Marketing Chapter 1 Homework During The Course The Semester Each The

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

2. Marketers are skilled at managing demand: They seek to influence its level, timing,

3. Marketing is not done only by the marketing department. It needs to affect every

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,

5. There are five competing concepts under which organizations can choose to conduct

6. The holistic marketing concept is based on the development, design, and

implementation of marketing programs, processes, and activities that recognize their breadth

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

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

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.

Collecting Information

and Forecasting Demand

Competitive information and environmental

scanning project(s) completed and presented

for instructor’s review.

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.

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

At this point in the semester-long project,

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

the projects to the material contained in this

chapter.

At this point in the semester-long project,

students should present their channel decisions

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.

demand and capacity issues.

Designing and

At this point in the semester-long project,

Managing Integrated

Marketing

Communications

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

should submit their proposals. This begins the

presentation phase of the project; student

groups should begin their presentations to the

class.

At this point in the semester-long project,

students who have decided to market their

product/service using digital communications

22

Managing Personal

Communications: Direct

And Database

Marketing And Personal

Selling

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.

marketing process.

At this point in the semester-long project,

students who have decided to market their

product/service through direct market channels

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.

END–OF–CHAPTER SUPPORT

MARKETING DEBATE—Does Marketing Create or Satisfy Needs?

Marketing has often been defined in terms of satisfying customers’ needs and wants. Critics,

however, maintain that marketing goes beyond that and creates needs and wants that did not

exist before. They feel marketers encourage consumers to spend more money than they should

on goods and services they do not really need.

freedom to choose is substantially weakened by constant and consistent exposure to a range of

needs and wants of others. Marketers should understand that when it comes to resisting the

pressure to conform, that individuals are and can be weak in their resolve. Marketers must take

an ethical position to only market to those consumers able to purchase their products.

MARKETING DISCUSSION – Shifts in Marketing

Consider the three key forces driving the new marketing realities. How are they likely to

change in the future? What other major trends or forces might affect marketing?

Suggested Response

Consumers can increasingly participate in marketing, and collaborative marketing is enabled

by technological advances and widespread technology adoption. This will continue to create

new opportunities, as technology improves companies’ abilities to share information and

manage customer relationships, including the customization of interactions. Globalization has

made countries increasingly multicultural and has changed innovation and product

Other trends and forces that might affect marketing include:

a) Social responsibility: the private second is taking more responsibility for improving

living conditions and firms have elevated the role of corporate social responsibility.

Sustainability is increasingly important to customers and firms.

b) New consumer capabilities: Consumers are empowered through technology, like

Marketing Excellence: Nike

1. What are the pros, cons, and risks associated with Nike’s core marketing strategy?

Suggested Answer:

One of Nike’s core marketing strategies is their belief in the “pyramid of influence” and its

2. If you were Adidas, how would you compete with Nike?

Suggested Answer: I would emphasize my “international” scope of producing great soccer

Marketing Excellence: GOOGLE

1. With a portfolio as wide as Google’s, what is the company’s core brand value?

Suggested Answer: Google’s core brand value is “to organize the world’s information and

2. What’s next for Google? Is the company right to put so much focus on Mobile?

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

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

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

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:

2. Nonexistent demand—Consumers may be unaware of or

uninterested in the product.

4. Declining demand—Consumers begin to buy the product less

frequently or not at all.

6. Full demand—Consumers are adequately buying all products put

into the marketplace.

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

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,

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:

2. Real needs

4. Delight 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.

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.

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

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),

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.

IV. The New Marketing Realities

A. Technology: widespread technology adoption has created new opportunities,

promotes shared information and customer relationship management.

B. Globalization:

i. Transportation, shipping, and communication technologies have made

it easier for us to know the rest of the world, to travel, to buy and sell

anywhere.

ii. Globalization has made countries increasingly multicultural.

V. Social Responsibility

A. The private sector is taking some responsibility for improving living conditions, and

firms all over the world have elevated the role of corporate social responsibility.

B. Marketing 3.0 suggests three central trends that change the way companies do

VI. A Dramatically Changed Marketplace

A. New Consumer Capabilities

i. Consumers are empowered through technology, like social media, and

by expanded information, communication and mobility.

ii. Consumers can use the Internet as a powerful information and

purchasing aid.

iii. Consumers can search, communicate, and purchase on the move.

iv. Consumers can tap into social media to share opinions and express

loyalty.

v. Consumers can actively interact with companies.

vi. Consumers can reject marketing they find inappropriate.

B. New Company Capabilities

i. Companies can use the Internet as a powerful information and sales

channel, including for individually differentiated goods.

C. Changing Channels

i. Retail transformation: increased competition from a variety of formats

has yielded more entertaining retail experiences.

ii. Disintermediation: delivery of products and services by intervening in

the traditional flow of goods.

D. Heightened Competition

i. Private labels: Powerful retailers market their own store brands,

increasingly indistinguishable from any other type of brand.

ii. Mega-brands: Many strong brands have become mega-brands and

E. Marketing Balance: Companies must always move forward (incorporate the Internet

and digital efforts into marketing plans), innovating products and services, staying in

touch with customer needs, and seeking new advantages rather than relying on past

strengths.

F. Marketing Accountability: Marketers are increasingly asked to justify their

investments in financial and profitability terms, as well as in terms of building the

VII. Company Orientation toward the Marketplace

A. The Production Concept:

i. Suggests consumers prefer products that are widely available and

inexpensive.

ii. Management aims for high production efficiency, low costs, and mass

distribution.

B. The Product Concept:

i. Consumers favor products offering the most quality, performance, or

innovative features.

ii. Managers may commit the “better–mousetrap” fallacy, believing a

better product will by itself lead people to beat a path to their door.

C. The Selling Concept:

i. Consumers and businesses, if left alone, won’t buy enough of the

organization’s products.

D. The Marketing Concept:

i. Find the right products for your customers.

ii. The marketing concept holds that the key to achieving organizational

goals is being more effective than competitors in creating, delivering,

and communicating superior customer value to your target markets.

E. The Holistic Marketing Concept:

i. Based on the development, design, and implementation of marketing

F. Relationship Marketing:

i. Aims to build mutually satisfying long-term relationships with key

constituents in order to earn and retain their business.

ii. Four key constituents for relationship marketing are customers,

supporting stakeholders—customers, employees, suppliers, distributors,

retailers, and others—with whom it has built mutually profitable

business relationships.

G. Integrated Marketing.

i. Two key themes:

2. marketers should design and implement any one marketing

activity with all other activities in mind.

ii. The company must develop an integrated channel strategy.

iii. The company must integrate communications to they reinforce and

complement each other.

H. Internal Marketing

i. Hiring, training, and motivating able employees who want to serve

customers well.

I. Performance Marketing

i. Requires understanding the financial and nonfinancial returns to

business and society from marketing activities and programs.

ii. Top marketers are increasingly going beyond sales revenue to examine

VIII. Updating the Four Ps

A. The original four Ps: product, price, place and promotion

B. The four As complement the four Ps:

i. Acceptability: extent to which a firm’s total product offering exceeds

customer expectations

ii. Affordability: extent to which customers in the target market are able

and willing to pay the product’s price.

iv. Awareness:

1. the extent to which customers are informed regarding the

2. It has two dimensions: brand awareness and product

knowledge.

C. Modern marketing realities suggest a more representative set that encompasses

modern marketing realities: people, processes, programs and performance.

i. People: reflects internal marketing and the fact that employees and

understanding consumers’ whole lives are critical to marketing success

ii. Processes: reflects all the creativity, discipline, and structure brought to

marketing management.

iii. Programs: reflects all the firm’s consumer-directed activities.

1. It encompasses the old four Ps as well as a range of other

iv. Performance: captures the range of possible outcome measures that

have financial and nonfinancial implications (profitability as well as

brand and customer equity) and implications beyond the company itself

(social responsibility, legal, ethical, and community related)

IX. Marketing Management Tasks

A. Developing Marketing Strategies and Plans: identify potential long-run opportunities,

given its market experience and core competencies

B. Capturing Marketing Insights:

i. Develop a reliable marketing information system to closely monitor its

marketing environment so it can continually assess market potential and

forecast demand.

ii. Develop a dependable marketing research system.

C. Connecting with Customers

i. Create value for its chosen target markets and develop strong,

profitable, long-term relationships with customers by understanding

consumer markets.

ii. Gain a full understanding of how organizational buyers buy. It needs a

sales force well trained in presenting product benefits.

D. Building Strong Brands

i. Divide the market into major market segments, evaluate each one, and

E. Creating Value

which includes the product quality, design, features, and packaging) to

gain a competitive advantage

ii. Decide on wholesale and retail prices, discounts, allowances, and credit

terms.

iii. Price should match well with the offer’s perceived value; otherwise,

buyers will turn to competitors’ products.

F. Delivering Value

i. Deliver the value embodied in products and services to the target

market.

ii. Channel activities include those the company undertakes to make the

product accessible and available to target customers.

G. Communicating Value

i. Develop an integrated marketing communication program that

maximizes the individual and collective contribution of all

communication activities

H. Creating Successful Long-Term Growth

i. Build a marketing organization capable of responsibly implementing

the marketing plan