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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.
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.
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
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
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
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.
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
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,
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
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
