978-0132539302 Chapter 1 Lecture Note Part 1

Part I – Understanding Marketing Management

Chapter 1 – Defining Marketing for the 21st Century

I. Chapter Overview/Objectives/Outline

A. Overview

Marketing is the organizational function charged with defining customer targets and the best

way to satisfy needs and wants competitively and profitably. Since consumers and business

buyers face an abundance of suppliers seeking to satisfy their every need, companies and

nonprofit organizations cannot survive today by simply doing a good job. They must do an

excellent job if they are to remain in the increasingly competitive global marketplace. Many

studies have demonstrated that the key to profitable performance is to know and satisfy target

customers with competitively superior offers. This process takes place today in an increasingly

global, technical, and competitive environment.

Marketing management is the conscious effort to achieve desired exchange outcomes with

target markets. The marketer’s basic skill lies in influencing the level, timing, and composition

of demand for a product, service, organization, place, person, idea, or some form of

information.

There are several alternative philosophies that can guide organizations in their efforts to carry

out their marketing goal(s). The production concept holds that consumers will favor products

that are affordable and available, and therefore management’s major task is to improve

production and distribution efficiency and bring down prices. The product concept holds that

consumers favor quality products that are reasonably priced, and therefore little promotional

effort is required. The selling concept holds that consumers will not buy enough of the

effort.

The marketing concept moves toward a more enlightened view of the role of marketing. The

marketing concept holds that the main task of the company is to determine the needs, wants,

and preferences of a target group of customers and to deliver the desired satisfactions. The four

principles of the marketing concept are: target market, customer needs, integrated marketing,

accomplished, a marketer can offer for sale the products that will lead to the highest

satisfaction. This encourages customer retention and profit, which is best achieved when all

areas/departments of a company become “customer-focused.” Beyond the marketing concept,

the societal marketing concept holds that the main task of the company is to generate customer

organizational goals and responsibilities.

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Interest in marketing continues to intensify as more organizations in the business sector, the

nonprofit sector, and the global sector recognize how marketing contributes to improved

B. Learning Objectives

Know why marketing is important to contemporary organizations.

Understand the core concepts of marketing.

Know the basic tasks performed by marketing organizations and managers.

Understand the differences between the various orientations to the marketplace.

marketing practice.

Know why marketing is critical to different types of organizations and in different

environments.

Gain an appreciation for the dynamics in technology related to not only the logistics of

marketing but also to the role technology plays in customer and prospect interactions

between themselves as well as with organizations

C. Chapter Outline

Introduction

I The Importance of Marketing

monitor changing consumer needs and must modify, add, or remove current

product and service offerings to meet changing needs. Organizations must

ensure that short- term sales-driven strategies do not hinder their long term

competitive position

marketing technology

II The Scope of Marketing

A. What is marketing?

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delivering, and communicating superior customer value.

The aim of marketing is to know and understand the customer so well that

the product or service optimally meets the customer’s human and social

needs. The value proposition should be so obvious that the product or

service sells itself

B. What is marketed? (10 types of entities)

1. Physical goods

2. Services – can be customer services or pure services

3. Events

an experience

5. Persons (celebrities)

6. Places (geographic destinations)

7. Properties (real estate, land, financial instruments)

8. Organizations (image)

9. Information (the internet has increased efficiency of marketing

information)

10. Ideas

C. Who markets?

1. A marketer is someone actively seeking one or more prospects for an

exchange of values

D. What is a market?

1. Marketplace – physical

diverse set of industries. includes metamediaries

3. Marketspace – digital

4. Figure 1.1shows the relationship between the industry and the market

III. Core marketing concepts

A. Needs, wants, and demands

2. Wants are desires for specific satisfiers of needs. There is usually one or

other factors which in this example would be health restrictions

3. Demands are wants for specific products backed by an ability and

willingness to buy them

B. Target markets, positioning, and segmentation

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translate into

benefits for a target market

2. The consumer perceives these benefits to be available in a product and

want(s)

3. Marketers break down the market into multiple segments. segments are

groups of customers with similar needs

4. Marketers select which segments they will market to, that is which segments

choose which segments to target

5. Marketers focus on specific product(s) or service features for each segment

based upon that respective segment’s needs, i.e., they position their

features as benefits to match the specific need

C. Offerings and brands

value proposition

D. Value and satisfaction

1. Customer value triad – combination of quality, service, and price (QSP)

2. Value is the consumer’s estimate of the product’s overall capacity to satisfy his

or her needs

3. Marketers respond by changes in the triad

E. Marketing channels

1. Reaching the target market is critical

2. Achieved via two-way communication channels

(1) Communication channels to deliver and receive information (media –

newspapers through the Internet)

(3) Service channels to facilitate a transaction

F. Supply chain

1. Refers to the long channel process that reaches from the raw materials and

components to the final product/buyers

2. Perceived as a value delivery system

G. Competition

H. Marketing environment

1. The task environment includes: immediate actors in the production, distribution,

and promotional environments

2. The broad environments include: demographic, economic, natural,

technological, political-legal, and social-cultural

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IV. The New Marketing Realities

A. Major Societal Forces

1. Network information technology

2. Globalization

3. Deregulation

4. Incerased competitiveness from domestic and foreign brands

5. Creation of mega-brands and “category-killers”

bypassing retailers

7. Reintermediation – Traditional retailers adding online channel

B. New Consumer Capabilities

1. Consumers leveraging the internet to increase their buying power

2. Social media precipitating user content used by consumers to share information

3. Internet used by companies to invite consumer to participate in creation of

product and service offerings.

4. Decreased levels of product/service differentiation results in lower brand loyalty

C. New Company Capabilities

1. Increased market research and market reach via Internet

2. Creation of online communities increases brand awareness

3. “Buzz” marketing enhanced via Internet use by early adopters and advocates

4. Efficient and cost effective value chain management

5. Intereactive marketing techniques improves target marketing and facilitates

permission marketing efforts

V. Company Orientation Toward the Marketplace

A. The production concept –

1. Assumes consumers will favor those products that are widely available

and inexpensive.

2. Frequently used to expand the market

3. Strategy used by developing countries

B. The product concept – assumes consumers will favor those products that offer the

best combination of quality, performance, or innovative features

C. The selling concept – assumes organizations must undertake aggressive selling and

determining and satisfying the needs and wants of target markets

E. The holistic marketing concept (four dimensions) illustrated in Figure 1.2

1. Relationship marketing

a. Relationship marketing seeks long-term, “win-win” transactions between

financial community members)

b. The ultimate outcome of relationship marketing is a unique company asset

called a marketing network of mutually profitable business relationships

c. Companies are focusing on more profitable customers using Life-Time-Value

as one method of profitability measurement (these activities are also CRM

strategies)

2. Integrated marketing

a. When all of a firm’s marketing activities, internal to the organization and

external within the value chain, are optimally coordinated to achieve specific

objective

b. Manage and coordinate communication efforts across all channels.

3. Internal marketing

accounting, operations, and human resources

b. Each within the organization should know how his or her activity relates to

the customer, thus the organization should change their business model to

become more customer-centric.

c. Another dimension to internal marketing is the method of marketing to and

serving the internal customer

power in the organization

f. Slow learning – despite efforts by management, learning comes slowly

g. Fast forgetting – there is a strong tendency to forget marketing principles

4. Performance Marketing……………………………………………………………………………..

a) Financial accountability while building the brand and managing the

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intangible

assets

b) Socially responsible marketing (refer to Table 1.1 for initiatives)

(1) Marketers must understand their role in social welfare.

Societal marketing concept calls on them to build social and

ethical considerations into their marketing practices. Examples:

use bio-degradable containers, avoid deceptive advertising,

ethnic marketing strategies appropriately

(2) Cause related marketing, linking an organization’s activity

with a specific cause perceived as important to the consumer,

practices can increase revenue and profits while establishing a

relationship or partnership with societal groups which have a

common cause. Examples: tobacco company promoting

nonsmoking practices, company employees spending their day

VI. Updating the 4 P’s

A. Originally the Four Ps represented the seller’s view of marketing approaches

leveraged in an effort to influence the buyer. (Refer to figure 1.3)

B. Adapting to complexities of current marketing environments, original approaches

using the logic of a 4 P’s strategy have been replaced with new strategies resulting

VII. Marketing management tasks

A. There is a shift in marketing efforts to one of using a more holistic approach

B. In accordance with these shifts marketers must:

1. Develop marketing strategies and plans, covered in chapter 2

2. Capture marketing insights by monitoring the marketing environment and

conducting market research, covered in chapter 3

9.

5. Shape the market offerings by creating a product or service strategy including

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pricing strategy, covered in chapters 10, 11, and 12

6. Create channel strategies, covered in chapter 13. Identify channel entities

(e.g. retail, wholesale, distributon) and their decision process methods in

chapter 14.

7. Communicate vale to the target market by designing the appropriate marketing

communication and integration strategies. Chapter 15 covers integrated

communications. Chapter 16 discusses mass communications (advertising and

PR). Chapter 17 analyzes personal communications.

8. Develop a long-term strategy which includes implementation and control as well

as global issues, covered in chapter 18

VII. Summary

II. Lectures

A. “Marketing Enters the 21st Century”

The focus in this discussion is on the increasingly important role of the marketing process

in the ever-changing domestic and global business environment.

Teaching Objectives

To explain the concepts related to understanding the role and potential of

marketing in the larger business environment.

To provide students a new and possibly different perspective on the role of

marketing in business and society.

student in assessing business developments.

Identify changes in the way consumers and businesses interact and how

organizations must adapt to changes both in behavior as well as technology.

Explore new consumer expectations with regards to organization compliance with

social mores.

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Discussion

INTRODUCTION

emphasis in marketing on creating and innovating with new and better products and services

rather than just competing against other firms and following the marketing patterns established

by competitors.

The marketing concept is a matter of increased marketing activity, but it also implies better

social/cultural issues.

CHANGES IN CONSUMER BEHAVIOR

There have been many major marketing shifts during the last few decades that have shaped

marketing in the 21st century. There is a view among professional marketers that there is no

longer the substantial product loyalty that existed over the last few decades. Product and brand

marketing quid-pro-quo strategies. Extensive airline loyalty program use and compensation in

the gambling industry are examples of the consumer understanding and using marketing

strategies to their advantage. The following chart demonstrates some of the major shifts that

have occurred to the present:

1980s 1990s 2000’s

Conspicuous consumer Frugal consumer, becoming

more well-off

Suspicious but generally well-off

consumer

something better

Emotional buyer Informed buyer Highly informed and specialized

Dreamers Escapists Focused on personal needs

Overindulgent Health, wellness-conscious Health, wellness and some

overindulgence, without

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expectation of costs or

consequences

Overworked Burnt-out, stressed out and

placing tremendous value on

convenience and time

Reliant on technology and

telecommunications to save time

in making purchase decisions

definition of the 4 P’s.

Optionally, another view of approaches can incorporate the concept of the four “4 Cs” as added

critical marketing variables:

1. Care: It has replaced service in importance. Marketers must really care about the

into a manageable good-better-best selection.

3. Community: Even national marketers must be affiliated, attached to

neighborhoods wherever they operate stores.

4. Challenge: The task of dealing with the ongoing reality of demographic change.

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