Chapter 1 - Defining Marketing for the 21st Century
I.  Chapter Overview/Objectives/Outline
A. Overview
Marketing is the organizational function charged with defining customer targets and the best way to satisfy needs and wants competitively and profitably. Since consumers and business buyers face an abundance of suppliers seeking to satisfy their every need, companies and nonprofit organizations cannot survive today by simply doing a good job. They must do an excellent job if they are to remain in the increasingly competitive global marketplace. Many studies have demonstrated that the key to profitable performance is to know and satisfy target customers with competitively superior offers. This process takes place today in an increasingly global, technical, and competitive environment.

Marketing management is the conscious effort to achieve desired exchange outcomes with target markets. The marketer’s basic skill lies in influencing the level, timing, and composition of demand for a product, service, organization, place, person, idea, or some form of information. 
There are several alternative philosophies that can guide organizations in their efforts to carry out their marketing goal(s). The production concept holds that consumers will favor products that are affordable and available, and therefore management’s major task is to improve production and distribution efficiency and bring down prices. The product concept holds that consumers favor quality products that are reasonably priced, and therefore little promotional effort is required. The selling concept holds that consumers will not buy enough of the company’s products unless they are stimulated through a substantial selling and promotion effort.
The marketing concept moves toward a more enlightened view of the role of marketing. The marketing concept holds that the main task of the company is to determine the needs, wants, and preferences of a target group of customers and to deliver the desired satisfactions. The four principles of the marketing concept are: target market, customer needs, integrated marketing, and profitability. The marketing concept places primary focus on the needs and wants of customers who comprise the target market for a particular product. 
Rather than coax customers into purchasing a product they may not find satisfying, the emphasis is on determining the types of markets to be satisfied, and creating the product that achieves this satisfaction objective. Choosing target markets and identifying customer needs is no small task; a marketer must dig beyond a customer’s stated needs. Once this is accomplished, a marketer can offer for sale the products that will lead to the highest satisfaction. This encourages customer retention and profit, which is best achieved when all areas/departments of a company become “customer-focused.”  Beyond the marketing concept, the societal marketing concept holds that the main task of the company is to generate customer satisfaction and long-run consumer and societal well being as the key to satisfying organizational goals and responsibilities.
Interest in marketing continues to intensify as more organizations in the business sector, the nonprofit sector, and the global sector recognize how marketing contributes to improved performance in the marketplace. The result is that marketers are reevaluating various marketing concepts and tools that focus on relationships, databases, communications and channels of distribution, as well as marketing outside and inside the organization.
B. Learning Objectives
• Know why marketing is important to contemporary organizations.
• Understand the core concepts of marketing.
• Know the basic tasks performed by marketing organizations and managers.
• Understand the differences between the various orientations to the marketplace.
• Know the components of the marketing concept and why they are critical to successful marketing practice.
• Know why marketing is critical to different types of organizations and in different environments.
• Gain an appreciation for the dynamics in technology related to not only the logistics of marketing but also to the role technology plays in customer and prospect interactions between themselves as well as with organizations
C. Chapter Outline
Introduction
I The Importance of Marketing
A. Most business disciplines are driven by the marketing function, the art of identifying needs and ensuring that organizations are optimally producing goods and services to fulfill those needs. The marketing function is now a critical core competency as witnessed by the creation of a chief marketing officer position     
B. Increasing competitiveness and rapidly changing consumer and business needs have created a dynamic marketplace. Organizations are challenged to closely monitor changing consumer needs and must modify, add, or remove current product and service offerings to meet changing needs. Organizations must ensure that short- term sales-driven strategies do not hinder their long term competitive position
C.  Chief Marketing Officer (CMO) a newer and key role in organizations.
  Five key functions of a CMO are: a) strengthen the brand, b)measure
            marketing effectiveness, c) use customer needs to drive product
            development, d) gather meaningful customer insights, e) leverage  new
            marketing technology

  
II The Scope of Marketing
A. What is marketing?
   Marketing Management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.
The aim of marketing is to know and understand the customer so well that the product or service optimally meets the customer’s human and social needs. The value proposition should be so obvious that the product or service sells itself  

 B. What is marketed? (10 types of entities)
         1.  Physical goods   
          2.  Services - can be customer services or pure services
          3.  Events
          4.  Experiences, a combination of goods and services combined to create      an experience
          5.  Persons (celebrities)
          6.  Places (geographic destinations)
          7.  Properties (real estate, land, financial instruments)
          8.  Organizations (image)
          9.  Information (the internet has increased efficiency of marketing         information)
          10. Ideas
C.  Who markets?
         1.  A marketer is someone actively seeking one or more prospects for an
              exchange of values
 
D.  What is a market? 
         1.  Marketplace - physical
         2.  Metamarket - cluster of complementary goods and services across
              diverse set of industries.  includes metamediaries
         3.  Marketspace – digital
         4. Figure 1.1shows the relationship between the industry and the market

III. Core marketing concepts
 A.  Needs, wants, and demands
       1.  To need is to be in a state of felt deprivation of some basic satisfaction. five   types of needs: stated, real, unstated, delight, secret
       2.  Wants are desires for specific satisfiers of needs. There is usually one or    more wants that can fulfill a need. For example, the need for     nourishment can be fulfilled by eating a cheeseburger or a salad.     selection of a want to fulfill a need may be influenced by demand or    other factors which in this example would be health restrictions
       3.   Demands are wants for specific products backed by an ability and     willingness to buy them

     B.  Target markets, positioning, and segmentation
           1.  Every product or service contains features that a marketer must translate into
                benefits for a target market 
        2.  The consumer perceives these benefits to be available in a product and    directly impacts the perceived ability to meet the consumer need(s) or    want(s)
        3.  Marketers break down the market into multiple segments. segments are    groups of customers with similar needs
        4.  Marketers select which segments they will market to, that is which segments   they will target. Companies cannot be all things to all segments and thus  must   choose which segments to target
        5.  Marketers focus on specific product(s) or service features for each segment   based upon that respective segment’s needs, i.e., they position their    features as benefits to match the specific need
   C.   Offerings and brands
          1.  An organization’s value proposition links the features of a product or service to a benefit that can fulfill a specific need
          2.   Brand - an offering from a known source. A strong brand image supports the value proposition
   D.   Value and satisfaction
          1.   Customer value triad - combination of quality, service, and price  (QSP)
          2.   Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her needs
          3.  Marketers respond by changes in the triad
          4.  Satisfaction reflects a person’s comparative judgment resulting from product or service’s perceived performance in relation to an expectation
   E.   Marketing channels 
          1.  Reaching the target market is critical 
          2.  Achieved via two-way communication channels
 (1)  Communication channels to deliver and receive information (media –
                      newspapers through the Internet)
 (2)  Distribution channels to deliver the product or service
 (3)  Service channels to facilitate a transaction 
   F.   Supply chain 
         1.  Refers to the long channel process that reaches from the raw materials and components to the final product/buyers 
         2.  Perceived as a value delivery system
   G.  Competition
   1.  Includes actual and potential rival offerings and substitutes 
   2.  A broad view of competition assists the marketer to recognize the levels of
        competition based on substitutability: brand, industry, form, and generic
   H.  Marketing environment 
   1.  The task environment includes: immediate actors in the production, distribution,
        and promotional environments 
                 2.  The broad environments include: demographic, economic, natural,
           technological, political-legal, and social-cultural

IV. The New Marketing Realities
   A.  Major Societal Forces
   1. Network information technology
   2. Globalization 
   3. Deregulation
   4. Incerased competitiveness from domestic and foreign brands
   5. Creation of mega-brands and “category-killers”
   6. Disintermediation – intervening in traditional channels such as Amazon
       bypassing retailers
   7. Reintermediation – Traditional retailers adding online channel 
   B.  New Consumer Capabilities
   1. Consumers leveraging the internet to increase their buying power
   2. Social media precipitating user content used by consumers to share information
   3. Internet used by companies to invite consumer to participate in creation of
       product and service offerings.
   4. Decreased levels of product/service differentiation results in lower brand loyalty
 
   C.  New Company Capabilities
   1. Increased market research and market reach via Internet
   2. Creation of online communities increases brand awareness
   3. “Buzz” marketing enhanced via Internet use by early adopters and advocates
   4. Efficient and cost effective value chain management
   5. Intereactive marketing techniques improves target marketing and facilitates
       permission marketing efforts
V. Company Orientation Toward the Marketplace
A.  The production concept –
1. Assumes consumers will favor those products that are widely available
    and inexpensive.
2. Frequently used to expand the market
3. Strategy used by developing countries
B.  The product concept - assumes consumers will favor those products that offer  the
      best combination of quality, performance, or innovative features
C.  The selling concept - assumes organizations must undertake aggressive selling and
      promotion efforts to enact exchanges with otherwise passive consumers
D.  The marketing concept - assumes the key to achieving organizational goals consists
      of being more effective than competitors in integrating marketing activities toward
      determining and satisfying the needs and wants of target markets
 E.  The holistic marketing concept (four dimensions) illustrated in Figure 1.2
       1.  Relationship marketing
 a.  Relationship marketing seeks long-term, “win-win” transactions between
                 marketers and key parties (customers, employees, marketing partners, and
                  financial community members)
            b. The ultimate outcome of relationship marketing is a unique company asset
                called a marketing network of mutually profitable business relationships
 c. Companies are focusing on more profitable customers using Life-Time-Value
                as one method of profitability measurement (these activities are also CRM
                strategies)
 d. Related to non-consumers, Partner Relationship Management focuses on
                building and sustaining relationships with business partners
       2.  Integrated marketing
 a.  When all of a firm’s marketing activities, internal to the organization and
                             external within the value chain, are optimally coordinated to achieve specific
                             objective
                        b.  Manage and coordinate communication efforts across all channels.

                    3.  Internal marketing
                         a.  Occurs at two levels, marketing specific activity such as sales, advertising,
                              customer research, and customer service while the other level is somewhat
                              removed from the direct marketing activities which include finance,
                              accounting, operations, and human resources
                         b.  Each within the organization should know how his or her activity relates to
                               the customer, thus the organization should change their business model to
                               become more customer-centric.
                         c.  Another dimension to internal marketing is the method of marketing to and
                              serving the internal customer
                         d.  Internal marketing is successful when upper-level management
                              demonstrates their buy in on a continual basis
                         e.  Organized resistance - some departments see marketing as a threat to their
                              power in the organization
                          f.  Slow learning - despite efforts by management, learning comes slowly
                          g.  Fast forgetting - there is a strong tendency to forget marketing principles
                    4.  Performance Marketing 
 a)  Financial accountability while building the brand and managing the
             customer relationship using creative metrics and placing value on intangible
             assets
 b) Socially responsible marketing (refer to Table 1.1 for initiatives)
      (1)  Marketers must understand their role in social welfare.
             Societal marketing concept calls on them to build social and
             ethical considerations into their marketing practices. Examples:
             use bio-degradable containers, avoid deceptive advertising,
             adhere to current and pending privacy laws and regulations, use
             ethnic marketing strategies appropriately
      (2)  Cause related marketing, linking an organization’s activity
             with a specific cause perceived as important to the consumer,
             practices can increase revenue and profits while establishing a
             relationship or partnership with societal groups which have a
 common cause. Examples: tobacco company promoting
 nonsmoking practices, company employees spending their day
              off cleaning the environment, sponsoring a cancer prevention race
VI. Updating the 4 P’s
             A. Originally the Four Ps represented the seller’s view of marketing approaches
                  leveraged in an effort to influence the buyer. (Refer to figure 1.3)
 B. Adapting to complexities of current marketing environments, original approaches
                 using the logic of  a 4 P’s strategy have been replaced with new strategies resulting
                 in new definitions of the 4 P’s definition in tandem with a holistic marketing
                 approach. These new 4 P’s are identified as people, processes, programs and
                 performance. An elaboration of these new 4P’s is present in Table 1.2.
VII. Marketing management tasks
 A.  There is a shift in marketing efforts to one of using a more holistic approach
 B.  In accordance with these shifts marketers must:
      1.  Develop marketing strategies and plans, covered in chapter 2
      2.  Capture marketing insights by monitoring  the marketing environment and
                      conducting market research, covered in chapter 3
      3.  Connect with customers by creating value propositions in order to build
                      long-term relationships with customers, covered in chapter 4. Chapters 5 and 6
                      explore the analysis of consumer and business markets. Identify major market
                      segments and target optimal segments, covered in chapter 7.
      4.  Build the brand and use as part of positioning strategy, covered in chapters 8 and
           9.
      5.  Shape the market offerings by creating a product or service strategy including
                      pricing strategy, covered in chapters 10, 11, and 12
        6.  Create channel strategies, covered in chapter 13. Identify channel entities
                 (e.g. retail, wholesale, distributon) and their decision process methods in
                         chapter 14.
      7.  Communicate vale to the target market  by designing the appropriate marketing
                      communication and integration strategies. Chapter 15 covers integrated
                      communications. Chapter 16 discusses mass communications (advertising and
                      PR). Chapter 17 analyzes personal communications.
      8.  Develop a long-term strategy which includes implementation and control as well
            as global issues, covered in chapter 18

VII. Summary

II.  Lectures
A.  “Marketing Enters the 21st Century”
The focus in this discussion is on the increasingly important role of the marketing process in the ever-changing domestic and global business environment.

Teaching Objectives 
• To explain the concepts related to understanding the role and potential of marketing in the larger business environment.
• To provide students a new and possibly different perspective on the role of marketing in business and society. 
• To indicate areas where the marketing process and concept will be useful to the student in assessing business developments.
• Identify changes in the way consumers and businesses interact and how organizations must adapt to changes both in behavior as well as technology.
• Explore new consumer expectations with regards to organization compliance with social mores.
 
Discussion
INTRODUCTION
Many observers argue that all new or important directions in management thought and practice are marketing oriented. Marketing is no longer something done when a company has extra revenue to invest. It must be implemented for a business to survive.
The marketing concept has changed dramatically over the last several decades, and recently the focus increasingly has moved to customers (versus products and selling), marketing globally, and the various technology issues that impact the market. In addition, there is renewed emphasis in marketing on creating and innovating with new and better products and services rather than just competing against other firms and following the marketing patterns established by competitors. 
The marketing concept is a matter of increased marketing activity, but it also implies better marketing programs and implementation efforts.  In addition, the internal market in every company (marketing your company and products to and with the employees of the company) has become as challenging as the external marketplace due to diversity and many other social/cultural issues. 

CHANGES IN CONSUMER BEHAVIOR
There have been many major marketing shifts during the last few decades that have shaped marketing in the 21st century. There is a view among professional marketers that there is no longer the substantial product loyalty that existed over the last few decades.  Product and brand loyalty, many argue, has been replaced by something more akin to a consumer decision that is based on the absence of a better product or service.  In addition, there are major changes in the way customers look at market offerings. During the 1980s customers were optimistic, and in the early 1990s they were pessimistic.  Later in the 1990s, consumers appeared rather optimistic, but still cautious at times. Many consumer segments have started to understand the value proposition concept and have learned how to use it to their advantage via permission marketing quid-pro-quo strategies. Extensive airline loyalty program use and compensation in the gambling industry are examples of the consumer understanding and using marketing strategies to their advantage. The following chart demonstrates some of the major shifts that have occurred to the present:

1980s 1990s 2000’s
Conspicuous consumer Frugal consumer, becoming more well-off Suspicious but generally well-off consumer
Image driven Value and quality driven Highly eclectic
Trusting Skeptical and cynical A “prove it” attitude
Brand loyal  Does not exhibit loyalty Believes that there is always something better
Emotional buyer  Informed buyer Highly informed and specialized
Dreamers Escapists Focused on personal needs
Overindulgent Health, wellness-conscious Health, wellness and some overindulgence, without expectation of costs or consequences
Overworked Burnt-out, stressed out and placing tremendous value on convenience and time Reliant on technology and telecommunications to save time in making purchase decisions
Industrious Baby Boomer Responsible Baby Boomer Unconvinced Generation Xer

Increasingly it is clear that while the 4 Ps (product, price, promotion, and place) have value for the consumer, the marketing strategies of the 21st century will use a revised set of 4 P’s (people, processes, programs, performance). With advances in technology and more kwoledgeable companies, it is not as difficult to create the same market offering. To help differentiate a product or service, companies should evaluate their interpretations of the old versus new definition of the 4 P’s.

Optionally, another view of approaches can incorporate the concept of the four “4 Cs” as added critical marketing variables:
1. Care: It has replaced service in importance. Marketers must really care about the way they treat customers, meaning that customers are really everything.
2. Choice: Marketers need to reassess the diversity and breadth of their offerings into a manageable good-better-best selection.
3. Community: Even national marketers must be affiliated, attached to neighborhoods wherever they operate stores.
4. Challenge: The task of dealing with the ongoing reality of demographic change.
END OF THE MASS MARKET
During the late 1990s and through the early 2000’s, we witnessed the death of the concept of mass market. It is now widely accepted that communicating with users by e-mail, Web sites, telephone and to a lesser extent mail and fax will bring not only measurable cost reductions, but also an increase in customer satisfaction as messages are more targeted to their specific needs. But there are also those organizations that feel if most of their competitors focus on more direct communications, there will be less competition in the mass communication market and thus they may achieve a louder voice. Additionally, mass marketing does contribute to brand awareness and brand reinforcement. However, the success of the Internet provides considerable evidence that one-to-one marketing is and will be appropriate for many packaged goods and other high- and low-involvement products and services that in the past sold almost exclusively with brand advertising. It is even applicable to
         high-involvement products and services as consumers may “experience” the good first
         but then use one-to-one channels for purchase.
Through the 1970s, only high-end retailers, cataloguers, and personal-service firms could afford to practice one-to-one marketing. For the most part, they did it the old-fashioned way with personal selling and index-card files. In the 1980s, as the mainframe computer became more practical, airlines got into the act with a proliferation of frequent flyer programs. Frequency marketing programs such as these relied on monthly statement mailings and large, batch-processed databases of customer records.
During the 1990s, bookstore chains, supermarkets, warehouse clubs, and even restaurants began to track individual purchase transactions to build their “share of the customer.” Many of these programs now run on PC platforms or workstation environments much more powerful than the most capable mainframes of the 1970s. They also are being executed in or close to real-time environments. It is possible today to track 5 or 6 million customers for the same real cost as tracking a single customer in 1950. With Internet-based databases and remote access, this capability literally has exploded in the last few years.
In the 2000’s the situation has become even more interesting as one-to-one marketing has become increasingly pervasive. With an increasingly powerful array of much more efficient, individually interactive vehicles, the options are virtually unlimited, including on-site interactivity, Web site connections, fax-response, e-mail, and interactive television.
Most households today either have direct Internet access, or with TV sets that also provide real-time interactivity through the Internet. We are closing rapidly on the time where individuals will interact with their television and/or computer simply by speaking to it.  Via various Web sites, computers work for us to enable us to remember transactions and preferences and find just the right entertainment, information, products, and services.  Likewise, online capabilities enable providers to anticipate what a consumer might want today or in the future. Unfortunately, the system has been slower to protect consumers from commercial intrusions that they may not find relevant or interesting.
The increasing level of market definition and refinement (and resulting opportunities for marketers) is possible through the massive social, economic, and technological changes of the past three decades. There is no longer a U.S. mass market because lifestyles have changed so dramatically. Some of the important demographic shifts have been:
• Increasing diversity of the population. The United States has always been an immigrant nation. However, large numbers of immigrants from Latin America and Asia have increased the proportion of minorities in the country to one in three, up from one in five in 1980. This diversity is even more noticeable in the younger market.
• Changing family and living patterns. There has been a substantial rise in the divorce rate, cohabitation, non-marital births, and increased female participation in the labor force. In addition, married couples with one earner make up only 15 percent of all households. Dual-earner households have become much more

               common—the additional income is often necessary for the family to pay their bills. Thus, the stereotypical family of the 1950s has been replaced by two older and harried, working parents with much less time available. There is also an emergence of nontraditional households such as same sex parents, single parents and multi-generation. The first set of baby boomers are entering retirement. They are more active, have a greater awareness of health maintenance, and have a higher disposable income, which is presenting new and greater marketing opportunities. They will also live longer than prior generations due to advances in medical research.
• Emergence of a new children’s market. Minorities are over-represented in the younger age brackets due to the higher fertility and the younger population structure of many recent immigrants. The result is that one in three children in the United States is black, Hispanic, or Asian. In addition, nearly all of today’s children grow up in a world of divorce and working mothers. Many are doing the family shopping and have tremendous influence over household purchases. In addition, they may simply know more than their elders about products involving new technology such as computers.
• Income and education increases are two other important demographic factors impacting the marketing management arena. Generally, income increases with age, as people are promoted and reach their peak earning years, and the level of education generally has increased over the last few decades. Family units today often have higher incomes because they may have two earners. Accordingly, there is an increased need for products and services because they likely have children and are homeowners.
In sum, the need for market analysis and marketing decision-making, and managers to perform those tasks has never been greater. But, as the course will demonstrate, the complexities of, and analytical tools required for, these activities have never been greater. Be prepared for a challenging experience.
B.  “The Changing Image of Marketing”
Focus: the changing perceptions of marketing in the contemporary business environment.

Teaching Objectives
• To explain the concepts related to understanding the role and potential of marketing in the larger business environment.
• To provide students a new and possibly different perspective on the role of marketing in business and society. 
• To indicate areas where the marketing process and concept will be useful to the student in assessing business developments.

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