chapter 1 an overview of marketing - cengage learning€¦ · web view · 2003-08-02chapter...

CHAPTER GUIDES and QUESTIONS

PART ONE

THE WORLD OF MARKETING

1 An Overview of Marketing

2 The Marketing Environment and Marketing Ethics

3 Developing a Global Vision

2 Chapter 1 An Overview of Marketing

CHAPTER 1 An Overview of Marketing

LEARNING OBJECTIVES

1 Define the term “marketing”

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

2 Describe four marketing management philosophies

Four competing philosophies strongly influence the role of marketing and marketing activities within an organization. These philosophies are commonly referred to as production, sales, marketing, and societal marketing orientations.

The production orientation focuses on internal efficiency to achieve lower prices for consumers. It assumes that price is the critical variable in the purchase decision.

A sales orientation assumes that buyers resist purchasing items that are not essential and that consumers must be persuaded to buy.

The marketing orientation is based on an understanding that a sale predominantly depends on the customer’s decision to purchase a product and on the customer’s perception of the value of that product. Responsiveness to customer wants is the central focus of the marketing orientation.

The societal marketing orientation holds that the firm should strive to satisfy customer needs and wants while meeting organizational objectives and preserving or enhancing both the individual’s and society’s long-term best interests.

3 Explain how firms implement the marketing concept

To implement the marketing concept successfully, management must embrace and endorse the concept and encourage its spread throughout the organization. Changing from a production or sales orientation to a marketing orientation often requires changes in authority and responsibility as well as front-line experience for management.

4 Describe the marketing process and identify the variables that make up the marketing mix

Marketing managers are responsible for a variety of activities that together represent the marketing process. These include: matching the role of marketing with the firm=s vision and mission, setting objectives, analyzing internal and external information, developing strategy, planning a marketing mix, implementing strategy, designing performance measures, and evaluating and adjusting strategy.

5 Describe several reasons for studying marketing

Marketing provides a delivery system for a standard of living, which is a monumental task in a society such as the United States, where a typical family consumes 2.5 tons of food per year.

No matter what an individual’s area of concentration in business, the terminology and fundamentals of marketing are important for communicating with others in the firm.

Between one-fourth and one-third of the entire civilian work force in the United States performs marketing activities. Marketing offers career opportunities in areas such as professional selling, marketing research, advertising, retail buying, distribution management, product management, product development, and wholesaling.

As a consumer of goods and services, everyone participates in the marketing process every day. By understanding marketing, one can become a more sophisticated consumer.

Chapter 1 An Overview of Marketing 3

PRE-TEST

Answer the following questions to see how well you understand the material. Re-take it after you review to check yourself.

1. Marketing is defined as:

2. What five conditions must be satisfied for any kind of exchange to take place?

3. The four variables of the marketing mix are: _____________________________________________. Which is the most important variable?

4. Four marketing management philosophies are:

5. List seven steps in the marketing process:

6. Name four reasons for studying marketing:


CHAPTER OUTLINE

1 Define the term “marketing”I. What Is Marketing?

A. Marketing is not the same as selling or advertising.

B. Marketing includes selling, advertising, making products available in stores, arranging displays, maintaining inventories, and much more.

C. Marketing is a philosophy or a management orientation that stresses the importance of customer satisfaction, as well as the set of activities used to implement this philosophy.

D. The American Marketing Association definition of marketing:

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

1. The Concept of ExchangeThe concept of exchange means that people give up something in order to receive something that they would rather have.

The usual medium of exchange is money. Exchange can also be fostered through barter or trade of items or services.

a. Five conditions must be satisfied for an exchange to take place:

1. There must be at least two parties.2. Each party must have something the other party values.3. Each party must be able to communicate with the other party and

deliver the goods or services sought by the other trading party.4. Each party must be free to accept or reject the other’s offer.5. Each party must want to deal with the other party.

Exchange may not take place even if all of these conditions exist, but these conditions are necessary for exchange to be possible.


II. Marketing Management Philosophies

Four competing philosophies strongly influence an organization’s marketing activities. These philosophies are commonly referred to as production, sales, marketing, and societal orientations.

A. Production Orientation

The production orientation focuses on internal capabilities of the firm rather than on the desires and needs of the marketplace. The firm is concerned with what it does best, based on its resources and experience, rather than with what consumers want.


. B. Sales Orientation

A sales orientation assumes that more goods and services will be purchased if aggressive sales techniques are used and that high sales result in high profits.

C. The Marketing Concept and Market Orientation

1. This philosophy, called the marketing concept, states that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational objectives.

2. The marketing concept involves:

a. Focusing on customer wants and needs so the organization can differentiate its product(s) from competitors’ offerings

b. Integrating all the organization’s activities, including production, to satisfy these wants and needs

c. Achieving long-term goals for the organization by satisfying customer wants and needs legally and responsibly

3. Firms that adopt and implement the marketing concept are said to be market oriented. Market orientation requires

a. Top management leadershipb. A customer focusc. Competitor intelligenced. Interfunctional coordination to meet customer wants and needs and deliver

superior values

4. Understanding your competitive arena and competitor’s strengths and weaknesses is a critical component of market orientation.

5. Market-oriented companies are successful in getting all business functions together to deliver customer value.

D. Marketing Societal Orientation

1. The philosophy called a marketing societal orientation states that an organization exists not only to satisfy customer wants and needs and to meet organizational but also to preserve or enhance individual’s and society’s long-term best interests.

2. This orientation extends the marketing concept to serve three bodies rather than two: customers, the organization itself, and society as a whole.


III. Considerations in Implementing Marketing Concept

A. Customer Value

1. Customer value is the ratio of benefits to the sacrifice necessary to obtain those benefits. 2. Creating customer value is a core business strategy of many successful firms.3. Marketers interested in customer value

a. Offer products that performb. Give consumers more than they expect


c. Avoid unrealistic pricingd. Give the buyer factse. Offer organization wide commitment in service and after-sales support

B. Customer Satisfaction

Customer satisfaction is the feeling that a product has met or exceeded the customer’s expectations. The organizational culture focuses on delighting customers rather than on selling products.

C. Building Relationships

Relationship marketing is a strategy that entails forging long-term partnerships with customers and contributing to their success.

The Internet is an effective tool for generating relationships with customers. Customers benefit from stable relationships with suppliers. A sense of well-being occurs when one establishes an ongoing relationship with provider. Most successful relationship marketing strategies depend upon: customer-oriented

personnel, effective training programs, employees with authority to make decisions and solve problems, and teamwork.

1. Customer-Oriented Personnel

All employees in marketing-oriented firms must be customer-oriented for the customer satisfaction goals to be met. Often one employee is the only contact a customer has with a company.

2. The Role of Training

Leading marketers recognize the role of employee training in customer service. In order to have full participation and understanding of the marketing philosophy, companies such as Walt Disney World, McDonald’s, and American Express train all their employees to become customer-oriented.

3. Empowerment

Empowerment is the practice of giving employees expanded authority to solve customer problems as they arise. This technique improves customer service by improving responsiveness.

4. Teamwork

Teamwork entails collaborative efforts of people to accomplish common objectives.

4 Describe the marketing process and identify the variables that make up the marketing mix

IV. The Marketing Process

Marketing includes the following activities: Gathering, analyzing, and interpreting information about the environment (environmental scanning) Understanding the organization’s mission and vision, and the role marketing plays.


Finding out what benefits people want the organization to deliver and what wants they want the organization to satisfy (market opportunity analysis)

Developing marketing strategy by deciding exactly which wants and whose wants the organization will try to satisfy (target market strategy); setting marketing objectives; and by developing appropriate marketing activities to satisfy the desires of selected target markets.

Implementing the marketing strategy Periodically evaluating marketing efforts and making changes if needed.

A. Environmental Scanning

Environmental Scanning is the collection of information about a variety of factors that have impact on the firm’s operations. It helps the firm identify market opportunities and threats. Categories of uncontrollable environmental factors are:

Social forces Demographic forces Economic forces Technological forces Political and legal forces Competitive forces

B. Organizational Mission

A critical success factor of any firm is a clear statement of the organizations purpose and mission. This statement defines the boundaries of the firm’s objectives, strategies, and actions.

C. Market Opportunity Analysis

Market opportunity analysis describes market segments of interest to the firm. It also estimates the size and slaes potential of these segments and assesses key competition in the same segments.

D. Marketing Strategy

Marketing strategy has these basic components:

1. Selecting one or more target markets2. Setting marketing objectives

E. Developing and maintaining a marketing mix

1. Target market strategy. Three types of targeting strategy are most common:a. Appeal to entire market with single marketing mixb. Concentrate on a single market segmentc. Appeal to multiple marketing with multiple mixes

2. Marketing objectives. Marketing objectives state what is to be accomplished through marketing activities.a. Characteristics

1) consistent with organizational objectives 2) measurable3) bound by a timeframe in which they are to be accomplished

b. Benefits1) can energize the firm’s personnel2) can serve as standards of performance3) in writing, they help sharpen and crystallize managers’ thinking

3. Marketing mix. The marketing mix consists of four elements (the 4 P’s)


a. Product – includes product itself AND its packaging, service, warranty, and brand/company image

b. Distribution (place) – all activities concerned with storing and transporting productsc. Promotion – personal selling, advertising, sales promotion and public relationsd. Price – what buyer must give up to obtain a product (most flexible element of the mix)


VI. Why Study Marketing?

A. Marketing Plays an Important Role in Society

Marketing provides a delivery system for a complex standard of living. The number of transactions needed everyday in order to feed, clothe, and shelter a population the size of the one in the United States is enormous and requires a sophisticated exchange mechanism.

B. Marketing Is Important to Businesses

Marketing provides the following vital business activities

1. Assessing the wants and satisfactions of present and potential customers2. Designing and managing product offerings3. Determining prices and pricing policies4. Developing distribution strategies5. Communicating with present and potential customers

C. Marketing Offers Outstanding Career Opportunities

1. Between one-fourth and one-third of the entire civilian work force in the United States performs marketing activities.

2. Marketing offers career opportunities in areas such as professional selling, marketing research, advertising, retail buying, distribution management, product management, product development, and wholesaling.

D. Marketing Affects Your Life Every Day

1. As consumers of goods and services, we participate in the marketing process every day.2. Almost 50 cents of every dollar consumers spend goes to pay marketing costs such as

market research, product research and development, packaging, transportation, storage, advertising, and sales-force expenses.


VOCABULARY PRACTICE

Fill in the blank(s) with the appropriate term or phrase from the alphabetized list of chapter key terms.

customer satisfactioncustomer valueempowermentexchangeenvironmental scanningevaluation4P’smarketingmarketing concept

marketing mixmarketing objectivesmarketing strategymarket opportunity analysismarketing orientationproduction orientationrelationship marketingsales orientationsocietal marketing conceptteamwork


1. The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods,

and services to create ____________________ that satisfy individual and organizational objectives defines

_____________________________.


2. There are four alternative marketing management philosophies. The first focuses on the firm’s internal

capabilities rather than the needs and desires of the marketplace; this is the

_____________________________. The second philosophy is the _____________________________,

which assumes that buyers resist purchasing nonessential items, so aggressive sales techniques should be

used to sell more products. The third philosophy, focuses on customer needs and wants, is the

_____________________________. Finally, a firm that decides to focus on the long-term best interests of its

customers and society has adopted the _____________________________.

3. When a firm focuses on customer wants, integrates all firm activities to satisfy these wants, and achieves

long-term goals by satisfying these wants legally and responsibly, the firm is using the

_____________________________.


4. Marketers who offer products that perform beyond customer expectations, avoid unrealistic pricing, give

consumers the facts and commit to after-sales support are in creasing _____________________________.

5. When an organization focuses on meeting and exceeding the needs of customers’ rather than selling

products, the organization will likely achieve _____________________________.

6. A strategy of forging long-term partnerships with customers, becoming part of the customer’s organization

and contribute to its success is called ___________________________.

7. When people collaborate their efforts to accomplish common objectives, they are practicing

_____________________________.


8. Marketing-oriented firms which give their employees expanded authority to solve customer problems

immediately are _____________________________ their workers.

4 Describe the marketing process and identify the elements that make up the marketing mix

9. A statement of what is to be accomplished with marketing activities is a(n) _____________________________.

10. The identification of market opportunities and threats to provide guidelines for the design of marketing strategy is known as _____________________________. Forces identified with this process include social, demographic, economic, technological, political/legal, and competitive forces.

11. The activities of selecting and describing one or more target markets and developing and maintaining a marketing mix to satisfy these markets is known as a(n) _____________________________.

12. When marketers want to estimate the size and sales potential of market segments, as well as assess key competitors in these market segments, they conduct a(n) _____________________________.

13. The unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market is the _____________________________. These elements are also known as the _____________________________.

14. The phase of the marketing process in which marketers gain the organizational compliance required to put marketing strategies into action is termed _____________________________. The phase in which marketers gauge the extent to which objectives have been achieved during a specified time period is the process of _____________________________.

Check your answers to these questions before proceeding to the next section.

TRUE/FALSE QUESTIONS

Mark the statement T if it is true and F if it is false.


_____ 1. A marketing exchange cannot take place unless each party in the exchange has something that the other party values.

_____ 2. The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational needs is management.


_____ 3. The owners of the Stayfast fasteners Company are pleased with their low unit costs and high production volumes. Salespeople are unnecessary because buyers are always waiting for new tires to come off the assembly line. Stayfast currently has a great sales orientation.


_____ 4. The president of EOB Putting Devices does not find it necessary to conduct much marketing research because the telephone selling campaign has been such a successful marketing strategy. EOB has a marketing orientation.

_____ 5. The marketing manager for International Internet Inc proposes to senior management that the company create Internet kiosks to be given to poor, isolated groups around the world. She argues that although this will not likely be profitable anytime in the near future, it will provide needed access to information for these people and exemplify the company’s long-term goals and societal marketing orientation.


_____ 6. You are about to start manufacturing and selling ferret food. You have met with your board of directors and discussed consumer benefits and sacrifices regarding the purchase of your food. Knowing the ratio of benefits to sacrifices allows you to specify how much customer value you will achieve.

_____ 7. As the new marketing major hired by Antiquated Approaches Company, you suggest the company could profit from repeat sales and referrals if you develop a strategy of forging long-term partnerships with existing customers. You are proposing the company take a better sales orientation.


_____ 8. The marketing mix variables are product, place, promotion, and price.

_____ 9. You have been hired to collect and analyze information about factors that may affect your new company. You are also responsible for identifying market opportunities and threats. Your job can be summarized as “environmental scanning.”

_____ 10. Your school of business is engaged in describing and estimating the size and sales potential of market segments (such as traditional students, executives, and the local community). In addition, the school is assessing major competitors (such as other colleges and educational programs). Your school is conducting a market opportunity analysis.

_____ 11. A small, independent motion picture studio decides to use theaters to advertise a new artistic movie release. This is an example of using “place” in the marketing mix.

5 Describe reasons for studying marketing

_____ 12. The most important reason to study marketing is to make money.



AGREE/DISAGREE QUESTIONS

For the following statements, indicate reasons why you may agree and disagree with the statement.

1. The marketing orientation actually encompasses both the sales orientation and the production orientation.

Reason(s) to agree:

Reason(s) to disagree:

2. Marketing is the job of everyone in a business organization, not just the marketing department.

Reason(s) to agree:


3. Only students who are majoring in marketing should be required to take marketing courses.

Reason(s) to agree:



MULTIPLE-CHOICE QUESTIONS

Select the response that best answers the question, and write the corresponding letter in the space provided.


_____ 1. Which of the following is true about marketing? a. Marketing is a philosophy that stresses producer satisfaction.b. Marketing is a product.c. Marketing involves everyone in an organization. d. Marketing is used for products only.e. Marketing involves projects, profits, production, and distribution.

_____ 2. Go-Go International wants to sell their products in a country that does not have an internationally accepted currency. One way Go-Go could overcome this problem would be to:a. insist the country join the World Trade Organizationb. barter for a product from the country and then sell it in international markets.c. encourage the country to adopt the U.S. dollar as their currency.d. get the U.S. government to accept the country’s currency.e. organize assistance so the country can improve its international credibility.

_____ 3. If you were in the marketing consulting business which of the following clients could you NOT serve?a. The Boston Museum of Science, which needs to determine what exhibits should it offer

visitorsb. The State of Mississippi, which needs to attract touristsc. Dr. Susan Scott, an orthopedic surgeon wishing to open a practice in your home townd. The World Gym, which needs to determine where to locate its next outlet for customerse. All of the above could be served by a marketing consultant

_____ 4. You are concerned with managing the exchange between the Red Cross and its blood donors. Which of the following costs would you have to be concerned about to create the ideal exchange?a. The travel costs incurred by donors visiting the Red Cross blood donation sites.b. The personal energy and time expended by the donorc. Your opportunity costs lost by not engaging in some other activityd. All of the above are marketing costs that would be of concern to someone managing the

exchange situatione. None of the above are costs of exchange situations


_____ 5. Florence Rock, the owner of Yesterday Products, Inc. is production-oriented. If you were in charge of her marketing operations, which of the following statements might you use as a guiding principle if you wish to meet Ms. Rock’s demand?a. “I’m a customer and everyone is like me. I buy on price, therefore everyone does, as well.”b. “We need to buy the fastest production equipment as possible to raise productivity and keep

prices at the lowest possible level.”c. “We produce the best widgits in the market place.”d. All of the above would be consistent with Mr. Stone’s demands.e. None of the above would be consistent, because all reflect a sales orientation.

_____ 6. Peter’s company does an excellent and efficient job of churning thousands of Nit -Pickers off the assembly line every day. One problem with this approach to marketing is the failure to consider whether Nit-Pickers also meet the needs of the marketplace.a. customer orientationb. sales orientationc. discount orientationd. marketing orientatione. production orientation


_____ 7. Jacque Lewellyn’s company markets gourmet syrups. Jack knows that buyers may consider the product nonessential, and he assumes that if he hires a team of aggressive, persuasive salespeople, buyers will buy more of the polish. Jacque has a: a. sales orientationb. production orientationc. promotion orientationd. marketing orientatione. customer orientation

_____ 8. Beth has noticed the lack of specialty recycling centers in her community, although local neighborhood clubs have repeatedly asked the city to provide such centers. Beth has decided to become certified in waste disposal and hopes to open a battery and motor oil recycling center next year. She hopes to include the innovative service of home pickup and delivery of recyclables. This business philosophy supports a(n) orientation. a. productionb. salesc. retaild. marketinge. enterprise

_____ 9. The American Banking Company tells its salespeople to try to sell credit cards to everyone they meet or contact. In contrast, the Family Financial Company concentrates on credit designed for single parents. Family Financial is:a. missing out by not concentrating on the average customerb. a company that would state that they are in the business of selling insurancec. a selling-oriented companyd. recognizing that different customer groups have different needs and wantse. aiming at a goal of profit through maximum sales volume

_____ 10. Bob & Gary’s is a contemporary ice cream manufacturer that donates 10 percent of its earnings to the local United Way organization. Bob & Gary’s has which type of orientation?a. productionb. salesc. promotiond. marketinge. societal marketing


_____ 11. Which of the following is NOT a part of the marketing process?a. understanding the organization’s missionb. developing performance appraisals for marketing personnelc. designing performance measuresd. setting objectivese. determining target markets

_____ 12. As the marketing director for a new pharmaceutical that prevents baldness, you have been asked by the CEO to provide marketing objectives for the next year. Your product is the second one of its type in the market. Which of the following is the most appropriate objective?a. To generate sales of $20 million during the first year of the launch.b. To attain a market share of 100 percent in the first year.c. To significantly increase the company’s sales.d. To be number one in the market for baldness-prevention products.e. To be known as the best product in the baldness-prevention market.


_____ 13. A power tool company conducted consumer research and describes its customers as being male, 28-55 years of age, married, 62 percent high school graduates, and earners of below-average income. This is the group of consumers most likely to buy the tools and is referred to as the: a. social responsibility groupb. exchangersc. target marketd. advertiseese. tool men

_____ 14. John Porter is the new vice president of marketing and is designing the marketing mix for his company. The starting point of Mr. Porter’s marketing mix strategy will be the: a. analysis of what production equipment is available and owned by the companyb. design of the promotion campaign to be used for the productc. study of the needs of his target marketd. development of the good or service to be solde. determination of the price to be charged for the good or service, enabling future revenues and

budgets to be estimated

_____ 15. Barak Austin is thinking about opening a new hardware and home improvement store in a community that research has shown needs more outlets. On which area of the marketing mix should he focus his attention?a. customer needs/wantsb. productionc. productd. promotione. distribution

_____ 16. Diana’s job is to decide whether her company’s advertising money will be spent on television, radio, newspaper, or direct mail. To which of the four P’s do Diana’s duties relate? a. publicityb. pricec. promotiond. placee. product

_____ 17. Albert must make a quick change to his marketing plan to boost sales, so he should change the __________ element of the marketing mix?a. productb. placec. priced. promotione. publicity

_____ 18. The marketing manager for Oil of Olan, a skin care product, is working with an advertising agency to develop a new web site targeting teen-agers. Which of the following marketing mix variables best describes this activity?a. productb. pricec. target marketd. distributione. promotion

_____ 19. Becky’s Bolt Supply has set up a management committee that is arranging the delegation of authority and responsibility for marketing strategies, determining a time frame for completion of tasks, and overseeing resource allocation. The task of this committee is: a. market planningb. strategic analysisc. alternative controld. implementatione. strategic planning



_____ 20. Jackie is a food science major at a state university and hopes to operate the family restaurant after graduation. Jackie has been advised to take a marketing course in the school of business as an elective, but she thinks this would be a waste of time. You are her friend and a marketing major. You advise that: a. marketing is not relevant for a business like a family restaurantb. Jackie declare a business minor because she needs a backup careerc. more nutrition and gourmet cooking classes will be most useful for Jackied. the main reason to take marketing is to teach Jackie how to advertise the restaurante. marketing knowledge will help Jackie to understand how she can satisfy consumers’ needs

and wants

_____ 21. Paul owns a small laboratory that makes biotech products. His company is growing fast, and there are many things he does not understand about his customers. Should Paul take a marketing course? a. Yes, because marketing is synonymous with selling, and Paul will want to learn aggressive

sales techniques to continue the company’s growthb. No, because he can hire an advertising firm and will not need further knowledge of

marketingc. No, because he has a high-tech business and will only be marketing to other tech people.d. Yes, because the concept of marketing will help Paul to better serve and satisfy his customerse. Yes, because marketing teaches businesses how to sell products that people don’t need


ESSAY QUESTIONS

1. The concept of exchange is crucial to the definition of marketing. What are the five conditions that must be satisfied for an exchange to take place? Can marketing occur even if an exchange does not take place?


2. Assume you are a marketing manager. Describe the marketing strategy for each of the four orientations of marketing management philosophy.

3. Briefly define the marketing process activities.

4. Your roommate sees you spending extra time studying this book and says, “why all the effort? Marketing is just sales and advertising.” How do you respond?


Internet Exercise

Visit your college or university’s web site. Go to the home page and look at the choices, read some of the introductory information targeted for prospective students. Using the production, sales, marketing, and societal marketing orientations discussed in Chapter 1, evaluate your university’s orientation. Use examples from the web site to justify your opinion.

CHAPTER NOTES

Use this space to record notes on the topics you are having the most trouble understanding.


WORK SPACE

ANSWERS TO THE END-OF-CHAPTER DISCUSSION AND WRITING QUESTIONSUse this space to work on the questions at the end of the chapter.

ANSWERS TO THE END-OF-CHAPTER CASEUse this space to work on the questions at the end of the chapter.


chapter 1 an overview of marketing - cengage learning€¦ · web view · 2003-08-02chapter...

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