Selling concept
. The belief that companies must sell and promote their offerings
aggressively because consumers will not buy enough of the offerings on their own.
Societal marketing concept
. The belief that a company's task is to identify the needs,
wants, and interests of target markets and to deliver the desired satisfactions better than
competitors do—but in a way that preserves or enhances consumers' and society's well-
being.
Supply chain
. The long series of activities that result in the creation of raw materials,
then components, and then final products that are carried to final buyers. A supply chain
includes the marketing channels that bring products to customers.
Value
. The ratio between what a customer gets and what he or she gives in return.
Want
. A desire that occurs when a need is directed to specific objects that might satisfy
that need; for example, a hamburger is a want that might satisfy the need for food.
What Would YOU Do?
Making a statement
As the head of accounting, Dan took pride in the efficiency of his
department. Just recently, he and his team had significantly reduced the
time between billing and receiving. The resulting improvement in cash
flow resulted in a team award from management. So he was a bit
annoyed when Janet, his old friend in marketing, told him about her
latest market research. "Customers find their statements confusing," she
said. "They seem to be paying the bills," Dan countered, "and we
manage to keep track of the money, what more do we have to do?" She
kept pushing. Couldn't they come up with clearer statements? Something
that would make customers' accounting easier? He was puzzled. It wasn't
his job to help make their accounting easier! He should do his job;
customers should do theirs. When Janet told him that these sorts of
issues were all part of marketing, part of their company's brand, Dan was
baffled. The marketing people and product development people handled
that stuff. What did a support department have to do with marketing?
What would YOU do?
A new language
Taniqua was excited when she was hired to design accessories for a
small but extremely popular handbag company. Now she sat at her work
area uninspired—when she should have been energized. She'd just
presented her sketches and prototypes for a whole new line of wallets,
and was thrilled when the top designer asked for one and started using it!
But the moment passed quickly. The marketing people started talking
about brands. Of course she knew what a brand was—but then they
droned on about something called differentiation and positioning, and
she was lost. She didn't know what she was supposed to do. Taniqua had
always had an instinct for fashion and trends—and a talent for being
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ahead of the curve. Now she began to realize that those instincts and
skills weren't going to be enough. She didn't want to go to business
school, but she had to be able to talk to these people…soon!
What would YOU do?
Building the business
Well-Built Furniture had a banner year selling attractive home-office
furniture to customers in a large metropolitan area. At a monthly
executive meeting, sales rep Harry presented his idea to develop a new
service: For an additional cost, customers could have a Well-Built
service representative assemble the unit in their home. Harry had talked
to enough customers to know the service would be a huge success. Every
customer he talked to loved the idea. Harry started planning right away.
He was projecting the costs of training the reps when a guy from
marketing strolled up to his desk and started asking about what the
competition was doing. Then he asked if Harry could come up with
numbers to show how the added service would increase revenue…and,
more importantly, raise profits. Harry was tempted to ask, "Isn't that your
job?" but he'd been around long enough to know you don't talk to other
managers that way. Besides, the questions made him a little nervous.
What if the idea wasn't as profitable as he'd thought? Maybe he was
rushing into it. Maybe he should come up with some numbers, but how?
He didn't even know where to begin.
What would YOU do?
Marketing—your job depends on it. Everyone in a company, from
product development to service representatives to support staff, need to
understand the basics of marketing so they can contribute to the effort of
bringing value to customers. In this topic, you'll learn the fundamentals
of marketing so that you can recognize marketing opportunities, work
with people in marketing to develop plans, and understand the big
picture. Your future and the future of your organization depend on it.
About the Mentors
Philip Kotler
Philip Kotler is a world renowned expert on strategic marketing. As a
Distinguished Professor of International Marketing at Northwestern
University's Kellogg Graduate School of Management, Philip's
research spans a broad number of areas including consumer
marketing, business marketing, services marketing, and e-marketing.
He is the author of numerous publications including the best-selling
book Marketing Management (Prentice Hall, 2000), A Framework for Marketing
Management (Prentice Hall, 2001), Principles of Marketing (Prentice Hall, 2001), and
Marketing Moves (Harvard Business School Press, 2002). In addition to teaching, he has
been a consultant to IBM, Bank of America, Merck, General Electric, Honeywell, and
many other companies.
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Bruce Wrenn
Bruce Wrenn, Ph.D., is an educator and consultant with more than 25 years experience
in marketing planning and research. He is currently a professor of marketing at Indiana
University South Bend and has authored five books on marketing. Bruce has consulted
with a variety of companies in the high-tech, food, pharmaceutical, health care, and
automotive industries, as well as helped of not-for-profit organizations develop
marketing programs.
What Is Marketing?
Quick: What's the first thing you think of when you hear the word marketing? Do you
imagine salespeople talking up their company's products with potential customers?
Flashy billboard ads lining a highway? Finance managers calculating the possible profits
that a new product may bring in?
If you envisioned any or all of these things, you're on the right track—selling,
advertising, and profitability calculations are all important parts of marketing. But
marketing consists of so much more. The American Marketing Association has
developed a comprehensive definition:
Marketing
is the process of planning and executing the conception, pricing, promotion,
and distribution of ideas, goods, and services to create exchanges that satisfy
individuals' and companies' goals.
Marketing starts with the organization's mission:
l
How does it define itself?
l
What are its goals?
l
Who are its customers?
l
How does it intend to fulfill its mission?
An organization's mission is the process of fulfilling its goals through the exchange of
goods, services, and ideas, and these activities define the process of marketing.
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Defining a Marketing Orientation
Exactly what is a marketing orientation? It occurs when everyone in the organization is
constantly aware of
l
who the company's customers are
l
what the company's customers want or need
l
how the firm can satisfy those customer needs better than its rivals
l
how the firm can satisfy customer needs in a way that generates the kind of profits
that the company wants to achieve
Marketing orientation begins at the top level of planning. A marketing orientation is a
customer orientation that is embodied in a company's
l
mission
—its very reason for existing; for example, "Our mission is to provide
low-pollution cars at a price that customers consider affordable and that lets our
employees and shareholders achieve their personal objectives."
l
strategy
—the concrete actions the company must take to achieve its mission; for
instance, "We must master the latest vehicle-emissions technology."
Effective marketing is a company-wide enterprise that hinges on a philosophy shared by
everyone within the organization. And a marketing orientation is vital because it helps
your company achieve its mission.
Marketing orientation touches everyone. Knowledge of basic marketing principles can
benefit anyone who's involved in the exchange of ideas, products, or services, whether
you're
l
a product manager or marketing professional in a large corporation
l
a production manager who directs the creation of the product
l
someone who's starting up a new business
l
an employee of a not-for-profit or educational institution
l
part of a small, growing company
Whatever your work situation, familiarity with marketing basics can help you contribute
to your company's success.
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The process starts with understanding customers.
Pay attention to your customers
Marketing is a way of understanding and satisfying the
customer.
Understand what the customer wants. Once marketers
understand these basic drives, they set about satisfying the customers' (or target
market's) needs, wants, and demands.
l
Needs
are fundamental requirements, such as food, air, water, clothing, and
shelter. Beyond the purely physical level, people also need recreation, education,
entertainment, and a place within a community or social status.
l
Wants
are needs that are directed at specific objects that might satisfy those
needs. For instance, you might need food, but for a special occasion you may want
to have a meal at a restaurant rather than preparing your food at home.
l
Demands
arise when people both want a specific product and are willing and able
to pay for it.
These needs are essential for life or quality of life, and marketing per se cannot affect
the needs themselves. But marketing can influence how those needs are fulfilled.
For example, a person might need food, but a restaurant's marketing message could
influence that person to want and demand a hamburger rather than fish and chips. Or, an
automobile manufacturer might promote the idea that its high-end model will satisfy a
person's need for social status.
Marketing focuses primarily on customer needs. These customer needs are the
underlying force for making purchasing decisions and they can be categorized as
follows:
l
stated
needs—what customers say they want; for example, "I need a sealant for
my window panes for the winter"
l
real
needs—what customers actually require; for example, a house that is better
insulated and therefore warmer during the winter
l
unstated
needs—requirements that customers don't happen to mention; for
example, an easy solution to insulating the house
l
delight
needs—the desire for luxuries, as compared to real needs
l
secret
needs—needs that customers feel reluctant to admit; for example, some
people may have a strong need for social status but feel uncomfortable about
admitting that status is important to them
Having a marketing orientation helps the marketer determine what type of need is
driving a customer's demand.
For instance, if a salesperson in a hardware store responds only to a customer's stated
need ("I need a sealant for my window panes") and does not attempt to discover the
customer's real need "My house needs to be better insulated for the winter"), the
salesperson might miss a great opportunity to tell the customer about her store's high-
tech insulation services and begin to develop a customer relationship.
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Match company offerings to customer needs
Customers' needs can be fulfilled in various ways—successful companies adapt their
offerings to match their customers' needs. Companies can offer the following:
l
goods
—physical offerings such as food, commodities, clothing, housing,
appliances, and so forth
l
services
—such as airline travel, hotels, maintenance and repair, and professionals
(accountants, lawyers, engineers, doctors, and so on)
l
experiences
—for example, a visit to a theme park or dinner at the most popular
restaurant
l
events
—for instance, the Olympics, trade shows, sports, and artistic performances
l
persons
—such as artists, musicians, rock bands, celebrity CEOs, and other high-
profile individuals
l
places
—cities, states, regions, and nations that attract tourists, businesses, and
new residents
l
properties
—including real estate and financial property in the form of stocks and
bonds
l
organizations
—entire companies (including not-for-profit institutions) that have
strong, favorable images in the mind of the public
l
information
—produced, packaged, and distributed by schools, publishers, Web-
site creators, and other marketers
l
ideas
—concepts such as "Donate blood" or "Buy saving bonds" that reflect a
deeply held value or social need
Any organization that engages in developing and offering one or more of these
"products" to customers is engaged in marketing.
See also Tips for Building a Marketing Orientation.
Developing a Marketing Orientation
Your company can achieve its mission by satisfying those customers' needs, wants, and
demands through the products it offers. But how exactly does your organization
accomplish this task? By developing the marketing orientation from top to bottom.
Define the company focus and marketing orientation
Different companies may emphasize different conceptual approaches to marketing.
Marketing
Orientation The Belief Behind It Company Focus
Production Consumers prefer products that are widely
available and inexpensive.
High production efficiency, low
costs, and mass distribution of
products
Product Consumers favor products that offer the
most quality, performance, or innovative
features.
The design and constant
improvement of superior products,
with little input from customers
Selling We have to sell our products aggressively,
because consumers won't buy enough of
them on their own.
Using a battery of selling and
promotional tools to coax
consumers into buying, especially
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All five of these marketing orientations have merit. Indeed, each one shown in the above
table builds on the one preceding it—but emphasizes something different. For example,
if your company emphasizes societal marketing, that doesn't mean it ignores the
importance of efficient production, high-quality products, selling, or obtaining
knowledge of customers. It means that it adds a new dimension—social and ethical
concerns—to its marketing approach.
Some companies may even change from one orientation to another in order to stay
competitive.
For example, many companies—including popular health-and-beauty-product
manufacturers and ice cream makers—have achieved impressive profits by emphasizing
societal marketing. That's because more and more consumers are demanding products
that are kind to human communities and the environment. As a result, other firms have
followed suit and adopted a societal marketing orientation.
Manage demand
Marketers recognize customer demand—transferring needs and wants into purchasing
decisions—and then try to manage it. However, because customer demand is exhibited
in many ways, marketers need to recognize the forms of demand and adapt marketing
strategies to them.
The shifting shapes of customer demand. Demand itself comes in a variety of forms,
and it is rarely stable.
l
latent
demand—when customers have a strong need that can't be satisfied by
existing offerings
l
increasing
demand—when customers become aware of a product, begin to like it,
and start asking for it
l
irregular
demand—when demand varies by season, day, or hour
l
full
demand—when customers want everything a company has to offer
l
overfull
demand—when customers' demands exceed the company's ability to
satisfy those demands
l
declining
demand—when demand diminishes
l
unwholesome
demand—when customers want unhealthy or dangerous products
l
negative
demand—when customers avoid a product
l
no
demand—when customers have no awareness of, or interest in a product
To meet its objectives, your company may have to influence the level, timing, and mix
of these various kinds of demand.
unsought goods (such as
insurance or funeral plots)
Marketing The key to achieving our goals is our
ability to be more effective than our rivals
in creating, delivering, and communicating
value to our target customers.
Target markets, customer needs,
coordination of all company
functions from the target
customer's point of view
Societal
marketing
Our task is to determine our target
customers' needs, wants, and interests—
and to satisfy them better than our rivals
do, but in ways that preserve or enhance
customers' and society's well-being.
Building social and ethical
considerations into marketing
practices; balancing profits,
consumer satisfaction, and public
interest
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For example, if demand for a product is seasonal, such as tomato seedlings in the spring,
then a garden center would plan accordingly to stock the seedlings at the right time of
year. If demand exceeds supply—you didn't stock enough seedlings—your company
would have to consider whether the demand will continue to rise during the next season,
making it worth the cost of adding inventory, or if the excessive demand was just a one-
time event and unlikely to occur again.
Plan the marketing process
Within an organization, the marketing process begins at the strategic planning level and
then moves to the planning and implementation stages in each area of the company.
Planning the Marketing Process
Whatever your position is in your organization, your awareness of the marketing process
and participation in it will help your company achieve its marketing and strategic
objectives.
Analyze market
opportunities.
Identify target customers, understand their needs, and know your
competition.
Develop a marketing
strategy.
Brainstorm new product ideas; define their competitive edge (that is,
the main reasons customers should buy your products instead of
your competitors'), and test-market your ideas.
Create a marketing
plan.
Decide how you'll position, price, and promote a product; which
distribution channels you'll use, and so forth.
Put your marketing
strategy into action.
Prepare for surprises and disappointments and incorporate feedback
and controls into the implementation process.
Evaluate the
effectiveness of your
marketing strategy.
Adjust it accordingly.
Analyze Market Opportunities—Consumers
The marketing process begins by identifying the market opportunities that will best help
your company achieve its mission, given the products and services that the company has
to offer. To determine these opportunities, the marketer answers two questions:
l
Who are our target customers?
l
Why should they buy our product and not our competitors'?
Who are your target customers?
Your firm probably has many different potential customers who may be interested in
your company's offerings. But, they likely fall into one of two main categories: (1)
individual consumers or (2) businesses or organizations.
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Whether your firm sells mainly to individual consumers or businesses depends on its
mission.
For example, if your company makes electronic gadgets for the home, you probably sell
primarily to individual consumers; however, if your firm makes high-speed photocopy
machines or offers management-consulting or corporate financial services, you probably
sell to businesses or organizations.
On the other hand, your company's primary market may shift over time if such a change
would have strategic value. For instance, an automobile manufacturer that sells mainly
to individuals might see some advantages in developing and marketing certain kinds of
vehicles—such as limousines—for business customers.
Understand individual consumers
Understanding consumer behavior helps marketers identify the most appropriate
offering to fulfill consumer demands.
People decide to buy products for many different reasons. The table below shows just a
few examples of the forces—cultural, social, personal, and psychological—that most
influence individuals' purchasing decisions.
Forces Affecting Consumer Buying
Understand consumers' buying process
Consumers use a fairly predictable series of steps when they decide whether to buy
something. You've probably followed the steps shown below many times yourself:
1. Recognize a need—for example, your computer has become outdated, and you
need a new one.
Cultural
Forces
National values, such as
an emphasis on material
comfort, youthfulness, or
patriotism
Ethnic or religious
messages or priorities
Identification with a
particular
socioeconomic class
Social Forces
Friends, neighbors,
coworkers, and other
groups with whom people
interact frequently and
informally
Family members,
friends—parents,
spouses, partners,
children, siblings
Individuals' own status
within their families,
clubs, or other
organizations
Personal
Forces
Age—including stage in
the life cycle; for example,
adolescence or retirement
Occupation, economic
circumstances, and
lifestyle (or activities,
interests, and opinions)
Personality and self-
image—including how
people view
themselves and how
they think others view
them
Psychological
Forces
Motives—conscious and
subconscious needs that
are pressing enough to
drive a person to take
action; for example, the
need for safety or self-
esteem
Perceptions
(interpretations of a
situation), beliefs, and
attitudes (a person's
enduring evaluation of
a thing or idea)
Learning—changes in
someone's behavior
because of experience
or study
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2. Search for more information—such as surfing the Internet for details on the
various features offered by computer companies.
3. Weigh the alternatives—"That computer seems to have more memory than this
other one."
4. Decide to buy—including determining that the price is right, concluding that
you've done enough "shopping around," and buying the product.
5. Evaluate and act on the purchase—you may feel satisfied, disappointed, or even
delighted with your purchase; you may return the product or decide to buy it
again; you may use and dispose of the product in ways that are important for
marketers to know.
Learning about consumers
How do your gather and use information about your target market? By researching and
evaluating. Here are a few ways to proceed:
l
Review your company's internal sales and order information—which reveal
existing customers' buying patterns and characteristics.
l
Gather marketing intelligence—which you collect through reading newspapers,
and trade publications; talking with customers, suppliers, and distributors;
checking Internet sources; and meeting with company managers.
l
Perform market research—which is conducted either by an internal research
department or an outside firm through devices such as market surveys, product-
preference tests, focus groups, and so forth.
l
Use secondary data sources—such as government publications, business
information, and commercial data.
By studying the forces that influence consumers' decisions—as well as the process that
consumers go through in deciding whether to buy—you can figure out how best to reach
and serve these customers.
See also Steps for Market Research.
Analyze Market Opportunities—Organizations
When organizations, rather than individual consumers, buy from your company, the
whole marketing picture changes.
Why? Organizations differ from individual consumers in important ways. For one thing,
they buy goods and services in order to produce their own offerings—which they then
sell, rent, or supply in some other way to other customers. Thus, they're usually looking
for the best possible deal for their company as a whole.
Kinds of organizations
Organizations fall into three main categories—each of which has different
characteristics:
Category Examples Characteristics
For-profit Major industries such as
manufacturing, construction,
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Demand for your company's products
may change radically in response to
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