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Chapter 1
Marketing: Managing Profitable Customer Relationships
Previewing the Concepts—Chapter Objectives
1.
2.
3.
4.
5.
Define marketing and outline the steps in the marketing process.
Explain the importance of understanding customers and the marketplace, and
identify the five core marketplace concepts.
Identify the key elements of a customer-driven marketing strategy and discuss the
marketing management orientations that guide marketing strategy.
Discuss customer relationship management and strategies for creating value for
customers and capturing value from customers in return.
Describe the major trends and forces that are changing the marketing landscape in
this age of relationships.
JUST THE BASICS
Chapter Overview
Marketing is all about customer relationships—profitable customer relationships.
Whether your company sells expensive systems to a few key customers or toothpaste to
millions, understanding the customer is the heart of a successful business. Although
everyone within a company must be obsessed with making sure the customer is happy,
one of the many roles of marketing is growing current customers and acquiring new ones.
Marketing is defined as a social and managerial process by which individuals and
groups obtain what they need and want through creating and exchanging value with
others. Figure 1-1 of the text shows a model of the marketing process that includes
understanding the marketplace and customer needs and wants; designing a customerdriven marketing strategy; constructing a marketing program that delivers superior value;
building profitable relationships and creating customer delight; and capturing value from
customers to create profits and customer quality. The chapter reviews these five steps,
focusing on the relationship aspect of marketing.
Chapter Outline
1.
Introduction
a.
NASCAR is a great marketing organization. It is the second highest-rated
regular season sport on television.
b.
It has a single-minded focus: creating lasting customer relationships.
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c.
d.
2.
A big part of the NASCAR experience is the feeling that the sport itself is
personally accessible. Because of this, NASCAR has attracted more than
250 big-name sponsors.
Today’s successful companies have one thing in common: they are
strongly customer focused and heavily committed to marketing.
What Is Marketing?
a.
A simple definition of marketing is managing profitable customer
relationships.
b.
Marketing must both attract new customers and grow the current
customers.
c.
Every organization must perform marketing functions, not just for-profit
companies. Non-profits also must also perform marketing.
Marketing Defined
d.
Most people think of marketing as selling and/or advertising—“telling and
selling.”
e.
Marketing must focus on satisfying customer needs.
f.
The formal definition of marketing is a social and managerial process by
which individuals and groups obtain what they need and want through
creating and exchanging value with others.
Use Key Term Marketing here.
Use Chapter Objective 1 here.
The Marketing Process
g.
Figure 1-1 shows the five-step marketing process.

Understand the marketplace and customer needs and wants.

Design a customer-driven marketing strategy.

Construct a marketing program that delivers superior value.

Build profitable relationships and create customer delight.

Capture value from customers to create profits and customer
quality.
h.
The first four steps create value for customers and build relationships with
them.
i.
The last step captures value from the customer in return for the value
delivered.
Use Figure 1-1 here.
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Let’s Discuss This
At this point, stop and ask students if the marketing process just described was what they
had in mind when they signed up for this class. Did they understand the full extent of
marketing? What was their conception of marketing when they first walked through the
door?
3.
Understanding the Marketplace and Consumer Needs
a.
Companies must first understand what the customer needs and wants, as
well as the marketplace in which they operate.
b.
Five core marketplace concepts are reviewed in this section:

Needs, wants, and demands;

Marketing offers (products, services, and experiences);

Value and satisfaction;

Exchanges, transactions, and relationships; and

Markets.
Needs, Wants, and Demands
c.
Human needs are felt deprivation.
d.
They include physical needs (food, clothing, safety); social needs
(belonging, affection); and individual needs (knowledge, self-expression).
e.
These needs are not created by marketing; they are intrinsic to humans.
f.
Human needs take the form of wants when culture and personality are
applied. They are shaped by society.
g.
Wants become demands when they are backed by buying power.
h.
Value and satisfaction are the motives for people to demand products.
i.
Marketing research helps companies understand customers’ needs, wants,
and demands.
Use Key Terms Needs, Wants, and Demands here.
Use Discussing the Issues 1 here.
Use Application Questions 1 here.
Applying the Concept
If time permits, have the students break into groups to discuss the concepts of needs,
wants, and demands as they were applied to their decision-making process for applying to
college, and accepting the offer from the University they are attending. Have them
discuss their groups’ responses in terms of the needs, wants, and demands, rather than
how they might describe it to their friends or family.
Marketing Offers—Products, Services, and Experiences
j.
A marketing offer is a combination of products, services, information or
experiences offered to satisfy a need or want.
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k.
l.
m.
n.
Marketing offers can also include such things as persons, places,
organizations, information, and ideas.
Marketing myopia is paying more attention to the individual products
offered, rather than the need satisfied, or benefits produced.
Companies should focus on brand experiences, rather than just the product
attributes.
Experiences have emerged as differentiating factors for many companies,
including Disney, Harley-Davidson, and NASCAR.
Use Key Term Marketing Offering here.
Value and Satisfaction
o.
Consumers make their choices based on their perception of the value
offered by each company.
p.
Companies have to be able to set the right level of expectations—set them
too low, and they may succeed in satisfying them, but they won’t be able
to attract many customers. If they set expectations too high, they could
risk disappointing customers.
Exchange, Transactions, and Relationships
q.
A core concept in marketing is exchange, which is the act of obtaining a
desired object from someone by offering them something in return.
r.
The marketer tries to bring about a response to some market offering; the
response may be more than buying or trading products and services.
s.
Marketing consists of actions taken to build and maintain desirable
exchange relationships with target audiences.
Use Key Term Exchange here.
Use Chapter Objective 2 here.
Markets
t.
A market is defined as the set of actual and potential buyers of a product.
u.
Marketers must manage markets to create the desired exchange
relationships.
v.
Sellers search for buyers, identify their needs, design good marketing
offers, set prices for them, promote them, and store and deliver them.
w.
Marketing generally involves serving a market of final buyers in the face
of competitors.
x.
A company’s success depends on how well their entire system meets the
needs of the consumer; the system includes their suppliers, their products
and services, and any marketing intermediaries they use.
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Use Figure 1-2 here.
Use Discussing the Issues 2 here.
4.
Designing a Customer-Driven Marketing Strategy
a.
Marketing management is defined as the art and science of choosing target
markets and building profitable relationships with them.
Use Key Term Marketing Management here.
Selecting Customers to Serve
b.
The company must decide whom it will serve by dividing the market into
segments of customers (market segmentation) and selecting which
segments to serve (target marketing).
c.
Some marketers need to reduce demand for their product; this is defined as
demarketing.
Use Key Term Demarketing here.
Use Discussing the Issues 3 here.
Choosing a Value Proposition
d.
A company must decide how it will differentiate and position itself.
e.
A company’s value proposition is the set of benefits or values it promises
to deliver; these value propositions differentiate one brand from another.
f.
Companies must design value propositions that give them advantage in the
marketplace.
Marketing Management Orientations
g.
Companies must decide on their philosophy to guide their marketing
strategy.
h.
There are five alternative philosophies.
i.
The production concept says that consumers will favor products that are
available and affordable.
j.
The product concept states that consumers favor products that are highest
in quality, performance, and innovative features.
k.
Companies that utilize the selling concept undertake large-scale selling
and promotional effort to get consumers to buy.
l.
The marketing concept says that the company needs to understand the
needs and wants of the target markets and deliver satisfaction better than
their competitors do.
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m.
n.
The societal marketing concept is a relatively new concept that asks
companies to not overlook consumer long-run welfare while meeting their
short-run wants.
Figure 1-3 illustrates the differences between the selling concept and the
market concept.
Use Key Terms Production Concept, Product Concept, Selling Concept, Marketing
Concept, and Societal Marketing Concept here.
Use Figures 1-3 and 1-4 here.
Use Chapter Objective 3 here.
Use Discussing the Issues 4 here.
5.
Preparing a Marketing Plan and Program
a.
The marketing strategy outlines which customers the company will serve.
b.
Guided by that strategy, marketing programs are developed to deliver
value to the target customers.
c.
The marketing mix is the set of tools the company uses to implement the
strategy.
d.
The marketing tools are classified into four categories, called the four Ps
of marketing: product, price, place, and promotion.
Use Linking the Concepts here.
6.
Building Customer Relationships
a.
The previous discussion covered the first three steps in the marketing
process—understanding the marketplace and customer needs; designing a
customer-driven marketing strategy; and constructing marketing
programs.
b.
The fourth and most important step is building profitable customer
relationships.
Customer Relationship Management
c.
Customer Relationship Management (CRM) is the overall process of
building and maintaining profitable customer relationships by delivering
superior customer value and satisfaction.
d.
A customer evaluates the difference between all the benefits and all the
costs of a marketing offer; this is the customer perceived value.
e.
The perceived values and costs may not be accurate or objective.
f.
Customer satisfaction depends on the products’ perceived performance
relative to a buyer’s expectations.
g.
The key is to match customer expectations with company performance.
h.
The marketer must balance customer satisfaction level with profitability.
i.
There are levels of customer relationships.
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j.
k.
l.
m.
n.
o.
The basic relationship level is at one extreme and is exhibited in markets
with many low-margin customers.
Full partnerships are developed in markets that have few customers and
high margins.
Many companies today develop customer loyalty and retention programs.
One way of doing that is by offering financial benefits, such as frequency
marketing programs.
Companies can also add social benefits, such as club marketing programs.
Yet another approach is structural ties such as McKesson’s online supply
management system that helps retail pharmacy customers.
Use Key Terms Customer Relationship Management, Customer Satisfaction, and
Customer Perceived Value here.
Use Marketing at Work 1-1 here.
Use Application Questions 2 here.
The Changing Nature of Customer Relationships
p.
Today’s companies are building lasting relationships that are direct. They
are targeting fewer customers that are more profitable.
q.
In addition to delivering value to customers, companies are assessing the
value they get from customers.
r.
Companies are also trying to use CRM to build profitable, long-term
relationships with customers that will enable them to retain the customers
they wish to serve.
s.
Direct marketing is growing; some companies sell only through direct
channels, such as Dell and Expedia.
Partner Relationship Marketing
t.
Companies work with many partners and engage in partner relationship
management.
u.
Inside the company, every functional area could interact with customers;
no longer is the marketing department solely responsible for
understanding customers. Many companies are forming cross-functional
selling teams, which can consist of sales and marketing people, operations
specialists, financial analysts, and more.
v.
Outside the firm, the company may deal with distributors, retailers, and
others. The supply chain stretches from raw materials to components to
final products that are carried to final buyers.
w.
Connections must also be made with the members of the supply chain.
Use Key Term Partnership Relationship Management here.
Use Discussing the Issues 5 here.
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7.
Capturing Value from Customers
a.
In the last step in the marketing process, the company captures value from
the customer.
b.
Satisfied customers stay loyal and buy more, which means greater longrun returns for the company.
Creating Customer Loyalty and Retention
c.
Completely satisfied customers are the most loyal, and even a slight drop
in satisfaction can make a big difference in loyalty.
d.
Customer lifetime value is an important concept that says that if you lose a
customer, you don’t just lose one sale. You potentially lose thousands or
even hundreds of thousands that a customer could spend over their
lifetime.
e.
As a marketer, you need to help customers form an emotional bond with
your brand, rather than just making a rational choice.
Use Key Term Customer Lifetime Value here.
Use Chapter Objective 4 here.
Use Application Questions 3 here.
Let’s Discuss This
Have the students discuss brands with which they have an emotional bond. For some
students, this could be Abercrombie & Fitch. For others it could be a brand of beer. At a
major University, it could be the University itself. Then ask them to discuss how they
would react if another brand made them an interesting offer: would they be willing to
switch brands under that circumstance? Why or why not?
Growing Share of Customer
f.
Customer Relationship Management helps grow share of customer—the
share the company gets of that customer’s total spending on the product or
service type.
g.
Companies can grow share of customer by offering greater variety to their
current customers.
h.
Cross-selling and up-selling are two other ways of increasing customer
expenditures with the company.
Use Key Term Share of Customer here.
Building Customer Equity
i.
Customer equity is the total combined lifetime values of all the company’s
customers.
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j.
k.
l.
m.
Customer equity forecasts the future, whereas sales and market share tell
what happened in the past.
Companies can classify their customers as to whether they are profitable
or not, and then manage the relationships accordingly.
Figure 1-5 shows one model of customer classification by profitability and
projected loyalty.
A key point is that different types of customers require different
management strategies to maintain and increase profitability.
Use Key Term Customer Equity here.
Use Figure 1-5 here.
Use Marketing at Work 1-2 here.
Use Linking the Concepts here.
8.
The New Marketing Landscape
a.
In this section, five trends are identified and discussed that show how
rapidly the business world is changing.
The New Digital Age
b.
Combined technology and information explosions have changed the way
we relate to one another across the globe.
c.
Technology has enabled companies to learn more about customers, to get
their products out to a much larger, global audience, and to tailor their
products to individual customer needs.
d.
There are also many new ways to reach customers, including CD-ROMs,
interactive TV, and other new technologies that let companies focus in on
individual customer needs.
e.
The Internet is expected to reach almost 1.4 billion users by 2007.
f.
Business-to-business e-commerce was projected to reach $4.3 trillion this
year compared with only $107 billion in consumer purchases.
Use Key Term Internet here.
Use Discussing the Issues 6 here.
Use Under the Hood/Focus on Technology here.
Rapid Globalization
g.
Companies large and small are globalizing, if only because they are facing
global competition themselves.
h.
This has resulted in a much more complex marketing environment for all
companies.
i.
Companies are also buying more of their supplies outside their home
country.
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j.
Many companies form strategic alliances and joint ventures with foreign
companies to build global networks.
The Call for More Ethics and Social Responsibility
k.
Companies are being asked today to look at what their impact is on their
environment.
l.
Those companies that look to the future are accepting their responsibilities
in the areas of social and environmental impact.
m.
Many companies, such as Ben & Jerry’s, practice “caring capitalism” by
being civic-minded.
Use Focus on Ethics here.
The Growth of Not-for-Profit Marketing
n.
Colleges, hospitals, museums, and other not-for-profit companies and
associations are using the same marketing strategies as for-profit
companies.
o.
Government agencies are also utilizing marketing for both recruitment and
social marketing campaigns.
9.
So, What Is Marketing? Pull It All Together
a.
Marketing is the process of building profitable customer relationships by
creating value for customers and capturing value in return.
b.
The first four steps are focused on creating value for the customer, while
the last step returns value from the customer to the company.
c.
After the marketing strategy is defined, the marketing program is
developed, which consists of the four Ps.
d.
When building value for customers, companies must utilize marketing
technology, go global in both selling and sourcing, and act in an ethical
and socially responsible way.
e.
Figure 1.6 shows a model of the marketing process, and the remainder of
the text goes into detail on all of the concepts covered in this first chapter.
Use Chapter Objective 5 here.
Use Table 1-1 here.
Use Figure 1-6 here.
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Travel Log
Discussing the Issues
1. Review the definitions of marketing discussed at the beginning of the chapter. Which
definition most closely aligns with your own definition of marketing before reading
the chapter? Why?
Student responses will vary based on personal experiences and opinions. The text
explains that many people think of marketing only as selling and advertising. But, today
marketing must be understood not in the old sense of making a sale—“telling and
selling”—but in the new sense of satisfying customer needs. Broadly defined, marketing
is a social and managerial process by which individuals and organizations obtain what
they need and want through creating and exchanging value with others. In a narrower
business context, marketing involves building profitable, value-laden exchange
relationships with customers. Hence, the text defines marketing as the process by which
companies create value for customers and build strong customer relationships in order to
capture value from customers in return.
2. Why is understanding customer wants so critical for marketers? How are the
concepts of value and satisfaction related to each other? Explain the difference
between transactions and relationships.
Human needs are states of felt deprivation. Given their wants and resources, people
demand products with benefits that add up to the most value and satisfaction. Perceived
value drives satisfaction. If the value of a product or service does not meet or exceed
customer expectations, the customer is likely to be dissatisfied. A transaction is a one
time event, while many transactions between the same customer and company create a
relationship.
3. Why is target market selection important for a customer-driven marketing strategy?
How might target market selection impact customer satisfaction?
Selecting a target market allows marketers to develop offerings that satisfy specific
consumer’s wants. Catering to specific wants increases the chance that the offering with
create customer satisfaction.
4. Compare and contrast the Marketing Concept and the Societal Marketing Concept.
Do you agree that marketers have an obligation to consider society’s long-run wellbeing when creating marketing offers?
The marketing concept holds that achieving organizational goals depends on knowing the
needs and wants of target markets and delivering the desired satisfactions better than
competitors do. Under the marketing concept, customer focus and value are the paths to
sales and profits. The marketing concept is a customer-centered “sense and respond”
philosophy. It views marketing not as “hunting,” but as “gardening.” The job is not to
find the right customers for your product, but to find the right products for your
customers. The societal marketing concept questions whether the pure marketing
concept overlooks possible conflicts between consumer short-run wants and consumer
long-run welfare. The societal marketing concept holds that marketing strategy should
deliver value to customers in a way that maintains or improves the well-being of both
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consumers and society. According to the societal marketing concept, companies should
balance three considerations in setting their marketing strategies: company profits,
consumer wants, and society’s interests. Student responses to the second part of this
question will vary.
5. How does a company benefit from building relationships with its customers and
partners? What are some ways in which a company can build more profitable
customer relationships?
Building relationships often creates more loyal customers who interact more with the
company, spend more on the company’s products and services, and encourage friends
and family to consider doing the same. Relationships therefore create more customer
equity. Companies can build relationships by tracking interactions with customers,
listening to customer concerns and interests, improving customer service, and developing
marketing offers that meet customer needs.
6. What recent changes in the marketing landscape do you think have had the most
significant impact on creating customer value and building marketing relationships?
Student responses will vary. Changes in the marketing landscape include technological
advancements, rapid globalization, the call for more ethics and social responsibility, and
the growth of not-for-profit marketing.
Application Questions
1. Consumers usually choose from a tremendous variety of products and services to
satisfy a given need or want. Consider your need for nourishment. How does that
need translate into different wants? What marketing offers are available to satisfy
your needs that also appeal to your wants? How might other consumers in different
market segments meet the same need for nourishment?
Student responses will vary. The need for nourishment creates different wants at
different times. Those wants are influenced by many things, including culture, income,
and personal preferences. Some might choose to satisfy hunger by eating at McDonalds;
others might cook a meal at home. Consumers with more financial resources may choose
to eat out more often; those with less time may choose to rely on ready to eat meals from
the grocery store.
2. Companies measuring customer lifetime value determine the potential profit from the
stream of purchases a customer makes throughout a lifetime of patronage. When
banks began tracking the profitability of individual customers, some found that a
subset of their customers actually cost them money, rather than generating profits.
Should banks “fire” their unprofitable customers? What are the consequences of such
an action? How might considering the lifetime value of a customer impact a bank’s
perspective on these customers? How might eliminating unprofitable customers
affect a bank’s customer equity both positively and negatively?
All companies must decide which customers they can profitably serve. Banks, too, should
consider which consumers are profitable, now and in the future. By considering
customer lifetime value, banks make a more accurate assessment of which customers
should be fired, if any. Some customers who are not currently profitable, like students,
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may be profitable over a lifetime of patronage as they accrue more wealth and require
more financial assistance (loans for cars, homes, and education).
3. Think of a company in your town with which you have a relationship. Review figure
1.5. Which relationship group do you fall into? What value do you get from the
relationship and how does that company capture value from you in return?
Student responses will vary.
Under the Hood
Building customer relationships that lead to customer satisfaction is the key to good
marketing. For many companies, customer relationship management depends not only
on the employees who interact with customers but also on software. “CRM” software
tracks each customer’s interaction with the company across a variety of lines of business
in multiple locations. By combining bits of information from all customer “touchpoints,”
companies try to maximize the value delivered by the next customer interaction. In
addition, by using CRM software, marketers can make educated guesses about a
customer’s lifetime value and the company’s customer equity.
1. Visit www.crm2day.com to learn more about how marketers rely on software to build
relationships with marketers. What are some of the potential downsides to managing
relationships using databases?
Good relationship management using a database requires accurate data entry and
cooperation from employees across many touchpoints. Outdated or inaccurate
information may lead to poor customer service.
2. Can software really help marketers manage customer relationships?
Student responses will vary. For many companies, software is key in helping to manage
customer relationships. By storing and analyzing information, software helps track
consumer interactions and preferences.
3. How might marketers use CRM software to help grow “share of customer”?
Gathering information on individual customers, as well as groups of customers, across
multiple touchpoints allows marketers to paint a clear picture of a consumer’s overall
buying behavior. Much like Amazon.com creates individual stores for each customer,
companies can create new marketing offers that meet current customers’ additional
needs.
Focus on Ethics
The marketing concept focuses on satisfying customer’s needs and wants, but what if
doing so places the consumer at risk? Although marketed and sold legally, the health
impacts of tobacco and alcohol are well known. In addition, the impact of poor nutrition
has recently come into the national spotlight. More specifically, the Food and Drug
Administration (FDA) has issued warnings about the level of trans-fatty acids present in
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some food products. In response, companies including McDonalds, Kraft Foods, and
Frito-lay, have recently been re-evaluating their products and making changes. For
example, McDonalds now offers either french fries or a bag of sliced fruit with each
Happy Meal.
1. What ethical responsibilities do companies producing products that have potentially
adverse health effects have to consumers?
Student responses will vary.
2. Can a company truly consider the long-term welfare of the consumer and of society
while also maximizing profits?
Student responses will vary. However, many companies have managed to balance longterm welfare with growing profits. Wild Planet, Honest Tea, and many others focus on
the double bottom line with profitable results.
3. Break into small groups. Divide into teams within each group and debate whether or
not marketing potentially unhealthy products is ethical.
After the students debate in small groups, the debate could be continued using the entire
class. Have the students switch sides of the issue for the large class debate. Also have
students debate as different stakeholders (e.g., consumers, government, shareholders,
company management, etc.).
4. What ethical concerns exist behind a McDonald’s order taker asking all customers if
they want to supersize their meal? Is this giving consumers what they want, or is this
inducing many overweight people to eat more than necessary? Debate the issue.
This question is likely to raise some heated debate regarding the purpose of the
organization. At its core, the question gets at the idea of doing what the customer wants
versus doing what is best for the customer. This question highlights that sometimes these
may be different things.
GREAT IDEAS
Barriers to Effective Learning
1.
2.
For most students, this will be their first introduction to marketing and all its
ramifications. To most of them, marketing is nothing more than selling and/or
advertising, and this gets reinforced daily when they see “marketing” job ads that
are really sales positions. It helps to get students talking about what marketing is,
and to give examples of what they think is really good marketing. Try to bring in
contemporary examples that the students can relate to.
Building relationships can sometimes be easy to understand in a business-tobusiness transaction, but it can be much more difficult to comprehend in
consumer businesses. Use examples such as Amazon.com that do a wonderful job
of developing one-on-one relationships with millions of customers through their
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3.
4.
5.
6.
tracking of customer purchases and analysis of these purchases to recommend
additional items. Ask students to discuss how they feel about the companies they
buy from. Have any developed relationships with them that have made them loyal
to the brand or store?
Demarketing is always a problem for students. Most of them have not yet
encountered anything like it. The light bulb seems to go on, though, when you
talk about National Parks and how crowded they get, and efforts to get people to
go see them during off-peak travel times. Again, having students come up with
their own examples will increase the level of understanding.
Societal marketing is also something that can be a little unclear to students. Why
should fast food chains, for instance, be responsible for the nation’s obesity (just
one very topical discussion point)? Understanding how one should balance the
need for profits with what some might consider to be “soft” issues can be difficult
at times. And that can be made even more difficult among the politically-astute
students, as they can easily lead the class into a left versus right discussion on
individual versus corporate versus governmental responsibility. Try to not let that
happen, instead focusing on how companies can actually increase their revenue
and profits by showing that they care about their customers and their
communities. Newman’s Own is a brand that could be discussed, as most profits
are donated to charities, and they have moved strongly into ensuring a sustainable
environment.
Traditional-age undergraduates have spent their entire lives with technology, and
so some of them can actually snicker when the discussion turns to how
technology has changed business in general and marketing more specifically. A
discussion of the difficulties of connecting to consumers without the Internet is
warranted. How would the students approach a one-on-one relationship with
millions of customers if they didn’t have email or the Internet or blast faxes?
At this stage, students are very apprehensive about the course. When they walked
into class, they thought they might learn about selling and advertising, and now
they’ve discovered that there is much more to marketing than just those two
subjects. Talking about how much fun it is to be the center of the company, and
knowing more about customers than any other functional area in the company,
can sometimes ease their minds and make them look forward to learning more.
Emphasizing that marketing combines both the analytical and the creative can
also ease some tension. The accounting and finance majors will find that there is
something in it to suit their more analytical frame of reference, and the artists and
designers who hope to become fashion mavens can also rest assured that although
they will need to understand the more logical areas of the subject, their intuition
can still reign supreme.
Student Projects
1.
2.
Clip or photocopy three current print advertisements and identify the marketing
orientation that, in your opinion, the companies appear to be following.
Develop a list—try for 10 each—of your needs and wants. How are they
different? What appeals on the part of companies seem to get your interest and
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3.
4.
5.
6.
7.
8.
attention? What do you think would be the most successful way for a company to
appeal to you if you were considering the purchase of (a) a computer; (b) a car;
(c) a college education; and (d) a soft drink?
Find an article from a contemporary business publication that describes a
company’s commitment to relationship marketing or connecting with consumers.
Abstract the article and share your findings with the class.
Think of a company or brand that you buy from over and over. What might your
customer lifetime value be, assuming they continue to delight you?
The American Cancer Society® is a nonprofit organization. Its Web site is at
www.cancer.org. How might they market their services? Who would their target
market be? How could they build lasting relationships with their “customers”?
What segment of potential buyers does Wal-Mart target? What about Nordstrom?
Many years ago, American Airlines created a new business “must have” by
offering frequent flier miles. All the airlines followed, and hotels weren’t far
behind. Most of these programs only offer a tracking system and upgrades to their
best customers, but Wyndham hotels are different. Go to the Wyndham Web site
(www.wyndham.com) and find the Wyndham ByRequest™ tab. Fill out the form
for membership, and then discuss how Wyndham is creating a relationship with
customers far and above what the typical hotel does in their frequency marketing
program. Discuss how this could create increased customer equity.
Identify the major variables of the marketing mix. Discuss how they might differ
between a for-profit business and a non-profit organization.
Interactive Assignments
Small Group Assignment
1. Form students into groups of three to five. Each group should read the opening
vignette to the chapter on NASCAR. Each group should answer the following
questions:
a. Why would NASCAR want to change its image to that of a familyfriendly organization?
b. How has this image change helped the organization in its marketing
efforts?
c. Why would fans be so loyal, as described in the vignette, to the point of
always buying sponsor’s brands?
d. How important is the use of technology to NASCAR’s strategy?
Each group should then share its findings with the class.
Individual Assignment
1. Read the opening vignette to the chapter. Think about answers to the following
questions:
a. How does NASCAR develop and maintain relationships with its customers, when over 200,000 could attend a single event?
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b. How has NASCAR proven that it is a family-friendly organization?
c. How has NASCAR utilized technology to extend its relationships?
Share your findings with the class.
Think-Pair-Share
Consider the following questions, formulate an answer, pair with the student on your
right, share your thoughts with one another, and respond to the questions from the
instructor. These questions could also be given as out-of-class assignments.
1. How is marketing different than selling or advertising?
2. How many companies or brands do you feel you have a relationship with?
Describe them.
3. Think about your “need” when you were exploring which college to attend. What
was the marketing “offer” at your school that attracted you?
4. What type of company or organization might be required to practice
“demarketing,” other than the examples in the text?
5. How is your college positioned in the marketplace?
Classroom Exercise/Homework Assignment
If the classroom has Internet access, this is a good classroom exercise. Otherwise, it can
be assigned as homework.
Sean “P. Diddy” Combs knows how to tap into a cultural phenomenon. Already a star in
the world of Hip Hop, in 1998 he launched a line of sports clothing for men, women and
children. He sells his clothes in virtually all markets—from stores located in inner cities
to Bloomingdale’s. The Web site for Sean John clothing combines fashion with Hip Hop
music, and appeals to those who enjoy urban culture with his tag line, “It’s not just a
label, it’s a lifestyle.” Visit the Web site at www.seanjohn.com for more information.
1. What is Sean John’s marketing offer, as exhibited on the Web site?
Sean John offers a bit of urban culture on the Internet. Featuring music from P. Diddy
himself, as well as the stars of his BadBoy Entertainment label, the Web site evokes the
inner city culture the clothing line represents. Thus, Sean John’s marketing offer contains
both the product itself as well as the experience of being a “bad boy.” There is also
information about the company on the Web site, including a discussion of how vendors
are selected and the company’s infrastructure. Finally, there is a store locator link, and if
you can’t find anything close by, Sean John very helpfully sends you to the
www.macys.com site where you can buy online.
So, the marketing offer includes the clothes themselves, popular music, and information
about the company as well as stars of the music world.
2. What marketing management orientation does Sean John seem to be following?
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Sean John appears to be utilizing the marketing concept. They have clearly tapped into a
generational philosophy that wanted recognition in the broader culture.
There is one brief area where the societal marketing concept might come in to play, and
this should not be ignored. On the Web site the company notes that their vendors are
audited for health and safety standards as well as the quality of their work. The company
says that it will not work with vendors that exploit their employees. Although the
language of the hip hop music may argue against the societal marketing concept, some
students may claim that the unwillingness to deal with vendors who abuse employees in
any way shows that the company cares about society as a whole.
3. Suggest ways that Sean John might be able to build relationships with their final
customers, because retail outlets are responsible for actually selling the clothes to
those who will wear them.
Sean John easily relates to their final customers through the design of the Web site and
the music that plays on it. However, it doesn’t appear that they currently try to build
relationships with their customers. There is virtually no information on how to contact
the company, although there is a way to send in comments, and it requests the
commenter’s email ID for response.
Sean John does have the opportunity to develop relationships with their customers,
however. Suggestions from students could include allowing a greater level of contact
with those who visit the Web site, allowing them, for instance, to record their likes and
dislikes as they are viewing the clothing line. Information could also be collected
regarding those who use the store locator link, and direct links could be made to address
and phone number information of the stores, or to their Web sites. There could be a guest
book for visitors to sign, and those who do sign in could be given the option of receiving
emails when new collections are being launched. Suggestions also could include giving
special discounts to those who visit the Web site, to see how many visitors are actually
converted into buyers.
Classroom Management Strategies
The first chapter of this textbook sets the stage for the rest of the content. It outlines the
major topics and principles that will be discussed in each of the following chapters, and
gives the student a good grounding in what to expect in their journey into the world of
marketing.
First classes are always difficult, both for the instructor and for the student. Therefore,
using examples that students can relate to easily is always a good idea when starting out.
The marketing application, Sean John clothing, attempts to do that, and can be scheduled
for the end of the class, or given as an assignment for the next scheduled meeting.
In reviewing the material in class, a good way to break it down follows. This assumes a
typical one-hour structure; if the class is longer, you can work through the Marketing
Application in class. If shorter, you can either break the chapter over two sessions, or
shorten each topic’s allotted discussion time.
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1.
2.
3.
4.
5.
6.
Ten minutes should be spent on discussing what marketing really is. Many
students will come into class thinking they are going to be learning all about
advertising, or all about selling. Ask students to talk about what they think
marketing is, and to use examples of what they’ve encountered in their own lives.
Ten minutes can also be spent on the second major topic of the chapter,
understanding the marketplace and consumer needs. Discussing the differences of
needs, wants, and demands, and how they relate to marketing, can greatly enhance
the students’ understanding of the basis of marketing. Also included in this
section are the notions of marketing offers, satisfaction, and relationships. You
can discuss the various ways companies develop relationships with their
customers. Using Amazon.com, the company discussed in the opening pages of
the chapter, can really help the students understand that a company with millions
of customers can still easily develop relationships with each and every one of
them.
Another 10 minutes can be spent on designing customer-driven marketing
strategies. Many students will still not understand how needs, wants, and demands
can drive companies’ product development, but this section of the chapter will
help them see it a little more clearly.
Preparing a marketing plan and program can be covered in 5 minutes. This section
shows how everything they learn in marketing will be pulled together, but it is too
soon in the semester to be spending a lot of time on the topic.
Customer relationships are the heart of the chapter and the entire text. Spend 15
minutes discussing this topic, and use examples that the students will appreciate.
Discussing the difference in the relationships they have with their hairdresser or
barber and that of www.bn.com or another one of the Internet merchants can drive
home the importance of holding on to good customers. Students will also be well
aware of frequency marketing programs, and examples of those will also be
beneficial.
The final 10 minutes can be spent discussing the future of marketing and the
development of customer relationships. The majority of students will never have
known an era without the Internet. Asking them how they would have developed
relationships with their customers without the assistance of technology is a good
way to get a discussion started on how marketing programs are developed. Then
you can talk about how the advent of email and the Internet has opened the entire
world for even a small retailer, as well as raised some ethical issues, such as the
marketing of the American culture to the entire world, regardless of their
societies’ mores and culture.
If time permits, revisit the question of “what is marketing?” The students should now
have a greater appreciation of the science behind marketing, as well as the creativity
necessary to develop successful marketing programs.
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