Chapter 1 Marketing: The Art and Science of Satisfying Customers 1
CHAPTER 1
MARKETING: THE ART AND SCIENCE OF SATISFYING CUSTOMERS
CHAPTER OVERVIEW
This new edition of Contemporary Marketing focuses on the strategies that allow companies to succeed
in today’s interactive marketplace. We call customer satisfaction an art because it requires imagination
and creativity and a science because it requires technical knowledge, skill, and experience.
Marketers must constantly look for ways to create loyal customers and build long-term relationships with
those customers, often on a one–to-one basis. They must be able to anticipate customer needs and
satisfy them with innovative goods and services. They must be able to do this faster and better than the
competition. And they must conduct their business according to the highest ethical standards.
Changes in the Updated Edition
The chapter has been updated and revised, and new features have been added:
• The Opening Vignette and Evolution of a Brand take a look at the Murray brothers and their
successful apparel company, Vineyard Vines. Shep and Ian Murray disliked their day jobs in
financial services and the business suits and ties that went with them. They went into business for
themselves, settling on a product they knew nothing about: neckties. They reasoned that if they
sold enough ties, they could stop wearing them. Fifteen years later, their idea has become
Vineyard Vines, a multimillion dollar business, that sells high-quality clothing for men, women, and
children via company stores, catalogs, and the company website. The complete story is in
“Vineyard Vines Markets the Good Life.”
• Solving an Ethical Controversy explores the issue of whether cities should ban the sale of
sugary drinks. In an effort to help reduce obesity rates among its residents, New York City tried to
• Marketing Success features the story of how the Weather Channel evolved from a cable channel
that reported on weather conditions to a business that expanded its brand through marketing
strategies that tap directly into the digital world. Now it operates a cable channel with original
reality-show programming, a website highlighting conditions and forecasts for 100,000 locations
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worldwide plus educational and seasonal features, a radio network with 700 affiliates, a popular
mobile app, and a Twitter partnership called Weather Channel Social. The company is in the
midst of changing its focus from a cable network viewers watch during weather disasters to a
company that forecasts consumer behavior by analyzing when, where, and how often consumers
check the weather.
• Chapter Case 1.1 “Kraft Focuses on Brand Building” talks about the innovative marketing
strategies used by Kraft to communicate and engage with customers. After splitting itself in two
separate companies, one of the companies, the Kraft Foods Group, focuses on meals and
desserts with products such as Cool Whip, Jell-O, and its iconic mac and cheese mix. Its social
media platform continues to engage loyal customers as well as younger, new consumers with
marketing strategies communicated across Facebook, Twitter, and Pinterest.
• Collaborative Learning Exercises are provided in several areas involving marketing and
customer satisfaction—Definition of Marketing, Not-for-Profit Marketing, Person Marketing, Place
Marketing, and Creativity.
LECTURE OUTLINE
Opening Vignette and Evolution of a Brand — Vineyard Vines Markets the Good Life. The company’s motto is
“Every day should feel this good.” How can the company’s marketing team continue to keep this branding
approach fresh while attracting new customers?
With more than half of its sales devoted to men’s clothing, what strategies can the company use to open up new
markets? How can the company use social media to market its products and expand its brand while capitalizing
on its laidback image? How can the company increase its e-commerce sales, which are only 30% of its
business?
Table 1.1 Four Types of
Utility. Ask students for
examples of each type
1. What is marketing?
a. Producing and marketing goods and services are the essence of
economic life in any society, creating a benefit called utility
b. Utility is the want-satisfying power of a good or service
2. The four basic kinds of utility:
a. Form utility—created when raw materials and components are
converted into finished goods and services
3. All organizations must create utility to survive. Designing and marketing
4. Marketing specialists are responsible for most of the activities necessary to
create the customers the organization wants, including:
a. Identifying customer needs
b. Designing goods and services that meet those needs
c. Communicating information about those goods and services to
prospective buyers
5. A definition of marketing
a. The word marketing encompasses a broad scope of activities and
ideas
6. Today’s global marketplace
a. Factors that have forced countries to extend their economic views
i. International agreements designed to increase trade
ii. Rise of electronic commerce
iii. Interdependence of the world’s economies
Assessment check questions
1.1. Define “marketing,” and explain how it creates utility.
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1.2. What three factors have forced marketers to embrace a global marketplace?
International agreements are negotiated to expand trade among nations. The growth
of technology is bringing previously isolated countries into the marketplace. The
interdependence of the world’s economies is now a reality.
Chapter Objective 2: Contrast marketing activities during the five eras in the history of marketing.
Key Terms: exchange process, production orientation, sales orientation, seller’s market, buyer’s market,
consumer orientation, marketing concept, relationship marketing, social era
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era? Think of a common
product, possibly one
with a long history. How
might it have been
marketed during each
1. Five eras in the history of marketing
a. The essence of marketing includes managing customer relationships
2. The production era
a. Characterized by a production orientation—a business philosophy
stressing efficiency in producing a quality product
3. The sales era
a. Characterized by a sales orientation—a business philosophy
assuming that consumers will resist purchasing nonessential goods
and services
b. Attitude toward marketing is that creative advertising and personal
4. The marketing era
a. Began to emerge during the Great Depression of the 1930s when
both personal incomes and consumer demand for goods and
services declined
b. Was interrupted when rationing and shortages of goods occurred
Chapter 1 Marketing: The Art and Science of Satisfying Customers 5
a seller’s market (one in which there were more buyers for
fewer goods and services) to a buyer’s market (one in which
there were more goods and services than people willing to
buy them)
ii. Consumer orientation is a business philosophy incorporating
the marketing concept of first determining unmet consumer
needs and then designing a system for satisfying them
success and overall performance
5. The relationship era
a. Represents a major shift from the traditional concept of marketing as
a simple exchange between buyer and seller
6. The social era
a. As the second decade of the new century gets underway, the
7. Converting needs to wants
a. Every consumer must acquire goods and services on a continuing
basis to fill certain needs
b. Everyone must satisfy the fundamental needs for food, clothing,
Assessment check questions
2.1. What is the major distinction between the production era and the sales era?
2.2. What is the marketing concept? The marketing concept is a companywide
2.3. Describe the relationship era of marketing. The relationship era focuses on
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building long-term, value-added relationships over time with customers and suppliers.
Chapter Objective 3: Explain the importance of avoiding marketing myopia.
Key Terms: marketing myopia
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Table 1.2 Avoiding
Marketing Myopia:
Illustrates how firms in a
1. Avoiding marketing myopia
a. Marketing myopia is the failure of managers to recognize the scope
of their business
b. Future growth is endangered when management is product-oriented
2. A broader focus on customer need satisfaction rather than on the products
3.1. What is marketing myopia? Marketing myopia is management’s failure to
3.2. Give an example of how a firm can avoid marketing myopia. A firm can find
innovative ways to reach new markets with existing goods and services.
Chapter Objective 4: Describe the characteristics of not-for-profit marketing.
Key Terms: bottom line
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1. Extending the traditional boundaries of marketing
a. Today’s organizations—both profit-oriented and not-for-profit—see
2. Marketing in not-for-profit organizations
a. More than a quarter of U.S. adults work or volunteer in one or more of
the 2.3 million not-for-profit organizations in the country
b. Not-for-profit organizations operate in both the public and private
sectors
i. Government units pursue service objectives that are not
Chapter 1 Marketing: The Art and Science of Satisfying Customers 7
Note: Ask students to
name some of the
popular not-for-profit
organizations in U.S.
and analyze if these
organizations have all
the characteristics listed
in the text.
businesses, executives benefit both parties
3. Characteristics of not-for-profit marketing
a. The financial bottom line (the overall profitability and financial
performance of the organization) is not the major objective of not-for-
profit organizations
b. However, not-for-profit organizations still need to generate sufficient
revenues, often from donors, to accomplish their objectives, and
marketing can help them accomplish these objectives
c. Like profit-seeking firms, not-for-profit organizations may market
tangible goods or intangible services
Assessment check questions
4.1. What is the most obvious distinction between a not-for-profit organization and a
commercial organization? The biggest distinction between for-profit and not-for-profit
4.2. Why do for-profit and not-for-profit organizations sometimes form alliances? For-
profits and not-for-profits may form alliances to promote each other’s causes and
offerings. For-profits may do so as part of their social responsibility efforts.
Chapter Objective 5: Explain each of the five types of nontraditional marketing.
Key Terms: person marketing, place marketing, cause marketing, event marketing, organization marketing
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Table 1.3 Categories of
Nontraditional
service that is marketed
through each method.
Note: Ask students for
1. Nontraditional marketing
a. As marketing has evolved into an organization-wide activity, its
application has broadened beyond traditional boundaries
2. Person marketing
a. Person marketing refers to efforts designed to cultivate the attention,
3. Place marketing
a. Place marketing attempts to attract customers to particular areas
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arenas with corporate
names.
Note: Ask if students
feel organization
marketing is
to lure vacation travelers.
c. They also promote themselves as good locations for businesses.
d. Examples include California: “Find Yourself Here.” Tennessee:
“We’re Playing Your Song.”
4. Cause marketing
a. Cause marketing refers to the identification and marketing of a social
issue, cause or idea to selected target markets
5. Event marketing
a. Event marketing refers to the marketing of sporting, cultural, and
charitable activities to selected target markets
b. It includes sponsorships of events by firms seeking to increase public
6. Organization marketing
a. Organization marketing attempts to persuade people to accept the
goals of, receive the services of, or contribute in some way to an
organization
Assessment check questions
5.1. Identify the five major categories of nontraditional marketing. The five categories
5.2. Give an example of a way in which two or more of these categories might
overlap. Overlap can occur in many ways. An organization might use a person to
promote its cause or event. Two organizations might use one marketing effort to
Chapter Objective 6: Explain the shift from transaction-based marketing to relationship and social
marketing.
Key Terms: transaction-based marketing, relationship marketing, mobile marketing, interactive marketing, social
Chapter 1 Marketing: The Art and Science of Satisfying Customers 9
marketing, buzz marketing, strategic alliances
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Note: Remind students
of the relative cost of
acquiring new
customers versus the
Figure 1.2 Converting
successfully convert a
new customer into a
regular one, a loyal
one, and finally a wildly
enthusiastic one. Are
you an advocate for a
product or service?
Trace the steps you
went through to
become totally sold on
the brand. Did you skip
any of the steps given
think of several recent
examples of strategic
alliances and
partnerships. The
strategic alliance
between Intrawest and
Sprint for wireless
1. From transaction-based marketing to relationship marketing
a. Traditional view of marketing is a simple exchange process
(transaction-based marketing)
e. Relationship marketing gives a company the opportunity to move
2. Using Social Marketing to Build Relationships
a. Today’s technology allows people to communicate via social media,
email, voice mail, text messages, videoconferencing, and computer
networks
b. People can subscribe to personalized news services that deliver
article summaries on specified topics directly to their computers or
cell phones
c. Effective relationship marketing often relies heavily on information
technologies such as computer databases that record customers’
tastes, price preferences, and lifestyles
company’s products
3. Developing partnerships and strategic alliances
a. Relationship marketing extends to business-to-business relationships
with a firm’s suppliers and distributors as well as other types of
corporate partnerships
b. Strategic alliances are partnerships that create competitive
advantages
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to promote their causes and raise funds
Assessment check questions
6.1. How does relationship marketing give companies a competitive edge?
6.2. Why are interactive and social marketing important tools for marketers?
6.3. What is a strategic alliance? A strategic alliance is a partnership formed between
two organizations to create a competitive advantage.
Chapter Objective 7: Identify the eight universal functions of marketing.
Key Terms: wholesalers, exchange functions
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Figure 1.3 Eight
Universal Marketing
Functions. Review the
eight marketing
functions, and give a
1. The costs of marketing (what the firm needs to spend to market a product)
a. Firms must spend money to create time, place, and ownership
2. The functions of marketing (what the consumer receives in return for the cost
of marketing a product) are: buying, selling, transporting, storing,
standardizing and grading, financing, risk taking, and securing marketing
information
a. The eight universal functions are performed by manufacturers,
retailers and other marketing intermediaries called wholesalers
b. Two exchange functions
i. Buying: marketers must determine how and why consumers
buy certain products (goods and services)
c. Two physical distribution functions
i. Transporting: physically moving goods from the seller to the
purchaser
ii. Storing: warehousing goods until they are needed for sale
d. Four facilitating functions help marketers perform the exchange and
physical distribution functions
i. Standardizing and grading: quality and quantity control
standards and grades reduce the need for buyers to inspect
each item
Chapter 1 Marketing: The Art and Science of Satisfying Customers 11
expectations
iv. Securing marketing information: marketers gather information
to determine and satisfy consumer needs, as well as
information regarding potential customers
Assessment check questions
7.1. Which two marketing functions represent exchange functions? Buying and selling
7.2. Which two functions represent physical distribution functions? Transporting and
7.3. Which four functions are facilitating functions? The facilitating functions are
standardization and grading, financing, risk taking, and securing market information.
Chapter Objective 8: Demonstrate the relationship between ethical business practices, social
responsibility, sustainability, and marketplace success.
Key Terms: ethics, social responsibility, sustainable products
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to an ethical code of
conduct.
Solving an Ethical
Controversy—Banning
Sugary Drinks
sustainability.
1. Ethics and social responsibility: doing well by doing good
a. Ethics are moral standards of behavior expected by a society
2. Most businesspeople follow ethical practices
a. Many companies offer ethics training to employees
b. Corporate mission statements often include pledges to protect the
environment, contribute to communities, and improve workers’ lives
c. Social responsibility involves marketing philosophies, policies,
procedures, and actions whose primary objective is to enhance
3. Strategic Implications of Marketing in the 21st Century
a. Advances and innovations in e-commerce and computer technologies
have allowed organizations to reach new markets, reduce selling and
marketing costs, and enhance their relationships with customers and
suppliers
Assessment check questions
8.2. What is social responsibility? Social responsibility involves marketing
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philosophies, policies, procedures, and actions whose primary objective is the
enhancement of society.
ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES
Chapter 1 Assurance of Learning Review
1. Identify the four types of utility, and give an example of each.
Answer: Form utility—raw materials and inputs are converted into finished goods (example: manufacturer
combining glass, plastic, metals, and circuits to create a digital camera). Time utility—goods or services
are available when consumers want them (example: pizza places adding delivery cars on Super Bowl
Sunday). Place utility—goods or services are available where consumers want them (example: vending
machines making snacks available in office lunch rooms). Ownership utility—title to goods or services is
transferred (example: music fan buying a concert ticket online).
Point value: 1
BUSPROG: Analytic
DISC: Marketing Plan
Learning Objective: 1-1
Topic: A-head: What Is Marketing?
Bloom’s: Knowledge
Difficulty: Easy
2. What condition in the marketplace gave rise to the need for a consumer orientation by businesses after
World War II?
Answer: The rationing and shortage of consumer goods during the war led to a shift from focusing on
selling products that were already produced to understanding the wants and needs of consumers.
Point value: 1
3. Define “relationship marketing” and describe how it fits into the marketing concept.
Answer: Relationship marketing involves developing long-term, value-added connections to customers
and suppliers over time. It includes strategic alliances and partnerships among manufacturers, retailers,
4. Why do not-for-profit organizations need to engage in marketing efforts?
Answer: More than 2.3 million not-for-profit organizations in the U.S. operate in both public and private
sectors. Profit is not the priority, but with all that competition, an organization often adopts marketing
concepts to help get out its message, cover costs and payroll, attract donors, and even sell tangible
5. Give an example of how the National Highway Traffic Safety Administration’s “Click it or Ticket”
campaign could use one or more of the nontraditional marketing techniques to promote the cause in a
state that is newly adopting it.
Answer: It could use person marketing by hiring a celebrity or local personality to endorse its services
and cause. It could use place marketing by stressing its “National Highway Traffic Safety
Administration’s” reputation with images of the city buildings and streets. It could use cause marketing by
6. What might be some of the benefits of mobile marketing for firms that use it to reach out to
consumers?
Answer: Mobile marketing offers the technology to send marketing messages via wireless Internet
connections—through laptops, computers, tablets, and smartphones. Firms might benefit from a number