Marketing
Chapter 1
What Is Marketing?
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Learning Objectives
After studying this chapter you should be able to:
1.1 Explain the concept of “marketing”
1.2 Distinguish between the concepts of “value” and
“exchange”
1.3 Describe the evolution of marketing
1.4 Analyze marketing’s role in society
1.5 Analyze criticism of modern marketing
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The Concept of Marketing (1 of 2)
• Define the elements and responsibilities of marketing
– The term “marketing” is derived from the term “market”.
Marketers are responsible for all of the factors of the
marketplace.
Figure 1.1 What Are Marketers Responsible for That Affects
the Marketplace?
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The Concept of Marketing (2 of 2)
• Recognize the elements of marketing management
– Marketing management is a concept used by larger
marketing organizations where a larger scope of
business control is given to the marketing function,
including:
1. Profit and loss
2. Advocacy and government relations
3. Legal reviews and risk assessments
4. Trend analysis
5. Competitive assessments
6. Managing and allocating resources for a portfolio of
products
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Distinguishing between Value and
Exchange (1 of 4)
• Explain the requirements for an exchange
– An exchange requires:
1. Two or more people
2. Each of whom is willing to trade with the other
3. Each of whom has something of consideration to
offer
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Distinguishing between Value and
Exchange (2 of 4)
• Explain how value influences agreed worth
– Value is what something is worth (either to one or other
of the parties in the exchange)
– Equal value or exchange value is the when two parties
agree that two items are exchangeable
– The key is that the parties have agreed on the worth
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Distinguishing between Value and
Exchange (3 of 4)
• Identify what is offered for exchange
‒ Money is not the only thing that is exchanged and
commercial activity is not the only form of exchange
– Figure 1.2 outlines a much broader definition of
exchange, identifying a wider range of marketers with
different exchange requirements
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Distinguishing between Value and
Exchange (4 of 4)
Figure 1.2 Who Markets? What Is the Nature of Exchange?
Entity
What Is Offered for Exchange?
In Consideration of What?
Business
Goods or services
Money
Charity
Sense of good feeling Ability to
participate in supporting something that
is of value to the consumer
Usually money; but also
support, participation,
political influence
Cause/Policy
A particular opinion or perspective; e.g.,
those who believe government should
provide a minimum basic income for all
citizens
Support, sometimes political
Political
Candidate
Ideas Personal characteristics
Vote
Destination
Tourist destination Investment
opportunity
Visits by tourists Investment
money
Experience
A memorable and often shared
communal event
Money, participation
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The Evolution of Marketing (1 of 8)
The function of marketing has evolved over time as changes
to the marketplace impacted both buyers and sellers
Figure 1.3 The Evolution of the Marketplace
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The Evolution of Marketing (2 of 8)
• Explain the impact of the product era on marketing
– Characterized by hand-made items
1. Costs were high
2. Sales were limited
3. No need for any form of mass advertising or
promotion
4. Number of products available quite limited
5. So were the numbers of people who could afford to
buy them
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The Evolution of Marketing (3 of 8)
• Explain the impact of the production era on marketing
– Characterized by mass produced items
1. Availability of large quantities of affordable products
2. For the first time, it was practical and possible to reach a
much larger group of consumers
3. Improvements in mass transportation provided less
expensive and readily available ways to distribute
4. For the first time, consumers consider disposing of and
replacing products, rather than preserving them because
of the cost and quality
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The Evolution of Marketing (4 of 8)
• Explain the impact of the sales era on marketing
– Characterized by the rise of the automobile and mass
transportation
1. For the first time, it was possible to produce large
quantities of items, and distribute them nationally or
even globally
2. The rise of well-recognized national and
international brands
3. Advances in technology and science allowed
previously limited items like food, to be distributed
over great distances
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The Evolution of Marketing (5 of 8)
• Explain the impact of the consumer era on marketing
– Characterized by the rise of the mass communication
and an affluent middle class
1. Rather than “selling” products to consumers, smart
marketers start at the consumer and work back
2. Marketers compete to better understand their
consumers, identify them, and develop products to
better serve their needs.
3. Fields like market research become prominent in
the marketing world, with scientific analysis applied
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The Evolution of Marketing (6 of 8)
• Explain the impact of the societal era on marketing
– Characterized by the rise of vocal consumer, advocacy
and activist groups
1. A greater awareness and sensitivity of the impact of
marketing on society
2. The opportunity for marketers to use their societal
awareness as a marketing tool
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The Evolution of Marketing (7 of 8)
This chart summarizes the essential elements of each era
and their impacts on marketing
Figure 1.4 Eras of Marketing and Their Impact
Era
Description
Impact on Marketing
Product
•
Products were handmade,
expensive, and rare
Focus on quality; things meant to
last
1.
Ability to produce large quantities
of items cheaply using machinery
and mass-production techniques
1.
•
Production
•
2.
2.
3.
4.
High cost + scarcity = small market; most
consumers could afford very little
No need for any mass marketing as consumer
base was small and available products were
limited
Rise of mass market as large quantities of
inexpensive products became available
Improved transportation and communication
methods increased geographic range of
consumers
Increased levels of competition as more
players from more geographic areas entered
market
Beginning of “disposable culture” whereby
consumers do not value and preserve items,
but merely replace them
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The Evolution of Marketing (8 of 8)
Era
Description
Impact on Marketing
Sales
•
1.
Improvements in
transportation and
communication
expand the range
of marketers and
manufacturers
2.
3.
Consumer
Societal
•
•
Mass
communication, in
particular the rapid
expansion of radio
and then television
1.
Awareness and
appreciation for the
impact marketing
and consumption
have on society,
not just consumers
1.
2.
2.
3.
4.
Improvements in production + rise of automobile allowed
marketers to expand into far ranging places, even those that had
small populations
Rise of national brands as manufacturers could produce large
quantities of products centrally and market them nationally or
globally
Improvements in refrigeration, preservatives, and packaging
allowed for expansion and availability of perishable, seasonal, or
non-local foods
Increased levels of competition + wide-ranging reach of
distribution encouraged marketers to start listening to consumers
and develop products based on specific, local, or niche needs
Huge increase in spending on advertising and promotion resulted
in consumers being inundated and often desensitized to large
numbers of advertising Messages
Consumer and societal pressure on marketers to consider larger
societal costs and impact of their activities
Consumers increasingly make choices based on marketers’ level
of social responsibility, not just product
Increasing awareness and demands to address issues related to
product disposal, excess packaging, labour conditions, and
materials sourcing
Higher levels of government regulation and control of the societal
impact of marketing efforts
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Marketing’s Role in Society
Beyond their relationship with their consumers, marketers
have a big impact on our world in several ways. We must:
1. Recognize marketing’s role in developing new products
2. Identify how choice increases consumers’ perception of
value
3. Distinguish among marketing’s contribution to the spread
of culture
4. Describe marketing’s contribution to employment
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Criticisms of Modern Marketing
While marketers may provide benefit and value to their
consumers and society, they are also subject to criticism for
their practices. Marketers must explain why they can be
accused of:
1. Manipulation
2. Propagating social issues
3. Contributing to waste
4. Contributing to overconsumption
5. Appropriating cultural concepts
6. Not living up to the standards of regulatory guidelines and
industry oversight of marketing
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Summary
• Marketing has been defined
• The responsibilities of marketers have been articulated
• The concepts of “value” and “exchange” have been
introduced
• The history of marketing and its evolution in line with
technology and society has been examined
• Marketing’s contribution to society has been identified
• Criticisms of marketing’s impact on society have been
identified
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Mini Case: The locavore movement
and social responsibility
1. More and more consumers are aware of and making
decisions based not just on what the product does and its
price, but how the product or the company impact society
as a whole. Movements like the locavore movement
impact not only the consumers who buy and vendors who
sell, but all of society – how?
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Mini Case: The problem of
overproduction and changing
consumer tastes
1. The mini case “everyone dies with too much China”
highlights some of the issues associated with
technological progress and changing consumer habits and
tastes. Discuss the advantages and disadvantages of a
society in which consumers have access more and more
goods, but seem to value them less and less.
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Mini Case: Marketing and new
product development
1. In a later chapter, we will dive deeper into the new product
development process, but in the case “Sony uses
consumer insights to develop a whole new way of
listening to music” we can see an example of a product
which appeared not to be a good idea, but on closer
examination really hit on a consumer need. Looking back,
however, they always seem obvious. What are the key
aspects of a personal music listening device like the
Walkman, which are of greatest appeal to consumers?
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Mini Case: Marketing and consumer
consumption
1. In this chapter we discussed the concept of over
consumption through the case “A place for our ‘stuff’— the
rise of the storage industry” as an example of how an
entire industry of personal storage has risen as
consumers buy more and more stuff and run out of places
to put it. What are some of the marketing factors which
contribute to this level of consumption?
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