Ch-01-S-Defining Marketing For The New Realities

07/10/2021
1
01
Defining Marketing for
the New Realities
16/e
Discussion Questions
1. Why is marketing important?
2. What is the scope of marketing?
3. What are some core marketing concepts?
4. What forces are defining the new marketing
realities?
5. What new capabilities have these forces given
consumers and companies?
6. What does a holistic marketing philosophy
include?
7. What tasks are necessary for successful
marketing management?
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-2
The Value of Marketing
• Nothing matters without sufficient demand

for products; truly marketing:
̶ Creates demand
̶ Determines financial success
̶ Creates jobs
̶ Creates strong brands
̶ Creates a loyal customer base
̶ Allows firms to engage in socially responsible
activities
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What Is Marketing?
• Misconceptions about marketing

• Marketing is all about:
̶ Telling and selling
̶ Advertising and selling
̶ The art of selling products & making profits
Selling Is Only the Tip of the Iceberg
―There will always be need for

some selling. But the aim of marketing
is to make selling superfluous. The aim
of marketing is to know and understand
the customer so well that the product or
service fits him and sells itself. Ideally,
marketing should result in a customer
who is ready to buy. All that should be
needed is to make the product or
service available.‖
Peter Drucker
What Is Marketing?
• No universal definition of marketing

• ―Marketing is the process of transferring
goods through commercial channels from
producer to consumer.‖
~~Brown in 1925
What a back-dated definition!
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07/10/2021
What Is Marketing?
Marketing starts long before...
―Marketing is the homework that we do

before we have a product".‖
—Philip Kotler
Father of Modern
marketing
(1931--)
What Is Marketing?
Marketing is dynamic
• The nature and scope of marketing is:

̶ Ever-changing and highly affected by its
contextual elements
What Is Marketing?
Marketing is dynamic
―Within five years, if you run your

business in the same way as you do now,
you‘re going to be out of business.‖
—Philip Kotler
Father of Modern
marketing
(1931--)
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What Is Marketing?
Marketing is eclectic in nature
• Combination of different fields of study

• Marketing doesn‘t exist on its own
What Is Marketing?
Be customer-centric
―The only way to serve your company‘s

interest is to serve your customer‘s
interest.‖
—Philip Kotler
Father of Modern
marketing
(1931--)
What Is Marketing?
Focus on benefits, NOT on products
―People don‘t buy a quarter-inch drill,

they want a quarter-inch hole.‖
—Theodore Levitt
―Kodak sells films, but they don‘t

advertise film; they advertise
memories.‖
- Theodore Levitt
Guru of Philip
Kotler
(1925-2006)
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What Is Marketing?
Put your customers first
―When a customer enters my store, forget

me. He is king.‖
—John Wanamaker
US merchant
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall (1838 – 1922)
1-13
What Is Marketing?
Never-ending debate
What Is Marketing?
• Marketing is sensing and responding

̶ Sensing is knowing your customers,
competitors, and marketplace or
environmental forces
̶ Responding is coming up with market-
driven strategies
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What Is Marketing?
Know what to make & create value
―Authentic marketing is NOT the art of

selling what you make but knowing what
to make.‖
―Marketing is the art of creating genuine

customer value.‖
—Philip Kotler
Father of Modern
marketing
(1931--)
What Is Marketing?
―Marketing creates, communicates,

and delivers value to a target market
at a profit.‖
Kotler at London Business Forum
Father of Modern
marketing
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-171-17
(1931--)
What Is Marketing?
Marketing is never-ending...
―Marketing is a race without a finishing

line.‖
—Philip Kotler
Father of Modern
marketing
(1931--)
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What Is Marketing?
• Marketing is
– Creating value for customers
– Capturing value from customers
• ―The process by which companies engage

customers, build strong customer
relationships, and create value in order to
capture value from customers in return.‖
What is Marketed?
Ten entities are marketed
• Goods • Places
• Services • Properties
• Events • Organizations
• Experiences • Information
• Persons • Ideas
Marketing Ideas
―Friends Don‘t Let

Friends Drive Drunk. ‖
This is the watch

Stephen
Hollingshead, Jr. was
wearing when he
encountered a drunk
driver.
Time of death 6:55 p.m.

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07/10/2021
Who Markets?
Marketer Prospect
is someone who is one from whom response
seeks a response….. is sought
Response
Attention
Purchase
Donation
Vote
If both parties are seeking to sell something

to each other, we call them both marketers
Demand Management
• Marketers manage demand

– Stimulating demand only is a limited view of
what they do
• They influence the level, timing, and

composition of demand to meet org
objectives
Types of Demand
Negative No Demand Latent
Declining Irregular
Full Overfull Unwholesome
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Types of Demand
Consumers dislike Conversational Marketing
Negative the product and • Analyze the sources of resistance
Demand may even pay to • Design mkt. programs and
avoid it
positive promotional message
Stimulational Marketing
No Consumers may be • Connect the benefits of the
Demand unaware of or product with customers‘ needs
uninterested in the • Alter the envt.
product
• Distribute info or product
Consumers may Developmental Marketing
Latent share a strong need • Measure the size of the potential
that cannot be market
Demand
satisfied by an
• Convert the latent demand into
existing product
actual demand through 4 Ps
Types of Demand
Consumers begin to Creative Marketing
Declining buy the product less • Find the causes of falling demand
Demand frequently or not at • Reconsider the target market and
all
mkt. programs
Consumer
Irregular purchases vary on Synchronizing Marketing
a seasonal, • Modify the mkt. programs to alter/
Demand
monthly, weekly, or influence the supply pattern or
daily, or even hourly demand pattern or the both
basis
Maintenance Marketing
Full Consumers are • Maintain efficiency in carrying out
Demand adequately buying activities
all products put into • Keep constant vigilance in
the marketplace monitoring external forces
Types of Demand
Demarketing
More consumers • Discourage customers
Overfull would like to buy the to buy products
product than can be − Modify mkt. programs
Demand
satisfied
− Don‘t destroy demand
Countermarketing
Consumers may be • Put restrictions on
Unwholesome attracted to products production
that have undesirable − Use negative ad with
Demand
social consequences fear or horror message
− Raise price
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The Marketing Process

Goal of Marketing: Satisfy customer needs and wants through
creating value for customers
Understanding the Marketplace

and Customer Needs
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Marketplace and Marketspace
• Marketplace is a
physical place where
products are bought and
sold • Marketspace is a
digital or online space
̶ Store, shopping mall
through which
products are bought
and sold
̶ eBay‘s auction market
Needs, Wants, and Demands
NEEDS
The states of felt
deprivation of some WANTS
basic satisfaction The form human needs
DEMANDS
The basic human take
Human wants for
requirements Shaped by culture and specific objects that are
Physical, social and individual personality backed by an ability to
individual needs pay
Addresses ‗WHAT‘ to
Addresses ‗WHY‘ to buy? Addresses ‗ABILITY‘ to
buy? buy?
(Market) Offerings
Value Proposition
Products
Goods Services Others
Offering Brand
Experience
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Value Proposition
– The intangible value

• The set of benefits or proposition is made
values a company physical by an offering
promises to deliver to its – Explains why a
target markets to satisfy consumer should buy
their needs an offering
– Helps differentiate an
offering
Product
• Anything tangible or intangible that

has the ability to satisfy a consumer
need
̶ Goods, services, people, place,
organizations, experiences, ideas,
information
Market Offering
• Some combination of ̶ More than a tangible

products, services, info, good
or experiences offered ̶ People buy offering,
to a market to satisfy a not a product
need or want ̶ Called augmented
product
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Brand
• A brand is an offering from a known source

• ―A name, term, design, symbol, or any other
feature that identifies one seller‘s good or
service as distinct from those of other
sellers.‖ ~~ AMA
• The summation of feelings, perceptions,

experiences, beliefs, and memories that
make the product distinct from others.‖
Marketing Myopia
• Theodore Levitt‘s article in

1960 in HBR ̶ A product-centric,
short-sighted, and
• A mistake of paying more inward looking
attention to the specific approach to
products than to benefits marketing
and experiences ̶ Ignores underlying
produced by these needs of customers
products
Goods, Services, and Experiences
Products Definitions
Goods • A tangible entity that has the ability to
satisfy the need of a customer
Services • An intangible entity like activity, benefit, or

satisfaction that cannot be possessed or
owned or bought or sold through the
third-party
Experiences • What buying a product will do for the

customer
̶ Experience is memorable and stays in mind
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(Customer-perceived) Value
Satisfaction
• The function of a product‘s perceived performance

compared to a customer‘s expectations
̶ Set right level of expectations
̶ Not too high or too low
• If PPP  Customer Expectation = Dissatisfied

• If PPP = Customer Expectation = Satisfied
• If PPP  Customer Expectation = Delighted
Exchange, Transactions, and

Relationships
• Exchange is the act of obtaining a desired

object from someone by offering something in
return
• Transactions involve negotiating and reaching

an agreement between two parties
̶ Conditions: At least two things of value, agreed-upon
conditions, a time and place of agreement
• Relationships consist of actions to build and

maintain desirable relations
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Markets
• A set of present and

• A market is NOT potential buyers who
̶ A ‗physical place‘
have:
(a) needs to satisfy
̶ A ‗set of buyers
and sellers‘ (b) money to spend, and
(c) the willingness to
spend the money
Key Customer Markets

Consumers or end-users Professional or institutional buyers
Consumer Market Business Markets
Global Markets Non-profit and

Individuals or institutional customers government market
Nonprofit and government organizations
1-44
Modern Marketing System
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Five Markets in the Economy
Marketing Channels
• A set of interdependent • They include:

organizations that help
̶ Communication
make a product channels
available for use or ̶ Distribution
consumption by the channels
market ̶ Service channels
Paid, Owned, and Earned Media
• Paid media— are media which convey messages

of the company at a certain fee
• Owned media— are media or channels owned

and controlled by the company
• Earned media— are outside media the voluntarily

communicate the company‘s message with the
target market
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Supply Chain Management

• Managing upstream & downstream value-added
flows of materials, final goods, and related info
among suppliers, the company, resellers, and
final consumers
Fig: The Supply Chain for Coffee
Marketing Environment
• The actors & forces outside mkt. that affect mkt.

management's ability to build & maintain successful
relationships with target customers
Task environment
Broad environment
Designing Customer-Value-Driven
Marketing Strategy and Plan
• Marketing manager can design a customer-

driven mkt. strategy
• Marketing management is the art and
science of choosing target markets and
building profitable relationships with them by
creating, communicating and delivering
superior customer value
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Marketing Management: Art or Science?
• An ‘ART’
̶ Deals with consumer minds,
hearts, & behaviors
̶ No ‗single best‘ solution
• A ‘SCIENCE’
̶ No ‗single way‘ to develop &
̶ Applies scientific
implement mkt. strategy
methods to know the
̶ Uses creativity, thoughts, needs and wants of
insights, skills, and intuitions customers
̶ Some concepts,
theories, and models
are universally
applicable
Designing Customer-Value-Driven
Marketing Strategy and Plan
• Marketing manager must answer the two

questions:
• What customers will we serve?
• How can we best serve these customers?
Selecting Customers to Serve
• Segmentation is the process of dividing the

market into smaller segments of homogenous
customers
• Target market is the segment of market that

shows the greatest opportunities to the
company
• Target marketing refers to selecting which

segments to go after
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Choosing a Value Proposition
How to differentiate and position itself?
• Positioning is determining a distinctive place

you want your product to occupy in the
marketplace relative to competition and in the
minds of target customers
‒ Volvo: Safety
‒ BMW: Performance or sophistication
‒ Prius: Green, efficient, or earth-friendly
Choosing a Value Proposition
• Value proposition is the set of

benefits or values a company
promises to deliver to its target
markets to satisfy their needs
‒ Differentiate the offerings
Marketing Management Orientations
• MM designs strategies to build profitable

relationships with target consumers
• But what philosophy should guide these
marketing strategies?
• What weight should be given to the interests
of customers, the organization, and society?
‒ Very often, these interests conflict
‒ Design and carry out marketing strategies under 5
concepts
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07/10/2021
Marketing Management Orientations

• Quality, performance • Be customer-centric
& innovative features
• Customer-focus & value are
• Leads to mkt. myopia the paths to sales & profits
• Builds a better
• Make what buyers need
mousetrap fallacy
• You look into mirror • Takes an outside-in-view
• Ignore 3 Ps • Makes profit through…
Production Product Selling Marketing Holistic
• Mass production & • Shows buying inertia

distribution at low cost • A cohesive & 360º
• Puts selling efforts approach
• Focuses on own • Sells what produced
operations • Everything matters
• Takes an inside-out-view here
• Leads to mkt. myopia
• Good for unsought goods • Brings efficiency,
• Makes profit through… consistency and
alignment to the
process
Selling Vs. Marketing Concept
Marketing Concept: Shortcomings
• Overlooks undesirable social consequences

and social responsibility
• Ignores
̶ Internal marketing
̶ Contribution outside the firm
̶ Ethical/legal/environmental issues
̶ Brand equity & customer equity
̶ Sustainability of business
• Focuses on maximizing personal benefits
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07/10/2021
Holistic Marketing Concept
Internal Marketing
The task of hiring, training, and motivating able

employees for top-level management and all
departments to serve customers well
Integrated Marketing
Occurs when the marketer

designs marketing programs
to create, communicate, and
deliver customer value
Two key themes:

• Different activities can
CCDV
• Design one mkt.
activity with all other
activities in mind
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07/10/2021
Relationship Marketing
4 key constituents:
• Customers
• Employees
• Partners
• Member of the financial community
Develop
marketing
Build mutually beneficial, long- networks
term relationships with…
Performance Marketing
‗Financial Scorecard‘ Vs. Marketing Scorecard
Intangible assets:
Loyal customer base, customer equity,
brand equity, marketing network,
Social Responsibility
Financial Accountability
Preparing an Integrated Marketing

Strategy and Plan
A set of tools (4 Ps) the firm uses to implement James Culliton (1948)
Neil Borden (1953),
its marketing strategy
McCarthy (1960)
A comprehensive plan that communicates
and delivers the intended value to chosen
customers
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Strategy and Plan
Expanded Marketing Mix by Kotler
People Process Programs Performance

Gathering
Employee: marketing insights Development Measuring
• Hiring
Developing new of customer- performance:
• Training ideas and products centric • Financial
• Developing Building long-term programs
• Non-financial
• Motivating relationships with
customers Performance
parameters
• Service delivery
• Complaints
• Response time

Strategy and Plan
McCarthy‘s Lauterborn's 4 Shimizu's 4 Sheth &

4 Ps Cs Cs Sisodia‘s 4 As
Product Customer solution Commodity Acceptability
Price Cost Cost Affordability
Place Convenience Channel Accessibility
Promotion Communication Communication Awareness

Strategy and Plan
Booms, Bitner, &

Jo‘s ―7 Ps of
Service Marketing‖
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07/10/2021
Engaging Customers and Managing

Customer Relationships
Customer Relationship Management
Customer Engagement and Today‘s Digital,

Mobile, and Social Media
Consumer-Generated Marketing
Partner Relationship Management
CRM
• Building and maintaining the right relationships

with the right customers
̶ Basic relationships with low-margin customers
̶ Full relationships with high-margin customers
̶ Frequency marketing programs (reward customer)
̶ Relationship building-blocks (Customer-perceived
value & Satisfaction)
Customer Engagement and Today‘s Digital,

Mobile, and Social Media
• CEM fosters direct and continuous customer

involvement in shaping brand conversations,
brand experiences, and brand community
̶ Make the brand a meaningful part of consumers‘
conversations & lives
̶ Embrace ―Customer-managed Relationships‖: Customers

connect with firms and with each other to shape & share
their own brand experiences
̶ Create ―Customer Brand Advocacy‖
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Customer-Generated Marketing
• Consumers themselves play roles in shaping their

own brand experiences and those of others
̶ This happens through invited and uninvited C2C
exchanges in social media, blogs, online review sites,
and other digital forums
̶ Firms increasingly invite consumers to play active roles

in shaping products & brand content
PRM
• Working closely with partners in other company

departments and outside the company to jointly
bring greater value to customers
Capturing Value from Customers
Creating Customer Loyalty and Retention
Growing Share of Customer
Building Customer Equity
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07/10/2021
Creating Customer Loyalty and Retention
• CLV is the value of the entire

stream of purchases a
customer makes over a
lifetime patronage
̶ Models vary in sophistication,
complexity, and accuracy
Growing Share of Customer
Share of Customer/Wallet (SOW)

• The portion of the customer‘s buying
that a firm gets in its product
categories
• Customer equity is the total combined CLVs of

all of the firm‘s current & future customers
̶ Increasing the number of current and future customers
̶ Keeping them loyal to the company
̶ Earning a greater share of their purchases
̶ Capturing their CLV
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Building the right relationships with the right customers
Werner Reinartz and V. Kumar
The Changing Marketing Landscape
• The Digital Age: Online, Mobile, and Social

Media Marketing
• The Growth of Not-for-Profit Marketing
• Rapid Globalization
• Sustainable Marketing: The call for more

environment and social responsibility
The Digital Age: Online, Mobile, and Social

Media Marketing
• Digital and Social Media

Marketing
̶ Using digital mkt. tools such as
websites, social media, mobile
apps and ads, online video,
email and blogs to engage
consumers anywhere, at any
time, via digital devices
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07/10/2021

Media Marketing
• Social media provide a digital home where

people can connect & share important info &
moments in their lives
• IoT is a global environment where everything &
everyone is digitally connected to everything &
everyone else
̶ More than 400 million people—55% of world
population are online
̶ 80% all American adults own smartphones

Media Marketing
• Mobile marketing is perhaps the fastest-

growing digital mkt. platform
• Big Data and AI can be used by brands to
get customer insights
Not-for-Profit Marketing & Globalization
• Not-for-profit marketing
̶ The number of colleges, hospitals,
museums, zooms, foundations, etc. is
growing
̶ Sound marketing can help them attract
membership, funds, and support
• Rapid globalization
̶ Managers must take a global, not just
local, view of the company‘s industry,
competitors, and opportunities
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Sustainable Marketing
• Socially & environmentally responsible mkt.

that meets the present needs of consumers
and businesses while preserving or
enhancing the ability of future generations to
meet their needs
̶ Reexamine the relationships with social values &
responsibilities and with the very earth that
sustains us
Marketing in Practice
Marketing in theory Marketing in practice

̶ Analyzing marketing ̶ Facing new challenges given
opportunities the new realities
̶ Selecting target markets ̶ Using internet & digital devices
along with digital tools
̶ Designing marketing
strategies ̶ Taking into account:
̶ Developing marketing • Marketing balance
programs
• Marketing accountability
̶ Managing the marketing
• Marketing in the organization
effort
Who Is Responsible for Marketing?
Entire Organization
Marketing Department
Chief Marketing Officer

(CMO)
• Marketers think as
executives in other
departments and
executives in other
departments think
more of marketers
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07/10/2021
Marketing Management Tasks
• Developing market strategies and plans

• Capturing marketing insights
• Connecting with customers
• Building strong brands
• Creating, delivering, and
communicating value
• Creating successful long-term growth
Marketing Debate
1. Does Marketing Create or Satisfy Needs?
2. ―The aim of marketing is to make selling

superfluous.‖-- Peter Drucker
3. Why do marketers not always understand

customer needs? How can they better identify
customer needs?
30

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07/10/2021

The Value of Marketing

• Nothing matters without sufficient demand

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-3

• Misconceptions about marketing

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-4

Selling Is Only the Tip of the Iceberg

―There will always be need for

• No universal definition of marketing

What a back-dated definition!

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-6

Marketing starts long before...

―Marketing is the homework that we do

• The nature and scope of marketing is:

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-8

―Within five years, if you run your

Marketing is eclectic in nature

• Combination of different fields of study

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-10

―The only way to serve your company‘s

―People don‘t buy a quarter-inch drill,

―Kodak sells films, but they don‘t

Put your customers first

―When a customer enters my store, forget

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-14

• Marketing is sensing and responding

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-15

―Authentic marketing is NOT the art of

―Marketing is the art of creating genuine

―Marketing creates, communicates,

―Marketing is a race without a finishing

• ―The process by which companies engage

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-19

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-20

―Friends Don‘t Let

This is the watch

Time of death 6:55 p.m.

If both parties are seeking to sell something

• Marketers manage demand

• They influence the level, timing, and

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-23

Negative No Demand Latent

Full Overfull Unwholesome

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-24

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-25

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-26

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-27

The Marketing Process

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-28

Understanding the Marketplace

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-30

Marketplace and Marketspace

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-31

Needs, Wants, and Demands

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-32

Goods Services Others

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-33

– The intangible value

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-34

• Anything tangible or intangible that

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-35

• Some combination of ̶ More than a tangible

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-36