Chapter One

Defining marketing for

the new realities
 Chapter 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 tasks are necessary for successful
marketing management?
 What is Marketing?
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.

Or marketing is “meeting needs profitably.”

 What is Marketing Management?

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.
 The Value of Marketing
• Financial success often depends on marketing
ability.
• Marketing builds strong brands and a loyal
customer base.
 What is Marketed?

• Goods
• Services
• Events
• Experiences
• Persons
 What is Marketed?
• Places: states, regions, and whole nations compete to
attract tourists.
• Properties: real estates, stocks and bonds.
• Organizations: Museums, performing arts
organizations, corporations, and nonprofits all use
marketing to boost their public images and compete for
audiences and funds.
• Information: is essentially what books, schools, and
universities produce.
• Ideas: Products and services are platforms for
delivering some idea or benefit.
WHO MARKETS?
 Demand States
Eight demand states are possible:
1.Negative demand: Consumers dislike the
product.
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.
 Demand States
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.
• In each case, marketers must identify the
underlying cause(s) of the demand state and
determine a plan of action to shift demand to
a more desired state.

• MARKETS Traditionally, a “market” was a

physical place where buyers and sellers
gathered to buy and sell goods.
| Fig. 1.1 | Structure of Flows in a
Modern Exchange Economy
 Figure 1.2
A Simple Marketing System
 Key Customer Markets
Consumer markets:

Business markets:

Global markets:

Nonprofit/Government markets:
Governments are a key customer market for many companies.
 Core Marketing Concepts
• Needs, Wants, and
• Impressions and
Demands
Engagement
• Target Markets,
• Value and Satisfaction
Positioning, and
Segmentation • Supply Chain
• Offerings and Brands • Competition
• Marketing Channels • Marketing
Environment
• Paid, Owned, and
Earned Media
 Types of Needs
• Stated needs: what the customer asks for (an
inexpensive car).
• Real needs: what the stated need really means
(The customer wants a car whose operating cost, not initial price, is low.)

• Unstated needs: (The customer expects good

service from the dealer.)
• Delight needs: (The customer would like the
dealer to include an onboard GPS system.)
• Secret needs: (The customer wants friends to see
him or her as a savvy consumer.)
 Target Markets, Positioning &
Segmentation
• Marketers identify distinct segments of buyers by
identifying demographic, psychographic, and
behavioral differences between them.
• They then decide which segment(s) present the
greatest opportunities.
• For each of these target market the firm develops
a market offering that it positions in target buyers’
minds as delivering some key benefit(s).
Target Markets, Positioning &
Segmentation
 Offerings and Brands
The company offering a set of benefits that
satisfy costumer needs, which can be a
combination of products, services,
information, and experiences.
A brand is
an offering
from a
known
source.
 Marketing Channels
To reach a target market, the marketer uses
three kinds of marketing channels:
1.Communication channels deliver and
receive messages from target buyers.
2.Distribution channels help display, sell, or
deliver the physical product or service(s) to
the buyer or user.
3.Service channels to carry out transactions
with potential buyers.
 PAID, OWNED, AND EARNED MEDIA
• The rise of digital media gives marketers a host of new ways to
interact with consumers and customers.
• Paid media: TV, Magazine and display ads.
• Owned Media: web sit, blog, Facebook page, Twitter account.
• Earned media: in which consumers, the press, or other
outsiders voluntarily communicate something about the brand
via word of mouth, buzz, or viral marketing methods.
 IMPRESSIONS AND ENGAGEMENT
• Marketers now think of three “screens” or
means to reach consumers: TV,
Internet, and mobile.
 Value and Satisfaction
The buyer chooses the offerings he or she
perceives to deliver the most value the sum of
the tangible and intangible benefits and costs.
 Value, a central marketing concept, 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.
 SUPPLY CHAIN
• The supply chain is a channel stretching
from raw materials to components to
finished products carried to final buyers.
The Supply Chain for Coffee
 COMPETITION
• Competition includes all the actual and
potential rival offerings and substitutes a
buyer might consider.
 Marketing Environment
Demographic Economic

Socio-cultural
Political-legal

Technological Natural

• Marketers must pay close attention to the trends and

developments in these and adjust their marketing strategies as
needed.
The New Marketing Realities
 The New Marketing Realities
Three transformative forces:
1.Technology:
2.Globalization:.
3.Social responsibility:
 What new capabilities have these forces given consumers
and companies?
NEW CONSUMER CAPABILITIES:
•Can use the Internet as a powerful information and
purchasing aid.
•Can search, communicate, and purchase on the move.
•Can tap into social media to share opinions and express
loyalty.
•Can actively interact with companies.
•Can reject marketing they find inappropriate.
 What new capabilities have these forces given consumers
and companies?

NEW COMPANY CAPABILITIES:

Can use the Internet as a powerful information and sales
channel, including for individually differentiated goods.
Can collect fuller and richer information about markets,
customers, prospects, and competitors.
Can reach customers quickly and efficiently via social media
and mobile marketing.
Can improve purchasing,
recruiting, training, and internal
and external communications.
Can improve cost efficiency.
Company Orientation toward
the Marketplace
Production

Product

Selling

Marketing

Holistic marketing concept

 The production concept
It holds that consumers prefer products that
are widely available and inexpensive.
Managers of production-oriented businesses
concentrate on achieving high production
efficiency, low costs, and mass distribution.
 The product concept
The Product concept proposes that
consumers favor products offering the
most quality, performance, or innovative
features.
They might commit the
“bettermousetrap” fallacy, believing a
better product will by itself lead people to
beat a path to their door.
 The selling concept
The selling concept holds that consumers and
businesses, if left alone, won’t
buy enough of the organization’s
products.
It is practiced most aggressively with
unsought goods—goods buyers don’t
normally think of buying such as
insurance and cemetery plots—and
when firms with overcapacity aim to sell what they make,
rather than make what the market wants.
 The marketing concept
• The job is to find not the right customers for
your products, but the right products for your
customers.
• 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.
 The holistic marketing concept
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 acknowledges that everything

matters in marketing— and that a broad,
integrated perspective is often necessary.
 The holistic marketing concept
• Holistic marketing thus recognizes and
reconciles the scope and complexities of
marketing activities.

• Four components characterizing holistic

marketing: relationship marketing, integrated
marketing, internal marketing, and
performance marketing.
Holistic Marketing
 Relationship Marketing
• Relationships with people and organizations
that directly or indirectly affect the success of
the firm’s marketing activities.
• Four key constituents for relationship
marketing are customers, employees,
marketing partners (channels, suppliers,
distributors, dealers, agencies), and members
of the financial community (shareholders,
investors, analysts).
 Integrated Marketing
• Integrated marketing occurs when the
marketer devises marketing activities and
assembles marketing programs to create,
communicate, and deliver value for
consumers such that “the
• whole is greater than the sum of its parts.”
 Internal Marketing
Internal marketing is the task of hiring,
training, and motivating able employees
who want to serve customers well.
 Performance Marketing

• Performance Marketing requires

understanding the financial and nonfinancial
returns and society from marketing activities
and programs.
 The Marketing Mix
• “A set of marketing tools that the firm uses
to pursue its marketing objectives in the
target market"
 Updating the Four Ps

People: reflects, in part, internal marketing and the fact that

employees are critical to marketing success.
Processes: reflects all the creativity, discipline, and structure
brought to marketing management.
Programs: reflects all the firm’s consumer-directed activities.
We define performance as in holistic marketing.
 Marketing Management Tasks
• Develop market strategies and plans
• Capture marketing insights
• Connect with customers
• Build strong brands
• Create value
• Deliver value
• Communicate value
• Conduct marketing responsibility for long-term
success.
The New Marketing Realities
 For Review
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 tasks are necessary for successful
marketing management?