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

5/19/2022
Discussion Questions
1 1. Why is marketing important?

2. What is the scope of marketing?
3. What are some core marketing concepts?
01 4. What forces are defining the new marketing
Defining Marketing for realities?
5. What new capabilities have these forces given
the New Realities consumers and companies?
6. What does a holistic marketing philosophy
include?
7. What tasks are necessary for successful
marketing management?
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The Value of Marketing What Is Marketing?
• Nothing matters without sufficient demand

for products; truly marketing: • Misconceptions about marketing
̶ Creates demand • Marketing is all about:
̶ Determines financial success ̶ Telling and selling
̶ Creates jobs ̶ Advertising and selling
̶ Creates strong brands ̶ The art of selling products & making profits
̶ Creates a loyal customer base
̶ Allows firms to engage in socially responsible
activities
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-3 Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-4
Selling Is Only the Tip of the Iceberg What Is Marketing?
“There will always be need for

some selling. But the aim of marketing
• No universal definition of marketing
is to make selling superfluous. The aim • “Marketing is the process of transferring
of marketing is to know and understand
goods through commercial channels from
the customer so well that the product or
service fits him and sells itself. Ideally,
producer to consumer.”
~~Brown in 1925
marketing should result in a customer
who is ready to buy. All that should be
needed is to make the product or
service available.” What a back-dated definition!
Peter Drucker
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What Is Marketing? What Is Marketing?
Marketing starts long before... Marketing is dynamic
“Marketing is the homework that we do • The nature and scope of marketing is:
before we have a product".”
̶ Ever-changing and highly affected by its
—Philip Kotler contextual elements
Father of Modern
marketing
(1931--)
Marketing is dynamic
Marketing is eclectic in nature
“Within five years, if you run your
business in the same way as you do now, • Combination of different fields of study
you’re going to be out of business.”
• Marketing doesn’t exist on its own
—Philip Kotler
Father of Modern
marketing
(1931--)

Focus on benefits, NOT on products
Be customer-centric
“People don’t buy a quarter-inch drill,
“The only way to serve your company’s they want a quarter-inch hole.”
interest is to serve your customer’s —Theodore Levitt
interest.” “Kodak sells films, but they don’t
—Philip Kotler advertise film; they advertise
memories.”
- Theodore Levitt
Father of Modern Guru of Philip

marketing Kotler
(1931--) (1925-2006)
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Never-ending debate
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 Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-14

Know what to make & create value
• Marketing is sensing and responding
“Authentic marketing is NOT the art of
̶ Sensing is knowing your customers, selling what you make but knowing what
competitors, and marketplace or to make.”
environmental forces
̶ Responding is coming up with market- “Marketing is the art of creating genuine
driven strategies customer value.”
—Philip Kotler
Father of Modern
marketing
(1931--)
Marketing is never-ending...
“Marketing creates, communicates,
and delivers value to a target market
“Marketing is a race without a finishing
at a profit.”
line.”
Kotler at London Business Forum
—Philip Kotler
Father of Modern Father of Modern

marketing marketing
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-171-17 Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-18
(1931--) (1931--)
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What Is Marketing? What is Marketed?

Ten entities are marketed
• Marketing is
• Goods • Places
– Creating value for customers
– Capturing value from customers • Services • Properties
• “The process by which companies engage • Events • Organizations

customers, build strong customer • Experiences • Information
relationships, and create value in order to
capture value from customers in return.” • Persons • Ideas
Marketing Ideas Who Markets?

Marketer Prospect
is someone who is one from whom response
“Friends Don’t Let seeks a response….. is sought
Friends Drive Drunk. ”
Response
This is the watch Attention
Stephen Purchase
Hollingshead, Jr. was
Donation
wearing when he
encountered a drunk Vote
driver.
If both parties are seeking to sell something
to each other, we call them both marketers
Time of death 6:55 p.m.
Demand Management Types of Demand
Negative No Demand Latent

• Marketers manage demand
– Stimulating demand only is a limited view of
what they do
Declining Irregular
• They influence the level, timing, and
composition of demand to meet org
objectives
Full Overfull Unwholesome
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Types of Demand Types of Demand

Consumers dislike Conversational Marketing Consumers begin to Creative Marketing
Negative the product and • Analyze the sources of resistance Declining buy the product less • Find the causes of falling demand
Demand may even pay to • Design mkt. programs and Demand frequently or not at • Reconsider the target market and
avoid it all
positive promotional message mkt. programs
Stimulational Marketing Consumer
No Consumers may be • Connect the benefits of the Irregular purchases vary on Synchronizing Marketing
unaware of or product with customers’ needs a seasonal, • Modify the mkt. programs to alter/
Demand Demand
uninterested in the monthly, weekly, or influence the supply pattern or
• Alter the envt. daily, or even hourly
product demand pattern or the both
• Distribute info or product basis
Consumers may Developmental Marketing Maintenance Marketing
Latent share a strong need • Measure the size of the potential Full Consumers are • Maintain efficiency in carrying out
that cannot be market adequately buying activities
Demand Demand
satisfied by an all products put into
• Convert the latent demand into • Keep constant vigilance in
existing product the marketplace
actual demand through 4 Ps monitoring external forces
Types of Demand The Marketing Process

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

and Customer Needs
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 1-30
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Marketplace and Marketspace Needs, Wants, and Demands
• Marketplace is a
physical place where NEEDS
products are bought and The states of felt

WANTS
sold • Marketspace is a deprivation of some
basic satisfaction The form human needs
digital or online space DEMANDS
̶ Store, shopping mall The basic human take
through which Human wants for
requirements Shaped by culture and specific objects that are
products are bought Physical, social and individual personality backed by an ability to
and sold individual needs pay
Addresses ‘WHAT’ to
buy? Addresses ‘ABILITY’ to
̶ eBay’s auction market Addresses ‘WHY’ to
buy? buy?
(Market) Offerings Value Proposition
Value Proposition
Products – 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
Goods Services Others target markets to satisfy consumer should buy
their needs an offering
Offering Brand – Helps differentiate an
offering
Experience
Product Market Offering
• Anything tangible or intangible that • Some combination of ̶ More than a tangible

has the ability to satisfy a consumer products, services, info, good
need or experiences offered ̶ People buy offering,
̶ Goods, services, people, place, to a market to satisfy a not a product
organizations, experiences, ideas, need or want ̶ Called augmented
information product
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Brand Marketing Myopia
• A brand is an offering from a known source

• Theodore Levitt’s article in
• “A name, term, design, symbol, or any other 1960 in HBR ̶ A product-centric,
feature that identifies one seller’s good or short-sighted, and
• A mistake of paying more inward looking
service as distinct from those of other attention to the specific approach to
sellers.” ~~ AMA products than to benefits marketing
and experiences ̶ Ignores underlying
• The summation of feelings, perceptions, produced by these needs of customers
experiences, beliefs, and memories that
products
make the product distinct from others.”
Goods, Services, and Experiences (Customer-perceived) Value
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
Satisfaction Exchange, Transactions, and

Relationships
• The function of a product’s perceived performance • Exchange is the act of obtaining a desired
object from someone by offering something in
compared to a customer’s expectations
return
̶ Set right level of expectations
̶ Not too high or too low • Transactions involve negotiating and reaching
an agreement between two parties
̶ Conditions: At least two things of value, agreed-upon
• If PPP  Customer Expectation = Dissatisfied
conditions, a time and place of agreement
• If PPP = Customer Expectation = Satisfied
• If PPP  Customer Expectation = Delighted
• Relationships consist of actions to build and
maintain desirable relations
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Markets Key Customer Markets

Consumers or end-users Professional or institutional buyers
• A set of present and

• A market is NOT potential buyers who
̶ A ‘physical place’
have:
(a) needs to satisfy
̶ A ‘set of buyers Consumer Market Business Markets
and sellers’ (b) money to spend, and
(c) the willingness to
spend the money
Global Markets Non-profit and

Individuals or institutional customers government market
Nonprofit and government organizations
1-44
Modern Marketing System Five Markets in the Economy
Marketing Channels Paid, Owned, and Earned Media
• Paid media— are media which convey messages

• A set of interdependent • They include: of the company at a certain fee
organizations that help
̶ Communication • Owned media— are media or channels owned
make a product channels and controlled by the company
available for use or ̶ Distribution
consumption by the channels • Earned media— are outside media the voluntarily
market communicate the company’s message with the
̶ Service channels
target market
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Supply Chain Management Marketing Environment

• Managing upstream & downstream value-added
flows of materials, final goods, and related info • The actors & forces outside mkt. that affect mkt.
among suppliers, the company, resellers, and management's ability to build & maintain successful
final consumers relationships with target customers
Task environment
Fig: The Supply Chain for Coffee Broad environment

Designing Customer-Value-Driven
Marketing Strategy and Plan Marketing Management: Art or Science?
• An ‘ART’
̶ Deals with consumer minds,
• Marketing manager can design a customer- hearts, & behaviors
driven mkt. strategy
̶ No ‘single best’ solution
• Marketing management is the art and • A ‘SCIENCE’
̶ No ‘single way’ to develop &
science of choosing target markets and ̶ Applies scientific
implement mkt. strategy
methods to know the
building profitable relationships with them by needs and wants of
̶ Uses creativity, thoughts,
creating, communicating and delivering insights, skills, and intuitions customers
superior customer value
̶ Some concepts,
theories, and models
are universally
applicable
Designing Customer-Value-Driven
Selecting Customers to Serve
Marketing Strategy and Plan
• Segmentation is the process of dividing the
market into smaller segments of homogenous
• Marketing manager must answer the two customers
questions: • Target market is the segment of market that
• What customers will we serve? shows the greatest opportunities to the
• How can we best serve these customers? company
• Target marketing refers to selecting which

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

you want your product to occupy in the benefits or values a company
marketplace relative to competition and in the promises to deliver to its target
minds of target customers markets to satisfy their needs
‒ Differentiate the offerings
‒ Volvo: Safety
‒ BMW: Performance or sophistication
‒ Prius: Green, efficient, or earth-friendly
Marketing Management Orientations Marketing Management Orientations

• Know the needs and wants of the
• Quality, performance target markets and deliver the
• MM designs strategies to build profitable & innovative features desired satisfactions better than
• Leads to mkt. myopia competitors.
relationships with target consumers • Make what buyers need
• Builds a better
mousetrap fallacy • Takes an outside-in-view
• But what philosophy should guide these • You look into mirror
• Makes profit through…
marketing strategies? • Ignore 3 Ps
• What weight should be given to the interests Production Product Selling Marketing Holistic
of customers, the organization, and society? • Mass production & • Shows buying inertia
distribution at low cost • A cohesive & 360º
‒ Very often, these interests conflict • Puts selling efforts approach
• Focuses on own • Sells what produced
operations • Everything matters
‒ Design and carry out marketing strategies under 5 • Takes an inside-out-view here
• Leads to mkt. myopia
concepts • 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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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 Relationship Marketing

4 key constituents:
Occurs when the marketer • Customers
designs marketing programs • Employees
• Partners
to create, communicate, and • Member of the financial community
deliver customer value
Two key themes: Develop

marketing
• Different activities can Build mutually beneficial, long- networks
CCDV term relationships with…
• Design one mkt.
activity with all other
activities in mind
Performance Marketing
Preparing an Integrated Marketing
Strategy and Plan
A set of tools (4 Ps) the firm uses to implement James Culliton (1948)
Neil Borden (1953),
‘Financial Scorecard’ Vs. Marketing Scorecard its marketing strategy
McCarthy (1960)
A comprehensive plan that communicates
Intangible assets: and delivers the intended value to chosen
Loyal customer base, customer equity, customers
brand equity, marketing network,
Social Responsibility
Financial Accountability
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Preparing an Integrated Marketing Preparing an Integrated Marketing

Strategy and Plan Strategy and Plan
Expanded Marketing Mix by Kotler
People Process Programs Performance McCarthy’s Lauterborn's 4 Shimizu's 4 Sheth &

Gathering 4 Ps Cs Cs Sisodia’s 4 As
Employee: marketing insights Product Customer solution Commodity Acceptability
Development Measuring
• Hiring
Developing new of customer- performance: Price Cost Cost Affordability
• Training ideas and products centric • Financial
programs Place Convenience Channel Accessibility
• Developing Building long-term • Non-financial
• Motivating relationships with Promotion Communication Communication Awareness
customers Performance
parameters
• Service delivery
• Complaints
• Response time
Preparing an Integrated Marketing Engaging Customers and Managing

Strategy and Plan Customer Relationships
Customer Relationship Management
Customer Engagement and Today’s Digital,

Booms, Bitner, & Mobile, and Social Media
Jo’s “7 Ps of
Service Marketing”
Consumer-Generated Marketing
Partner Relationship Management
Customer Engagement and Today’s Digital,

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

• Building and maintaining the right relationships involvement in shaping brand conversations,
with the right customers brand experiences, and brand community
̶ Basic relationships with low-margin customers ̶ Make the brand a meaningful part of consumers’
conversations & lives
̶ Full relationships with high-margin customers
̶ Frequency marketing programs (reward customer) ̶ Embrace “Customer-managed Relationships”: Customers
connect with firms and with each other to shape & share
̶ Relationship building-blocks (Customer-perceived their own brand experiences
value & Satisfaction)
̶ Create “Customer Brand Advocacy”
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Customer-Generated Marketing PRM
• Consumers themselves play roles in shaping their • Working closely with partners in other company
own brand experiences and those of others departments and outside the company to jointly
̶ This happens through invited and uninvited C2C bring greater value to customers
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
Capturing Value from Customers Creating Customer Loyalty and Retention
Creating Customer Loyalty and Retention • CLV is the value of the entire
stream of purchases a
customer makes over a
lifetime patronage
Growing Share of Customer
̶ Models vary in sophistication,
complexity, and accuracy
Building Customer Equity
Growing Share of Customer Building Customer Equity
Share of Customer/Wallet (SOW)

• Customer equity is the total combined CLVs of
• The portion of the customer’s buying all of the firm’s current & future customers
that a firm gets in its product ̶ Increasing the number of current and future customers
categories ̶ Keeping them loyal to the company
̶ Earning a greater share of their purchases
̶ Capturing their CLV
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Building Customer Equity The Changing Marketing Landscape

Building the right relationships with the right customers
• 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
Werner Reinartz and V. Kumar

The Digital Age: Online, Mobile, and Social The Digital Age: Online, Mobile, and Social
Media Marketing Media Marketing
• Social media provide a digital home where

• Digital and Social Media people can connect & share important info &
Marketing moments in their lives
̶ Using digital mkt. tools such as • IoT is a global environment where everything &
websites, social media, mobile everyone is digitally connected to everything &
apps and ads, online video, everyone else
email and blogs to engage
consumers anywhere, at any ̶ More than 400 million people—55% of world
population are online
time, via digital devices
̶ 80% all American adults own smartphones
The Digital Age: Online, Mobile, and Social

Media Marketing Not-for-Profit Marketing & Globalization
• Mobile marketing is perhaps the fastest- • Not-for-profit marketing

growing digital mkt. platform ̶ The number of colleges, hospitals,
museums, zooms, foundations, etc. is
• Big Data and AI can be used by brands to growing
get customer insights ̶ 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 Marketing in Practice
Marketing in theory Marketing in practice

• Socially & environmentally responsible mkt.
that meets the present needs of consumers ̶ Analyzing marketing ̶ Facing new challenges given
and businesses while preserving or opportunities the new realities
enhancing the ability of future generations to ̶ Selecting target markets ̶ Using internet & digital devices
meet their needs along with digital tools
̶ Designing marketing
̶ Reexamine the relationships with social values & strategies ̶ Taking into account:
responsibilities and with the very earth that ̶ Developing marketing • Marketing balance
sustains us programs
• Marketing accountability
̶ Managing the marketing
• Marketing in the organization
effort
Who Is Responsible for Marketing? Marketing Management Tasks
Entire Organization • Developing market strategies and plans

Marketing Department
• Capturing marketing insights
Chief Marketing Officer

• Connecting with customers
(CMO)
• Building strong brands
• Marketers think as
executives in other • Creating, delivering, and
departments and
executives in other
communicating value
departments think
more of marketers • 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?
15

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5/19/2022

1 1. Why is marketing important?

The Value of Marketing What Is Marketing?

• Nothing matters without sufficient demand

Selling Is Only the Tip of the Iceberg What Is Marketing?

“There will always be need for

What Is Marketing? What Is Marketing?

Marketing starts long before... Marketing is dynamic

What Is Marketing? What Is Marketing?

What Is Marketing? What Is Marketing?

Father of Modern Guru of Philip

What Is Marketing? What Is Marketing?

“When a customer enters my store, forget

What Is Marketing? What Is Marketing?

What Is Marketing? What Is Marketing?

Father of Modern Father of Modern

What Is Marketing? What is Marketed?

• “The process by which companies engage • Events • Organizations

Marketing Ideas Who Markets?

Demand Management Types of Demand

Negative No Demand Latent

Types of Demand Types of Demand

Types of Demand The Marketing Process

Understanding the Marketplace

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

Marketplace and Marketspace Needs, Wants, and Demands

products are bought and The states of felt

(Market) Offerings Value Proposition

Products – The intangible value

Product Market Offering

• Anything tangible or intangible that • Some combination of ̶ More than a tangible

Brand Marketing Myopia

• A brand is an offering from a known source

Goods, Services, and Experiences (Customer-perceived) Value

Services • An intangible entity like activity, benefit, or

Experiences • What buying a product will do for the

Satisfaction Exchange, Transactions, and

Markets Key Customer Markets

• A set of present and

Global Markets Non-profit and

Modern Marketing System Five Markets in the Economy

Marketing Channels Paid, Owned, and Earned Media

• Paid media— are media which convey messages

Supply Chain Management Marketing Environment

Fig: The Supply Chain for Coffee Broad environment

• Target marketing refers to selecting which

Choosing a Value Proposition Choosing a Value Proposition

How to differentiate and position itself?

• Positioning is determining a distinctive place • Value proposition is the set of

Marketing Management Orientations Marketing Management Orientations

Selling Vs. Marketing Concept Marketing Concept: Shortcomings

• Overlooks undesirable social consequences

• Focuses on maximizing personal benefits

Holistic Marketing Concept Internal Marketing

The task of hiring, training, and motivating able

Integrated Marketing Relationship Marketing

Two key themes: Develop

Preparing an Integrated Marketing Preparing an Integrated Marketing

People Process Programs Performance McCarthy’s Lauterborn's 4 Shimizu's 4 Sheth &

Preparing an Integrated Marketing Engaging Customers and Managing

Customer Engagement and Today’s Digital,

Partner Relationship Management

Customer Engagement and Today’s Digital,