Chapter 1
Defining Marketing for
st
21 Century
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Copyright © 2003 Prentice-Hall, Inc.
Key Points for Chapter 1
1.
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5.
6.
7.
8.
Definition of marketing
Demand States
Marketplace, marketspace and metamarket
Needs, wants, and demands
Value and satisfaction
Customer value triad
Marketing channels
Supply chain
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Key Points for Chapter 1
9. Production concept, product concept, selling
concept, and marketing concept
10. Relationship marketing
11. Integrated Marketing
12. Four P’s and Four C’s
13. Internal marketing and external marketing
14. Societal responsibility marketing
15. Market Segmentation, Targeting, and
Positioning
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The Importance of Marketing
 Financial success depends on marketing ability
 All other company functions will not matter,
 if there is not sufficient demand for its products and
services which brings a profit to a company.
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The Scope of Marketing
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What is Marketing?
What is Marketed?
Who Markets?
Marketing in Practice
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What is Marketing?
 Marketing
 Marketing is about identifying and meeting
human and social needs.
 In short, marketing is “meeting needs
profitably.”
 Social Definition of Marketing: Marketing is
a societal process by which people obtain
what they need and want through creating,
offering, and exchanging products and
services of value with others
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What is Marketed?
 10 Types of Marketing Entities
1. Goods
2. Services
3. Experiences
4. Events
5. Persons
6. Places
7. Properties
8. Organizations
9. Information
10. Ideas
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Who Markets?
 Marketers and Prospects
 Marketers
 Prospects
 Eight demand states
 Negative demand,
 Latent demand,
 Irregular demand,
 Overfull demand,
Nonexistent demand
Declining demand
Full demand
Unwholesome demand
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Who Markets?
 Markets
 Traditional concept
 Economist’s concept
 Marketer’s concept
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Who Markets?
 Five Basic Markets & Connecting Flow
(Fig. 1.1)
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1. Resource markets
2. Manufacturer markets
3. Intermediary markets
4. Government markets
5. Consumer markets
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Relationship between Industry
and Market (Fig. 1.2)
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Who Markets?
 Key Customer Markets
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Consumer markets
Business markets
Global markets
Nonprofit & Government market
 Marketplace, Marketspace, and
Metamarkets
 Marketplace
 Marketspace
 Metamarket
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Marketing in Practice
 Marketing is not done only by marketing
department
 Five Functions of CMO
 1. Strengthening the brands
 2. Measuring marketing effectiveness
 3. Driving new product development based
on customer needs
 4. Gathering meaningful customer insights
 5. Utilizing new marketing technology
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Core Marketing Concepts
 Needs, Wants, and Demands
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Needs: Basic human requirements
Wants: Specific objects that might satisfy needs
Demands: Wants backed by an ability to pay
Criticism:
 Five types of needs
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Stated needs
Real needs
Unstated needs
Delight needs
Secret needs
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Core Marketing Concepts
 Market Segmentation, Targeting, and
Positioning
 Market segmentation
 Market targeting
 Market positioning
 Value Proposition, Offerings, and Brands
 Value proposition
 Market offering
 Brand
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Core Marketing Concepts
 Value and Satisfaction
 Customer value triad: Quality, Service, & Price
 Degree of Satisfaction
 Disappointed
 Satisfied
 Delighted
 Marketing Channels
 Communication channels
 Distribution channels
 Service channels
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Core Marketing Concepts
 Supply Chain
 From raw materials to components to final goods to
final buyers
 Upstream and downstream of a value-delivery
network
 Competition
 Include all the actual and potential rival offerings
and substitutes that can satisfy the same customer
needs or wants
 Do not fall into the “Marketing Myopia”
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Core Marketing Concepts
 Marketing Environment
 Task Environment: Microenvironment
 The company, suppliers, distributors, dealers,
and customers
 Broad Environment: Macroenvironment
 Demographic, Economic, Techological, Political-Legal, &
Social-Cultural Environments
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New Marketing Realities
 Major Societal Forces
 New Consumer Capabilities
 New Company Capabilities
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Major Societal Forces
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Network Information Technology
Globalization
Deregulation
Privatization
Heightened Competition
Industry Conversion
Consumer Resistance
Retail Transformation
Disintermediation
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New Consumer Capabilities
 A substantial increase in buying power
 A great variety of available goods and services
 A great amount of information about
practically anything
 A great ease in interacting and placing and
receiving orders
 An ability to compare notes on products and
services
 An amplified voice to influence peer and public
opinion
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New Company Capabilities
 Can use the Internet as a powerful information
and sales channel and reach customers
worldwide
 Can collect fuller and richer information about
markets, customers, prospects, and
competitors.
 Can facilitate and speed internal
communication among their employees
 Can facilitate and speed external
communication with customers
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New Company Capabilities
 Can have easier target marketing and two-way
communication
 Can assemble information about individual
customers’ purchases, preferences,
demographics, & profitability
 Can reach consumers on the move with mobile
marketing
 Can produce individually differentiated
products
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New Company Capabilities
 Can improve purchasing, recruiting, &
training
 Can achieve substantial savings by using the
Internet to compare sellers’ prices and to
purchase materials at auction or by posting
their own terms
 Can improve logistics and operations and reap
substantial cost savings, at the same time
increasing accuracy and service quality.
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Company Orientations Toward
the Market Place
 The Production Concept
 The Product Concept
 The Selling Concept
 The Marketing Concept
 The Holistic Marketing Concept
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The Production Concept
 It holds that consumers will prefer
products that are widely available and
inexpensive.
 High production and distribution
efficiency to reduce cost
 Makes sense in developing countries
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The Product Concept
 It holds that consumers favor products that
offer the most quality, performance, or
innovative features
 Major focuses on making superior products
and improving them over time without
realizing what the market needs or wants
 Better-mousetrap fallacy.
 WebTV’s early failure
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The Selling Concept
 It holds that customers or businesses, if left
alone, will ordinarily not buy enough of the
company’s products
 Therefore, the company must undertake aggressive
selling and promotion efforts to passive buyers
 Companies aim to sell what they make rather
than make what the market wants. Make-andsell philosophy.
 Unsought goods and goods that buyers
normally do not think of buying
 Hard selling carries high risk.
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The Marketing Concept
 It holds that the seller must first find out what
the markets need or want and create, deliver
and communicate superior customer value to
the chosen target markets. Sense-and-respond
philosophy.
 Starts with target market
 Finds right products for customers rather than
right customers for the firm’s products
 Gardening instead of hunting
 Superior concept than selling concept
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The Marketing Concept (continued)
 Marketing concept can be applied by
 Reactive marketing orientation
 Meet customers’ expressed needs only
 Proactive marketing orientation
 Meet customers latent needs through a “probeand learn” process
 Total marketing orientation
 Both Reactive and Proactive marketing
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The Holistic Marketing Concept
 Relationship Marketing
 Integrated Marketing
 Internal Marketing
 Social Responsibility Marketing
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Relationship Marketing
 Building mutually satisfying long-term
relationships with
 Customers under CRM (Customer Relationship
Management) for customer retention & a larger
share of customer’s wallet.
 Marketing partners under PRM (Partner
Relationship Management) for effective delivery to
final customers.
 Key suppliers & distributors
 Competition is not between companies but
between marketing networks
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Integrated Marketing
 All marketing activities and programs need to
be integrated
 Coordinates the seller’s 4 P’s with customer’s 4
C’s
 Four P’s: Product, Price, Place,
Promotion
 Four C’s: Customer solution,
Customer cost, Convenience,
Communication
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Internal Marketing
 Task of hiring, training, and motivating
employees
 Marketing activities within the company
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Social Responsibility Marketing
 Marketing must be conducted in a way that preserves
or enhances the consumer’s and society’s well-being.
 Profit to a company, satisfaction to consumers, and
well-being to society
 Examples
 McDonald’s (Table 1.2)
 Ben & Jerry: 7.5% of pretax profit
 The Body Shop: Trade-Not-Aid program
 Patagonia:1% of sales or 10% of pretax profit
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Marketing Management Tasks
 Developing Marketing Strategies and
Plans
 Capturing Marketing Insights
 Connecting with Customers
 Building Strong Brands
 Shaping the Marketing Offerings
 Delivering Value
 Communicating Value
 Creating Long-Term Growth
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