Home assignment- Philip Kotler- 12th edition- Chapter Ist.

CHAPTER 1 :- DEFINING MARKETING FOR THE 21st CENTURY

MARKETING DEBATE—Does Marketing Create or Satisfy Needs? Marketing has often been defined in terms of satisfying customers’ needs and wants. Critics, however, maintain that marketing does much more than that and creates needs and wants that did not exist before. According to these critics, marketers encourage consumers to spend more money than they should on goods and services they really do not need. Take a position: Marketing shapes consumer needs and wants versus marketing merely reflects the needs and wants of consumers.

MY OPINION:Pro: With the vast amount of information available to marketers today and the emphasis on relational marketing, marketers are in more of a position to suggest needs and wants to the public. Certainly, not all consumers have all the needs and wants suggested by society today. However, with the vast amount of exposure to these societal needs and wants via the media, a substantial amount of consumers will, through mere exposure, decide that they “have” the same needs and wants of others. Marketers by their efforts increase peer pressure, and group thinking, by showing examples of what others may have that they do not. An individual’s freedom to choose is substantially weakened by constant and consistent exposure to a range of needs and wants of others. Marketers should understand that when it comes to resisting the pressure to conform, that individuals are and can be weak in their resolve. Marketers must take an ethical position to only market to those consumers able to purchase their products. Con: Marketing merely reflects societal needs and wants. The perception that marketers influence consumers’ purchasing decisions discounts an individual’s freedom of choice and their individual responsibility. With the advent of the Internet, consumers have greater freedom of choice and more evaluative criteria than every before. Consumers can and do make more informed decisions than previous generations. Marketers can be rightly accused of influencing wants, along with societal factors such as power, influence, peer pressure, and social status. These societal factors pre-exist marketing and would continue to exist if there was no marketing efforts expended.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

MARKETING DISCUSSION Consider the broad shifts in marketing. Are there any themes that emerge to these shifts? Can they be related to the major societal forces? Which force contributed to which shift? ANSWER:The major themes that emerge in these broad shifts are technology, decentralization, and empowerment. As companies face increased global competition, they are beginning to increase their attention to all aspects of marketing and are beginning to encompass marketing as a corporate goal and not just a departmental function. The major societal forces at work: two-income families, increased technology, fewer firms, increased consumer education, and empowerment are forcing companies and marketers to shift their thinking about marketing and rethink their best business practices. Global competition: 1. From marketing does the marketing to everyone does the marketing. 2. From organization by products units to organizing by customer segments. 3. From being local to being “glocal”—both global and local. 4. Increase technology. 5. From making everything to buying more goods and services from outside. 6. From emphasizing tangible assets to emphasizing intangible assets increasing consumer expectations. 7. From relying on old market positions to uncovering new ones. 8. From building brands through advertising to building brands through performance and integrated communications. 9. From attracting customers through stores and salespeople to making products available online. 10. From selling to everyone to trying to be the best firm serving a well-defined target market. 11. From focusing on profitable transactions to focusing on customer lifetime value. 12. From focusing on the financial scorecard to focusing on the marketing scorecard. 13. From a focus on gaining market share to a focus on building customer share. 14. From focusing on shareholders to focusing on stakeholders. 15. Decreased availability of firms. 16. From using many suppliers to working with fewer suppliers in a “partnership.”

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

MARKETING SPOTLIGHT—Coca-Cola 1. What have been the key success factors for Coca-Cola? Its pursuit of always looking for new ways to portray the brand, to keep the brand “fresh” in the minds of current consumers without betraying the “core values.” 2. Where is Coca-Cola vulnerable? A change in consumer tastes for soft drinks is vulnerability for Coca-Cola. Additionally, as the brand expands into third-world countries, lifestyles and customs provide challenges. 3. What should they watch out for? Any demographic, or lifestyle changes that would have long-term consequences would be a threat for the brand. Young consumers must embrace the brand to ensure that they continue to drink Coca-Cola as they age. If Coca-Cola misses a generation, sales will suffer for a long time. 4. What recommendation would you make to their senior marketing executives going forward? Continue to embrace the core values of the brand and expand soft drink sales opportunities, not from the Coca-Cola brand, but from flanker brands or acquisitions. Preserve the Coke franchise and defend it steadfastly. 5. What should they be sure to do with their marketing? Evolve, adapt to changes in the consumer market by constantly monitoring consumer buying habits, purchase intents, and their shifts in lifestyle priorities.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

DETAILED CHAPTER OUTLINE

Q1. What is marketing and why it is important?
ANS:Marketing is everywhere. Formally or informally, people and organizations engage in a vast number of activities that could be called marketing. Good marketing is no accident, but a result of careful planning and execution. Marketing is both an “art” and a “science”—there is constant tension between the formulated side of marketing and the creative side.

THE IMPORTANCE OF MARKETING Financial success often depends on marketing ability. Many firms have created a Chief Marketing Officer (CMO) to put marketing on an equal footing with other Chief Executives such as a CFO and CEO. Marketing is tricky and making the right decisions is not always easy. Skillful marketing is a never-ending pursuit.

Q2. What is the scope of marketing and explain some fundamental marketing concepts?
ANS:To prepare to be marketers, you need to understand what marketing is, how it works, what is marketed, and who does the marketing.

What Is Marketing?
Marketing deals with identifying and meeting human and social needs. One of the shortest definition of marketing is “meeting needs profitably.” A) The American Marketing Association offers the following formal 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 individual and organizational goals.” B) Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Guru Doc. 22-05-2007 4

Home assignment- Philip Kotler- 12th edition- Chapter Ist. C) A social definition of marketing is that “marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.”

Exchange and Transactions
Exchange is the process of obtaining a desired product from someone by offering something in return. For exchange potential to exist, the following conditions must be satisfied: A) There are at least two parties. B) Each party has something that might be of value to the other party. C) Each party is capable of communication and delivery. D) Each party is free to accept or reject the exchange offer. E) Each party believes it is appropriate or desirable to deal with the other party. F) Exchange is a value-creating process because it normally leaves both parties better off. G) A transaction is a trade of values between two or more parties and involves several dimensions: 1) At least two things of value. 2) Agreed upon conditions. 3) A time of agreement. 4) A place of agreement. H) A transaction differs from a transfer. In a transfer, A gives X to B but does not receive anything tangible in return. I) Marketers seek to elicit a behavioral response from another party.

What Is Marketed?
Marketing people are involved in marketing ten types of entities: goods, services, events, experiences, persons, places, properties, organizations, information, and ideas. A) Goods Physical goods constitute the bulk of production and marketing efforts. B) Services A growing portion of business activities are focused on the production of services. The U.S. economy today consists of a 70–30 services to goods mix. C) Events Guru Doc. 22-05-2007 5

Home assignment- Philip Kotler- 12th edition- Chapter Ist. Marketers promote time-based events such as trade shows, artistic performances, and the Olympics. D) Experiences By orchestrating several services and goods, a firm can create and market experiences such as Walt Disney World’s Magic Kingdom. E) Persons Celebrity marketing is a major business. F) Places Cities, states, regions, and whole nations compete actively to attract tourists, factories, and new residents. G) Properties Are intangible rights of ownership of either real property (real estate) or financial property (stocks and bonds). H) Organizations Actively work to build a strong, favorable, and unique image in the minds of their target publics. I) Information Can be produced and marketed as a product. Schools, universities, and others produce information and then market it. J) Ideas Every market offering includes a basic idea. Products and services are platforms for delivering some idea or benefit.

Who Markets? Marketers and Prospects
A marketer is someone seeking a response (attention, purchase, vote, donation, etc.) from another party called the prospect. A) Marketers are responsible for stimulating demand for a company’s product. B) Marketing managers seek to influence the level, timing, and composition of demand to meet the organization’s objectives. Eight demand states are possible: 1) Negative demand—consumers dislike the product and may even pay a price to avoid it. 2) Non-existent demand—consumers may be unaware or uninterested in the product. 3) Latent demand—consumers may share a strong need that cannot be satisfied by an existing product.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist. 4) Declining demand—consumers begin to buy the product less frequently or not at all. 5) Irregular demand—consumer purchases vary on a seasonal, monthly, daily, or even an hourly basis. 6) Full demand—consumers are adequately buying all product put into the marketplace. 7) Overfull demand—too many consumers would like to buy the product that can be satisfied. 8) Unwholesome demand—consumers may be attracted to products that have undesirable social consequences.

Markets
Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class. Marketers use the term “ market” to cover various groups of customers. They view the sellers as constituting the industry and the buyers as constituting the market. They talk about need markets, product markets, demographic markets, and geographic markets. A) Sellers and buyers are connected by flows: 1) Seller sends goods, services, and communications to the market. 2) In return they receive money and information. 3) There is an exchange of money for goods and services. 4)There is an exchange of information

Key Customer Markets
A) Consumer Markets Consumer goods and services such as soft drinks and cosmetics, spend a great deal of time trying to establish a superior brand image. B) Business Markets Companies selling business goods and services often face well-trained and wellinformed professional buyers who are skilled in evaluating competitive offerings. C) Global Markets Companies face challenges and decisions regarding which countries to enter, how to enter the country, how to adapt their products/services to the country, and how to price their products. D) Nonprofit and Governmental Markets Companies selling to these markets have to price carefully because these organizations have limited purchasing power.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

MARKETPLACES, MARKETSPACES, AND METAMARKETS
>>The marketplace is physical; the marketspace is digital. locations (Internet locations) that consumers use in deciding what car to purchase. >>Mohan Sawhney has proposed the concept of metamarkets to describe a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. An example is the automobile industry that consists of physical locations (car dealers) and marketspace

How Business and Marketing Are Changing
A) Changing technology. B) Globalization. C) Deregulation. D) Privatization. E) Customer empowerment. F) Customization. G) Heightened competition. H) Industry convergent. I) Disintermediation.

COMPANY ORIENTATIONS TOWARD THE MARKETPLACE
The competing concepts under which organizations have conducted marketing activities include; the production concept, product concept, selling concept, marketing concept, and holistic marketing concept.

Production Concept
A) The production concept holds that consumers will prefer products that are widely available and inexpensive.

Product Concept
A) The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features.

Selling Concept
A) The selling concept holds that consumers and businesses, will ordinarily not buy enough of the organization’s products, therefore, the organization must undertake aggressive selling and promotion effort.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

Marketing Concept
A) The marketing concept holds that the key to achieving organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. 1) Reactive market orientation—understanding and meeting consumers’ expressed needs. 2) Proactive marketing orientation—researching or imagining latent consumers’ needs through a “probe-and-learn” process. Companies that practice both reactive and proactive marketing orientation are implementing a total market orientation.

Relationship Marketing
A) Relationship marketing has the aim of building mutually satisfying long-term relationships with key parties—customers, suppliers, distributors, and other marketing partners. Relationship marketing builds strong economic, technical, and social ties among the parties. 1) Marketing must not only do customer relationship management (CRM) but also partnership relationship management (PRM). 2) Four key constituents for marketing are: a. Customers. b. Employees. c. Marketing partners (channel partners). d. Members of the financial community. 3) The ultimate outcome of relationship marketing is the building of a unique company asset called a marketing network. A marketing network consists of the company and its supporting stakeholders (customers, suppliers, distributors, retailers, ad agencies, university scientists, and others) with whom it has built mutually profitable business relationships.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

Integrated Marketing
A) The marketer’s task is to devise marketing activities and assemble fully integrated marketing programs to create, communicate, and deliver value for consumers. The 4Ps of marketing: product, price, place, and promotion Marketing—mix decisions must be made for influencing the trade channels as well as the final consumers. 1) Robert Lauterborn suggests that the sellers 4Ps correspond to the customers’ 4Cs: 4Ps Product Price Place Promotion 4Cs Customer solution Customer cost Convenience Communication

B) Two key themes of integrated marketing are: 1) Many different marketing activities are employed to communicate and deliver value. 2) All marketing activities are coordinated to maximize their joint efforts.

Internal Marketing
A) Holistic marketing incorporates internal marketing, ensuring that everyone in the organization embraces appropriate marketing principles. B) Internal marketing must take place on two levels: 1) At one level, the various marketing functions (sales force, advertising, customer services, product management, and marketing research) must work together. 2) Secondly, marketing must be embraced by the other departments—they must “think customer.” Marketing is not a department so much as a company orientation.

Social Responsible Marketing
Holistic marketing incorporates social responsibility marketing and understanding broader concerns, and the ethical, environmental, legal, and social context of marketing activities and programs.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

FUNDAMENTAL MARKETING CONCEPTS, TRENDS, AND TASKS
To understand the marketing function, we need to understand certain fundamental concepts and tasks, along with current trends.

Core Concepts
Creates foundations for marketing management and holistic marketing orientation.

Needs, Wants, and Demands
Marketers must try to understand the target market’s needs, wants, and demands. A) Needs are basic human desires. B) Wants are shaped by one’s society. C) Demands are wants for specific products backed by an ability to pay. D) Marketers do not create needs—needs pre-exist marketers. E) Marketers, along with society influence wants. 1) There are five types of needs that marketers must understand: a. Stated needs. b. Real needs. c. Unstated needs. d. Delight needs. e. Secret needs.

Target Markets, Positioning, and Segmentation
A) A marketer can rarely satisfy everyone in a market therefore the marketers must divide the market into segments. B) The marketer then decides which segment presents the greatest opportunity—which are its target markets. C) For each chosen target market, the firm develops a market offering. D) The offering is positioned in the minds of the target buyers as delivering some central benefit(s).

Offerings and Brands
A) Companies put forth a value proposition, a set of benefits they offer to customers to satisfy their needs. B) The intangible value proposition is made physical by an offering that can be a combination of products, services, information, and experiences.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

Value and Satisfaction
A) The offering will be successful if it delivers value and satisfaction to the target buyer. B) The buyer chooses between different offerings based on which is perceived to deliver the most value. C) Value reflects the perceived tangible benefits and costs to customers. D) Value can be a combination of quality, service, and prices called the customer value triad. E) Value is a central marketing concept. F) Marketing can be seen as the identification, creation, communication, delivery, and monitoring of customer value. 1) Satisfaction reflects a person’s comparative judgment resulting from a product’s perceived performance (or outcome) in relation to his or her expectations.

Marketing Channels (three kinds of marketing channels)
A) Communication channels deliver and receive messages from target buyers. B) Distribution channels to display, sell, or deliver the physical product or service(s). C) Service channels to carry out transactions with potential buyers (warehouses, transportation companies, banks).

Supply Chain
A) Describes a longer channel stretching from raw materials to finished goods. B) Represents a value delivery system.

Competition
A) Includes all the actual and potential rival offering and substitutes that a buyer might consider.

Marketing Environment
A) Consists of the task environment and the broad environment. B) Task environment includes the immediate actors involved in producing, distribution, and promoting the offering: suppliers, company, dealers, and target customers. C) The broad environment consists of six components: 1) Demographic. 2) Economic. 3) Natural.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist. 4) Technological. 5) Political-legal. 6) Social-cultural.

Marketing Planning
A) Consists of analyzing marketing opportunities. B) Selecting target markets. C) Designing marketing strategies. D) Developing marketing programs. Managing the marketing effort.

Q3. How has marketing management changed?
ANS:A) A number of important trends and forces are eliciting a new set of beliefs and practices on the part of business firms. These fourteen major shifts are: 1) From marketing does the marketing to everyone does the marketing. 2) From organization by products units to organizing by customer segments. 3) From making everything to buying more goods and services from outside. 4) From using many suppliers to working with fewer suppliers in a “partnership.” 5) From relying on old market positions to uncovering new ones. 6) From emphasizing tangible assets to emphasizing intangible assets. 7) From building brands through advertising to building brands through performance and integrated communications. 8) From attracting customers through stores and salespeople to making products available online. 9) From selling to everyone to trying to be the best firm serving a well-defined target market. 10) From focusing on profitable transactions to focusing on customer lifetime value. 11) From a focus on gaining market share to a focus on building customer share. 12) From being local to being “glocal”—both global and local. 13) From focusing on the financial scorecard to focusing on the marketing scorecard. 14) From focusing on shareholders to focusing on stakeholders.

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Home assignment- Philip Kotler- 12th edition- Chapter Ist.

Q4. What are the tasks necessary for successful marketing management?
ANS:A) Developing marketing strategies and plans Connecting with customers B) Building strong brands C) Shaping the market offerings D) Delivering value E) Communicating value F) Capturing marketing insights and performance G) Creating successful long-term growth

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