Chapter 1:

Overview of Marketing
(Part 1 of 2)
 An Overview of Strategic
Marketing
Objectives
1
 To overview the role of Marketing and
environmental forces in our society.
• To identify important terms & concepts such
as the Marketing Mix and Exchange
Relationships.
•To understand the marketing management
process, the Marketing Concept and the
societal concept.
•ToIssues:
understand
EconomicMarketing
Justice ForisAll
focused on
. . . All economic
customers
life shouldand customer
be shaped relationships.
by moral principles.
 Generic Keys to
Success
#1 Risk taking #5 Target market
selection
#2 Adaptation ability #6 Personnel
Skills
#3 Specialty products #7 Resources

#4 Structured marketing #8 Timing

mix
 Self Employment By Choice
or Necessity ?
70%
60%
50% India
40% Poland
30% Brazil
Mexico
20%
Australia
10% U.S.A.
0%
Percentage of entrepreneurs by necessity - no
other job prospects.

Source: Bailey, Jeff. “Desire – More Than Need – Builds a Business.” WSJ, B4, May 21, 2002.
Major Business Functions
MARKETING
MARKETING
FINANCE
FINANCE

PRODUCTION
PRODUCTION HUMAN
HUMAN RESOURCES
RESOURCES
 Marketing Is the
Integrating Function

Human Resources Production

MARKETING
CUSTOMER

Finance Legal Collaborators

 Process of
Bringing Buyers and Sellers
Together

CONSUMERS
CONSUMERS
PRODUCERS
PRODUCERS

MARKETING
MARKETING

Marketing Is Performed by
All Organizations
 What Is Marketing ?
■ An exchange process
■ To find a need/want and fill it .…by
solving a customer’s problem
Example: An unmet need or want:
Voice Recognition – a 1998 Reality
Dirt cheap microchips for $5.00 that allow
people to talk to:
-refrigerators -doors … “open – close”
-lights ... “lights on”
-treadmills ... “go slower”
-telephones … “call mom”
 Macro Marketing
A broad view:
■ An Economic role. . . To allocate resources
among competitors so that supply equals
demand
■ A Managerial philosophy

Production Orientation Sales focus

Marketing Focus Societal Focus ?

Macro marketing
“The delivery of a standard
of living to society.”
Micro Marketing is . . .
- The process of planning and executing
the conception, pricing, promotion and
distribution of ideas, goods and services
to create exchanges that satisfy
(individual + organizational) objectives.
AMA Board (1985)
■The process of creating, distributing, promoting,
and pricing goods, services, and ideas to
facilitate satisfying exchange
relationships with customers in a dynamic
environment (Text)
 A Micro View of
Marketing

■ A “Hands on” process within each firm

Product price promotion

Place (physical distribution)

Micromarketing
“having the right goods
or services at the right Convenience store
time and the right place
in the right
 Marketing Satisfies . . .

- Needs and wants … that derive from basic

values & cultural conditioning by
developing product utilities such as . . .
Form . . . . . . . production + marketing
Time………….. storage,
Place…………. assemble, transport,
Ownership….. legal possessions
Information….image (perception)
Value…………..price & quality
. . . through the exchange process.
 A Voluntary Exchange
Process
SOMETHING OF
VALUE

SELLER
BUYER process
■Exchange
–The provision or transfer of goods, services,
or ideas in return for something of value
(money, credit, labor, goods)
 Examples of Exchange

Product Money
(good)
Politician Vote
(service performance)

Social Values Behavioral

(ideas) Support
 Marketing Builds Satisfying
Exchange Relationships
Exchange
conditions
✔ Two or more participants with
unmet needs or wants and
something of value to offer
✔ Effective communication &
confidence in the exchange sys
CONSUMERS
CONSUMERS ✔ Mutual Satisfaction of exchange
expectations to build trust
✔ An Exchange mechanism
 Marketing Exchange
Functions
are also career opportunities
■ Merchandise Buyer, ■ Environmental
research Analyst
Assortment &
■ Consumer Analyst
Quantity
■ Product Manager
■ Warehouse Storage
■ Promotion activities
■ Transportation
■ Pricing Analyst
(Valuation)
Why Study Marketing?
■ Personal Role: Job(s) Career(s)
- all organizations use marketing
- cross-functional business functions
- entrepreneurial opportunities
■ Economic Role in Society
- marketing skills are important
to meet competition (global)
■ Consumer Role in Society
- knowledge increases societies
awareness & responsibility
 Starting Salaries for College
Graduates

Source: American Demographics, December 2000, p. 27. Adapted with permission.

 An Oxymoron ....
■ Marketing by
accountants has moved
from referrals and golf
outings to hard sell
campaigns. The
undignified has become
acceptable. (WSJ, 17 Sept.1991)
 The Marketing Mix,
Creating a Competitive
Begins with Advantage
the Target
Market =
Customer
Needs
The Marketing Mix (4
P’s),
is a creative process

PRODUCT PRICE

TARGET
CUSTOMERS
DISTRIBUTION PROMOTION
 Producer Management of Consumer
(Create Value)
Marketing Mix (Wants Value)

Information gaps Information gaps

■ Social trends ■ Cultural
■ Technology ■ Social class
trends ■ Reference
■ Economic trends groups
■ Legal ■ Motivations
environment
■ Competitive
environment
be
Physical . . . or. . . Psychological

Product
Differentiation
■ Used to give products unique identities to
distinguish them from their competitors.
■ Example: Branding & pour spout

Glass
cleaners

d ex
W in
 An example

Find a need/want & fill it

 The Marketing Mix and
Religion
■ Product ■ Salvation
Values/Beliefs
■ Norms of Behavior
■ Price
Tithing/Fasting
■ Personal Selling
■ Promotion
Pilgrimages/Mail
■ Physical
■ Church/Synagogue
Distribution
When 2 people ...
Churches turn to research in saving new souls
Marketing Occurs in a Dynamic
& Uncontrollable Environment
Competitive Economic Political

Legal Regulatory Technological Sociocultural

 Environmental Trends influence
demand & type of marketing mix

Economic Economic
Prosperity Turmoil

Government Laws
to foster competition Government
Taxes

Technology creates
New Products Technology creates
Product Obsolescence
 The Wall Street Journal Sept
11th 2001

■ Essence: Marketing occurs in a dynamic &

uncontrollable environment. Tobacco Companies
have to understand external forces

}
– Competitive Interpreting the external
– Political environment (Marketing
– Legal
Management)
– Sociocultural
 Tobacco Market
W o rld P ro d u c tio n o f T o b a c c o in 1 9 9 5
5 ,5 3 5 ,0 5 9 M illio n P ie c e s

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1 ,6 0 0 ,0 0 0 1
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1 ,2 0 0 ,0 0 0
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Th e Re s t Un ite d S ta te s B ra z il Ch in a In d o n e s ia Ja p a n EU
Tobacco Industry’s
Environment
World Health
Organizations (WHO):
– Promote a global treaty to curb
cigarette smoking
– Framework Convention on
Tobacco Control (FCTC)

Antismoking activists
Government
Tobacco Industry’s
Environment
■ Different measures for
different countries
■ Different legal and political
regulations
■ Most stringent countries:
– Thailand: Banned all
cigarettes advertising
– U.S.: Ban for advertising a
billboards (1998)
 Complexity of Marketing
Multiple Domestic factors
decision
makers

Complex interactions

Global
Interaction factors
Time frame
Marketing Management
Marketing management is the process of
… “Interpreting” the external environment (the
firm’s and the prospect’s)
… To develop internal strategy and tactics (by
allocating company resources to alternative
marketing mixes directed at selected target
markets)
… To influence (control) the level of brand demand
… To achieve organizational objectives (profit)
■ Marketing Management
–The process of planning, organizing,
implementing, and controlling marketing
activities to facilitate exchanges effectively
and efficiently
–Effectiveness
■ The degree to which an exchange
helps an organization achieve its
objectives
–Efficiency
■ The process of minimizing the
resources an organization must
spend to achieve a specific level
of desired exchanges
 The Effects of
Inaccurate
Environmental Analysis

Lack of Direction

POOR WHICH
ADVERSELY
ANALYSIS
Missed AFFECTS
MAY COMPANY
LEAD Opportunities
PER-
TO FORMANCE
Legislative
Violations
 A Systems View
■ Management is a
total system of
functional subsets
such as finance,
production,marketing
etc., operating as
one unit. (Wholistic)
■ Avoid: inverting the
means with the end.
 Advantages of the
Systems Approach
■ A methodical, systematic
analysis
■ Quicker problem
recognition
■ Synergism
■ Avoids sub optimization
 A Systems View of
Strategic Marketing
Influences
Economics
Social
Personnel Culture
Political
Legal Acctg. Top Mgmt
Organization Marketing
Finance & Consumer Technology
Wants
R&D
Legal

Production

Monopoly Pure Competition