LEARNING OBJECTIVES
In this chapter, we will address the following questions:
1. Why is marketing important?
2. What is the scope of marketing?
3. What are some core marketing concepts?
4. What forces are defining the new marketing realities?
5. What new capabilities have these forces given consumers and companies?
6. What does a holistic marketing philosophy include?
7. What are the tasks necessary for successful marketing management?
SUMMARY
1. Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer relationships in
ways that benefit the organization and its stakeholders. 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.
2. Marketers are skilled at managing demand: They seek to influence its level, timing,
and composition for goods, services, events, experiences, persons, places, properties,
organizations, information, and ideas. They also operate in four different marketplaces:
consumer, business, global, and nonprofit.
3. Marketing is not done only by the marketing department. It needs to affect every
aspect of the customer experience. To create a strong marketing organization, marketers must
think like executives in other departments, and executives in other departments must think
more like marketers.
4. Today’s marketplace is fundamentally different as a result of major societal forces that
have resulted in many new consumer and company capabilities. In particular, technology,
globalization, and social responsibility have created new opportunities and challenges and
significantly changed marketing management. Companies seek the right balance of
tried-and-true methods with breakthrough new approaches to achieve marketing excellence.
5. There are five competing concepts under which organizations can choose to conduct
their business: the production concept, the product concept, the selling concept, the marketing
concept, and the holistic marketing concept. The first three are of limited use today.
6. The holistic marketing concept is based on the development, design, and
implementation of marketing programs, processes, and activities that recognize their breadth
and interdependencies. Holistic marketing recognizes that everything matters in marketing and
that a broad, integrated perspective is often necessary. Four components of holistic marketing
are relationship marketing, integrated marketing, internal marketing, and performance
marketing.
C H A P T E R
1
DEFINING MARKETING
FOR THE NEW REALITIES
7. The set of tasks necessary for successful marketing management includes developing
marketing strategies and plans, capturing marketing insights, connecting with customers,
building strong brands, creating, delivering, and communicating value, and creating long-term
growth.
OPENING THOUGHT
It is important to focus on how and why the traditional view of marketing has changed, and to
introduce the various ways of measuring performance, since they will reappear throughout the
text. Marketing applies to a variety of different areas and is increasingly involving many
levels of the organization. Students who are not marketing majors may have some difficulty
accepting the encompassing role that marketing has on the other functional disciplines within
a firm. For those students who have never been exposed to marketing and its components, the
instructor’s challenge is to educate the students about the world of marketing. The in-class and
outside of class assignments noted in this text should help both educate and excite the students
about the “world of marketing.”
TEACHING STRATEGY AND CLASS ORGANIZATION
PROJECTS
1. Semester-Long Marketing Plan Project
An effective way to help students learn about marketing management is through the actual
creation of a marketing plan for a product or service. This project is designed to
accomplish such a task.
Dividing the class into groups, have each group decide on a “fictional” consumer product
or service they wish to bring to market. During the course of the semester, each of the
elements of the marketing plan, coordinating with the text chapter, will be due for the
instructor’s review. The instructor is encouraged to review each submission and suggest
areas for improvement, for more detailed study, or if acceptable to allow the students to
proceed to the next phase in development. Students can use the computer program
Marketing Plan Pro in creating their proposals and submissions and in their final
presentation(s). At the end of the semester, each group is to present their entire marketing
plan to the class.
The following is an outline of this process:
Chapter # Title Element of the Marketing Plan Due
1 Defining Marketing for
the New Realities
None, group formation and begin the process
of selecting the product or service.
2 Developing Marketing
Strategies and Plans
Formation of groups; first presentation of
“product” to instructor for approval.
3 Collecting Information Competitive information and environmental
and Forecasting
Demand
scanning project(s) completed and presented
for instructor’s review.
4 Conducting Marketing
Research
Initial marketing research parameters
completed; demand forecasted and target
market selections defined.
5 Creating Long-Term
Loyalty Relationships
Students should have completed their value
proposition for the fictional product, defined
how they will deliver satisfaction, and
maintain customer loyalty.
6 Analyzing Consumer
Markets
Definitive data on the consumer for the
product/service including all demographic and
other pertinent information obtained and ready
for instructor’s approval.
7 Analyzing Business
Markets
No report due for this chapter; allows students
and instructor to “catch up” on the project.
8 Tapping into Global
Markets
If the project is to be exported to another
country, then students’ submissions regarding
the cultural factors that need to be considered
should be done here.
9 Identifying Market
Segments and Targets
Specific market segmentation, targeting, and
positioning statements by the students due.
10 Crafting the Brand
Positioning
At this point in the semester, student projects
should include their fictional product or
service’s brand positioning. In relationship to
the material contained in the chapter, students
should have delineated and designed a
differentiated brand positioning for their
project.
11 Creating Brand Equity At this point in the semester, students are to
have their “branding” strategy developed for
their project. Questions to have been
completed include the brand name, its equity
position, and the decisions in developing the
brand strategy.
12 Addressing Competition
and Driving Growth
At this point in the semester-long project,
students should be prepared to present their
competitive analysis. Who are the market
leaders for their chosen product or service?
What niche have they identified for their
product/service? Is their product or service
going to be a leader, follower, or challenger to
well-established products or brands?
13 Setting Product Strategy At this point in the semester-long project,
students should have set their group project’s
product or service strategy. Instructors are to
evaluate their submissions on the product (or
service) features, quality, and price and other
considerations of “product” found in this
chapter.
14 Designing and
Managing Services
At this point in the semester-long project,
those students who have selected a “service”
idea for the marketing plan must submit their
offering. Students whose project is a
“product-based” component do not have
anything to submit for this chapter.
15 Introducing New Market
Offerings
At this point in the semester-long project, in
this section should be a brief write up by the
students as to the consumer-adoption process
for their new product. How will the consumer
learn about their new product and how quickly
will they adopt it? Will the product be targeted
to the heavy users and early adopters first, then
early and late majorities? What is their
estimated time for full adoption?
16 Developing Pricing
Strategies and Programs
At this point in the semester-long project,
students should be prepared to hand in their
pricing strategy decisions for their fictional
product/service. In reviewing this section, the
instructor should make sure that the students
have addressed all or most of the material
concerning pricing covered in this chapter.
17 Designing and
Managing Integrated
Marketing Channels
At this point in the semester-long project,
students should present their channel decisions
for getting their product or service to the
consumer. In evaluating this section, the
instructor should evaluate the completeness of
the projects to the material contained in this
chapter.
18 Managing Retailing,
Wholesaling, and
Logistics
At this point in the semester-long project for
the “fictional” product or service, students
should be directed to turn in their retailing,
wholesaling, and logistical marketing plans.
Those students who are acting in the role of
providing a new “service” should include here
their plans for locations, hours of operations,
and how their “service” plans on managing
demand and capacity issues.
19 Designing and
Managing Integrated
Marketing
Communications
At this point in the semester-long project,
students should have agreed upon their
integrated marketing communications matrix.
The instructor is encouraged to evaluate the
submissions vis-à-vis the material presented in
this chapter. In reviewing the submissions, the
instructor should evaluate the continuity of the
message across all possible communication
media (students will tend to concentrate their
media on television or on the Internet and
exclude other forms such as personal selling
and radio).
20 Managing Mass
Communications:
Advertising, Sales
Promotion, Events and
Experiences, and Public
Relations
At this point in the semester-long project,
students should submit their advertising
program complete with objectives, budget,
advertising message, and creative strategy,
media decisions, and sales and promotional
materials.
21 Managing Digital
Communications:
Online, Social Media,
and Mobile
At this point in the semester-long project,
students who have decided to market their
product/service using digital communications
should submit their proposals. This begins the
presentation phase of the project; student
groups should begin their presentations to the
class.
22 Managing Personal
Communications: Direct
And Database
Marketing And Personal
Selling
At this point in the semester-long project,
students who have decided to market their
product/service through direct market channels
should submit their proposals. All other groups
must decide at this point if they will use a
direct sales force, and if so, to outline the
specifics (including financials) for this option.
23 Managing a Holistic
Marketing Organization
for the Long Run
Second phase of the presentations of the
project; students should ensure that their
marketing plans contains a holistic view of the
marketing process.
Under the projects heading for each chapter will be a reminder of the material due when that
chapter is scheduled to be discussed in class.
ASSIGNMENTS
In small groups, ask the students to review the annual report from Unilever. How do the
missions discussed in the opening vignette translate into their current business practices? How
are its marketing investments and initiatives affecting its profitability? What conclusions can
you draw from Unilever’s progress?
Assign students the task of visiting some companies Web sites to see if they feel that the
company is responding to the changes in marketing today, namely, societal marketing.
Suggestions include firms like Tom’s (shoes) and Ben and Jerry’s Ice Cream. Have the
students comment on what they find there of particular interest to them.
Students can choose a firm of their preference, interview key marketing management
members and ask the firm how they are reacting to the changes in marketing management for
the new realities.
Have the students read Adi Narayan’s “Marketers Aim New Ads at Video iPod Users,”
BloombergBusinessWeek April 17, 2014
(http://www.businessweek.com/articles/2014-04-17/indias-mobile-marketers-try-phone-calls-t
o-reach-rural-consumers) and Suzanne Vranica and Christopher S. Stewart’s “Mobile
Advertising Begins to Take Off: Spending More Than Doubled in the First Half,” Wall Street
Journal, October 9, 2013 and comment on how effective they believe cell phone
advertisements will be in the future.
Have the students reflect upon their favorite product and/or service. Then have the students
collect marketing examples from each of these companies. This information should be in the
form of examples of printed advertising, copies of television commercials, Internet
advertising, or radio commercials. During class, have the students share what they have
collected with others. Questions to ask during the class discussion should focus on why this
particular example of advertising elicits a response from you. What do you like/dislike about
this marketing message? Does everyone in the class like/dislike this advertising?
DETAILED CHAPTER OUTLINE
Opening Vignette: Unilever is responding to the digital revolution and other major
changes in the business environment with a new marketing model that establishes social,
economic, and product missions for each brand. Examples of initiatives include halving
its ecological footprint while doubling revenues and drawing 70-75% of business from
developing and emerging markets by 2020. Marketing is both an art and a science, and
results from careful planning and execution using state-of-the art tools and techniques.
I. The Value of Marketing
A. Marketing ability helps create sufficient demand for products and services, which is
essential for a firm’s financial success, creates jobs and provides resources for firms
to engage is socially responsible activities.
B. Marketing Decision Making
i. Marketers must choose features, prices, and markets and decide how
much to spend on advertising, sales, and online and mobile marketing
in an environment where consumers, competition, technology, and
economic forces change rapidly and consequences quickly multiply.
ii. Marketers that fail to carefully monitor their customers and
competitors, continuously improve their value offerings and marketing
strategies, or satisfy their employees, stockholders, suppliers, and
channel partners in the process are more vulnerable to competitive
entry.
C. Marketers adapt, for example, including the use of web-only and social media campaigns
in their marketing mixes, to thrive in the changing environment.
II. The Scope of Marketing
A. What is Marketing?
i. Marketing is about identifying and meeting human and social needs
ii. “Meeting needs profitably.”
iii. American Marketing Association definition: Marketing is the activity, set of
institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and
society at large.
iv. 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.
v. Social definition of marketing: 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.
vi. Selling is not the most important part of marketing; aim of
marketing is to know and understand the customer so well that the
product or service fits him and sells itself.
B. What is Marketed? Ten main types of entities: goods, services, events,
experiences, persons, places, properties, organizations, information, and ideas.
i. Goods: physical goods include food products, cars, refrigerators,
televisions, machines, and other mainstays of a modern economy.
ii. Services: represent approximately 2/3 of the U.S. economy,
including airlines, hotels, maintenance and repair people, and
accountants, bankers, doctors, and management consultants.
iii. Events: include time-based events, global and local events
iv. Experiences: marketers orchestrate several services and goods to
create, stage, and market experiences.
v. Persons: include artists, musicians, CEOs, physicians, high-profile
lawyers and financiers, and other professionals often get help from
marketers, and each person has been advised to become a “brand.”
vi. Places: include economic development specialists, real estate
agents, commercial banks, local business associations, and
advertising and public relations agencies.
vii. Properties: intangible rights of ownership to either real property
(real estate) or financial property (stocks and bonds).
viii. Organizations: include museums, performing arts organizations,
corporations, and nonprofits that use marketing to boost their public
images and compete for audiences and funds.
ix. Information: what books, schools, and universities produce, market,
and distribute at a price to parents, students, and communities.
x. Ideas: every market offering includes a basic idea. Products and
services are platforms for delivering some idea or benefit.
C. Who Markets?
i. A marketer is someone who seeks a response—attention, a
purchase, a vote, a donation—from another party, called the
prospect.
ii. Marketers are skilled at stimulating demand for their products, but
they also seek to influence the level, timing, and composition of
demand to meet the organization’s objectives.
iii. Eight demand states are possible:
1. Negative demand—Consumers dislike the product and may even pay
to avoid it.
2. Nonexistent demand—Consumers may be unaware of 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, weekly, daily, or even hourly basis.
6. Full demand—Consumers are adequately buying all products
put into the marketplace.
7. Overfull demand—More consumers would like to buy the
product than can be satisfied.
8. Unwholesome demand—Consumers may be attracted to products
that have undesirable social consequences.
iv. A market is a collection of buyers and sellers who transact over a
particular product or product class (such as the housing market or the
grain market).
v. Key customer markets include:
1. Consumer Markets typically establish a strong brand image by
developing a superior product or service, ensuring its
availability, and backing it with engaging communications and
reliable performance.
2. Business Markets typically have a strong emphasis on the sales
force, the price, and the seller’s reputation.
3. Global Markets require companies to navigate cultural,
language, legal, and political differences as they make
marketing decisions.
4. Nonprofit and Governmental Markets include churches,
universities, charitable organizations, and government
agencies.
III. Core Marketing Concepts
A. Needs, Wants, and Demands
i. Needs = basic human requirements
ii. Wants = when needs are directed to specific objects that might satisfy the
need
iii. Demands = wants for specific products backed by an ability to pay
iv. Marketers do not create needs: Needs pre-exist marketers.
v. Five types of needs:
1. Stated needs
2. Real needs
3. Unstated needs
4. Delight needs
5. Secret needs
B. Target Markets, Positioning and Segmentation
i. Segmentation: identification of distinct segments of buyers by
identifying demographic, psychographic, and behavioral differences
between them.
ii. Target markets: the segment(s) present the greatest opportunities.
iii. For each target market, the firm develops a market offering that it
positions in target buyers’ minds as delivering some key benefit(s).
C. Offerings and Brands
i. A value proposition is a set of benefits that satisfy a consumer’s
needs.
ii. The intangible value proposition is made physical by an offering, which
can be a combination of products, services, information, and
experiences.
iii. A brand is an offering from a known source. All companies strive to
build a brand image with as many strong, favorable, and unique brand
associations as possible.
D. Marketing Channels
i. Communication channels deliver and receive messages from target buyers
ii. Distribution channels help display, sell, or deliver the physical product or
service(s) to the buyer or user
iii. Service channels include warehouses, transportation companies, banks, and
insurance companies
E. Paid, Owned, and Earned Media
i. Paid media allow marketers to show their ad or brand for a fee.
ii. Owned media are communication channels marketers actually own, like a
company or brand brochure, Web site, blog, Facebook page, or Twitter
account.
iii. Earned media are streams in which consumers, the press, or other outsiders
voluntarily communicate something about the brand via word of mouth,
buzz, or viral marketing methods.
F. Impressions and Engagement
i. Marketers now think of three “screens” or means to reach consumers:
TV, Internet, and mobile.
ii. Impressions occur when consumers view a communication
iii. Engagement is the extent of a customer’s attention and active
involvement with a communication
G. Value and Satisfaction
i. Value is primarily a combination of quality, service, and price (qsp),
called the customer value triad. Value perceptions increase with quality
and service but decrease with price.
ii. Satisfaction reflects a person’s judgment of a product’s perceived
performance in relationship to expectations.
H. Supply Chain
i. The supply chain is a channel stretching from raw materials to components
to finished products carried to final buyers.
ii. Each company in the chain captures only a certain percentage of the total
value generated by the supply chain’s value delivery system. When a
company acquires competitors or expands upstream or downstream, its aim
is to capture a higher percentage of supply chain value.
I. Competition: includes all the actual and potential rival offerings and substitutes a
buyer might consider.
J. Marketing Environment
i. Task environment includes the actors engaged in producing, distributing,
and promoting the offering.
ii. Broad environment consists of six components: demographic environment,
economic environment, social-cultural environment, natural environment,
technological environment, and political-legal environment