of

C H A P T E R

An 1 “Marketing is too important to be left

only to the marketing department.
—David Packard
”
Overview LO1 What Is Marketing?
What does the term marketing mean to you? Many people think it means the
same as personal selling. Others
think marketing is the same as per-

Marketing
sonal selling and advertising. Still
others believe marketing has
something to do with making prod-
What do youthink?

z z z z z z z
ucts available in stores, arranging Marketing is only for really creative people.
displays, and maintaining invento- Strongly Disagree Strongly Agree
ries of products for future sales. 1 2 3 4 5 6 7
Actually, marketing includes all of z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z z
these activities and more.
Marketing has two facets. First, it is a philosophy, an attitude, a perspective, or a
management orientation that stresses customer satisfaction. Second, marketing is an
organization function and a set of processes used to implement this philosophy. This is
the marketing process. The American Marketing Association’s definition encompasses
both perspectives: “Marketing is the activity, set of institutions, and processes for creat-
ing, communicating, delivering, and exchanging offerings that have value for cus-
tomers, clients, partners, and society at large.”1 Marketing involves more than just
activities performed by a group of people in a defined area or department. In the often-
quoted words of David Packard, co-founder of Hewlett-Packard, “marketing is too
important to be left only to the marketing department.”
Marketing is a process that focuses on delivering value and benefits to customers,
not just selling goods, services, and/or ideas. Marketing uses communication, distri-
Learning Outcomes bution, and pricing strategies to provide customers and other stakeholders with the
goods, services, ideas, values, and benefits they desire when and where they want
LO 1 Define the term marketing them. It involves building long-term, mutually rewarding relationships when these
benefit all parties concerned. Marketing also entails an understanding that organiza-
LO 2 Describe four marketing management tions have many connected stakeholder “partners,” including

SRI MAIAVA RUSDEN/WORKBOOK STOCK, JUPITERIMAGES

philosophies employees, suppliers, stockholders, distributors, and others. marketing
When an organization creates a high level of employee satis- the activity, set of institu-
faction, this leads to greater effort, which leads to higher-quality tions, and processes for
LO 3 Discuss the differences between sales goods and services, which lead to more repeat business, which
creating, communicating,
and market orientations delivering, and exchang-
leads to higher growth and profits, which lead to higher stock- ing offerings that have
holder satisfaction, which leads to more investment, and so on. 2 value for customers,
LO 4 Describe several reasons for studying The motto of Wegmans Food Markets, the Rochester-based grocery
clients, partners, and
society at large
marketing chain ranked by Fortune magazine as one of the best companies to exchange
work for in America, states, “Employees first, customers second.” people giving up
The rationale is that if employees are happy, customers will be too.3 something to receive
something they would
One desired outcome of marketing is an exchange—people giv- rather have
ing up something to receive something they would rather have.

CHAPTER 1 An Overview of Marketing 3

production Normally, we think of money
orientation
as the medium of exchange.
a philosophy that
We “give up” money to “get”
focuses on the internal
capabilities of the firm the goods and services we
rather than on the want. Exchange does not
desires and needs
require money, however. Two
of the marketplace
people may barter or trade
such items as baseball cards or
oil paintings. An exchange can take place only if the
following five conditions exist:
Conditions of Exchange
1. There must be at least two parties.
2. Each party has something that might be of
value to the other party.
3. Each party is capable of communication and
delivery.
4. Each party is free to accept or reject the
exchange offer.
5. Each party believes it is appropriate or desir-
able to deal with the other party.4
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Exchange will not necessarily take place even if all
these conditions exist. They are, however, necessary
for exchange to be possible. For example, you may
place an advertisement in your local newspaper stat-
ing that your used automobile is for sale at a certain
price. Several people may call you to ask about the car,
some may test-drive it, and one or more may even
make you an offer. All five conditions are necessary
for an exchange to exist. But unless you reach an
agreement with a buyer and actually sell the car, an
exchange will not take place.
Notice that marketing can
occur even if an exchange
Marketing can occur
does not occur. In the example
just discussed, you would have an exchange does not occur. ities; in fact, such assessments
engaged in marketing even if
no one bought your used car.
2 because it does not consider whether the goods and
LO Marketing
Management Philosophies
Four competing philosophies strongly influence
an organization’s marketing processes. These
philosophies are commonly referred to as production,
sales, market, and societal marketing orientations.
4 PART 1 The World of Marketing
Production Orientation
A production orientation is a philosophy that
focuses on the internal capabilities of the firm
rather than on the desires and needs of the market-
place. A production orientation means that man-
agement assesses its resources and asks these
questions: “What can we do best?” “What can our
engineers design?” “What is
easy to produce, given our
equipment?” In the case of a
Alt h o ugh f
service organization, man-
agers ask, “What services ing o n p ro d s-
are most convenient for the c a p a bil it ie s
firm to offer?” and “Where
o k , b e t te r
do our talents lie?” Some t o
have referred to this orien- f o c us o n w
tation as a Field of Dreams c
h at
us t ome rs w
orientation, from the
well-known movie line,
“If we build it, they will
come.” The furniture industry
is infamous for its disregard of customers
and for its slow cycle times.
even if
This has always been a
production-oriented industry.
There is nothing wrong
with assessing a firm’s capabil-
are major considerations in
strategic marketing planning
(see Chapter 2). A production orientation falls short
services that the firm produces most efficiently also
meet the needs of the marketplace. Sometimes what a
firm can best produce is exactly what the market
wants. For example, the research and development
department of 3M’s commercial tape division devel-
oped and patented the adhesive component of Post-It
Notes a year before a commercial application was
identified. In other situations, as when competition is ies became inconsistent, sales orientation
the idea that people will
weak or demand exceeds supply, a production- telephone reps put customers
buy more goods and ser-
oriented firm can survive and even prosper. More on hold more often, and vices if aggressive sales
often, however, firms that succeed in competitive mar- customers were frequently techniques are used and
that high sales result in
kets have a clear understanding that they must first overcharged. Streamline then
high profits
determine what customers want and then produce it, revamped its Web site and
marketing concept
rather than focusing on what company management switched to a new system that the idea that the social
thinks should be produced. checked inventory in real time, and economic justifica-
slowing down the interface tion for an organization’s
existence is the satisfac-
tremendously and making tion of customer wants
Sales Orientation ordering very cumbersome and and needs while meeting
time-consuming. Streamline’s organizational objectives
A sales orientation is based on the ideas that people
will buy more goods and services if aggressive sales fancy technology (sales orien-
techniques are used and that high sales result in tation) caused management to lose sight of how
high profits. Not only are sales to the final buyer Streamline made its customers’ lives easier (market
emphasized but intermediaries are also encouraged orientation).5
to push manufacturers’ products more aggressively.
To sales-oriented firms, marketing means selling
things and collecting money.
Market Orientation
The fundamental problem with a sales orienta- The marketing concept is a simple and intuitively
tion, as with a production orientation, is a lack of appealing philosophy that articulates a market ori-
understanding of the needs and wants of the mar- entation. It states that the social and economic jus-
ketplace. Sales-oriented companies often find that, tification for an organization’s existence is the
despite the quality of their sales force, they cannot satisfaction of customer wants and needs while
convince people to buy goods or services that are meeting organizational objectives. It is based on an
neither wanted nor needed. understanding that a sale does not depend on an
Some sales-oriented firms fail to understand what aggressive sales force, but rather on a customer’s
ocu
is important to their customers. Many so-called dot- decision to purchase a product. What a business
. com businesses that came into existence in the late thinks it produces is not of primary importance to
is 1990s are no longer around because they focused on its success. Instead, what customers think they are
the technology rather than the customer. Online grocer
buying—the perceived value—defines a business.
Streamline.com installed a refrigerator in its clients’ The marketing concept includes the following:
garages to make deliveries when they weren’t home.
• Focusing on customer wants and needs so that the organiza-
a n t. When something went wrong, Streamline instantly
tion can distinguish its product(s) from competitors’ offerings
credited customers’ accounts and customer service
reps were always available on the phone. As the com- • Integrating all the organization’s activities, including production,
pany expanded its customer base, however, the deliver- to satisfy these wants
{The Real Deal
} 4 million+ subscribers
© AP PHOTO/PAUL SAKUMA
Reed Hastings used the mar-
keting concept when he
$700 million in annual revenue
founded Netflix, the online
60,000 titles
movie rental service. Netflix
subscribers chose from multi- 34 distribution centers
ple subscription plans, build
92% of movies delivered within one day of
lists of movies they want to see, and
receive DVDs in the mail. Plus,
being ordered
Netflix’s proprietary Cinematch software gives suggestions for
movies customers might like based on over half a billion customer-
50 customer service reps support the entire
subscriber base
supplied ratings. Less than a decade after being started, Netflix has
some impressive stats: 1,000,000 customer movie ratings sent to
Netflix each day
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CHAPTER 1 An Overview of Marketing 5
 market orientation
a philosophy that
assumes that a sale
does not depend on an
• Achieving long-term goals for the
organization by satisfying customer
wants and needs legally and responsibly
assessing what existing or potential competitors
might be intending to do tomorrow as well as what
they are doing today.
Customer Value
“ Keeping current customers satisfied is just as important
as attracting new ones and a lot less expensive.

Customer value is the relationship between benefits

value. Although passengers do not
get assigned seats or meals (just
”
because the airline offers superior customer value
the relationship between
benefits and the sacrifice
necessary to obtain those
aggressive sales force and the sacrifice necessary to obtain those benefits. peanuts or crackers) when they benefits
Firms that adopt and Customer value is not simply a matter of high qual- use the airline, its service is reli- customer
but rather on a cus-
tomer’s decision to pur- implement the marketing Societal Marketing Orientation ity. A high-quality product that is available only at a able and friendly and costs less satisfaction
chase product. It is concept are said to be market customer’s evaluation of
high price will not be perceived as a good value, nor than most major airlines. All
synonymous with the One reason a market-oriented organization may a good or service in
oriented. Achieving a market will bare-bones service or low-quality goods selling Southwest employees are involved terms of whether it has
marketing concept choose not to deliver the benefits sought by cus-
orientation involves obtain- in the effort to satisfy customers. met their needs and
societal marketing tomers is that these benefits may not be good for for a low price. Instead, customers value goods and
ing information about cus- Pilots tend to the boarding gate expectations
orientation services that are of the quality they expect and that
individuals or society. This philosophy, called a when their help is needed, and
the idea that an organi- tomers, competitors, and are sold at prices they are willing to pay. Value can be
zation exists not only to societal marketing orientation, states that an orga- ticket agents help move luggage.
markets; examining the used to sell a Mercedes Benz as well as a $3 Tyson
satisfy customer wants nization exists not only to satisfy customer wants
and needs and to meet information from a total busi- frozen chicken dinner.
organizational objec- ness perspective; determin-
and needs and to meet organizational objectives but Customer Satisfaction
also to preserve or enhance individuals’ and society’s The automobile industry illustrates the impor-
tives but also to pre- ing how to deliver superior
serve or enhance long-term best interests. Marketing products and tance of creating customer value. To penetrate the Customer satisfaction is the customer’s evaluation
individuals’ and soci- customer value; and imple- fiercely competitive luxury automobile market, Lexus of a good or service in terms of whether that good or
containers that are less toxic than normal, are more
ety’s long-term best menting actions to provide adopted a customer-driven approach, with particular service has met the customer’s needs and expecta-
interests durable, contain reusable materials, or are made of
value to customers. For emphasis on service. Lexus stresses product quality tions. Failure to meet needs and expectations results
recyclable materials is consistent with a societal
example, Coach interviews at with a standard of zero defects in manufacturing. The in dissatisfaction with the good or service. 10
marketing orientation. For example, Duracell and
least 10,000 customers each year to keep track of service quality goal is to treat each customer as one Keeping current customers satisfied is just as impor-
Eveready battery companies have reduced the levels
perceptions of the brand. It also tests products in a would treat a guest in one’s home, to pursue the per- tant as attracting new ones and a lot less expensive.
of mercury in their batteries and will eventually mar-
limited number of stores six months before the fect person-to-person relationship, and to strive to One study showed that reducing customer attrition
ket mercury-free products.
product actually comes out. This helps the company improve continually. This pursuit has enabled Lexus by just 5 to 10 percent could increase annual profits
assess the final design and forecast demand. Coach to establish a clear quality image and capture a signif- by as much as 75 percent.11 Firms that have a repu-
LO3 Differences between
also works to establish and maintain rewarding rela- icant share of the luxury car market. Marketers inter- tation for delivering high levels of customer satisfac-
tionships with its customers. You can bring in your ested in customer value: tion do things differently from their competitors.
Coach bag any time and have it repaired free for the
natural life of the bag. The company fixes 100,000
Sales and Market Orientations • Offer products that perform: This
Top management is obsessed
with customer satisfaction,
each year.6 The differences between sales and market ori- is the bare minimum requirement. Marketers interested
and employees throughout the
Understanding your competitive arena and entations are substantial. The two orientations can Consumers have lost patience with in customer value:
shoddy merchandise. organization understand the
competitors’ strengths and be compared in terms of five characteristics: the orga-
link between their job and sat-
weaknesses is a critical nization’s focus, the firm’s business, those to whom • Earn trust: Diane Hessan, CEO of Offer products that perform isfied customers. The culture of
component of a market ori- the product is directed, the firm’s primary goal, and Communispace in Watertown,
Earn trust the organization is to focus on
entation. This includes the tools used to achieve those goals. Massachusetts, says that “selling is all about delighting customers rather
the right to do business with someone. Put Avoid unrealistic pricing than on selling products.
yourself in their shoes, and understand what
The Organization’s Focus the issues are. In today’s business environ- Give the buyer facts Nordstrom’s impeccable rep-
ment, the most critical element of any sale is utation for customer service
Personnel in sales-oriented firms tend to be “inward Offer organization-wide commitment comes not from its executives or
trust. Ultimately, when someone says yes to
looking,” focusing on selling what the organization in service and after-sales support its marketing team, but from
you, they are saying, ‘I’m betting on what
makes rather than making what the market wants.
this person is telling me.’”9 the customers themselves. The
Many of the historic sources of competitive advan- zzzzzzzzzzzzzzzzzzzzzzzzzzzzz
retail giant is willing to take
tage—technology, innovation, economies of scale— • Avoid unrealistic pricing: E-mar-
risks, do unusual and often expensive favors for shop-
allowed companies to focus their efforts internally keters are leveraging Internet technology to redefine how prices are
pers, and reportedly even accept returns on items not
and prosper. Today, many successful firms derive their set and negotiated. With lower costs, e-marketers can often offer
lower prices than their brick-and-mortar counterparts. The enormous even purchased there. But big risks often yield big
competitive advantage from an external, market-
COURTESY OF THE ADVERTISING ARCHIVES

oriented focus. A market orientation has helped com-
panies such as Dell, Wegmans, and Southwest Airlines
outperform their competitors. These companies put
customers at the center of their business in ways most
companies do poorly or not at all.7
As with Streamline, a sales orientation has led to
the demise of many dot-com firms, including the
Digital Entertainment Network and Urban Box Office.
As one technology industry analyst put it, “no one
has ever gone to a Web site because they heard there
was great Java running.”8
popularity of auction sites such as eBay and Amazon.com and the
customer-bid model used by Priceline and uBid illustrates that online
customers are interested in bargain prices. Many are not willing to
pay a premium for the convenience of examining the merchandise
and taking it home with them.
• Give the buyer facts: Today’s sophisticated consumer
wants informative advertising and knowledgeable salespeople.
Web sites that don’t provide enough information are among the
top ten things that irk Internet shoppers most.
• Offer organization-wide commitment in service
and after-sales support: People fly Southwest Airlines
gains. People tell their friends that a company is doing
crazy things for its customers, and the words spreads.
Pretty soon this word of mouth, or viral marketing,
lures new people to the store—even people who have
no idea what’s inside want to experience what it’s like
to shop there.12
Building Relationships
Attracting new customers to a business is only the
beginning. The best companies view new-customer
attraction as the launching point for developing and

6 PART 1 The World of Marketing CHAPTER 1 An Overview of Marketing 7

relationship enhancing a long-term rela-
marketing
tionship. Companies can
a strategy that focuses
on keeping and improv- expand market share in three
ing relationships with ways: attracting new cus-
current customers tomers, increasing business
empowerment with existing customers, and
delegation of authority
to solve customers’
retaining current customers.
problems quickly—usu- Building relationships with
ally by the first person existing customers directly
that the customer noti-
fies regarding a problem
addresses two of the three
possibilities and indirectly
addresses the other.
Relationship marketing is a strategy that focuses
on keeping and improving relationships with current
customers. It assumes that many consumers and busi-
ness customers prefer to have an ongoing relationship
with one organization rather than switch continually
among providers in their search for value.13 USAA is a
good example of a company focused on building long-
term relationships with customers. Customer reten-
tion was a core value of the company long before
customer loyalty became a popular business concept.
USAA believes so strongly in the importance of cus-
tomer retention that managers and executives’
bonuses are based, in part, on this dimension.14
Most successful relationship marketing strategies
depend on customer-oriented personnel, effective
training programs, employees with authority to make
decisions and solve problems, and teamwork.
Customer-Oriented Personnel For an organization to be
focused on building relationships with customers,
employees’ attitudes and actions must be customer
oriented. An employee may be the only contact a par-
ticular customer has with the firm. In that customer’s
eyes, the employee is the firm. Any person, depart-
ment, or division that is not customer oriented weak-
ens the positive image of the entire organization. For
example, a potential customer who is greeted dis-
courteously may well assume that the
employee’s attitude represents the whole firm.
Some companies, such as Coca-Cola, Delta Air
Lines, Hershey Company, Kellogg, Nautilus, and
Sears, have appointed chief customer offi-
cers (CCOs). These customer advocates
provide an executive voice for cus-
tomers and report directly to the CEO.15
Their responsibilities include assuring
that the company maintains a cus-
tomer-centric culture and that all
company employees remain focused
on delivering customer value.16
The Role of Training Leading marketers
recognize the role of employee train-
8 PART 1 The World of Marketing
ing in customer service and relationship building. In the family’s oven, or going to a customer’s home to department or work group teamwork
collaborative efforts of
2006, corporate training spending increased by seven rescue a meal. Empowering employees goes beyond begin supporting and assist-
people to accomplish
percent—the largest increase in more than five years. having them make house calls though. It means creat- ing each other and empha- common objectives
Today, the average corporation spends $1,273 on ing an environment where employees can do the right size cooperation instead of
employee training per year. 17 It is no coincidence that thing, unburdened by hierarchies. According to competition. Performance is
corporations that invest in training perform much bet- Heather Pawlowski, a Wegmans vice president, “We’re also enhanced when cross-functional teams align
ter than other firms in their respective industries. For taking customers to a place they’ve not been before. their jobs with customer needs. For example, if a
example, Google provides 100 hours and Genentech And once they arrive, shoppers don’t want to leave.”19 team of telecommunications service representatives
offers 140 hours of training for their employees each Empowerment gives customers the feeling that is working to improve interaction with customers,
year. Google and Genentech were rated number 1 and their concerns are being addressed and gives back-office people such as computer technicians or
2, respectively, on Fortune's annual list, "100 Best employees the feeling that their expertise matters. training personnel can become part of the team with
Companies to Work For" in 2007.18 All new employees The result is greater satisfaction for both customers the ultimate goal of delivering superior customer
at Disneyland and Walt Disney World must attend and employees. value and satisfaction.
Disney University, a special training program for
Disney employees. They must first pass Traditions 1, a
daylong course focusing on the Disney philosophy and
operational procedures. Then they go on to specialized
training. There is an extra payoff for companies such
Teamwork Many organiza-
tions, such as Southwest
Airlines and Walt Disney
World, that are frequently
“ A market-oriented firm
defines its business in
The Firm’s
Business
as Disney that train their employees to be customer
oriented. When employees make their customers
noted for delivering superior terms of the benefits its A sales-oriented firm defines
customer value and provid- its business (or mission) in
happy, the employees are more likely to derive satis- ing high levels of customer customers seek. terms of goods and services.
faction from their jobs. Having contented workers who
are committed to their jobs leads to better customer
service and greater employee retention.
satisfaction assign employ-
ees to teams and teach them team-building skills.
Teamwork entails collaborative efforts of people to
” A market-oriented firm
defines its business in terms of the benefits its
customers seek. People who spend their money,
accomplish common objectives. Job performance, time, and energy expect to receive benefits, not just
Empowerment In addition to training, many market- company performance, product value, and customer goods and services. This distinction has enormous
oriented firms are giving employees more authority to satisfaction all improve when people in the same implications.
solve customer problems on the spot. The term used to
describe this delegation of authority is empowerment.
Employees develop ownership attitudes when they are
>> When employees make their customers
happy, the employees are more likely to derive
treated like part-owners of the business and are satisfaction from their jobs. Having contented
expected to act the part. These employees manage workers who are committed to their jobs
themselves, are more likely to work hard, account for leads to better customer service and greater
employee retention.
their own performance and the company’s, and take
prudent risks to build a stronger business and sustain
the company’s success.
At Wegmans Food Markets, employees are encour-
© SCOTT GRIES/GETTY IMAGES/© ROSE ALCORN/CENGAGE LEARNING
aged to do just about anything on the spot, without
consulting a higher-up, to satisfy a customer.
That could entail cooking a family’s
Thanksgiving turkey at the store because
the one purchased was too big to fit in
{ }
Training
Luxury-makeup company Kiehl’s spends nearly
10% of its compensation budget to send new
hires to New York, Miami, or San Francisco
© GETTY IMAGES
for an up to four-week
training residency.
The Art of Service, Fast Company,
October 2005, 55.
CHAPTER 1 An Overview of Marketing 9
 Answering the question “What is this firm’s busi-
ness?” in terms of the benefits customers seek,
instead of goods and services, offers at least three
important advantages:
• It ensures that the firm keeps focusing on customers and
avoids becoming preoccupied with goods, services, or the organi-
zation’s internal needs.
• It encourages innovation and creativity by reminding people
that there are many ways to satisfy customer wants.
• It stimulates an awareness of changes in customer desires
and preferences so that product offerings are more likely to
remain relevant.
Having a market orientation and focusing on
customer wants do not mean that
customers will always receive
everything they want. It is People don’t know what
not possible, for example, to they want—they only want
profitably manufacture and what they know.
market automobile tires that will
last for 100,000 miles for $25. Furthermore,
customers’ preferences must be mediated by sound
professional judgment as to how to deliver the bene-
fits they seek. As one adage suggests, “People don’t
know what they want—they only want what they
know.” Consumers have a limited set of experiences.
They are unlikely to request anything beyond those
experiences because they are not aware of benefits
they may gain from other potential offerings. For
example, before the Internet, many people thought
that shopping for some products was boring and
time consuming, but could not express their need for
electronic shopping.
Those to Whom the
Product Is Directed
A sales-oriented organization targets its products at
“everybody” or “the average customer.” A market-
oriented organization aims at specific groups of people.
The fallacy of developing products directed at the aver-
age user is that relatively few average users actually
exist. Typically, populations are characterized by diver-
sity. An average is simply a midpoint in some set of
{ When Sales Fails
}
In 1989, 220-year-old Britannica had estimated revenues of $650 million
© TERRI MILLER/E-VISUAL
COMMUNICATIONS INC.
and a worldwide sales force of 7,500 selling full 32-volume sets of
Encyclopædia Britannica (weight, 120 pounds; length, 4.5 feet of shelf
space; cost, $1,500).
Britannica was slow to react to changing technologies, and within 5
years, the company suffered tremendous losses and its sales force
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10 PART 1 The World of Marketing
characteristics. Because most potential customers are
not “average,” they are not likely to be attracted to an
average product marketed to the average customer.
Consider the market for shampoo as one simple exam-
ple.There are shampoos for oily hair, dry hair, and dan-
druff. Some shampoos remove the gray or color hair.
Special shampoos are marketed for infants and elderly
people. There is even shampoo for people with average
or normal hair (whatever that is), but this is a fairly
small portion of the total market for shampoo.
A market-oriented organization recognizes that
different customer groups want different features or
benefits. It may therefore need to develop different
goods, services, and promotional appeals. A
market-oriented organization care-
fully analyzes the market and
divides it into groups of peo-
ple who are fairly similar in
terms of selected characteris-
tics. Then the organization develops
marketing programs that will bring about mutu-
ally satisfying exchanges with one or more of those
groups. Chapter 7 thoroughly explores the topic of
analyzing markets and selecting those that appear to
be most promising to the firm.
The Firm’s Primary Goal
A sales-oriented organization seeks to achieve prof-
itability through sales volume and tries to convince
potential customers to buy, even if the seller knows
that the customer and product are mismatched.
Sales-oriented organizations place a higher premium
on making a sale than on developing a long-term
relationship with a customer. In contrast, the ulti-
mate goal of most market-oriented organizations is
to make a profit by creating customer value, provid-
ing customer satisfaction, and building long-term
relationships with customers. The exception is so-
called nonprofit organizations that exist to achieve
goals other than profits. Nonprofit organizations can
and should adopt a market orientation. Nonprofit
organization marketing is explored further in
Chapter 11.
had collapsed to under 300 repre-
sentatives. If Britannica had defined its
business as providing information instead of
publishing books, it might not have suffered such a
precipitous fall.
Tools the Organization
Uses to Achieve Its Goals
Sales-oriented organizations seek to gener-
ate sales volume through intensive promo-
tional activities, mainly personal selling and
advertising. In contrast, market oriented
organizations recognize that promotion deci-
sions are only one of four basic marketing
mix decisions that have to be made: product
decisions, place (or distribution) decisions,
promotion decisions, and pricing decisions. A
market-oriented organization recognizes
that each of these four components is impor-
tant. Furthermore, market-oriented organi-
zations recognize that marketing is not just a
responsibility of the marketing department.
Interfunctional coordination means that
skills and resources throughout the organiza-
tion are needed to create, communicate, and
COURTESY OF THE ADVERTISING ARCHIVES
deliver superior customer service and value.
Word of Caution
This comparison of sales and market orien-
tations is not meant to belittle the role of
promotion, especially personal selling, in
the marketing mix. Promotion is the means
by which organizations communicate with
present and prospective customers about
the merits and characteristics of their
organization and products. Effective promo-
tion is an essential part of effective market-
ing. Salespeople who work for market-oriented
an important role in society, marketing is impor-
organizations are generally perceived by their cus-
tant to businesses, marketing offers outstanding
tomers to be problem solvers and important links to
supply sources and new products. Chapter 16 exam-
career opportunities, and marketing affects your
life every day.
ines the nature of personal selling in more detail.
LO4 Why Study Marketing Marketing Plays an
Important Role in Society
Now that you understand the meaning of the
term marketing, why it is important to adopt a The total population of the United States exceeds 295
marketing orientation, how organizations million people.20 Think about how many transactions
implement this philosophy, and how one-to- are needed each day to feed, clothe, and shelter a pop-
one marketing is evolving, you may be ask- ulation of this size. The number is huge. And yet it all
ing, “What’s in it for me?” or “Why should I works quite well, partly because the well-developed
study marketing?” These are important ques-
tions, whether you are majoring in a business field
other than marketing (such
U.S. economic system efficiently distributes the output
of farms and factories. A typical U.S. family, for exam-
ple, consumes 2.5 tons of food
“
as accounting, finance, or Marketing affects your life a year. Marketing makes food
”
management information available when we want it, in
systems) or a nonbusiness every day. desired quantities, at accessi-
ble locations, and in sanitary
field (such as journalism,
and convenient packages and forms (such as instant
education, or agriculture). There are several impor-
tant reasons to study marketing: Marketing plays and frozen foods).
CHAPTER 1 An Overview of Marketing 11

© PHOTODISC/GETTY IMAGES
Marketing Is
Important to Businesses
The fundamental objectives of most businesses are
survival, profits, and growth. Marketing contributes
directly to achieving these objectives. Marketing
includes the following activities, which are vital to
business organizations: assessing the wants and sat-
isfactions of present and potential customers,
designing and managing product offerings, deter-
mining prices and pricing policies, developing distri-
bution strategies, and communicating with present
and potential customers.
All businesspeople, regardless of specialization or
area of responsibility, need to be familiar with the
terminology and fundamentals of accounting,
finance, management, and marketing. People in all
business areas need to be able to communicate with
specialists in other areas. Furthermore, marketing is
not just a job done by people in a marketing depart-
ment. Marketing is a part of the job of everyone in the
organization. Therefore, a basic understanding of
marketing is important to all businesspeople.
Basic ways
companies can
expand market share >
3 Marketing manage-
ment philosophies
or orientations >
< Increase in
75% profits from
100,000
retaining just
5-10% of existing
customers
12 PART 1 The World of Marketing
Marketing Offers Outstanding
Career Opportunities
Between a fourth and a third of the entire civilian
workforce in the United States performs marketing
activities. Marketing offers great career opportuni-
ties in such areas as professional selling, marketing
research, advertising, retail buying, distribution
management, product management, product devel-
opment, and wholesaling. Marketing career opportu-
nities also exist in a variety of nonbusiness
organizations, including hospitals, museums, uni-
versities, the armed forces, and various government
and social service agencies (see Chapter 11).
As the global marketplace becomes more challeng-
ing, companies all over the world and of all sizes are
going to have to become better marketers.
Marketing Affects
Your Life Every Day
Marketing plays a major role in your everyday life. You
participate in the marketing process as a consumer of
goods and services. About
half of every dollar
you spend pays About half of every dollar you
for marketing
spend pays for marketing costs.
costs, such as
marketing research,
product development, packaging, trans- MKTG was designed for students just like you—
portation, storage, advertising, and busy people who want choices, flexibility, and
sales expenses. By developing a bet- multiple learning options.
ter understanding of marketing,
you will become a better- MKTG delivers concise, focused information in a
informed consumer. You will
© PHOTODISC/GETTY IMAGES
fresh and contemporary format. And . . . MKTG
better understand the buying gives you a variety of online learning materials
process and be able to negoti- designed with you in mind.
ate more effectively with sell-
ers. Moreover, you will be
At 4ltrpress.cengage.com/mktg, you’ll find
better prepared to demand satis-
electronic resources such as video
faction when the goods and ser-
vices you buy do not meet the
podcasts, audio downloads, and cell
standards promised by the manu- phone quizzes for each chapter. These
facturer or the marketer. resources will help supplement your
understanding of core
4 Conditions required for exchange;
key characteristics that differentiate
the marketing orientation from the 5
marketing concepts in a format that
fits your busy lifestyle.
Visit 4ltrpress.cengage.com/mktg
to learn more about the multiple
sales orientation >
MKTG resources available to
< Bags repaired 2.5 help you succeed!
<
by Coach in a year < Tons of food con-
sumed by the average
U.S. household in a year