.c Marketing partners (channel partners).
.d Members of the financial community.
)3 The ultimate outcome of relationship marketing is the building of a unique company
asset called a marketing network.
A marketing network consists of the company and its supporting stakeholders (customers,
suppliers, distributors, retailers, ad agencies, university scientists, and others) with whom it has
built mutually profitable business relationships.
Review Key Definitions here: relationship marketing and marketing network
Integrated Marketing
)A The marketer’s task is to devise marketing activities and assemble fully integrated marketing
programs to create, communicate, and deliver value for consumers.
)B The 4Ps of marketing: product, price, place, and promotion.
Figure 1.4 shows the particular marketing variables under each P.
Marketing—mix decisions must be made for influencing the trade channels as well as the final
consumers.
)1 Robert Lauterborn suggests that the sellers 4Ps correspond to the customers’ 4Cs:
4Ps 4Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
)C Two key themes of integrated marketing are:
)1 Many different marketing activities are employed to communicate and deliver value.
)2 All marketing activities are coordinated to maximize their joint efforts.
Figure 1.5 shows the company preparing an offering mix of products, services, and prices and
utilizing a communications mix of sales promotion, advertising, sales force, public relations,
direct mail, telemarketing, and interactive marketing to reach the trade channels and the target
customers.
Internal Marketing
)A Holistic marketing incorporates internal marketing, ensuring that everyone in the
organization embraces appropriate marketing principles.
)B Internal marketing must take place on two levels:
)1 At one level, the various marketing functions (sales force, advertising, customer
services, product management, and marketing research) must work together.
)2 Secondly, marketing must be embraced by the other departments—they must “think
customer.” Marketing is not a department so much as a company orientation.
Supply Chain
A) Describes a longer channel stretching from raw materials to finished goods.
B) Represents a value delivery system.
Competition
A) Includes all the actual and potential rival offering and substitutes that a buyer might consider.
Marketing Environment
A) Consists of the task environment and the broad environment.
B) Task environment includes the immediate actors involved in producing, distribution, and
promoting the offering: suppliers, company, dealers, and target customers.
C) The broad environment consists of six components:
1) Demographic.
2) Economic.
3) Natural.
4) Technological.
5) Political-legal.
6) Social-cultural.
Marketing Planning
A) Consists of analyzing marketing opportunities.
B) Selecting target markets.
C) Designing marketing strategies.
D) Developing marketing programs.
E) Managing the marketing effort.
Figure 1.6 presents a grand summary of the marketing process and the forces shaping the
company’s marketing strategy.
What Is Marketed?
Marketing people are involved in marketing ten types of entities: goods, services, events,
experiences, persons, places, properties, organizations, information, and ideas.
A) Goods
Physical goods constitute the bulk of production and marketing efforts.
B) Services
A growing portion of business activities are focused on the production of services. The U.S.
economy today consists of a 70–30 services to goods mix.
C) Events
Marketers promote time-based events such as trade shows, artistic performances, and the
Olympics.
D) Experiences
By orchestrating several services and goods, a firm can create and market experiences such as
Walt Disney World’s Magic Kingdom.
E) Persons
Celebrity marketing is a major business.
F) Places
Cities, states, regions, and whole nations compete actively to attract tourists, factories, and
new residents.
G) Properties
Are intangible rights of ownership of either real property (real estate) or financial property
(stocks and bonds).
H) Organizations
Actively work to build a strong, favorable, and unique image in the minds of their target
publics.
I) Information
Can be produced and marketed as a product. Schools, universities, and others produce
information and then market it.
J) Ideas
Every market offering includes a basic idea. Products and services are platforms for delivering
some idea or benefit.
Who Markets?
Marketers and Prospects
A marketer is someone seeking a response (attention, purchase, vote, donation, etc.) from
another party called the prospect.
A) Marketers are responsible for stimulating demand for a company’s product.
B) Marketing managers seek to influence the level, timing, and composition of demand to
meet the organization’s objectives. Eight demand states are possible:
1) Negative demand—consumers dislike the product and may even pay a price to avoid
it.
2) Non-existent demand—consumers may be unaware or uninterested in the product.
3) Latent demand—consumers may share a strong need that cannot be satisfied by an
existing product.
4) Declining demand—consumers begin to buy the product less frequently or not at all.
5) Irregular demand—consumer purchases vary on a seasonal, monthly, daily, or even
an hourly basis.
6) Full demand—consumers are adequately buying all product put into the marketplace.
7) Overfull demand—too many consumers would like to buy the product that can be
satisfied.
8) Unwholesome demand—consumers may be attracted to products that have
undesirable social consequences.
Markets
Economists describe a market as a collection of buyers and sellers who transact over a
particular product or product class.
Figure 1.1 shows five basic markets and their connection flows.
Marketers use the term “ market” to cover various groups of customers. They view the sellers as
constituting the industry and the buyers as constituting the market. They talk about need
markets, product markets, demographic markets, and geographic markets.
See Figure 1.2 shows the relationship between the industry and the market.
A) Sellers and buyers are connected by flows:
1) Seller sends goods, services, and communications to the market.
2) In return they receive money and information.
3) There is an exchange of money for goods and services.
4) There is an exchange of information.
Review Key Definitions here: negative demand, non-existent demand, latent demand, declining
demand, irregular demand, full demand, overfull demand, and unwholesome demand.
Key Customer Markets
A) Consumer Markets
Consumer goods and services such as soft drinks and cosmetics, spend a great deal of time
trying to establish a superior brand image.
B) Business Markets
Companies selling business goods and services often face well-trained and well-informed
professional buyers who are skilled in evaluating competitive offerings.
C) Global Markets
Companies face challenges and decisions regarding which countries to enter, how to enter the
country, how to adapt their products/services to the country, and how to price their products.
D) Nonprofit and Governmental Markets
Companies selling to these markets have to price carefully because these organizations have
limited purchasing power.
physical locations (car dealers) and marketspace locations (Internet locations) that consumers
use in deciding what car to purchase.
Review Key Definitions here: marketplace—physical, marketspace—digital, metamarket—
both physical and digital