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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 orientationsMarketing 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

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

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

PRETESTAnswer 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

1I. A. B.

Define the term "marketing"What Is Marketing? 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.

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. 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.

3. Exchange may not take place even if all of these conditions exist, but these conditions are necessary for exchange to be possible.

2II.

Describe four marketing management philosophiesMarketing Management Philosophies Four competing philosophies strongly influence an organizations 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

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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. The marketing concept involves: a. 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 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. Understanding your competitive arena and competitor's strengths and weaknesses is a critical component of market orientation. Market-oriented companies are successful coordinating all business functions to deliver customer value.

2.

b.

4. 5. D.

Societal Marketing Orientation 1. 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 the organization itself, and society as a whole rather than two: customers,

2.

3A.

Discuss the differences between sales and market orientations

III. Differences Between Sales and Market Orientations 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. B. Customer Value 1. 2. Customer value is the ratio of benefits to the sacrifice necessary to obtain those benefits. Creating customer value is a core business strategy of many successful firms.

4

Chapter 1 An Overview of Marketing

3.

Marketers interested in customer value a. b. c. d. e. 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

C.

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. 2. 3. 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. A market-oriented firm defines its business based on the benefits customers seek. Why is this customer benefit definition so important?

b. c.

a. It ensures the firm keeps focusing on customers. It encourages innovation and creativity . It stimulates an awareness of changes in customer desires and preferences. 4. F. 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 organizat