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Chapter 1
What is Marketing?
What is Marketed?
Who Markets?
Marketer: someone who seeks a response attention, a purchase, a vote etc. from another
party (prospect); if both selling to each other, both are marketers
Marketers responsible for demand management: want to influence the level, timing, and
composition of demand to meet organizations demands.
o Negative Demand: consumer) doesnt like product, may pay to avoid it
o Nonexistent Demand: consumer is either unaware of or uninterested in the product
o Latent Demand: consumer may share a strong need that cannot be satisfied by an
existing product
o Declining Demand: consumer begin to buy product less or not at all
o Irregular Demand: consumer purchases vary on seasonal, monthly etc. basis
o Full Demand: consumer buying all products put into marketplace
o Overfull Demand: more demand than supply
o Unwholesome Demand:
consumer attracted to products
that have undesirable social
consequences
Market: collection of buyers and sellers
who have transactions over a certain
product/product class (ie. Housing
market or grain market); used to be a
physical place
Figure 1.1: Nations economy and Global
economy consist of interacting sets of
markets linked through exchange
processes
Marketers use market to mean
various groups of customers;
sellers are the industry and
buyers are the market
o Need market (diet-
seeking market),
product market (shoe
market), demographic
market (youth
market), geographic market (Chinese market) but extends to voter, labor, and donor
markets
Consumer Markets: companies selling mass consumer goods/services (ie. Juice, cosmetics etc.)
o Want strong brand image by making superior product/packaging, ensuring availability,
and backing it with engaging communications and reliable service
Business Markets: companies selling business goods and services; they face well-informed
professional buyers who can evaluate competitive offerings
o Business buyers buy goods to make or resell to others at a profit so business marketers
need to show how their product will improve revenue or lower costs
o Advertising important but sales force, price and reputation may be more important
Global Markets: companies must decide which countries to enter; how to enter (ie. Exporter,
licenser, joint venture, contract manufacturer, or solo manufacturer); how to adapt
product/service to each country; how to price product in various countries; how to design
communications for different cultures
o There are different requirements for buying/disposing of property; cultural, language,
legal and political differences; and currency fluctuations.
o Payoff can be huge
Nonprofit and Governmental Markets: companies selling to nonprofit organizations with
limited purchasing power (ie. Churches, uni, charitable organizations, government agencies)
have to price carefully but price affects features/quality in the offering
o A lot of government purchasing calls for bids and buyers focus on practical solutions and
favor the lowest bid (disregarding extenuating factors)
Marketplace is physical; Marketspace is digital (internet); Metamarket is a cluster of
complementary products and services closely related in the minds of consumers but spread
across a diverse of industries
Metamarket is the result of marketers packaging a system that simplifies carrying out related
product/service activities
o Auto market made of manufacturers, new/old car dealers, financing companies,
insurance, mechanics etc.
Metamediaries assist buyer to move seamlessly through metamarkets (ie. Edmunds helps car
buyers find features and prices of cars and click to other sites to search for lowest price dealer
for financing, etc.)
o Metamediaries in home ownership, parenting, baby care, and weddings
Core Marketing Concepts
Divide the market into segments; identify and profile distinct groups of buyers that might
want/require varying product and service mixes
o Do this by looking at demographic, psychographic, and behavioral differences among
buyers
Then decide on which segments present the best opportunities target markets
o For each target market, the marketer makes a market offering that it positions in the
minds of the target buyers as offering some central benefit (ie. Volvo cars for safety-
conscious, position as safest car)
Companies address customer needs by putting forth a value proposition: a set of benefits that
satisfy those needs; intangible value proposition is made physical by an offering
Brand is an offering from a known source; companies strive to build a brand image with as many
strong, favorable, and unique brand associations as possible
Buyer chooses the offering they think provides the most value: the sum of tangible benefits,
intangible benefits and costs to her
Value: a combination of quality, service, and price (qsp); called customer value triad
o Value perceptions increase with quality and service but decrease with price
Marketing is the identification, creation, communication, delivery, and monitoring of customer
value
Satisfaction: reflects a persons judgment of a products perceived performance in relationship
to expectations; performance falls short of expectations, you get disappointment, matches
expectations, you get satisfaction and exceeds expectations you get delight
Marketing Channels
Communication channels: deliver and receive messages from target buyers (ie. Newspapers,
magazines, radio, television, mail, telephone, billboards, posters etc.)
o Firms also communicate through the look of their retail stores, web sites etc.
Distribution Channels: used to display, sell, deliver product/service to buyer/user
o Can be direct (via Internet, mail, mobile phone etc) or indirect (distributors, wholesalers,
retailers etc.)
Service Channels: used to carry out transactions with potential buyers
o Warehouses, transportation companies, banks, insurance companies etc.
Need to choose the right mix of channels for offerings
Supply Chain
Longer channel stretching from raw materials to components to finished products carried to
final buyers
Ie. Coffee from farmers sold to wholesalers or fair trade cooperative (if fair trade), coffee
packaged by alternative trading organization (ATO) which then transports coffee to developing
world to be sold directly or via retail channels
A company captures only a certain percentage of the total value generated by the supply chains
value delivery system; when a company acquires competitors or expands
(upstream/downstream), its aim is to get a higher percentage of supply chain value
Competition
Includes all actual and potential rival offerings/substitutes a buyer might consider
Marketing Environment
Marketing environment consists of the task environment and the broad environment
Task environment: includes actors involved in producing, distributing, and promoting the
offering (ie. Company, supplies, distributors, dealers, and target customers)
Broad environment: demographic environment, economic environment, social-cultural
environment, natural environment, technological environment, political-legal environment
Network Information technology: Information age more accurate production, more target
communications, more relevant pricing
Globalization: easier for companies to market in, consumers to buy from any country in world
Deregulation: many countries deregulated industries to have more competition and growth
opportunity
Privatization: many countries converted public companies to private to increase efficiency
Heightened Competition: competition (domestic & foreign) raises marketing costs, shrinks
profit margins
o Brand manufactures are further buffeted by powerful retailers that market their own
brands become megabrands and extended to related product categories
competitive threat
Industry convergence: industry boundries blurring; more opportunities at intersection of 2+
industries convergence (ie. Apple, Sony releasing TV, mp3, video recorders etc.)
Retail transformation: store-based retailers facing competition from catalog houses, direct mail
firms, newspaper, magazine, TV, e-commerce
o So they try to build entertainment into stores (ie. Dicks sporting goods) to make
shopping an experience
Disintermediation: removal of intermediaries in distribution channels (ie. Amazon)
o Traditional companies engaged in reintermediation (brick and click) adding online
services to their offerings; could beat pure-click firms because more resources and
established brand names
Consumer buying power: partly to disintermediation, consumers have more buying power
Consumer information: consumers can collect info with more breadth/depth about anything
(ie. Imdb, wiki)
Consumer participation: consumers have an amplified voice to influence peer/public opinion so
companies invite consumers to participate in designing and marketing offerings to increase
sense of connection and ownership
Consumer resistance: customers feel there are less real product differences so less brand
loyalty instead more price/quality-sensitive in search for value and therefore less tolerant
about undesired marketing (aversion from over marketing)
Societal forces introduce challenges but also created a new set of capabilities to help companies
cope/respond
Marketrs can use the Internet as powerful information and sales channel
o Increases ability to inform customers and promote products worldwide
Marketers can collect fuller and richer information about markets, customers, prospects and
competitors
o Can conduct fresh marketing research via Internet (arrange focus gps, questionnaires,
gather primary data in other ways)
o Can assemble info about customers puchases, preferences, demographics, and
profitability
Markets can tap into social media to amplify their brand message
o Blog/other postings/online support communities help improve brand image
Marketers can facilitate and speed external communication among customers
o Can create or benefit from online/offline buzz through brand advocates and user
communities
Marketers can send ads, coupons, samples, and information to customers who have
requested them or given the company permission to send them
o Micro-target marketing and two-way communication is easier through TV, internet,
special-interest magazines
o Extranets linking supplier/distributor allow firms to send/receive info, place orders,
make payments more efficiently
o Can even interact with each customer individually to personalize messages, service,
relationship
Marketers can reach consumers on the move with mobile marketing
o Marketers can pinpoint consumers exact location, send them messages/coupons via
GPS technology; this is attractive because it reaches customer closer to the point of sale
Companies can make and sell individually differentiated goods
o Advances in factory customization, computer tech, database marketing etc. allows
customer to customize products (M&M w/ name on it, BMW user to design own car
models from variations)
Companies can improve purchasing, recruiting, training, and internal and external
communications
Companies can facilitate and speed up internal communication among their employees by
using the Internet as a private Intranet
o Employees can query each other, seek advice, download relevant info from and to
companys main computer
Companies can improve their cost efficiency by skillful use of the Internet
o Corporate buyers can get savings by using Internet to compare sellers prices and
purchase materials at auctions or posting their own items at reverse auctions
o Companies can improve logistics/operations while improving accuracy/service quality
Marketing in Practice
Marketing is not done by just marketing division; because marketing must affect every aspect of
customer experience, marketers must properly manage all possible touch points (store layouts,
package designs, product functions, employee training, logistics)
Marketing must be influential in key general management activities (product innovation, new-
business development)
Customer is source of companys prosperity; need to emphasize interdepartmental teamwork to
manage key processes
Relationship Marketing
Integrated Marketing
Occurs when marketer creates 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.
Two key themes:
o Many different marketing activities can create, communicate, and deliver value
o Marketers should design and implement any one marketing activity with other activities
in mind (ie. Buying MRI comes with expectation of good installation, maintenance, and
training services with purchase)
Company communications also must be integrated; using integrated communication strategy
means choosing communication options that reinforce and complement each other (ie. Tv,
radio, print advertising, public relations, web site communications so each contributes on its
own but also improves effectiveness of others)
Company must also develop an integrated channel strategy; should asses each channel option
for its direct effect on product sales and brand equity as well as indirect effect through
interactions with other channel options
o Must weigh trade-off between too many channels (conflict among channel
members/lack of support) and too few (losing out on market opportunities)
Internal marketing
Internal marketing: the task of hiring, training, and motivating able employees who want to
serve customers well
Ensures that everyone in organization embraces appropriate marketing principles (esp. senior
management)
Marketing within company is as or more important that marketing outside company; company
staff needs to be able to provide excellent service before promising it
Marketing is a company wide undertaking; not just one departments duty
o Drives companys vision, mission, and strategic planning
o Succeeds only when all departments work together to achieve customer goals
o Departments only harmonize when management clearly communicates a vision of how
the companys marketing orientation and philosophy serve customers
Requires vertical alignment with senior management and horizontal alignment with other
departments; so everyone understands, appreciates, and supports the marketing effort
Performance Marketing