Download CHAPTER 1 An Overview of Marketing

SAMPLE STUDY GUIDE CHAPTER, BASED ON CHAPTER 1
LEARNING OBJECTIVES
1
Define the term "marketing"
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 objectives.
2
Describe four marketing management philosophies
Four competing philosophies strongly influence the role of marketing and marketing activities within an
organization. These philosophies are commonly referred to as production, sales, marketing, and societal marketing
orientations.
The production orientation focuses on internal efficiency to achieve lower prices for consumers. It assumes that price
is the critical variable in the purchase decision.
A sales orientation assumes that buyers resist purchasing items that are not essential and that consumers must be
persuaded to buy. The marketing orientation is based on an understanding that a sale predominantly depends on the
customer's decision to purchase a product and on the customer's perception of the value of that product. Responsiveness
to customer wants is the central focus of the marketing orientation.
The societal marketing orientation holds that the firm should strive to satisfy customer needs and wants while
meeting organizational objectives and preserving or enhancing both the individual's and society's long-term best interests.
PRETEST
Answer the following questions to see how well you understand the material. Re-take it after you review to check
yourself.
1.
Marketing is defined as:
2.
What five conditions must be satisfied for any kind of exchange to take place?
3.
The four variables of the marketing mix are:
4.
Four marketing management philosophies are:
Chapter 1  An Overview of Marketing
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CHAPTER OUTLINE
1
I.
Define the term "marketing"
What Is Marketing?
A.
Marketing is a philosophy or a management orientation that stresses the importance of customer
satisfaction, as well as the set of activities used to implement this philosophy.
B.
The American Marketing Association definition of marketing:
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.
C.
The Concept of Exchange
The concept of exchange means that people give up something in order to receive something that they
would rather have.
1. The usual medium of exchange is money. Exchange can also be through barter or trade of items or
services.
2. Five conditions must be satisfied for an exchange to take place:
a.
b.
c.
d.
e.
3.
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II.
There must be at least two parties.
Each party has something that might be of value to the other party.
Each party is capable of communication and delivery.
Each party is free to accept or reject the exchange offer.
Each party believes it is appropriate or desirable to deal with the other party.
Exchange may not take place even if all of these conditions exist, but these conditions are
necessary for exchange to be possible.
Describe four marketing management philosophies
Marketing Management Philosophies
Four competing philosophies strongly influence an organization’s marketing activities. These philosophies
are commonly referred to as production, sales, marketing, and societal orientations.
A.
Production Orientation
The production orientation focuses on internal capabilities of the firm rather than on the desires and
needs of the marketplace. The firm is concerned with what it does best, based on its resources and
experience, rather than with what consumers want.
B.
Sales Orientation
A sales orientation assumes that more goods and services will be purchased if aggressive sales
techniques are used and that high sales result in high profits.
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Chapter 1  An Overview of Marketing
C.
Market Orientation
1.
The marketing concept states that the social and economic justification for an organization's
existence is the satisfaction of customer wants and needs while meeting organizational objectives.
2.
The marketing concept involves:
a.
b.
c.
D.
Focusing on customer wants and needs so the organization can differentiate its product(s)
from competitors' offerings
Integrating all the organization's activities, including production, to satisfy these wants and
needs
Achieving long-term goals for the organization by satisfying customer wants and needs
legally and responsibly.
3.
A market orientation involves obtaining information about customers, competitors, and
markets; examining the information from a total business perspective; determining how to deliver
superior customer value; and implementing actions to provide value to customers.
4.
Understanding your competitive arena and competitor's strengths and weaknesses is a critical
component of market orientation.
5.
Market-oriented companies are successful in getting all business functions together to deliver
customer value.
Societal Marketing Orientation
1.
The philosophy called a societal marketing orientation states that an organization exists not
only to satisfy customer wants and needs and to meet organizational goals, but also to preserve or
enhance individual's and society's long-term best interests.
2.
This orientation extends the marketing concept to serve three bodies rather than two: customers,
the organization itself, and society as a whole
VOCABULARY PRACTICE
Fill in the blank(s) with the appropriate term or phrase from the alphabetized list of chapter key terms.
customer satisfaction
customer value
empowerment
exchange
marketing
marketing concept
marketing orientation
production orientation
relationship marketing
sales orientation
societal marketing orientation
teamwork
1
Define the term "marketing"
1.
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
defines
_____________________________.
2.
When consumers give up something (such as money) to receive something they would rather have (such as a
product), this is known as a(n) _____________________________.
Chapter 1  An Overview of Marketing
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2
Describe four marketing management philosophies
3.
There are four alternative marketing management philosophies. The first focuses on the firm's internal capabilities
rather than the needs and desires of the marketplace; this is the _____________________________. The second
philosophy is the _____________________________, which assumes that buyers resist purchasing nonessential
items, so aggressive sales techniques should be used to sell more products. The third philosophy, which focuses on
customer needs and wants, is the _____________________________. Finally, a firm that decides to preserve
long-term best interests of its customers and society has adopted the _____________________________.
4.
When a firm focuses on customer wants, integrates all firm activities to satisfy these wants, and achieves long-term
goals by satisfying these wants legally and responsibly, the firm is using the _____________________________.
Check your answers to these questions before proceeding to the next section.
TRUE/FALSE QUESTIONS
Mark the statement T if it is true and F if it is false.
1
Define the term "marketing"
_____
2
1.
A marketing exchange cannot take place unless each party in the exchange has something that the other
party values.
Describe four marketing management philosophies
_____
2.
The owners of the Plane Rubber and Tire Company are pleased with their low unit costs and high
production volumes. Salespeople are unnecessary because buyers are always waiting for new tires to
come off the assembly line. Plane currently has a production orientation.
_____
3.
The president of Hoppity Flea Collars does not find it necessary to conduct much marketing research
because the telephone selling campaign has been such a successful marketing strategy. Hoppity has a
marketing orientation.
_____
4.
Having a sales orientation is the same as having a market orientation since both have the ultimate goal of
satisfying customer needs.
Check your answers to these questions before proceeding to the next section.
AGREE/DISAGREE QUESTIONS
For the following statements, indicate reasons why you may agree and disagree with the statement.
1.
The marketing concept actually encompasses both the sales concept and the production concept.
Reason(s) to agree:
Reason(s) to disagree:
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Chapter 1  An Overview of Marketing
MULTIPLE CHOICE QUESTIONS
Select the response that best answers the question, and write the corresponding letter in the space provided.
1
Define the term "marketing"
_____
1.
Which of the following is NOT true about marketing?
a. Marketing is a philosophy that stresses customer satisfaction.
b. Marketing is a process.
c. Marketing can involve any number of parties.
d. Marketing can be used for ideas, goods, or services.
e. Marketing involves products, pricing, promotion, and distribution.
_____
2.
In order for exchange to occur:
a. a complex societal system must be involved
b. each party must have something of value to the other party
c. a profit-oriented organization must be involved
d. money or other legal tender is required
e. organized marketing activities must also occur
_____
3.
If you were in the marketing consulting business which of the following clients could you not serve?
a. The Boston Museum of Science, which needs to determine what exhibits should it offer visitors
b. The State of Mississippi, which needs to attract tourists
c. Dr. Susan Scott, an orthopedic surgeon wishing to open a practice in your home town
d. The World Gym, which needs to determine where to locate its next outlet for customers
e. All of these could be served by a marketing consultant
_____
4.
You are concerned with managing the exchange between the Red Cross and its blooddonors. Which of
the following costs would you have to be concerned about to create the ideal exchange?
a. The travel costs incurred bydonors visiting the Red Cross blood donation sites.
b. The personal energy and time expended by the donator
c. The opportunity costs lost by not engaging in some other activity
d. All of these are marketing costs that would be of concern to someone managing the exchange
situation
e. None of these are costs of exchange situations
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Describe four marketing management philosophies
_____
5.
Fred Stone, the owner of Neanderthal Products, Inc. is production-oriented. If you were in charge of his
marketing operations, which of the following statements might you use as a guiding principle if you
wished to meet Mr. Stone's demand?
a. "I'm a customer and everyone is like me. I buy on price, therefore everyone does, as well."
b. "We need to buy the fastest production equipment as possible to raise productivity and keep prices
at the lowest possible level."
c. "We produce the best widgits in the market place."
d. All of these would be consistent with Mr. Stone's demands.
e. None of these would be consistent, because all reflect a sales orientation.
_____
6.
Peter's company does an excellent and efficient job of churning thousands of Nit-Pickers off the
assembly line every day. One problem with this ____________ approach to marketing is the failure to
consider whether Nit-Pickers also meet the needs of the marketplace.
a. customer orientation
b. sales orientation
c. discount orientation
d. marketing orientation
e. production orientation
Chapter 1  An Overview of Marketing
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_____
7.
Jack Niven's company markets golf club polish. Jack knows that buyers may consider the product
nonessential, and he assumes that if he hires a team of aggressive, persuasive salespeople, buyers will
buy more of the polish. Jack has a:
a. sales orientation
b. production orientation
c. promotion orientation
d. marketing orientation
e. customer orientation
_____
8.
Beth has noticed the lack of specialty recycling centers in her community, although local neighborhood
clubs have repeatedly asked the city to provide such centers. Beth has decided to become certified in
waste disposal and hopes to open a battery and motor oil recycling center next year. She hopes to
include the innovative service of home pickup and delivery of recyclables. This business philosophy
supports a(n) orientation.
a. production
b. sales
c. retail
d. marketing
e. enterprise
_____
9.
The Ajax Insurance Company tells its salespeople to try to sell life insurance to everyone they meet or
contact. In contrast, the Family Shelter Insurance Company concentrates on special insurance plans
designed for single parents. Family Shelter is:
a. missing out by not concentrating on the average customer
b. a company that would state that they are in the business of selling insurance
c. a selling-oriented company
d. recognizing that different customer groups have different needs and wants
e. aiming at a goal of profit through maximum sales volume
_____
10. Bob & Gary’s is a contemporary ice cream manufacturer that donates 10 percent of its earnings to the
restoration of the Amazon rain forest. Bob & Gary’s has which type of orientation?
a. production
b. sales
c. promotion
d. marketing
e. societal marketing
Check your answers to these questions before proceeding to the next section.
SCENARIO
After you read the marketing scenario, answer the questions that follow.
The fictitious Freedom Mutual Insurance Company is a leading provider of life, medical, property, and casualty insurance
to consumers. Before 2002, sales agents of Freedom Mutual were trained to aggressively take business away from their
competitors by offering lower prices on similar insurance coverage or by creating packages with more features. Sales
agents had strict quotas to maintain, and bonuses were granted on the number of new accounts and the amount of revenue
the agents brought into the company.
In 2002, the company began to change its way of conducting business. Sales agents were still trained to bring in new
accounts, but they were also given incentives to keep existing business. Sales assistants input many types of data about
their policyholders into a new database, thus creating a rich profile of each customer. Current policyholders are sent
messages about additional coverage they may need as changes in the family (birth of a new child, new car, etc.) occur. In
addition, customers are asked fill out a survey twice a year about the service that they have received from their insurance
agent and any suggestions for improvement.
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Chapter 1  An Overview of Marketing
True/False:
_____ 1.
Before 2002, Freedom Mutual Insurance Company followed a marketing orientation.
_____ 2.
In 2002, Freedom Mutual changed from a sales orientation to a marketing orientation.
_____ 3.
Because of its new focus on existing policyholders, Freedom Mutual will likely lose revenue in the
short-run because agents will be too busy to focus on new business.
Multiple Choice:
_____
4.
After 2002, Freedom Mutual paid more attention to its existing customers by keeping updated
customer profiles and tracking major “life changes” that may require new coverage. This is an
example of:
a. a production orientation.
b. customer satisfaction.
c. relationship marketing.
d. a societal marketing orientation.
e. a database orientation.
_____
5.
Before 2002, Freedom Mutual’s target market can be described as
a. everybody.
b. current policyholders.
c. people who already have insurance.
d. people with high incomes.
e. people with insurance from competing firms
_____
6.
In order to adopt a true marketing orientation, Freedom Mutual should:
a. train all personnel – not just sales agents –to focus on customer satisfaction.
b. change its mission statement to be more customer-oriented.
c. target certain market segments who would most benefit from the company’s offerings.
d. do all these.
e. do none of these.
Short Answer:
7.
If you were the national marketing director for Freedom Mutual, what kinds of activities would you most likely be
involved with? (Name at least seven activities.)
ESSAY QUESTIONS
1.
The concept of exchange is crucial to the definition of marketing. What are the five conditions that must be satisfied
for an exchange to take place? Can marketing occur even if an exchange does not take place?
Chapter 1  An Overview of Marketing
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2.
Assume you are a marketing manager. Describe the marketing strategy for each of the four orientations of
marketing management philosophy.
APPLICATION
The objective of this assignment is to understand the differences between the marketing concept – a fundamental
objective for the entire course – and other business philosophies.
Look up the following Web sites of marketing organizations or products:




McDonald’s Restaurants:
Pepsi-Cola:
Procter & Gamble:
Intel:
http://www.mcdonalds.com
http://www.pepsi.com
http://www.pg.com
http://www.intel.com
For each Web site:
1.
2.
Review the Web sites thoroughly and click on several different links.
List the elements on the Web site that you believe are marketing-oriented.
3.
Describe why you believe these elements are marketing-oriented.
4.
List the elements on the site that you believe are NOT marketing-oriented (i.e., they are sales-oriented or productionoriented.).
5.
Describe why you believe these elements are NOT marketing oriented.
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Chapter 1  An Overview of Marketing
ON LINE EXERCISES
On-line exercises are scattered throughout the chapter. They are repeated here so that you can complete the
activities.
SoapWorks, p. 5
How does SoapWorks use its Web site to connect with its market? What indications do you have that this is a
customer-oriented company?
http://www.soapworks.com
Western Union, p. 9
Has Western Union rebounded from its failure to define its competitive arena as telecommunications? Evaluate the
company’s Web site to find out. Against whom does Western Union seem to be competing in the twenty-first
century?
http://www.westernunion.com
Zane’s Cycles, p. 11
What evidence of a market orientation do you see on Zane’s Cycles’ Web site? How does the company demonstrate
its commitment to the customer?
http://www.zanescycles.com
Volvo, p. 12
How does Volvo use its Web site to maintain customer relations? Do you think Volvo has a sales or a market
orientation? What evidence do you have to support your conclusion?
http://www.volvocars.com
Disney, p. 13
Disney training stretches beyond the bounds of its own organizational structures. Visit the Disney site listed below.
Click on “Disney Difference.” What are the major themes of these programs? View a sample agenda to find out.
What does this tell you about Disney’s business philosophy?
http:// disney.go.com/DisneyWorld/DisneyInstitute/ProfessonialPrograms
Britannica, p.14
Go to Britannica’s Web site. What evidence do you see that Britannica has redefined its core business? What do
you think its business definition currently is? How has the company met the challenge of CD-ROM technology?
http://www.britannica.com/
Chapter 1  An Overview of Marketing
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