Download CHAPTER 1 An Overview of Marketing

CHAPTER 1: AN OVERVIEW OF MARKETING
LEARNING OBJECTIVES
1
Define the term "marketing"
Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to
customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
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.
3
Discuss the differences between sales and market orientations
Selling Orientation
Organization's focus is inward on the firm's needs
Business is defined by its goods and services offered
Product is directed to everybody
Primary goal is profit through maximum sales volume
Goals are achieved through intensive promotion
4
Marketing Orientation
Focus is outward on the wants and preferences of
customers
Business is defined by benefits sought by customers
Product is directed to specific groups (target markets)
Primary goal is profit through customer satisfaction
Goals are achieved through coordinated marketing
Describe several reasons for studying marketing
Marketing provides a delivery system for a standard of living, which is a monumental task in a society such as the
United States, where a typical family consumes 2.5 tons of food per year. No matter what an individual's area of
concentration in business, the terminology and fundamentals of marketing are important for communicating with
others in the firm.
Between one-fourth and one-third of the entire civilian work force in the United States performs marketing activities.
Marketing offers career opportunities in areas such as professional selling, marketing research, advertising, retail buying,
distribution management, product management, product development, and wholesaling.
As a consumer of goods and services, everyone participates in the marketing process every day. By understanding
marketing, one can become a more sophisticated consumer.
Chapter 1  An Overview of Marketing
1
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.
List and briefly describe four marketing management philosophies are:
4.
List five ways in which a marketing orientation is different from a sales orientation.
5.
Name four reasons for studying marketing.
2
Chapter 1  An Overview of Marketing
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 Marketing is an organizational function and a set of processes for creating, communicating,
and delivering value to customers and for managing customer relationships in ways that benefit the
organization and its stakeholders.
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.
2
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.
Chapter 1  An Overview of Marketing
3
C.
D.
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:
Focusing on customer wants and needs so the organization can differentiate its product(s)
from competitors' offerings
b.
Integrating all the organization's activities, including production, to satisfy these wants and
needs
c.
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 coordinating all business functions to deliver customer value.
Societal Marketing Orientation
1.
2.
3
a.
The societal marketing orientation states that an organization exists not only to satisfy customer
wants and needs and to meet organizational but also to preserve or enhance individual's and
society's long-term best interests.
This orientation extends the marketing concept to serve three bodies
organization itself, and society as a whole
rather than two: customers, the
Discuss the differences between sales and market orientations
III. Differences Between Sales and Market Orientations
A.
B.
4
The Organization's Focus
1.
Sales-oriented firms tend to be inward-looking. They focus on satisfying their own needs rather
than those of customers.
2.
Market-oriented firms derive their competitive advantage from an external focus. Departments in
these firms coordinate their activities and focus on satisfying customers.
Customer Value
1.
Customer value is the ratio of benefits to the sacrifice necessary to obtain those benefits.
2.
Creating customer value is a core business strategy of many successful firms.
Chapter 1  An Overview of Marketing
3.
Marketers interested in customer value
a.
b.
c.
d.
e.
C.
Offer products that perform
Give consumers more than they expect
Avoid unrealistic pricing
Give the buyer facts
Offer organization-wide commitment in service and after-sales support
Customer Satisfaction
Customer satisfaction is the feeling that a product has met or exceeded the customer's expectations. The
organizational culture focuses on delighting customers rather than on selling products.
D.
Building Relationships
Relationship marketing involves forging long-term partnerships with customers and contributing to
their success.
Most successful relationship marketing strategies involve the following features:
1.
2.
3.
4.
E.
Customer-oriented personnel: employees’ attitudes and actions are geared toward the customers’
best interests.
Training: employees receive specialized training in building relationships with customers.
Empowerment: employees are “empowered” – or “enabled” – to make key decisions when necessary
in order to fix problems or meet customer needs.
Teamwork: entails collaborative efforts of people to accomplish common objectives.
The Firm's Business
1.
A sales-oriented firm defines its business in terms of the goods and services it offers, like an
encyclopedia publisher defining itself simply as a book publisher/seller.
2.
A market-oriented firm defines its business based on the benefits customers seek.
3.
Why is this customer benefit definition so important?
a.
b.
c.
4.
F.
It ensures the firm keeps focusing on customers.
It encourages innovation and creativity .
It stimulates an awareness of changes in customer desires and preferences.
Focusing on customer wants does not mean that customers will always receive the specific goods and
services they want.
Those to Whom the Product Is Directed
1.
A sales-oriented organization targets its products at "everybody" or "the average customer."
However, few "average" customers exist.
2.
The market-oriented firm
a.
b.
c.
Recognizes that different customer groups have different wants
Targets specific subgroups of customers
Designs special products and marketing programs for these groups
Chapter 1  An Overview of Marketing
5
G.
H.
4
The Firm's Primary Goal
1.
The goal of a sales-oriented firm is profitability through sales volume. The focus is on making the
sale rather than developing a long-term relationship with a customer.
2.
The ultimate goal of most market-oriented organizations is to make a profit from satisfying
customers. Superior customer service enables a firm to have large amounts of repeat business,
customer loyalty, and higher profit margins.
Tools the Organization Uses to Achieve Its Goals
1.
Sales-oriented firms seek to generate sales volume through intensive promotional activities, mainly
personal selling and advertising.
2.
Market-oriented organizations recognize that promotion is only one of the four basic tools that
comprise the marketing mix. The tools are the marketing mix elements (the four P's): product, place
(distribution), promotion, and price.
3.
The important distinction is that market-oriented firms recognize that each of the four components
of the marketing mix is of equal importance: sales-oriented organizations view promotion as the
primary means of achieving their goals.
Describe several reasons for studying marketing
IV. Why Study Marketing?
A.
Marketing Plays an Important Role in Society
Marketing provides a delivery system for a complex standard of living. The number of transactions
needed everyday in order to feed, clothe, and shelter a population the size of the one in the United States
is enormous and requires a sophisticated exchange mechanism.
B.
Marketing Is Important to Businesses
The fundamental objectives of most businesses are survival, profits, and growth. Marketing contributes
directly to achieving these objectives.
Marketing provides the following vital business activities:
1.
2.
3.
4.
5.
C.
6
Assessing the wants and satisfactions of present and potential customers
Designing and managing product offerings
Determining prices and pricing policies
Developing distribution strategies
Communicating with present and potential customers
Marketing Offers Outstanding Career Opportunities
1.
Between one-fourth and one-third of the entire civilian work force in the United States performs
marketing activities.
2.
Marketing offers career opportunities in areas such as professional selling, marketing research,
advertising, retail buying, distribution management, product management, product development,
Chapter 1  An Overview of Marketing
and wholesaling.
D.
Marketing Affects Your Life Every Day
1.
As consumers of goods and services, we participate in the marketing process every day.
2.
Almost 50 cents of every dollar consumers spend goes to pay marketing costs such as market research,
product research and development, packaging, transportation, storage, advertising, and sales-force.
VOCABULARY PRACTICE
Fill in each blank with the appropriate term or phrase from the alphabetized list of chapter key terms. These
definitions do not necessarily follow the same order as the textbook. Each term is used only once.
customer satisfaction
customer value
empowerment
exchange
marketing
marketing concept
1.
2.
3.
4.
market orientation
production orientation
relationship marketing
sales orientation
societal marketing orientation
teamwork
A business philosophy that assumes that people will buy more
goods and services if aggressive sales techniques are used and
that high sales result in high profits.
_____________________________
Delegation of authority to solve customers’ problems quickly –
usually by the first person that the customer notified regarding a
problem.
_____________________________
A business philosophy that focuses on customer needs and wants
rather than on aggressive sales techniques.
An organizational function and a set of processes for creating,
communicating, and delivering value to customers and for
managing customer relationships in ways that benefit the
organization and its stakeholders.
_____________________________
_____________________________
5.
Collaborative efforts of people to accomplish common
objectives.
6.
The idea that people give up something to receive something
they would rather have.
_____________________________
A business philosophy that focuses on the internal capabilities of
the firm rather than on the desires and needs of the marketplace.
_____________________________
A strategy that entails forging long-term partnerships with
customers.
_____________________________
7.
8.
9.
The ratio of benefits to the sacrifice necessary to obtain those
benefits.
10. The idea that an organization exists in part to preserve and
Chapter 1  An Overview of Marketing
_____________________________
_____________________________
7
enhance individuals’ and society’s long-term best interests.
_____________________________
11. Customers’ evaluation of a good or service in terms of whether it
has met their needs and expectations.
_____________________________
12. The idea that the social and economic justification for an
organization’s existence is the satisfaction of customer wants and
needs while meeting organizational objectives.
_____________________________
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.
Henry Ford, founder of Ford Motor Company, once said about his cars: “You can have any color you
want as long as it’s black.” This shows a strong marketing orientation.
_____
3.
The president of Airbuzz cellular phone service likes to conduct research among current customers to
find out their likes, dislikes, and overall needs. This is an example of 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.
3
Discuss the differences between sales and marketing orientations
_____
4
5.
You are about to start manufacturing and selling ferret food. You have met with your board of directors
and you all discussed the benefits and sacrifices regarding the purchase of your food. Knowing the ratio
of benefits to sacrifices allows you to specify how much customer value you will achieve.
Describe several reasons for studying marketing
_____
6.
Marketing activities are handled primarily by marketing managers in major corporations.
_____
7.
Only about one-tenth of the nation’s workforce is engaged in marketing activities.
Check your answers to these questions before proceeding to the next section.
8
Chapter 1  An Overview of Marketing
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:
2.
Marketing is the job of everyone in a business organization, not just the marketing department.
Reason(s) to agree:
Reason(s) to disagree:
3.
Only highly creative people should consider marketing as a career.
Reason(s) to agree:
Reason(s) to disagree:
Chapter 1  An Overview of Marketing
9
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 the above could be served by a marketing consultant
_____
4.
Which of the following is NOT part of the definition of marketing?
a. Managing customer relationships.
b. Hiring people to work in the marketing department.
c. Creating value for customers.
d. An organizational function focused on delivering value to customers.
e. Creating value that benefits organizational stakeholders.
2
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 wish
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 the above would be consistent with Mr. Stone's demands.
e. None of the above would be consistent, because all reflect a sales orientation.
_____
6.
Assume that there are two major competitors in a hospital products company. Company A uses
salespeople who uses aggressive promotional tactics when they call on doctors, nurses and hospital
administrators. Company B uses very little sales effort and makes the cheapest hospital products. The
idea behind Company B’s strategy is that “the price will sell the product.” Company B’s has a:
a. customer orientation
b. sales orientation
c. production orientation
d. marketing orientation
e. discount orientation
10
Chapter 1  An Overview of Marketing
_____
7.
Rhonda works for a company that markets time-share condos on beach resorts in Mexico. Her job is to
call people and invite them for a free weekend at one of the beach resorts, where customers only have
the obligation to take a tour and listen to a pitch about investing in the time-share. Rhonda’s company
has a:
a. marketing orientation
b. production orientation
c. promotion orientation
d. sales orientation
e. customer orientation
_____
8.
Joanne noticed that her neighborhood had a large number of children who attended school until midafternoon and then came home to an empty house while their parents were still at work. She canvassed
the neighborhood and asked parents if they would be willing to provide a small investment to rent
facilities at a nearby park so that their children could participate in safe but stimulating activities under
the care of young adult volunteers. There was overwhelmingly positive response, and Joanne started the
Kids’ Klub in her neighborhood. Joanne’s efforts support a ___________ orientation.
a. production
b. sales
c. marketing
d. customer
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. Paul Newman’s line of Newman’s Own food products donates all profits to charitable organizations.
Newman’s Own has which type of orientation?
a. production
b. sales
c. promotion
d. marketing
e. societal marketing
3
Discuss the differences between sales and market orientations
_____
11. A sales orientation __________, while a marketing orientation __________.
a. achieves profit through customer satisfaction, achieves profit through maximum sales volume
b. targets specific groups of people, targets everybody
c. delivers superior customer value, focuses on selling goods and services
d. has an “outward” focus, has an “inward” focus
e. uses intensive promotion to maximize profits, uses coordinated interfunctional activities
_____
12. Which of the following is NOT a necessary feature of relationship marketing?
a. large database of customers
b. empowerment
c. employee teamwork
d. customer-oriented personnel
e. employee training
Chapter 1  An Overview of Marketing
11
_____
4
13. Jason likes his sales associate job at Whiz-Bang electronics store because he loves dealing with
customers and is allowed to solve their problems himself rather than going through an arduous hierarchy
of approvals. Customers seem to respond very well to the quick problem-solving. This is a good
example of:
a. teamwork
b. one-to-one marketing
c. a sales orientation
d. empowerment
e. training
Describe several reasons for studying marketing
_____
14. Jackie is a food science major at a state university and hopes to operate the family restaurant after
graduation. Jackie has been advised to take a marketing course in the school of business as an elective,
but she thinks this would be a waste of time. You are her friend and a marketing major. You advise that:
a. marketing is not relevant for a business like a family restaurant
b. Jackie declare a business minor because she needs a backup career
c. more nutrition and gourmet cooking classes will be most useful for Jackie
d. the main reason to take marketing is to teach Jackie how to advertise the restaurant
e. marketing knowledge will help Jackie to understand how she can satisfy consumers' needs and
wants
_____
15. Jon owns a small laboratory that makes bifocal contact lenses. His company is growing fast, and there
are many things he does not understand about his customers. Should Jon take a marketing course?
a. Yes, because marketing is synonymous with selling, and Jon will want to learn aggressive sales
techniques to continue the company's growth
b. No, because he can hire an advertising firm and will not need further knowledge of marketing
c. No, because marketing is a minor function in business
d. Yes, because the concept of marketing will help Jon to better serve and satisfy his customers
e. Yes, because marketing teaches businesses how to sell products that people don't need
Check your answers to these questions before proceeding to the next section.
SCENARIO
Please read the following marketing scenario and 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 this year, 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 2005, 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.
True/False:
_____
1.
Before this year, Freedom Mutual Insurance Company followed a marketing orientation.
_____
2.
This year, Freedom Mutual changed from a sales orientation to a marketing orientation.
12
Chapter 1  An Overview of Marketing
_____
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.
In 2005, 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 proactive orientation
_____
5.
Before 2005, 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 babies.
_____
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. empower front-line employees to solve customer problems.
e. do all the above.
Short Answer:
7.
If you were named the national marketing director for Freedom Mutual in 2005, how would you describe the
company’s new external focus in the new marketing materials? (Name at least seven ways.)
Chapter 1  An Overview of Marketing
13
ESSAY QUESTIONS
1.
Define marketing in your own words. Compare it to the textbook’s definition of the term. Have you included all the
elements that are necessary for marketing?
2.
Briefly describe each of the following: a production orientation, a sales orientation, a market orientation, and a
societal marketing orientation.
14
Chapter 1  An Overview of Marketing
3.
Name and describe five key areas in which a market orientation differs from a sales orientation.
4.
Review the appendix called “Careers in Marketing.” It immediately follows Chapter 1. Of the careers that are listed,
which one would you be most interested in pursuing if you were to pursue a marketing career? List activities from
your education (both high school and college), extracurricular activities, volunteer work, and/or paid work
experience that would quality you for this job.
Chapter 1  An Overview of Marketing
15
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:




Ford Motor Company:
Amazon.com:
T-Mobile:
Carnival Cruise Line:
http://www.ford.com
http://www.amazon.com
http://www.tmobile.com
http://www.carnival.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
production-oriented.).
5.
Describe why you believe these elements are NOT marketing oriented.
16
Chapter 1  An Overview of Marketing
ONLINE EXERCISES
On line exercises are scattered throughout the chapter. They are repeated here so that you can complete the activities.
MarineMax, p. 5
How does MarineMax use its Web site to connect with its market? What clues on the home page of its Web site indicate
that MarineMax is a customer-oriented company?
http://www.marinemax.com
Western Union, p. 8
Has Western Union rebounded from its failure to define its competitive arena as telecommunications? Evaluate the
company’s Web site to find out. Describe, if you can, the company’s value proposition, the market it serves, and whom it
seems to be competing against in the twenty-first century.
http://www.westernunion.com
Philip Morris, p. 11
How does Philip Morris handle the sensitive issues associated with marketing tobacco? What kind of information does its
Web site provide about smoking and its negative effects on health? How do you think Philip Morris is able to justify such
marketing tactics? After checking around the site, do you think that approach makes the company more or less
trustworthy?
http://www.philipmorris.com
Southwest Airlines, p. 12
Do some investigating at the Web site for Southwest Airlines. How does Southwest Airlines provide value to its
customers? How does its Web site support its ability to satisfy potential and existing customers? What evidence can you
find that is both successful and organization-wide?
http://www.iflyswa.com
Chapter 1  An Overview of Marketing
17
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 challenges of CD-ROM technology and online
content distribution?
http://britannica.com
Reflect.com, Custom Chocolate, p. 15
Create your own customized products at the Web sites of Reflect.com and Custom Chocolate. How did your experiences
compare? Do you think that one type of product is more conducive to customization and online distribution than the
other? Why?
http://www.reflect.com
http://www.custom-chocolate.com
18
Chapter 1  An Overview of Marketing
SOLUTIONS TO CHAPTER 1 QUESTIONS AND EXERCISES
PRETEST SOLUTIONS
1. Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to
customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
(text p. 6)
2.
The five conditions are:
 There must be at least two parties
 Each party must have something the other party values
 Each party must be able to communicate with the other party and deliver the goods or services ought by the
other trading party
 Each party must be free to accept or reject the other’s offer
 Each party must want to deal with the other party
(text p. 6)
3.
The production orientation, the sales orientation, the marketing orientation, and the societal marketing orientation.
(text pp. 7-9)
5.
Sales orientation:
 Inward focus based on organization’s needs
 Focus on selling goods and services
 Product targeted at everyone
 Profit is gained through maximum sales volume
 Goals achieved through intensive promotion
Marketing orientation:
 Outward focus, based on wants and preferences of customers
 Focus on satisfying customer wants and needs and delivering superior value
 Product targeted at specific groups of people
 Profit is gained through customer satisfaction
 Goals achieved through coordinated marketing and interfunctional activities
(text pp. 9-17)
6.
Four reasons for studying marketing are: (1) Marketing plays an important role in society; (2) Marketing is important
to business; (3) Marketing offers outstanding career opportunities; and (4) Marketing affects your life every day.
(text pp. 17-18)
VOCABULARY PRACTICE SOLUTIONS
Q#
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Correct Answer
sales orientation
empowerment
market orientation
marketing
teamwork
exchange
production orientation
relationship marketing
customer value
societal marketing orientation
customer satisfaction
marketing concept
Chapter 1  An Overview of Marketing
Text
Reference
7
13
8
6
14
6
7
12
11
9
12
8
19
TRUE/FALSE SOLUTIONS
Q#
1.
2.
Correct
Answer
T
F
3.
4.
T
F
5.
F
6.
7.
F
F
Text
Reference Answer Rationale
6
7
This shows a strong production orientation given the focus on the firm’s capabilities (same
color car).
8
A sales orientation is based on “pushing products” to customers, while a market orientation
7
is based on satisfying customer needs while meeting organizational objectives.
11
The customer needs to determine the benefits and the sacrifices; these perceptions cannot
be defined by the marketer.
18
Marketing is generally the responsibility of every employee in a company.
18
Between one-fourth and one-third of the workforce is engaged in marketing activities, one
of the most common types of activities in American business.
AGREE/DISAGREE SOLUTIONS
(question number / sample answers)
1.
Reason(s) to agree: In order for a firm to be marketing oriented, it must operate efficiently (production
orientation) and use aggressive selling techniques to push products through distribution channels.
Reason(s) to disagree: Maintaining a production orientation or a sales orientation can actually hurt the firm’s
marketing efforts. If too much focus is given to production or sales, the firm will lost focus on customer
satisfaction, the ultimate goal of marketing.
2.
Reason(s) to agree: An organization with a marketing orientation must ensure that all employees—and
especially those who are in direct contact with customers—understand that the firm’s goal is to satisfy customer
needs. Organizations such as Nordstrom’s, Disney, and Southwest Airlines understand this concept well, and all
employees are trained in delivering good customer service.
Reason(s) to disagree: Though this concept sounds good, it is not practical. By making marketing “everyone’s
job,” no one in the organization has accountability for marketing. While customer service can be delivered by
everyone, there are many other aspects of marketing--such as promotion, planning, and marketing research--that
require the expertise of a trained marketing department.
3.
Reason(s) to agree: Marketing professionals are known for their creativity in coming up with new product ideas,
new promotional ideas, and new ways of reaching consumers. Certainly the advertising world – an essential part
of marketing – is based on innovation and creativity.
Reason(s) to disagree: Creativity can take many forms, including problem-solving. It does not always require
innovation or coming up with new ideas.
MULTIPLE-CHOICE SOLUTIONS
Q#
1.
2.
Correct
Answer
c
b
3.
e
4.
b
5.
d
6.
c
7.
d
8.
c
20
Text
Reference Answer Rationale
6
Marketing must involve at least two parties in order for an exchange to occur.
6
Exchange involves the trade of items of value but does not necessarily involve formal
organizations, profit, or money/legal tender.
6
As long as there is an organization and a client/user/customer/consumer group willing to
engage in the exchange act, then marketing activities are relevant.
6
Hiring marketing professionals is generally part of human resource management activities,
not marketing activities.
7
The production orientation is a philosophy that focuses on the internal capabilities of the
firm rather than on the desires and needs of the of the marketplace.
7
Making the cheapest product usually depends on high-volume, low-cost production efforts;
therefore, Company B has a production orientation.
7
Only the sales orientation assumes that aggressive sales techniques will sell more products,
regardless of customer desires and needs.
8
Joanne tested her idea by conducting marketing research to uncover customer needs;
therefore, she has a marketing orientation.
Chapter 1  An Overview of Marketing
9.
d
8
10.
e
9
11.
e
10
12.
a
13
13.
14.
d
e
12
18
15.
d
17
Family Shelter is exemplifying the marketing concept by concentrating on the needs of a
specific group of customers.
Organizations with a societal marketing orientation seek the long-term best interests of
society. The donation of earnings to an environmental cause is illustrative of this
orientation.
A sales orientation has the short-term goal of increasing sales, which can be easily done
through intensive sales promotions, such as discount pricing. A marketing orientation
involves coordination among many organizational functions, such as production, research
and development, finance, and marketing.
Databases can certainly help with relationship marketing, but they are not absolutely
necessary. The other features are.
Empowerment is the delegation of authority to solve customer problems quickly.
Marketing is an important conceptual base that will help assess the needs and wants of the
various business contacts and customers. Marketing is a key component of every business.
The marketing concept stresses the commitment to satisfying customer needs and wants
with an entire range of marketing tools, not just selling or advertising.
SCENARIO SOLUTIONS
1. False.
Because the sales agents aggressively pursue business with discounts and promotions, the company
seemed to have more of a sales orientation before 2005.
2. True
The creation of the customer database, the focus on keeping existing customers satisfied, and the
feedback process are all signs of a marketing orientation.
3. False
Sales agents still pursue new business, but existing policyholders have become important new sources of
additional income. An old saying in marketing is “it’s cheaper to keep a current customer than to gain a
new one.”
4. c
By keeping customer profiles updated and sending information about coverage needed for life changes,
the company is engaging in relationship marketing.
5. a
Before 2005, the company held a sales orientation, which targets the mass market (everybody) without
taking into account different needs. Everybody would include people with high incomes, people who
already have insurance, etc.
6. d
All the choices reflect a marketing orientation.
7.
New marketing materials could describe the company’s new external customer focus by emphasizing
customer value, customer satisfaction, and building relationships. In the copy about building
relationships, you could describe the company’s customer-oriented personnel, how the personnel are
trained (indicating their high level of expertise), how employees are empowered to help customers right
away, and how the company stresses teamwork.
ESSAY QUESTION SOLUTIONS
1. The textbook’s definition of marketing is: “Marketing is an organizational function and a set of processes for
creating, communicating, and delivering value to customers and for managing customer relationships in ways that
benefit the organization and its stakeholders.”
(text p. 6 )
2.
The production orientation focuses firms on their internal production capabilities rather than the desires and needs
of the marketplace.
The sales orientation assumes that buyers resist purchasing items that are not essential, and that buyers will
purchase more of any item if aggressive selling techniques are used. Again, this orientation does not address the
needs and wants of the marketplace.
The marketing orientation is dependent on the customer's decision to purchase a product and provides increased
responsiveness to customer needs and wants.
The societal marketing orientation refines the marketing orientation by stating that the social and economic
justification for an organization's existence is the satisfaction of customer wants and needs while meeting the
organization's objectives and preserving or enhancing both the individual's and society's long-term best interests.
(text pp. 6-9)
3.
Five key areas in which a market orientation differs from a sales orientation are as follows:
 The organization’s focus: A market orientation has an “outward” focus based on the wants and preferences of
customers, while a sales orientation has an “inward” focus based on the organization’s needs.
Chapter 1  An Overview of Marketing
21

The firm’s business: A market orientation defines business as satisfying customer needs and delivering value,
while a sales orientation defines business as selling goods and services.
 Those to whom the product is directed: A market orientation targets specific groups of people who have
needs for products, while a sales orientation targets everybody in order to maximize short-term sales.
 The firm’s primary goal: A market orientation has the goal of gaining profit through customer satisfaction,
while a sales orientation has the goal of gaining profit through maximum sales volume.
 Tools the organization uses to achieve goals: A market orientation achieves goals through coordinated
marketing and interfunctional activities, while a sales orientation achieves goals through intensive promotion.
(text pp. 9-17)
4.
Your answers will vary, depending on which career you choose. As you’ve probably seen, even if you are not
ultimately interested in a marketing career, you probably have had some “marketing” experience.
(text p. 27)
APPLICATION SOLUTIONS
Not all questions require solutions. Those that do are listed below:
2.
Elements that would make a Web site seem marketing-oriented include: 1) an assumption that most Web site
viewers are seen as potential customers or the target market; 2) the Web site seems more focused on the wants,
needs and preferences of customers rather than on selling product; 3) the Web site is not targeted at everyone;
it’s targeted at specific groups of people (you may not even be part of the target market); 4) the Web sites
features promotions that appeal to the target market; and 5) the Web site uses colorful graphics that are
appealing to the target market. There may be other elements that make the Web site seem more marketingoriented.
Recall that the marketing orientation is dependent on the customer's decision to purchase a product and provides
increased responsiveness to customer needs and wants.
4.
Elements that may make the Web site appear NOT to be marketing-oriented are: 1) a focus on investors, not on
consumers; 2) a focus on the internal elements of the company, such as employment or general company
information; 3) a strong focus on the product features but not the product benefits; etc.
Recall that the production orientation focuses firms on their internal production capabilities rather than the
desires and needs of the marketplace.
The sales orientation assumes that buyers resist purchasing items that are not essential, and that buyers will
purchase more of any item if aggressive selling techniques are used. Again, this orientation does not address the
needs and wants of the marketplace.
The societal marketing orientation refines the marketing orientation by stating that the social and economic
justification for an organization's existence is the satisfaction of customer wants and needs while meeting the
organization's objectives and preserving or enhancing both the individual's and society's long-term best interests.
(text pp. 6-9)
22
Chapter 1  An Overview of Marketing