CHAPTER NO 1

DEFINING MARKETING FOR THE 21ST CENTURY

Why is marketing important?

 The first decade of the 21st century challenged firms to prosper financially and
even survive in the face of an unforgiving economic environment. Marketing is
playing a key role in addressing those challenges.
 Marketing’s broader importance extends to society as a whole. Marketing has
helped introduce and gain acceptance of new products.
 Successful marketing builds demand for products and services, which, in turn,
creates jobs.
 Making the right marketing decisions isn’t always easy. One survey of more
than a thousand senior marketing and sales executives revealed that although
83 percent felt that marketing and sales capabilities were a top priority for
their organization’s success, in rating their actual marketing effectiveness,
only 6 percent felt that they were doing an “extremely good” job.
 Marketers must decide what features to design into a new product or service,
what prices to set, where to sell products or offer services, and how much to
spend on advertising, sales, the Internet, or mobile marketing. They must
make those decisions in an Internet-fueled environment where consumers,
competition, technology, and economic forces change rapidly, and the
consequences of the marketer’s words and actions can quickly multiply
 The Scope of Marketing
WHAT IS MARKETING?

Marketing is about identifying and meeting human and social needs. One of the shortest good definitions
of marketing is “meeting needs profitably.
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large.
marketing management as the art and science of choosing target markets and getting, keeping, and
growing customers through creating, delivering, and communicating superior customer value.
Managers sometimes think of marketing as “the art of selling products,” but many people are surprised
when they hear that selling is not the most important part of marketing! Selling is only the tip of the
marketing
What Is Marketed
 Marketers market 10 main types of entities:
1. GOODS
2. SERVICES
3. Events
4. EXPERIENCES
5. Person
6. PLACES
7. PROPERTIES
8. ORGANIZATIONS
9. INFORMATION
10. IDEAS
Who Markets?

 MARKETERS AND PROSPECTS A marketer is someone who seeks a

response—attention, a purchase, a vote, a donation—from another party, called
the prospect. If two parties are seeking to sell something to each other, we call
them both marketers.
 One of the most important areas of marketing is the work that social marketers do
to promote socially desirable behaviors.
Eight demand states are possible
1. Negative demand—Consumers dislike the product and may even pay to avoid it.
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.
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.
 MARKETS Traditionally,a “market”was a physical place where buyers and
sellers gathered to buy and sell goods.Economists describe a market as a
collection of buyers and sellers who transact over a particular product or product
class (such as the housing market or the grain market).
Five types of markets
KEY CUSTOMER MARKETS

 KEY CUSTOMER MARKETS Consider the following key customer markets:

 consumer,
 business,
 global, and
 nonprofit.
Core Marketing Concepts

 Needs are the basic human requirements such as for air,food,water,clothing,and

shelter. Humans also have strong needs for recreation, education, and
entertainment.
 These needs become wants when they are directed to specific objects that might
satisfy the need.
 Demands are wants for specific products backed by an ability to pay. Many
people want a Mercedes; only a few are able to buy one. Companies must
measure not only how many people want their product,but also how many are
willing and able to buy it.
 “marketers create needs” or “marketers get people to buy things they don’t want.”
 Marketers do not create needs: Needs preexist marketers. Marketers, along with
other societal factors, influence wants. They might promote the idea that a
Mercedes would satisfy a person’s need for social status. They do
not,however,create the need for social status.
Five types of needs

 1. Stated needs (The customer wants an inexpensive car.)

 2. Real needs (The customer wants a car whose operating cost,not initial price,is
low.)
 3. Unstated needs (The customer expects good service from the dealer.)
 4. Delight needs (The customer would like the dealer to include an onboard GPS
navigation system.)
 5. Secret needs (The customer wants friends to see him or her as a savvy
consumer.)
Target Markets, Positioning, and
Segmentation
 Not everyone likes the same cereal, restaurant, college, or movie. Therefore,
marketers start by dividing the market into segments.
 They identify and profile distinct groups of buyers who might prefer or require
varying product and service mixes by examining demographic, psychographic,
and behavioral differences among buyers.
 After identifying market segments,the marketer decides which present the greatest
opportunities— which are its target markets
 For each,the firm develops a market offering that it positions in the minds of the
target buyers as delivering some central benefit
Offerings and Brands

 Companies address customer needs by putting forth a value proposition,a set of

benefits that satisfy those needs. The intangible value proposition is made
physical by an offering, which can be a combination of
products,services,information,and experiences.
 A brand is an offering from a known source. A brand name such as McDonald’s
carries many associations in people’s minds that make up its image.
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 to her.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.
 We can think of marketing as the identification, creation, communication,
delivery, and monitoring of customer value. Satisfaction reflects a person’s
judgment of a product’s perceived performance in relationship to expectations.
The New Marketing Realities

 Network information technology. The digital revolution has created an

Information Age that promises to lead to more accurate levels of production, more
targeted communications, and more relevant pricing.
 Globalization. Technological advances in transportation,shipping,and
communication have made it easier for companies to market in,and consumers to
buy from,almost any country in the world. International travel has continued to
grow as more people work and play in other countries.
 Deregulation. Many countries have deregulated industries to create greater
competition and growth opportunities. In the United States, laws restricting
financial services, telecommunications, and electric utilities have all been
loosened in the spirit of greater competition.
 Privatization. Many countries have converted public companies to private ownership and
management to increase their efficiency,such as the massive telecom company Telefónica CTC
in Chile and the international airline British Airways in the United Kingdom.
 Heightened competition. Intense competition among domestic and foreign brands raises
marketing costs and shrinks profit margins.Brand manufacturers are further buffeted by powerful
retailers that market their own store brands.
 Industry convergence. Industry boundaries are blurring as companies recognize new
opportunities at the intersection of two or more industries. The computing and consumer
electronics industries are converging, for example, as Apple, Sony, and Samsung release a
stream of entertainment devices from MP3 players to plasma TVs and camcorders. Digital
technology fuels this massive convergence
 Retail transformation. Store-based retailers face competition from catalog
houses; directmail firms; newspaper, magazine, and TV direct-to-customer ads;
home shopping TV; and e-commerce. In response, entrepreneurial retailers are
building entertainment into their stores with coffee bars, demonstrations, and
performances, marketing an “experience” rather than a product assortment.
 Disintermediation. The amazing success of early dot-coms such as
Amazon.com, Yahoo!, eBay, E*TRADE, and others created disintermediation in
the delivery of products and services by intervening in the traditional flow of
goods through distribution channels.
 Consumer buying power. In part, due to disintermediation via the Internet,
consumers have substantially increased their buying power. From the home,
office, or mobile phone, they can compare product prices and features and order
goods online from anywhere in the world 24 hours a day, 7 days a week,
bypassing limited local offerings and realizing significant price savings.
 Consumer information. Consumers can collect information in as much breadth
and depth as they want about practically anything. They can access online,
dictionaries, medical information, movie ratings, consumer reports, newspapers,
and other information sources in many languages from anywhere in the world.
 Consumer participation. Consumers have found an amplified voice to influence
peer and public opinion. In recognition, companies are inviting them to participate
in designing and even marketing offerings to heighten their sense of connection
and ownership. Consumers see their favorite companies as workshops from which
they can draw out the offerings they want.
 Consumer resistance. Many customers today feel there are fewer real product
differences, so they show less brand loyalty and become more price- and quality-
sensitive in their search for value, and less tolerant about undesired marketing.
Marketing in an Age of Turbulence

 The severe economic recession of 2008–2009 caused marketers to rethink best

practices of management.
 Philip Kotler and John Caslione see management entering a new Age of
Turbulence in which chaos, risk, and uncertainty characterize many industries,
markets, and companies.
 They see many new challenges in the foreseeable future, and unlike past
recessions, there may be no assurance that a return to past management practices
would ever be successful again.
 They recommend marketers keep these eight factors in mind as they create “
chaotic marketing strategies.”
1.Secure your market share from core customer segments. This is not a time to get greedy, so get your core
customer segments firmly secured, and be prepared to ward off attacks from competitors seeking your most
profitable and loyal customers.

2. Push aggressively for greater market share from competitors. companies fight for market share, and in turbulent
and chaotic times, many have been weakened. Slashing marketing budgets and sales travel expenses is a sure sign a
competitor is buckling under pressure. Push aggressively to add to your core customer segments at the expense of
your weakened competitors.
3. Research customer more now, because their needs and wants are in flux
Everyone is under pressure during times of turbulence and chaos, and all customers—even those in your core
segments whom you know so well—are changing. Stay close to them as never before. Research them more than ever.
Don’t find yourself using old, tried-and-true marketing messages that no longer resonate with them.
4. Minimally maintain , but seek to increase, your marketing budget.
With your competitors aggressively marketing to your core customers, this is the worst time to think about cutting
anything in your marketing budget that targets them. In fact, you need to add to it, or take money away from forays
into totally new customer segments. It's time to secure the home front.
5. Focus on all that’s safe and emphasize core values.
When turbulence is scaring everyone in the market, most customers flee to higher ground. They need to feel the
safety and security of your company and your products and services. Do everything possible to tell them that
continuing to do business with you is safe, and to sell them products and services that keep making them feel safe.
6. Drop programs that aren’t working for you quickly.
Your marketing budgets will always be scrutinized, in good times and bad times. If anyone is to cut one of your
programs, let it be you, before anyone else spots any ineffective ones. If you’re not watching, rest assured someone
else is, including your peers whose budgets couldn’t be protected from the axe.
7. Don’t discount your best brands.
Discounting your established and most successful brands tells the market two things: your prices were too high
before hand your products won’t be worth the price in the future once the discounts are gone. If you want to appeal
to more frugal customers, create a new brand with lower prices.
8. Save the strong; lose the weak.
In turbulent markets, your strongest brands and products must become even stronger. There's no time or money to be
wasted on marginal brands or products that lack strong value propositions and a solid customer base. Appeal to safety
and value to reinforce strong brands and product and service offerings. Remember, your brands can never be strong
enough, especially against the waves of a turbulent economy.
Company Orientation Toward the
Marketplace

Given these new marketing realities, what philosophy should

guide a company’s marketing efforts? Increasingly, marketers
operate consistent with the holistic marketing concept. Let's
first review the evolution of earlier marketing ideas.
The Production Concept

 The production concept is one of the oldest concepts in business.

 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.
 This orientation makes sense in developing countries such as China,
 Marketers also use the production concept when they want to expand the market.
The Product Concept

 The product concept proposes that consumers favor products offering the most
quality, performance, or innovative features.
 However, managers are sometimes caught in a love affair with their products.
 .A new or improved product will not necessarily be successful unless it’s
priced,distributed,advertised,and sold properly.
The Selling Concept

 The selling concept holds that consumers and businesses, if left alone, won’t buy
enough of the organization’s products.
 firms with overcapacity aim to sell what they make, rather than make what the
market wants.
 Marketing based on hard selling is risky
The Marketing Concept

 The marketing concept emerged as a customer-centered, sense-and-respond

philosophy.
 The job is to find not the right customers for your products, but the right products
for your customers
 Dell doesn’t prepare a perfect computer for its target market. Rather, it provides
product platforms on which each person customizes the features he or she desires
in the computer.
 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
 Without question, the trends and forces that have defined the first decade of the
21st century are leading business firms to a new set of beliefs and practices.
“Marketing Memo: Marketing Right and Wrong” suggests where companies go
wrong—and how they can get it right—in their marketing.
 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.
Relationship Marketing
 Increasingly, a key goal of marketing is to develop deep,enduring relationships
with people and organizations that directly or indirectly affect the success of the
firm’s marketing activities.
 Relationship marketing aims to build mutually satisfying long-term relationships
with key constituents in order to earn and retain their business,
 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).
 The ultimate outcome of relationship marketing is a unique company asset called
a marketing network.
 Companies are also shaping separate offers, services, and messages to individual
customers, based on information about past transactions, demographics,
psychographics, and media and distribution preferences.
 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.
 Two key themes are that (1) many different marketing activities can create, communicate, and deliver value
and (2) marketers should design and implement any one marketing activity with all other activities in mind.
 A marketer might selectively employ television, radio, and print advertising, public relations and events,
and PR and Web site communications so each contributes on its own as well as improving the effectiveness
of the others. Each must also deliver a consistent brand message at every contact.
Internal Marketing

 Internal marketing, an element of holistic marketing, is the task of hiring, training,

and motivating able employees who want to serve customers well.
 It ensures that everyone in the organization embraces appropriate marketing
principles, especially senior management. Smart marketers recognize that
marketing activities within the company can be as important.
 Marketing is no longer the responsibility of a single department—it is a company-
wide undertaking that drives the company’s vision, mission, and strategic
planning.49 It succeeds only when all departments work together to achieve
customer goals.
 Performance Marketing
 Performance marketing requires understanding the financial and nonfinancial returns to business and society
from marketing activities and programs.
 Top marketers are increasingly going beyond sales revenue to examine the marketing scorecard and interpret
what is happening to market share, customer loss rate, customer satisfaction, product quality, and other
measures.
 FINANCIAL ACCOUNTABILITY Marketers are increasingly asked to justify their investments in financial
and profitability terms, as well as in terms of building the brand and growing the customer base.
 SOCIAL RESPONSIBILITY MARKETING Because the effects of marketing extend beyond the company
and the customer to society as a whole, marketers must consider the ethical, environmental, legal,and social
context of their role and activities.
Updating The Four Ps
 People reflects, in part, internal marketing and the fact that employees are critical to
marketing success. Marketing will only be as good as the people inside the organization. It
also reflects the fact that marketers must view consumers as people to understand their lives
more broadly, and not just as they shop for and consume products and services.
 Processes reflects all the creativity, discipline, and structure brought to marketing
management. Marketers must avoid ad hoc planning and decision making and ensure that
state-of-the-art marketing ideas and concepts play an appropriate role in all they do.
 Programs reflects all the firm’s consumer-directed activities. It encompasses the old four Ps
as well as a range of other marketing activities that might not fit as neatly into the old view
of marketing. Regardless of whether they are online or offline, traditional or nontraditional,
these activities must be integrated such that their whole is greater than the sum of their parts
and they accomplish multiple objectives for the firm.
 We define performance as in holistic marketing, to capture the range of possible outcome
measures that have financial and nonfinancial implications (profitability as well as brand and
customer equity), and implications beyond the company itself(social responsibility,
legal,ethical,and community related).
Marketing Management Tasks

With the holistic marketing philosophy as a backdrop, we can identify a specific set
of tasks that make up successful marketing management and marketing leadership.
Developing Marketing Strategies and
Plans
 The first task facing sony is to identify its potential long-run opportunities, given
its market experience and core competencies.
 Whichever direction it chooses, it must develop concrete marketing plans that
specify the marketing strategy and tactics going forward
Capturing Marketing Insights

 needs a reliable marketing information system to closely monitor its marketing

environment so it can continually assess market potential and forecast demand.
 Its microenvironment consists of all the players who affect its ability to produce
and sell cameras—suppliers, marketing intermediaries, customers, and
competitors. Its macroenvironment includes
demographic,economic,physical,technological,political-legal,and social-cultural
forces that affect sales and profits.
Connecting with Customers

 how to best create value for its chosen target markets and develop strong,
profitable, long-term relationships with customers.
 Who buys cameras, and why? What features and prices are they looking for, and
where do they shop? Atlas also sells cameras to business markets, including large
corporations, professional firms, retailers,and government agencies, where
purchasing agents or buying committees make the decisions
Building Strong Brands

 Premium product
 Competitive
 Better innovation
 Marketing strategies
Shaping the Market Offerings

 At the heart of the marketing program is the product—the firm’s tangible offering
to the market, which includes the product quality, design, features, and packaging.
 To gain a competitive advantage, sony may provide leasing, delivery, repair, and
training as part of its product offering.
Delivering Value

 how to properly deliver to the target market the value embodied in its products
and services.
 Channel activities include those the company undertakes to make the product
accessible and available to target customer
 It must understand the various types of retailers, wholesalers, and physical-
distribution firms and how they make their decisions
Communicating Value

 adequately communicate to the target market the value embodied by its products
and services.
 It will need an integrated marketing communication program that maximizes the
individual and collective contribution of all communication activities
 needs to set up mass communication programs consisting of advertising, sales
promotion, events,and public relations
Creating Successful Long-Term Growth

 Based on its product positioning, sony must initiate new-product development,

testing, and launching as part of its long-term view. The strategy should take into
account changing global opportunities and challenges.
END OF THE CHAPTER