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Marketing: Real People, Real Decisions
The World of Marketing
Chapter 1
Lecture Slides
Solomon, Stuart,
Carson, & Smith
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Marketing: Real People, Real Decisions
Chapter Learning Objectives
When you have completed your study of this chapter, you should
be able to:
• Define the marketing concept.
• Define the objective of marketing.
• Understand the basics of marketing
planning.
• Describe the evolution of the marketing
concept.
• Explain how marketing is important to
both individual and business customers in
the market place, in our daily lives, and in
society.
• Explain marketing’s role within an
organization.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Introduction to the Topic
• What is marketing?
• Is is advertising? Sales? Going to the grocery store?
• It is a functional area within a business, but what does it do?
• A useful definition from the American
Marketing Association:
• Marketing: 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 objectives.
• Note the many component parts (including the
4 P’s) to this definition, which will all be
discussed in good time.
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Marketing: Real People, Real Decisions
Needs versus Wants
• Marketing attempts to satisfy the needs of consumers.
• Consumer: the ultimate user of a good or service
• Could be an individual, business, or organization
• Need: recognition of any difference between a
consumer’s actual state and some ideal or desired
state.
• Want: the desire to satisfy needs in specific ways
that are culturally and socially influenced.
• Why is the difference between these two relevant
to marketers?
• If consumers must learn how to satisfy needs, then
they can be influenced in the process.
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Marketing: Real People, Real Decisions
Exchange of Value
• If marketing is all about exchanges of value, what is value?
• Customer value: what the customer gets in the purchase, use, and
ownership of a product relative to the costs and sacrifices incurred.
• Exchange: the process by which some
•
•
•
•
transfer of value occurs between a buyer
and seller.
Most exchanges are in the form of money,
but barter can also be popular on a local
basis.
What is the relationship between value
and price?
Customers will pay for value received; the
more received, the more they will pay.
A good deal is, therefore, a state of mind?
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Exchange of Value (continued)
• To be meaningful to marketers, wants need resources.
• Demand: customers’ desire for products coupled with the
resources to obtain them.
• Market: all of the customers and potential customers who:
– share a common need that can be satisfied by a specific product,
– have the resources to exchange for it,
– are willing to make the exchange, and,
– have the authority to make the exchange.
• Note that these four conditions
also make a good definition of a
customer.
• Marketplace: any location or
medium used to conduct an
exchange.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
(Almost) Anything Can Be Marketed
• Product: a tangible good, a service, an idea, or some combination of
these that, through the exchange process, satisfies consumer or
business customer needs; a bundle of attributes including features,
function, benefits, and uses. Products have:
• Features: characteristics of the product,
such as materials, construction, and what it
does. A feature of a computer is that it has
512 Mb of RAM
• Advantages: what the features do for the
user of the product. More RAM allows for
greater computing power.
• Benefits: the outcome sought by a
customer that motivates buying behaviour.
The customer wants more RAM to run the
latest version of a software program.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
(Almost) Anything Can Be Marketed
• Idea marketing: many organizations, including governments use
marketing to sell ideas, such as not smoking, responsible alcohol
consumption, safe sex, and using recycling programs.
• Place marketing: using marketing
to sell places as a destination for
tourists or for industries to choose to
locate in.
• Tourism is big business in Canada.
• People marketing: using
marketing to sell people and their
images, such as celebrities endorsing
products or representing organizations.
• Why would Nike pay Tiger Woods
$40 million over 5 years just to wear
their clothing and footwear?
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
The Marketing Concept
• Marketing concept: a management orientation that focuses on
achieving organizational objectives by understanding consumer needs
and wants and the associated costs of satisfying them.
• Which comes first, the consumer need or
the product to satisfy it?
• It is important to recognize that marketing
does not exist in isolation from the world
around it.
• Social marketing concept: an
orientation that focuses on satisfying
consumer needs and wants while also
addressing the needs of the larger society.
• “It’s not easy being green.”
– Kermit the frog
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Planning
• Strategic planning: the process of identifying and analyzing
alternative ways of achieving objectives.
Type of factor
Location of
factor
Internal to
the company
Favourable
Unfavourable
Strengths
Weaknesses
•Industry position
•Product innovation/design
•Brand awareness
•Distribution channels
•History of success
•Pricing position
•Limited distribution
•Limited range of products
•Leadership/direction
•Resource constraints
Opportunities
External to
the company
•New markets
•New branding strategies
•Expand globally
•Expand accessories line
•Form strategic partnerships
Threats
•Fierce competition
•Brand name may become
the generic for the category
•Pace of technology
•Regulatory environment
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Planning (continued)
• Market segment: a distinct group of customer within a larger
market, who are similar to one another in some way and whose needs
differ from other customers in the larger market.
• Target market: the market segment
on which and organization focuses its
marketing plan and toward which it
directs its marketing efforts.
• Market position: the way in which
the target market perceives the product
in comparison to competitors’ brands.
• To be effective, organizations will do all
three steps, one after the other, as each
one builds on the step previous.
• How do marketers achieve positioning?
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing’s Tools
• Marketing mix:
A combination of
the product itself,
the price of the
product, the place
where it is made
available, and the
activities that
introduce it to the
consumers, which
creates a desired
response among a
set of predefined
consumers.
Figure 1-1
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Planning (continued)
• Relationship marketing: a marketing philosophy that focuses on
building long-term relationships with customers, suppliers, distributors,
and other key stakeholders to satisfy mutual needs.
• This philosophy recognizes that it is more
efficient to keep existing customers happy
and buying, than to be constantly trying to
find new ones to replace those who have
left.
• It also recognizes the value of teamwork,
when it comes to the supply chain.
• Stakeholders: individuals or
organizations who affect, or are affected
by, the activities of a firm.
• Society as a whole have a stake in what
organizations do.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
The Evolution of a Concept
• Product orientation: a management philosophy that emphasizes
the most efficient ways to produce and distribute products.
• This philosophy focuses on developing products through research and
development activities.
• This approach works best in a seller’s market, where
demand is greater than supply.
• Selling orientation: a managerial view of marketing as
a sales function, or a way to move products out of
warehouses to reduce inventory.
• Also known as the hard sell, this approach is necessary in
times of a buyer’s market, where product availability
exceeds demand.
• Think aluminum siding in the early 60’s, home security
systems today, and other unsought goods.
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Marketing: Real People, Real Decisions
The Evolution of a Concept (continued)
• Consumer orientation: a management philosophy that focuses
on being proactive and responsive in identifying and satisfying
consumer needs and wants.
• Focusing on what the consumer wants makes for good business, as
Mattel does with the Barbie™ product line.
• New era orientation: a
management philosophy in
which marketing decision
making means a devotion to
excellence in designing and
producing products that benefit
the customer plus the firm’s
employees, shareholders, and
fellow citizens.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Creates Value
• Functional value: consumer benefits relating to product features,
characteristics, utility, performance, and outcomes.
• What will the product do for me?
• Utility: the usefulness or benefit received by
consumers from a product. Utility can based on
form, place, time, and possession.
• Buying snow tires after the first snowfall in winter
qualifies for all four!
• Experiential value: consumer benefits
relating to sensory, emotional, relational, and
epistemic experiences.
• Live theatre and sports are experiences enjoyed for
many different reasons.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Creates Value
• Symbolic (expressive) value: consumer benefits relating to
self-concept or self-identity, self-expression, social meaning, personal
meaning, or conditional meaning.
• Some products or services we consume for what we believe they say
about us to others. Luxury products are a good example.
• Cost (sacrifice) value: consumer
benefits relating to economic costs,
psychological costs, personal investment,
and risk.
• Warehouse retailers and e-tailers appeal to
those consumers who appreciate value
created by low prices, selection, and
convenience of shopping.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing and Culture
• Popular culture: the music, movies, sports, books, celebrities, and
other forms of entertainment consumed by the mass market.
• Marketing of celebrities is pervasive in North American culture, much to
the chagrin of many observers.
• Cultural activities can be differentiated and
targeted to particular market segments.
• Myths: stories containing symbolic
elements that express the shared emotions
and ideals of a culture.
• There are only so many plot and story lines
out there to be used, and universal themes
such as good versus evil have widespread
appeal due to their simplicity.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing’s Role in Society
• Ethical behaviour is good business for many reasons beyond it is
the right thing to do. Organizations attempt to manage their public
image through careful promotional strategies.
• The practice of marketing is not beyond
criticism, such as:
– Marketers create artificial needs
– Marketing teaches us to value people
for what they own rather than who they
are
– Marketers promise miracles
• Most of these criticisms center on the issue
of personal responsibility and tend to overestimate the power of marketing. Agree or
disagree?
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Famous Last Words…
• For good or bad, marketing
is everywhere.
• Our challenge for the
remainder of this course
will be to try to understand
what it can do for
organizations attempting to
achieve their objectives.
©Copyright 2003 Pearson Education Canada Inc.
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