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Lesson 1: Marketing, A Macro Perspective

Lesson 1 provides a defining overview of the marketing function, including how marketing affects
customer value, how strategic planning is carried out, and what is included in a marketing plan. From a
managerial point of view, marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer relationships in ways that
benefit the organization and its stake holders. 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.

Learning Objectives
Upon completion of Lesson 1, you should be able to:

Relate fundamental marketing concepts and new marketing realities.

Outline the tasks necessary for successful marketing management.

Evaluate how marketing affects customer value.

Describe what a marketing plan includes and the components of a modern marketing
information system.

Explain how companies collect marketing intelligence; conduct marketing research; and
accurately measure and forecast demand.

What To Do Next
Lecture and Research Update
Click on the Lecture and Research Update link above to access your lesson lecture notes.
Required Readings
After reading the Lecture and Research Update, you should read all of the Required Reading selections
by clicking on the Required Readings link above.
Vocabulary List
Click on the Vocabulary List link above to view vocabulary terms that are found in the Required
Readings and/or the Lecture and Research Update for this lesson. Study and learn the meaning of
each term and how to apply the term to the content area and the real world.
Discussion Questions
After you have completed the readings in this lesson and feel comfortable with the material presented,
go to the Assignments tool on the left navigation panel underneath the QUICK LINKS section and
complete Discussion Question 1_01 and Discussion Question 1_02.
Stand-Alone Project Benchmark

Lecture and Research Update from Your Professor, James A.


Lumpp, Ph.D.
You will receive the greatest benefit from the following Lecture and Research Update if you first read this
narrative, review the lesson, study the Required Readings, then come back to this section and carefully
re-read this Lecture and Research Update. The lecture portion of this narrative focuses on issues from
the textbook that need further explanation, while the research update portion integrates supportive
information from recent professional academic and trade articles with the textbook information.
Welcome to Marketing and Advertising! Many observers argue that all new or important directions in
management thought and practice are marketing oriented. Marketing is no longer something done when a
company has extra revenue to invest. It must be implemented for a business to survive. The marketing
concept has changed dramatically over the last several decades, and recently the focus increasingly has
moved to customers (versus products and selling), marketing globally, and the various technology issues
that impact the market. In addition, there is renewed emphasis in marketing on creating and innovating
with new and better products and services rather than just competing against other firms and following the
marketing patterns established by competitors.
Changes in Consumer Behavior
There have been many major marketing shifts during the last few decades that have shaped marketing in
the 21st century. There is a view among professional marketers that there is no longer the substantial
product loyalty that existed over the last few decades. Product and brand loyalty, many argue, has been
replaced by something more akin to a consumer decision that is based on the absence of a better product
or service. In addition, there are major changes in the way customers look at market offerings. During the
1980s customers were optimistic, and in the early 1990s they were pessimistic. Later in the 1990s,
consumers appeared rather optimistic, but still cautious at times. Many consumer segments have started
to understand the value proposition concept and have learned how to use it to their advantage via
permission marketing quid-pro-quo strategies. Extensive airline loyalty program use and compensation in
the gambling industry are examples of the consumer understanding and using marketing strategies to
their advantage.
Increasingly it is clear that while the 4 Ps (product, price, promotion, and place) have value for the
consumer, the marketing strategies of the 21st century will use a revised set of 4 Ps (people, processes,
programs, performance). With advances in technology and more knowledgeable companies, it is not as
difficult to create the same market offering. To help differentiate a product or service, companies should
evaluate their interpretations of the old versus new definition of the 4 Ps. Optionally, another view of
approaches can incorporate the concept of the four 4 Cs as added critical marketing variables:

1. Care: It has replaced service in importance. Marketers must really care about the way they treat
customers, meaning that customers are really everything.

2. Choice: Marketers need to reassess the diversity and breadth of their offerings into a manageable
good-better-best selection.

3. Community: Even national marketers must be affiliated, attached to neighborhoods wherever they
operate stores.

4. Challenge: The task of dealing with the ongoing reality of demographic change.

Marketing strategy today also means focusing on technology. Intelligent management of information and
the use of technology-supported customer interactions are among the e-marketing rules for the New
Economy, according to Dr. Philip Kotler. Most households today either have direct Internet access or TV
sets that also provide real-time interactivity through the Internet. We are closing rapidly on the time where
individuals will interact with their television and/or computer simply by speaking to it. Via various Web
sites, computers work for us to enable us to remember transactions and preferences and find just the
right entertainment, information, products, and services. Likewise, online capabilities enable providers to
anticipate what a consumer might want today or in the future. The need for market analysis and marketing
decision-making, and managers to perform those tasks has never been greater.
Quality and Value
The first step toward achieving leadership in market-perceived quality and value is to understand what
causes customers in the targeted market to make their decisionsto decide that one product offers better
value than another. This understanding is the most important objective of a customer value analysis. The
factors that contribute to quality in the customers mind are not mysteries. Customers can readily tell a
researcher what the critical value factors are to him or her. A customer value analysis uses consumer
value and purchasing information to show how consumers make decisions in the marketplace. The ability
to accurately predict the value of the customers of a company has huge impact on the capacity to make
intelligent decisions. Knowing the individual value of each customer allows the identification of the most
profitable customers and directing marketing spend towards them (Talaba, 2013). With this information,
managers should be able to understand what changes should be made to ensure that more of their
customers would buy from the firm.
The simplest customer value analysis consists of two phases. First, the firm should create a customer
value profile that compares their performance with that of one or more competitors. This customer value
profile itself usually has two elements: A market-perceived quality profile and a market-perceived price
profile. The former summarizes the aspects of the marketplace that are usually easiest to change to
improve the business. In many markets, market-perceived price may be a greater driver of customer
decisions than market-perceived quality; however, cutting prices wont usually improve the bottom line for
the firm, despite some common misconceptions. Once the customer value profile has been established, it
is possible to draw a customer value map.
Leimbach and Frevert (2012) tell us that even salespeople should be developing customer value maps.

Salespeople often believe they know what the customer wants and needs, based on their own company's
value proposition and one or two discovery conversations with trusted contacts. Or they may be
responding to an RFP that spells out the official requirements -- information that is shared with all bidders.
In fact, this information only tells part of the story and will not protect against competition. The Value Map
is one simple tool salespeople can use to determine the customer 's true view of value. The important
thing is how the buyer defines price and performance. For some, performance means the latest
technology, while for others it is a high level of service. The key is to focus on aligning with both the
customer's definition of value and their position on the Value Map.

Unfortunately, very few companies have developed customer value analysis/profiles, and fewer still have
customer value maps, but executives often argue that most operating managers have an implicit model
in their heads. Managers supposedly have a feel for who their competitors are, for what is important to
purchases, and for how their company performs versus competitors. Sometimes in organizations with
exceptionally good leadership, these implicit models work well and are truly aligned to the real needs of
customers. But marketers should check the situation in their organizations. This can be done via the
Delphi Technique by simply asking top-ranking members of the management team to produce,
individually, a picture of the customer value profile for the business and its key competitors. The following
is an example:
Retrieved from: www.expertprogrammanagement.com
If it is determined that all top managers have similar opinions, there is a reasonable chance that the
implicit models in their heads are accurate. This is particularly true if several members of the top-
management team spend most of their time with customers. But the firm should check management
perceptions carefully to ensure that the purchase-selection criteria, weights, and relative performance
scores are appropriately aligned within the management groupand with customers in the targeted
market. Most organizations find that when they make this implicit model check there is much less
alignment within the organization than was expected. Thus, if the managers cant agree among
themselves about the purchase criteria and desires of the customers, it is unlikely they can achieve rapid
progress toward fulfilling those needs.
Marketing Information Systems
Most successful firms operate with some form of marketing information system and evaluation of the
marketing environment, but the system varies greatly with the size and level of sophistication. In many
cases, information is not readily available, comes too late, or cannot be trusted. Many companies are
learning in the challenging environment of the 21st century that they lack an appropriate information
system, lack access to appropriate information, or they do not know what information they lack or need to
know to compete effectively.
A well-designed market information and marketing environment assessment system consists of four sub-
systems. The first is the internal records system, which provides current data on sales, costs, inventories,
cash flows, and accounts receivable and payable. Many companies have developed advanced computer-
based internal report systems to allow for speedier and more comprehensive information.
The second market information subsystem is the marketing intelligence system, supplying marketing
managers with everyday information about developments in the external marketing environment. Here a
well-trained sales force, detailed awareness of activities in the distribution channel, competitive
intelligence, purchased data from syndicated sources, and development of a corporate marketing
intelligence office to provide information throughout the firm will enhance the firms marketing efforts.
The third subsystem, marketing research, involves collecting information that is relevant to specific
marketing problems facing the company. The scientific method, creativity, multiple methodologies, model
building, and cost/benefit measures of the value of effective decision-making information characterize
good marketing research. The marketing research process generally consists of six steps: defining the
problem and research objectives; developing the research plan; collecting information; analyzing the
information; presenting the findings; and making a decision based on the research.
The fourth system in the research process is the marketing decision support system (mDSS). The mDSS
consists of statistical and decision tools to assist marketing managers in making better decisions. mDSS
is a coordinated collection of data, systems, tools, and techniques with supporting software and hardware.
The mDSS software is a generic Decision Support System (DSS) developed to assist decision makers in
the management of environmental problems. It can help users to:

better understand or explain to the involved actors (disciplinary experts, policy/decision makers,
other stakeholders) the problem at hand,

explore possible decision options, also within the contexts of alternative scenarios,

facilitate public participation,

smoothen the conflicts related to alternative courses of action,

extend collaboration with and within different stakeholder groups (Retrieved from:
http://www.netsymod.eu/mdss/)

Using mDSS software and decision models, the organization gathers and interprets relevant information
from the business and the environment and turns it into a basis for marketing action. mDSS experts use
descriptive or decision models, and verbal, graphical, or mathematical models, to perform analysis on a
wide variety of marketing problems.
To carry out their responsibilities, marketing managers need estimates of current and future demand.
Quantitative measurements are essential for market opportunity, planning marketing programs, and
controlling the marketing effort. The firm prepares several types of demand estimates, depending on the
level of product aggregation, the time dimension, and the space dimension. As the course will
demonstrate, the complexities of, and analytical tools required for, these activities have never been
greater. Be prepared for a challenging experience.
Lecture and Research Update Bibliography
Delphi Model Example. (2014). Retrieved from: www.expertprogrammanagement.com.
Kotler, P. and Keller, K. (2012) A Framework for Marketing Management (5th ed.). Upper Saddle River,
NJ: Prentice-Hall.
Leimbach, M., Frevert, N. (Oct 2012). Don't Blindsided by the Competition: Know What the Customer
Really Values. Agency Sales 42.10: 30-33. Retrieved from:
http://search.proquest.com/docview/1151787914/D1F48791B5AB4E13PQ/17?accountid=45844
mDSS. (2014). Retrieved from: http://www.netsymod.eu/mdss/.
Talaba, M. (2013). COMPARISON BETWEEN CUSTOMER LIFETIME VALUE (CLV) AND TRADITIONAL
MEASUREMENT TOOLS OF CUSTOMER VALUE. Knowledge Horizons. Economics 5.2: 189-
192. Retrieved from:
http://search.proquest.com/docview/1520561154/C97262C199534FE8PQ/5?accountid=45844
PowerPoint Lecture Notes
Use the lecture notes available in PowerPoint as you study this chapter by CLICKING THE LINK
BELOW. These notes will help you identify main concepts and ideas presented in this chapter.
If you do not have PowerPoint on your computer, you can download a free viewer from Microsoft by
clicking here.
A Framework for Marketing Management

Chapter 1

Chapter 2

Chapter 3

Advertising & IMC: Principles and Practice

Chapter 1

Required Readings
After reviewing this lesson in its entirety and reading the Lecture and Research Update, you
should read all of the Required Reading selections below. You can access library resources from
our Web site for readings that are not from your textbook(s). You may find it helpful to make notes
while you read or to highlight information of importance. Take special note when the identified
vocabulary terms show up in the Required Readings.
DIRECTIONS: To access ProQuest articles, you MUST first open a Web browser window to the
ProQuest Library; otherwise, you will be denied access to the articles when you click the links.
Once your browser is open to ProQuest, simply click on the link for the article you need to read.
For detailed instructions on how to access ProQuest, click here. For non-ProQuest articles, use
the provided Internet link to access the Required Readings material.
REPORT A DEAD LINK: If you have problems with a link, please report the problem to Ashworth
College by e-mail at masters@ashworthcollege.edu.
Textbook Readings

Kotler, P. & Keller, K. (2012) A Framework for Marketing Management (5th ed.). Upper Saddle
River, NJ: Prentice-Hall. Chs. 1-3, pp. 1-52.

Moriarty, S., Mitchell, N. & Wells, W. (2012) Advertising & IMC: Principles and Practice. (9th ed.).
Upper Saddle River, NJ: Prentice Hall, Ch. 1, pp. 4-30.
ProQuest Links

The 4 Cs of Marketing
Lombardi, L. J., A.S.A. (2010). LIMRA's MarketFacts Quarterly, 29(4), 71-71,90.

Understanding the Value of Customer Data
Green, A. (2012). Journal of Direct, Data and Digital Marketing Practice, 13(3), 221-233.

How can a Business Best Dealing with Profitable Customers? Analysis a New Model for
Customer Lifetime Value
Kahreh, M. S., Haghighi, M., & Hesan, M. (2011). International Journal of Innovation,
Management and Technology, 2(4), 321.

Vocabulary List
You will find the following vocabulary terms in the Required Readings and/or the Lecture and
Research Update for this lesson. Study and learn the meaning of each term and how to apply the
term to the content area and the real world.
Relationship
Forecasting
Marketing
Marketing Channel SBU
Marketing Information
Scenario Analysis
System
Marketing Metrics Target Market
Marketing Plan Value Chain
Mission Statement Value Proposition
Stand-Alone Project Benchmark: Competitive Market Analysis
It is not too early to begin thinking about individual components that will make up the Competitive Market
Analysis and its implications for the hypothetical new product manufacturer youll be working for. First,
choose the product youre going to analyze and then proceed to construct a step-by-step plan to develop
the end result: an extensive document that makes the case for or against the product. Note portions of the
Required Readings that will be useful as referents for your information and recommendations. Also
consider the products place in the current economy and the stages of demand that exist in the potential
marketplace.

Grading Criteria
1. Discussion Questions Cover Sheet
2. Discussion Question #1 24 points
3. Discussion Question #2 26 points
Contribution to Course Grade
50 points 5%