Chapter 1 – The Field of Marketing
CHAPTER 1
The Field of Marketing
1
Chapter 1 – The Field of Marketing
CHAPTER 1: The Field of Marketing
SECTION 1.1: Chapter Goals
“What is marketing?” Chapter one answers this question, and the answer may surprise you.
After studying this chapter, you should have an understanding of:
•
•
•
•
•
•
•
•
•
The relationship between exchange and marketing.
How marketing applies to business and nonbusiness situations.
The evolution of marketing.
Services and relationship marketing.
An understanding of the factors that drive customer satisfaction.
The difference between selling and marketing.
The marketing concept.
The impact of quality, service, and ethics in modern marketing.
M arketing’s role in the global economy, in Canada’s economy, in an individual organization,
and in your life.
SECTION 1.2: Key Terms and Concepts
The numbers in brackets refer to the pages of the text on which the terms and concepts are
defined.
Exchange (4)
M arketers (5)
M arket (5)
Product (7)
Relationship (7)
M arketing (8)
Production-orientation stage (10)
Sales-orientation stage (11)
M arketing-orientation stage (11)
Drivers of customer satisfaction (14)
Relationship marketing (15)
M arketing concept (15)
Societal marketing concept (17)
Ethics (18)
Quality (20)
Total quality management (20)
Value/utility (23)
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Chapter 1 – The Field of Marketing
SECTION 1.3: Chapter Summary
This chapter takes a broad look at some of the major concepts and issues in marketing. Some key
points:
• M arketing is based on exchange within a successful marketing relationship.
• Broadly, marketing is all the activities that make that exchange happen.
• M arketers are on one side of the exchange, customers on the other.
• Both business and not-for-profit organizations are involved in marketing.
• M arketing is not just goods; it is also services, ideas, people and places.
• Relationships develop as both sides find the exchanges satisfying.
• M arketing is defined as a total system of business activities designed to plan, price, promote
and distribute want-satisfying products to target markets to achieve consumer and
organizational objectives.
• M arketing has gone through three stages:
• The production orientation, with cranking out product as the goal.
• The sales orientation, with selling available products as the goal.
• The marketing orientation, with meeting customers’ needs and wants as the goal.
• While this is generally a progression, many firms remain at lower levels.
•
Selling emphasizes product while marketing emphasizes customers needs and wants.
• M ore than the core product or service is needed to satisfy customers, with five levels of
factors that drive customer satisfaction identified.
• The marketing concept is based on a customer orientation and co-ordination of all marketing
activities to achieve organizational objectives.
• The societal marketing concept adds society’s best interests to the marketing concept.
• M arketers need to consider ethics in their activities.
• Quality, which is essentially consistency, is crucial in marketing.
• Between a quarter and a third of the workforce is involved in marketing.
• M arketing creates utility in form, information, place, satisfaction, image, time, and
possession.
• M arketing is a concept that is also useful to service and not-for-profit firms.
• M arketing can help you in your career.
SECTION 1.4: Completion Questions
1.
Customers not only need the ________ they buy; they also need the ________ that the
purchased item will perform.
2.
Since marketing is a(n) ________, it consists of all activities designed to generate and
facilitate that exchange which is intended to satisfy human ________.
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Chapter 1 – The Field of Marketing
3.
M arketing is defined as the total ________ of business activities designed to plan, price,
promote, and distribute ________ products to ________ markets in order to achieve
________.
4.
This definition implies that marketing must be ________and that a marketingprogram should
start with an idea about a new _________ and should not end until the customer is
________.
5.
In the text, ________ will be used generically to denote a good, service, idea, person, or place.
6.
Customers and consumers are not the same thing. ________ make buying decisions, while
________ are individuals or organizations that use or consume a product.
7.
Selling and marketing are also not the same. In ________ , a firm makes a product and then
convinces customers to buy it. In ________ , the firm first finds out what the ________
wants and then develops the product that will satisfy the ________ and still yield a
satisfactory profit.
8.
The three stages of the evolution of marketing are ________ stage, ________ stage, and
________ stage.
9.
M anufacturers in the first stage were ________.
10.
The ________-orientation stage is the "hard sell" stage.
11.
In the marketing-orientation stage, attention shifts from selling to ________.
12.
The marketing concept is based on three fundamental beliefs: (1) all company actions should
be oriented toward the ________, (2) marketing activities should be ________, and (3) both
of these are essential for achieving the organization's ________.
13.
A firm's marketing concept and its social responsibility are ________ so long as it strives
over the long run to: (1) satisfy the wants of its product-buying ________, (2) meet the
________ needs of others affected by the firm's activities, and (3) meet the firm's ________.
14.
________ are the rules or standards of behaviour generally accepted by a society.
15.
Product or service quality is the responsibility of every ________.
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Chapter 1 – The Field of Marketing
16.
For marketers, the best measure of quality is ________ satisfaction.
17.
M arketing plays an important role in the ________ economy, in the Canadian ________
system, and in an individual ________.
18.
M ost countries today recognize the importance of ________ beyond their own national
borders.
19.
A measure of the importance of marketing in our socioeconomic system is its creation of
________, that is, the attribute in an item that makes it capable of satisfying human
________.
20.
M arketing creates four types of value: ________, ________, ________ or ________ utility,
and ________ utility, and plays a supporting role in creating ________ utility.
SECTION 1.5: True/False Questions
If the statement is true, circle "T"; if false, circle "F."
T F
1.
Whenever you attempt to persuade someone to do something, you are engaged in
marketing.
T F
2.
The idea of quality in marketing is simple — simply build the best product you can
and people will buy it.
T F
3.
The marketing concept emphasizes customer orientation and profitable sales volume.
T F
4.
Central to the idea of marketing is the concept of exchange.
T F
5.
M arketers must tell consumers what quality means.
T F
6.
As a philosophy, the marketing concept is meaningless unless it is translated into
effective action.
T F
7.
The newest interpretation of the marketing concept reaffirms the idea that marketers
should concentrate on a single group only — the customer.
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Chapter 1 – The Field of Marketing
T F
8.
Ethics are the standards of behaviour generally accepted by a society.
T F
9.
M arketing is limited to business organizations. Organizations such as churches,
museums, symphony orchestras, hospitals, and universities derive little or no benefit
from marketing.
T F
10.
Selling and marketing mean the same thing.
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Chapter 1 – The Field of Marketing
SECTION 1.6: Multiple Choice Questions
In the space provided write the letter of the answer that best fits the statement.
1.
Which of the following statements regarding ethics is correct?
A.
Ethics are the rules we play by.
B.
Ethics are the standards of behaviour accepted by a society.
C.
Ethical standards must be communicated to employees.
D.
Ethics are a cornerstone of business success.
E.
All of the statements are correct.
2.
Which of the following is marketing?
A.
Two candidates are debating in public for the same political office.
B.
Canada Post encourages stamp collecting.
C.
A hockey player is negotiating his first contract.
D.
The federal government sponsors a "Say NO to drugs" campaign.
E.
All of the above.
3.
Which pair of terms best describes the marketing concept?
A.
Problem solving and decision making.
B.
Increasing sales and better management.
C.
Building quality products and reducing prices.
D.
Customer orientation and profitable sales volume.
E.
Lower prices and better service.
4.
The definition of marketing includes all the following elements EXCEPT:
A.
Profit maximization.
B.
A system of business activities.
C.
The creation of value.
D.
Public benefit.
E.
Target markets.
5.
M arketing emphasizes:
A.
Products.
B.
Sales volume.
C.
Customers' wants.
D.
The short term.
E.
Needs of the seller.
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Chapter 1 – The Field of Marketing
6.
The societal marketing concept emphasizes:
A.
The long run.
B.
A broad definition of "customers."
C.
Consumer satisfaction.
D.
The company's performance objectives.
E.
All of the above.
7.
Which of the following statements regarding quality is correct?
A.
Quality is the absence of variation.
B.
Quality must be the responsibility of every employee.
C.
For marketers, the best measure of quality is customer satisfaction.
D.
Product quality cannot be delegated to one department in an organization.
E.
All of the above are correct.
8.
When M cDonald's can get children to associate its food with Ronald M cDonald it
has created ________ utility.
A.
Time
B.
Possession
C.
Form
D.
Information
E.
Place
9.
The "hard sell" stage in the evolution of marketing was the:
A.
Production-orientation stage.
B.
Sales-orientation stage.
C.
M arketing-orientation stage.
D.
Societal-marketing stage.
E.
None of the above.
10.
In the evolutionary development of marketing, the first stage emphasizes:
A.
M arketing.
B.
Advertising.
C.
Production.
D.
Sales.
E.
Customer orientation.
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Chapter 1 – The Field of Marketing
11.
Consumers are viewed as the target of all business activities under the
concept.
A.
Production
B.
M arketing
C.
Social
D.
Segmentation
E.
Consumer
12.
What
A.
B.
C.
D.
E.
13.
One implication of the micro definition of marketing is:
A.
M arketing is sales-oriented.
B.
To be successful, marketing must maximize sales volume.
C.
The marketing program begins as soon as the product has been engineered and
manufactured.
D.
M arketing primarily consists of one business activity.
E.
None of the above.
14.
Which of the following best describes the spirit of modern-day marketing?
A.
Eliminate poverty and pollution.
B.
M ake the best products we can.
C.
Satisfy customers' needs and wants.
D.
M aximize our profit next year.
E.
Economic survival depends upon free enterprise.
15.
A firm that believes a quality product will sell itself is probably in the __________
stage of marketing management.
A.
sales-orientation
B.
promotion-orientation
C.
production-orientation
D.
monopolistic-orientation
D.
none of the above
is being marketed could include:
Goods.
Services.
Ideas.
Places.
All of the above.
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Chapter 1 – The Field of Marketing
SECTION 1.7: Matching Questions
In the space provided write the number of the word or expression from column 1 that best fits the
description in column 2.
1
2
1.
Consumers
a.
Utility created through manufacturing.
2.
Customers
b.
Utility created by storage
3.
Ethics
c.
Standards of behaviour generally accepted
by society.
4.
Exchange
d.
The total system of business activities
designed to plan, price, promote, and
distribute want-satisfying goods, services,
and ideas to target markets to achieve
organizational objectives.
5.
Form utility
e.
The last stage in the evolution of marketing
management.
6.
Image utility
f.
The "hard sell" stage.
7.
Information utility
g.
Utility created by taking title.
8.
M arket
h.
A transaction intended to satisfy human
wants and needs.
9.
M arketing
i.
The individuals or organizations making the
buying decision.
10.
M arketing concept
j.
People or organizations with wants to
satisfy, money to spend, and the
willingness to spend it.
11.
M arketing-orientation stage
12.
Place utility
13.
Possession utility
14.
Production-orientation stage
15.
Quality
16.
Sales-orientation stage
17.
Societal marketing concept
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Chapter 1 – The Field of Marketing
18.
Time utility
19.
Relationship
20.
M arketer
SECTION 1.8: Marketing Exercise: The Marketing Concept
Name:
Class:
The foundation of this text is the “marketing concept”. For each of the following pairs of statements,
identify which most closely conforms to the marketing concept.
1.
Firm A
Firm B
"I'll give them any colour car they want so long as it's black."
"I'll give them any colour car they want."
2.
Firm A
Firm B
"By adding plastic pump impellers, we can make it give longer service."
"By adding plastic pump impellers we can cut our costs."
3.
Firm A
"If you sign this contract today, we can easily fit your order into our factory
schedule."
"If you sign this contract today, you can get the products in time to meet
your sales goals."
Firm B
4.
Firm A
Firm B
"We offer you a means for gathering, processing, and analyzing business
data."
"We make computers."
5.
Firm A
Firm B
"We make pumps."
"We deliver water into people's homes at the right pressure and volume."
6.
Firm A
"The first product my grandfather made when he started this furniture
factory is this Shaker love seat. We'll always make it."
"Simple, classic Shaker furniture continues to enjoy wide acceptance."
Firm B
7.
Firm A
Firm B
"Please donate blood. Your hospital needs it."
"Please donate blood. You will never know when you or one of your loved
ones will need it."
8.
Firm A
"Perhaps we had better get back to taking Visa cards. A lot of customers
seem to be using them."
"We'll continue with M asterCard if they give us a better deal than Visa."
Firm B
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Chapter 1 – The Field of Marketing
9.
Firm A
Firm B
10.
Firm A
Firm B
"Profits are down. Let's look around to see if we can do a better job of
meeting the needs of our customers."
"Profits are down. Let's initiate a cost-reduction program."
"No way I'm going into that new shopping centre. The rents are outrageous."
"No way I'm going into that new shopping centre. Our customers are better
served if we stay right here."
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Chapter 1 – The Field of Marketing
SECTION 1.9: Web Exercises: What’s Their Orientation?
With this Exercise, you have the opportunity to judge for yourself how much some famous
manufacturers reflect a production orientation or a marketing orientation. Choose either the footwear
or automobiles category and visit at least three of the sites listed. M ake notes on each one, using
these headings as a guide:
1. What "hits you in the face?"
2. Do they talk a lot about their products and how wonderful they are?
3. Do they talk about what they are doing for you, the customer?
4. How easy would it be for you to reach them via e-mail? Do they seem interested?
5. Finally, what's your judgement? Are they production-, sales-, or marketing-oriented?
6. Bonus! Any signs of a societal marketing orientation? Is this Relationship M arketing?
Just remember, the web addresses shown all should be prefaced with “http://”, as in
http://www.nike.com. The format shown simply creates less clutter and many browsers will take
you there without the “http://” anyway.
Footwear
Check out these famous footwear floggers:
Nike, home of the swoosh: www.nike.com
Adidas, reincarnated king of the '70s!: www.adidas.com
Reebok, the U.K. upstart: www.reebok.com
Brooks is another name on the run!: www.brookssports.com
Automobiles
You can compare North American versus European sites with this selection:
General M otors still offers more than anybody!: www.gmcanada.com
Ford makes 'em in Oakville. Do they make it with you?: www.ford.ca
Chrysler, King of the M inivan: www.daimlerchrysler.ca
This is the European (world) site for M ercedes-Benz.: www.mercedes-benz.com
Audi is creating new models like crazy: www.audi.com
BM W: Good enough for James Bond: www.bmw.com
Compare your views with other students for added learning on this Exercise.
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Chapter 1 – The Field of Marketing
SECTION 1.9 Web Assignment: What’s Their Orientation?
Name:
Class:
S ite Visited Orientation
Production Sales
Relationships?
Additional Comments
M arketing Societal
Production Sales
M arketing Societal
Production Sales
M arketing Societal
Production Sales
M arketing Societal
Production Sales
M arketing Societal
Production Sales
M arketing Societal
For one of the sites, explain why they are doing a good job of marketing.
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Chapter 1 – The Field of Marketing
SECTION 1.10.1: Case: Biotechnology I — Monsanto Inc.
If you developed foods which reduced the use of pesticides, improved productivity, helped control
diseases in both advanced and developing countries as well as making great strides to solve the
world’s food shortages, you might expect to be greeted as a hero. Instead, Robert Shapiro, chief
executive officer of M onsanto Co. was viewed as a villain, whose company was labelled by some as
‘M onsatan.’
Background
For close to a century, M onsanto was a commodity chemical producer, known more for carpet fibres
than high-fibre diets. M onsanto began to diversify and bought companies from many different
sectors in the 1980s. One 1985 acquisition was Searle, manufacturer of Nutrasweet artificial
sweeteners. Along with the company came Shapiro, who became CEO of M onsanto in 1995. He
brought massive change to the hidebound company, including being one of the first executives to
dress casually. He assembled 500 employees and painted for them a vision of a company that could
address a world problem: “Without radical change,” he remarked, we faced “an unthinkable world of
mass migrations and environmental degradation on an unimaginable scale” due to the exploding
population of the world.
His solution was to use the scientific know how M onsanto possessed, along with its huge cash
resources, to create foods that would need less land and resources to grow, while yielding more
nutrition. He also envisaged medicines derived from novel foods that would help maintain health.
Working with environmentalists, farmers and nutritionists, M onsanto began developing a whole
range of products filled with promise. For instance, a new breed of potato contained a gene which
killed its main predator, the Colorado potato beetle. If used by all potato farmers in the U.S., this
potato would save 4 million pounds in raw materials, 2.5 million pounds of manufacturing waste,
180,000 containers, and 150,000 gallons of fuel — once needed to apply pesticides. Other products
could enhance the nutrition of rice, a staple food in much of the world, to improve the health of
millions.
The New Era of Biotechnology
In 1996, M onsanto began selling soybean seeds which were the first of the new “designer crops” to
enter the market. They were “Roundup-ready,” meaning they were created to withstand Roundup, a
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Chapter 1 – The Field of Marketing
fierce herbicide that kills almost anything green. Farmers could spray Roundup and kill the weeds
while sparing the soybeans. Farmers loved it. Other products included Bt corn, which is protected
from the corn borer, an insect that can ruin an ear of corn. Yields increased by five to 10% — a huge
difference when you consider many farmers grow hundreds of tonnes of corn.
Researchers began working on potatoes that would absorb less fat during frying, so low-fat fries
would become a reality. Other crops held promise as nutraceuticals — plants with pharmaceutical
benefits, such as reducing cholesterol. Shapiro was delighted as his vision of new products creatinga
better world began to take shape.
The method behind all this was genetic modification. DNA, the genetic blueprint for all livingthings,
was only discovered in 1953 and only in the late 1980s did scientists learn how to manipulate it, so
that genes could be inserted or removed to create desired characteristics. While breeders and farmers
have been doing this for centuries to create animals or foods with desired characteristics, the new
biotechnology made it possible to change species quickly and with many more possibilities.
Consumer Reaction
European consumers did not share Shapiro’s enthusiasm. M any of the soybeans grown in North
America make their way to Europe, where environmental awareness is generally higher. With
memories of mad cow disease and other horrors fresh in their minds, Europeans were much more
aware of and concerned about what was in their food. They demanded the right to know if their
foods had been genetically modified.
As they learned more about how these foods were modified, many consumers began to look into
biotechnology and did not like everything they saw. M any were fired up by organizations like
Greenpeace, which saw the situation it loves — an emotional, easily over-simplified issue and a large
corporation to blame, all leading to the aggrandisement of Greenpeace. Before long, “Frankenfoods”
was coined to suggest foods put together like the Frankenstein monster, and M onsanto was soon
dubbed “M onsatan”. Protesters hit the streets, media gobbled up images of mutant corn ears, and
biotechnology entered the popular vocabulary.
Monsanto’s Response
For Shapiro and many other M onsanto employees, all this was very hard to take. He had worked
with environmentalists from the start and was genuinely committed to doing something about global
problems. However, he conceded he had made a huge mistake in his first product — Roundup-ready
soybeans were very popular with farmers, but they did not offer any particular benefit to
consumers, as their reduced cost was hardly noticeable among other cost components. M oreover,
since M onsanto made Roundup, it was easy to characterize the company as creating a monopoly for
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Chapter 1 – The Field of Marketing
its own product through this captive market. With several billion dollars sunk into the new field,
M onsanto was in major trouble. A corporate merger soon created the situation where Shapiro was
being nudged away from the reins of power.
Looking back, analysts wondered what had gone wrong. Was Shapiro blind to the concerns of
consumers? Was he too fond of the technological marvels his scientists could create? Had he simply
launched the wrong product first? After all, the same technology has created medicines which are
being welcomed by consumers. To Shapiro, his critics were misguided at best, or perhaps ignorant of
science, or just plain malicious.
This case w as prepared by David Now ell, and is based on Monsanto Boss’s Grand Vision Gets Reality Check, by Scott Kilman
and Thomas M. Burton of The Wall Street Journal in The Globe & Mail, December 22, 1999. Contents ©2001, David
Now ell. All Rights Reserved.
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Chapter 1 – The Field of Marketing
Case Assignment 1.10.1: Monsanto Inc.
Name:
Class:
With respect to the M onsanto Inc. case, answer the following questions in the manner directed by
your professor.
1. From the case, what suggests M onsanto had each of the following orientations:
Production Orientation
Sales Orientation
M arketing Orientation
Societal M arketing
Orientation
2. Which of these orientations do you feel best describes the firm? Explain.
3. As a budding marketer, what mistake do you feel M onsanto made?
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Chapter 1 – The Field of Marketing
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Chapter 1 – The Field of Marketing
SECTION 1.10.2: Case: Soul-searching on the Super Sole
Frank Flanagan had been euphoric when his new “Super Sole” design was accepted by Hypekok
Shoes as the way to differentiate its products from the many other aggressive shoe sellers. Nike had
its Air shoes and other manufacturers promoted other devices that were supposed to make their
shoes superior to others on the market. As a smaller firm, Hypekok needed all the help it could get,
so the new “Super Sole” gave it something to promote—a shoe that would help prevent injuries.
Super Sole was a cushioning system that combined good stiffness in the sole of the shoe with the
ability to cushion and flex with variations in the surface, such as when a runner stepped on some
gravel. This would reduce injuries due to reduced twisting of the foot. Due to the secrecy that
surrounds the industry, further details are not available.
However, Frank choked on his coffee when he read a report from researchers at M cGill University in
M ontreal which showed that all of the fancy gimmicks in shoes might not be that helpful in
preventing injuries. In fact, they might do just the opposite, by giving runners a false sense of
security and causing them to be less careful when they ran! The research showed that runners were
actually twice as likely to suffer injuries when they wore the fancy high-tech shoes! The Canadian
study followed on a Swiss one that looked at 5,000 runners and concluded that those in high-priced
shoes had a 123% higher incidence of injuries than those in the cheap ones.
These studies suggested that runners were less cautious when they believed that their shoes would
protect them from injury. Runners thought that advertising claims of superior injury protection had
been checked out by the government and were sound.
Frank wondered now if it was wise to promote the shoes on the basis of injury prevention. On the
one hand, he knew that laboratory tests had proven that the shoes really would be helpful in
preventing foot injuries because of the Super Sole design. However, if runners would take more
chances because this made them more confident, they would actually have more injuries than if they
wore basic shoes and showed caution as they ran.
“I don’t know what the right thing to do here is,” Frank confided in a colleague. “This product could
actually cause more injuries, even though people bought it to prevent injuries!”
“Frank, what are you worried about?” responded Ashley Olympus. “You did a good job making a
good shoe and it isn’t your fault if someone is too stupid to take proper precautions when they run.
All you can do is make a good product. You can’t make people use it properly.”
Still, Frank wondered if it was ethical to market the Super Sole shoe.
This case w as w ritten by David Now ell, Sheridan College, and is based in part on Pricey Shoes Overrated, Report Says, by
Beverley Smith, The Globe & Mail, December 11, 1997. The firm and character are fictitious. Copyright © 1998 David
Now ell.
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Chapter 1 – The Field of Marketing
SECTION 1.11: Answers to Questions
SECTION 1.4: Completion Questions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
products/functions
exchange/needs or wants
system/want-satisfying/target/organizational objectives
consumer oriented/product/satisfied
product
Customers/consumers
selling/marketing/customer/need
production-orientation/sales-orientation/marketing-orientation
production-driven
sales
marketing
customer/coordinated/objectives
compatible/customers/societal/performance objectives
Ethics
employee
customer
global/socioeconomic/organization
marketing
utility/wants
place/time/information/image/possession/form
SECTION 1.5: True/False Questions
1. T
2. F
3. T
4. T
5. F
6. T
7. F
8. T
9. F
10. F
SECTION 1.6: Multiple Choice Questions
1. E
2. E
3. D
4. A
5. C
6. E
7. E
8. D
9. B
10. C
11. B
12. E
13. E
14. C
15. C
SECTION 1.7: Matching Questions
a. 5
b. 18
c. 3
d. 9
e. 11
f. 16
g. 13
h. 4
i. 2
j. 8
21