CHAPTER

LEARNING OBJECTIVES
1 DEFINING MARKETING
FOR THE NEW REALITIES
After studying this chapter, you should be able to:

1.1 Define the scope of marketing.

1.2 Describe the new marketing realities.
1.3 Explain the role of marketing in the organization.
1.4 Illustrate how to organize and manage a modern marketing department.
1.5 Explain how to build a customer-centric organization.

CHAPTER SUMMARY

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. 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.
2. Companies aim to create value by marketing goods, services, events, experiences,
persons, places, properties, organizations, information, and ideas. They also
operate in five basic markets: resource markets, manufacturer markets, consumer
markets, intermediary markets, and government markets.
3. Today’s marketplace is fundamentally different as a result of major societal forces
that have resulted in many new consumer and company capabilities. In particular,
technology, globalization, and social responsibility have created new
opportunities and challenges and significantly changed marketing management.
Companies seek the right balance of tried-and-true methods with breakthrough
new approaches to achieve marketing excellence.
4. Four major market forces—technology, globalization, the physical environment,
and social responsibility—have forged new consumer and company capabilities
and have dramatically altered the competitive landscape. These changes require
companies to re-evaluate their current business models and adapt the way they
create market value to the new environment.
5. The holistic marketing concept is based on the development, design, and
implementation of marketing programs, processes, and activities that are based on
breadth and interdependencies. Holistic marketing recognizes that everything
matters in marketing and that a broad, integrated perspective is often necessary.
Four components of holistic marketing are relationship marketing, integrated
marketing, internal marketing, and performance marketing.

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OPENING THOUGHT

Good marketing is no accident. It is both an art and a science, and it results from careful
planning and execution using state-of-the-art tools and techniques. Skillful marketers are
continually updating classic practices and inventing new ones to find creative, practical
ways to adapt to new marketing realities. In this chapter, we lay the foundation for sound
marketing practices by reviewing important marketing concepts, tools, frameworks, and
issues. Marketing applies to a variety of different areas and is increasingly involving
many levels of the organization. Students who are not marketing majors may have some
difficulty accepting the encompassing role that marketing has on the other functional
disciplines within a firm. For those students who have never been exposed to marketing
and its components, the instructor’s challenge is to educate the students about the world
of marketing.

TEACHING STRATEGY AND CLASS ORGANIZATION

PROJECTS

1. Semester-Long Marketing Plan Project

An effective way to help students learn about marketing management is through the actual
creation of a marketing plan for a product or service. This project is designed to
accomplish such a task.

Dividing the class into groups, have each group decide on a “fictional” consumer product
or service they wish to bring to market. During the course of the semester, each of the
elements of the marketing plan, coordinating with the text chapter, will be due for the
instructor’s review. The instructor is encouraged to review each submission and suggest
areas for improvement, for more detailed study, or if acceptable, to allow the students to
proceed to the next phase in development. Students can use a computer program in
creating their proposals and submissions and in their final presentation(s). At the end of
the semester, each group is to present their entire marketing plan to the class.

The following is an outline of this process:

Chapter # Title Element of the Marketing Plan Due

1 Defining Marketing for the None; group formation and begin the
New Realities process of selecting the product or service.

2 Marketing Planning and Formation of groups; first presentation of

Management “product” to instructor for approval.
3 Analyzing Consumer Definitive data on the consumer for the
Markets product/service including all demographic
and other pertinent information obtained
and ready for instructor’s approval.
4 Analyzing Business No report due for this chapter; allows

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 Markets students and instructor to “catch up” on the
project.
5 Conducting Marketing Initial marketing research parameters
Research completed; demand forecasted and target
market selections defined.
6 Identifying Market Specific market segmentation, targeting,
Segments and Target and positioning statements by the students
Customers due.
7 Crafting a Customer Value At this point in the semester, student
Proposition and Positioning projects should include their fictional
product or service’s brand positioning. In
relationship to the material contained in the
chapter, students should have delineated
and designed a differentiated brand
positioning for their project.
8 Designing and Managing At this point in the semester-long project,
Products students should have set their group
project’s product or service strategy.
Instructors are to evaluate their
submissions on the product (or service)
features, quality, and price and other
considerations of “product” found in this
chapter.
9 Designing and Managing At this point in the semester-long project,
Services those students who have selected a
“service” idea for the marketing plan must
submit their offering. Students whose
project is a “product-based” component do
not have anything to submit for this
chapter.
10 Building Strong Brands At this point in the semester, students are
to have their “branding” strategy
developed for their project. Questions to
have been completed include the brand
name, its equity position, and the decisions
in developing the brand strategy.
11 Managing Pricing and Sales At this point in the semester-long project,
Promotions students should be prepared to hand in
their pricing strategy decisions for their
fictional product/service. In reviewing this
section, the instructor should make sure
that the students have addressed all or most
of the material concerning pricing covered
in this chapter.
12 Managing Marketing At this point in the semester-long project,
Communications students should have agreed upon their

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 communication campaign that spans
different media. The instructor is
encouraged to evaluate the submissions
vis-à-vis the material presented in this
chapter. In reviewing the submissions, the
instructor should evaluate the continuity of
the message across all possible
communication media. (Students will tend
to concentrate their media on television or
on the internet and exclude other forms
such as personal selling and radio.)
13 Designing an Integrated At this point in the semester-long project,
Marketing Campaign in the students should submit their advertising
Digital Age program including proposal for digital
communications. The instructor is
encouraged to evaluate the submissions
vis-à-vis the material presented in this
chapter.
14 Personal Selling and Direct At this point in the semester-long project,
Marketing students who have decided to market their
product/service through direct market
channels should submit their proposals. All
other groups must decide at this point if
they will use a direct sales force, and if so,
to outline the specifics (including
financials) for this option.
15 Designing and Managing At this point in the semester-long project,
Distribution Channels students should present their channel
decisions for getting their product or
service to the consumer. In evaluating this
section, the instructor should evaluate the
completeness of the projects to the material
contained in this chapter.
16 Managing Retailing At this point in the semester-long project
for the “fictional” product or service,
students should be directed to turn in their
retailing, wholesaling, and logistical
marketing plans. Those students who are
acting in the role of providing a new
“service” should include here their plans
for locations, hours of operations, and how
their “service” plans on managing demand
and capacity issues.
17 Driving Growth in At this point in the semester-long project,
Competitive Markets students should be prepared to present their
competitive analysis. Who are the market

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 leaders for their chosen product or service?
What niche have they identified for their
product/service? Is their product or service
going to be a leader, follower, or
challenger to well-established products or
brands?
18 Developing New Market At this point in the semester-long project,
Offerings in this section should be a brief write up by
the students as to the consumer-adoption
process for their new product. How will
the consumer learn about their new product
and how quickly will they adopt it? Will
the product be targeted to the heavy users
and early adopters first, then early and late
majorities? What is their estimated time for
full adoption?
19 Building Customer Loyalty Students should have completed their
value proposition for the fictional product,
defined how they will deliver satisfaction,
and maintain customer loyalty.
20 Tapping into Global If the project is to be exported to another
Markets country, then students’ submissions
regarding the cultural factors that need to
be considered should be done here.
21 Socially Responsible Second phase of the presentations of the
Marketing project; students should ensure that their
marketing plans contain a holistic view of
the marketing process.

Under the projects heading for each chapter will be a reminder of the material due when that
chapter is scheduled to be discussed in class.

ASSIGNMENTS
In small groups, ask the students to review the annual report from Unilever. How do the
missions discussed in the opening vignette translate into their current business practices? How
are its marketing investments and initiatives affecting its profitability? What conclusions can
you draw from Unilever’s progress?

Assign students the task of visiting a company’s websites to see if they feel that the company
is responding to the changes in marketing today, namely, societal marketing. Suggestions
include firms like Tom’s (shoes) and Ben and Jerry’s Ice Cream. Have the students comment
on what they find on the sites that are of particular interest to them.

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Students can choose a firm of their preference, interview key marketing management
members, and ask the firm how they are reacting to the changes in marketing management for
the new realities.

Have the students read:

Mobile Advertising: https://www.tapjoy.com/lp/mobile-advertising-that-works/?
utm_feeditemid=&utm_device=c&utm_term=%2Bmobile
%20%2Badvertising&utm_source=google&utm_medium=ppc&utm_campaign=&hsa_cam=
6481850327&hsa_grp=100687649910&hsa_mt=b&hsa_src=g&hsa_ad=420956173110&hsa
_acc=%7B155-325-1239%7D&hsa_net=adwords&hsa_kw=%2Bmobile
%20%2Badvertising&hsa_tgt=kwd-
20499154838&hsa_ver=3&utm_feeditemid=&utm_device=c&utm_term=%2Bmobile
%20%2Badvertising&utm_source=google&utm_medium=ppc&utm_campaign=TAP-NT+-
+Mobile+Advertising&hsa_cam=6481850327&hsa_grp=100687649910&hsa_mt=b&hsa_sr
c=g&hsa_ad=420956173110&hsa_acc=1553251239&hsa_net=adwords&hsa_kw=
%2Bmobile%20%2Badvertising&hsa_tgt=kwd-
20499154838&hsa_ver=3&gclid=Cj0KCQiA962BBhCzARIsAIpWEL05LTgWFN7_ej6RM
50qFjBOxcsLkYK7T4FYcB4oFAB7YkAVxRkZhT0aAr5NEALw_wcB

Have the students reflect upon their favorite product and/or service. Then have the students
collect marketing examples from each of these companies. This information should be in the
form of examples of printed advertising, copies of television commercials, internet
advertising, or radio commercials. During class, have the students share what they have
collected with others. Questions to ask during the class discussion should focus on why this
particular example of advertising elicits a response from the students. What do students
like/dislike about this marketing message? Does everyone in the class like/dislike this
advertising?

END-OF-CHAPTER SUPPORT
Marketing Spotlight: Nike
1. What are key components of Nike’s marketing strategy?
Suggested Answer: One of Nike’s core marketing strategies is their belief in the “pyramid of
influence” and its dependency on a core group of athletes to influence shoe purchases. While
this may have worked in the past, there is no guarantee that future athletes will command such
influence on the shoe purchaser in the future. Athlete influence(s) can and could decrease due
to changing consumer preferences and changes in consumer tastes and priorities. Athletic
influence could be adversely affected by the actions/inactions by Nike’s chosen
spokespersons.

2. What are Nike’s strengths and weaknesses?

Suggested Answer: Strengths. One of Nike’s greatest successes came in 1985 with the
signing of rookie basketball player Michael Jordan as a spokesperson. In addition to
associating itself with the best athletes, Nike also showed a talent for creating iconic
advertising campaigns. While expanding overseas, Nike’s heavy investment in soccer

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helped propel the brand’s growth internationally as its image morphed from that of a
sneaker company into a brand that represented emotion, allegiance, and identification.

Weaknesses. The company quickly learned that its U.S.-style ads were too aggressive for
consumers in Europe, Asia, and South America, and adjusted its tone. Furthermore, it
needed to tailor its marketing for different countries so consumers would feel that the
brand was authentic.

3. If you were Adidas, how would you compete with Nike?

Suggested Answer: I would emphasize my “international” scope of producing great soccer
shoes and could also extend my marketing to emphasize my “everyday/everyone” usage for
my products. Creating a point of difference for Adidas versus Nike is key to a sustainable
advantage—Adidas’ soccer shoes, for example, are a good starting point to differentiate one
brand from another.

Marketing Spotlight: Disney

1. How does Disney create value for its customers?

Suggested Answer: Disney has focused on the value-creation dynamic that sets it apart
from its competitors. The Disney Difference, based on high standards of quality and
recognition, stems from one of Walt Disney’s most recognizable quotes: “Whatever you
do, do it well. Do it so well that when people see you do it, they will want to come back
and see you do it again and they will want to bring others and show them how well you
do what you do.”

2. What are the core strengths of the Disney brand?

Suggested Answer: Disney works hard to connect with its customers on a multitude of
levels and through every single detail. For example, when visiting Disney world,
employee “cast members” are trained to be “assertively friendly” and greet visitors by
waving big Mickey Mouse hands, giving maps to adults and stickers to kids, and cleaning
up the park so diligently that it’s difficult to find a piece of garbage anywhere.

3. What are the risks and benefits of expanding the Disney brand to new products and
services?

Suggested Answer: Benefits: The company thought of creative new ways to target its
core family-oriented consumers and expand into areas that would reach an older
audience. Disney launched the Disney Channel, Touchstone Pictures, and Touchstone
Television. Risks: One major risk for Disney is the effect of the COVID-19 pandemic,
because travel to Disney parks was severely curtailed. This affected the business unit
Parks, Experiences and Consumer Products, which brings Disney’s stories, characters,
and franchises to life through parks and resorts, toys, apps, apparel, books, and stores.
Disney’s greatest challenge today is keeping its 90-year-old brand relevant and current,

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while retaining its core audience and staying true to its heritage and fundamental brand
values.

DETAILED CHAPTER OUTLINE

Opening Vignette: Bird provides a fleet of shared electric scooters that can be accessed
via smartphones. Rather than requiring dedicated docking areas, Bird scooters can be
picked up and dropped off on sidewalks throughout the city. Bird’s business model has
constantly evolved. The company has introduced Bird’s platform, a suite of products that
gives entrepreneurs the opportunity to become independent operators and manage a fleet
of shared e-scooters. Marketing is both an art and a science, and results from careful
planning and execution using state-of-the-art tools and techniques.

I. The Scope of Marketing

A. What is Marketing?
i. Marketing is about identifying and meeting human and social needs.
ii. “Meeting needs profitably.”
iii. American Marketing Association definition: Marketing is the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large.
iv. 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.
v. Social definition of marketing: Marketing is a societal process by which individuals
and groups obtain what they need and want through creating, offering, and freely
exchanging products and services of value with others.
vi. Selling is not the most important part of marketing; the aim of marketing is
to know and understand the customer so well that the product or service fits
perfectly and sells itself.
B. What is Marketed?
i. Ten main types of entities: goods, services, events, experiences, persons,
places, properties, organizations, information, and ideas
ii. Goods: physical goods include food products, cars, refrigerators, televisions,
machines, and other mainstays of a modern economy
iii. Services: represent approximately 2/3 of the U.S. economy,
including
airlines, hotels, maintenance and repair people, accountants, bankers, doctors, and
management consultants
iv. Events: time-based, global, and local events
v. Experiences: marketers orchestrate several services and goods to create,
stage, and market experiences
vi. Persons: artists, musicians, CEOs, physicians, high-profile lawyers
and financiers, and other professionals often get help from marketers, and
each person has been advised to become a “brand”
vii. Places: cities, states, regions, and nations

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 viii. Properties: intangible rights of ownership to either real property (real estate)
or financial property (stocks and bonds)
ix. Organizations: museums, performing arts organizations, corporations, and
nonprofits that use marketing to boost their public images and compete for
audiences and funds
x. Information: what books, schools, and universities produce, market, and
distribute at a price to parents, students, and communities
xi. Ideas: Every market offering includes a basic idea. Products and
services are
platforms for delivering some idea or benefit.
C. The Marketing Exchange
i. A marketer is someone who seeks a response—attention, a purchase, a vote,
a donation—from another party, called the prospect.
ii. Marketers are skilled at stimulating demand for their products, but they also
seek to influence the level, timing, and composition of demand to meet the
organization’s objectives.
iii. A market is a collection of buyers and sellers who transact over a particular
product or product class (such as the housing market or the grain market).
iv. Manufacturers go to markets (raw material markets, labor markets, money
markets), buy resources, and turn them into goods and services, and sell finished
products to intermediaries, who sell them to consumers. Consumers sell their
labor and receive money with which they pay for the goods and services they
purchase. The government collects tax revenues to buy goods from resource,
manufacturer, and intermediary markets and use these goods and services to
provide public services. See Fig. 1.1.
v. Figure 1.2 shows how sellers and buyers are connected by four flows. Sellers
send goods and services and communications, such as ads and direct mail, to the
market; in return, they receive money and information as data on customer
attitudes and sales.
vi. Financial success often depends on marketing ability. Marketing’s value extends
to society as a whole. Successful marketing builds demand for products and
services, which, in turn, creates jobs. By contributing to the bottom line,
successful marketing also allows firms to more fully engage in socially
responsible activities.
vii. Innovation in marketing is critical. Imaginative ideas on strategy exist in many
places within a company.
II. The New Marketing Realities
A. The Four Major Market Forces
i. The marketplace is dramatically different from even 10 years ago, with new
marketing behaviors, opportunities, and challenges emerging.
ii. Technology: Technological developments have given birth to new business
models that take advantage of the new capabilities. Advances in data analytics,
machine learning, and artificial intelligence have enabled companies to better
understand their customers.
iii. Globalization: Geographic and political barriers have been eroded as advanced
telecommunication technologies and workflow platforms enable all types of

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 computers to work together to create opportunities for communication,
collaboration, and data mining.
iv. Globalization has made countries increasingly multicultural.
v. Globalization changes innovation and product development as companies take
ideas and lessons from one country and apply them to another.
vi. The physical environment has changed during the past decade. Two particularly
far-ranging changes include climate change and changes in global health
conditions.
vii. Social responsibility: The private sector is taking some responsibility for
improving living conditions, and firms all over the world have elevated the role
of social responsibility.
viii. Because marketing’s effects extend to society as a whole, marketers must
consider the ethical, environmental, legal, and social context of their activities.
ix. The organization’s task is thus to determine the needs, wants, and interests of
target markets and satisfy them more effectively and efficiently than
competitors, while preserving or enhancing consumers’ and society’s long-term
well-being.
x. Marketers must think holistically and craft creative win–win solutions to
balance conflicting demands.
B. The Three Key Marketing Outcomes
i. New Consumer Capabilities
 Consumers can use online resources as a powerful information and
purchasing aid.
 Consumers can search, communicate, and purchase on the move.
 Consumers can tap into social media to share opinions and express loyalty.
 Consumers can actively interact with companies.
 Consumers can reject marketing they find inappropriate.
ii. New Company Capabilities
 Companies can use the internet as a powerful information and sales
channel, including for individually differentiated goods.
 Companies can collect fuller and richer information about markets,
customers, prospects, and competitors.
 Companies can reach customers quickly and efficiently via social media
and mobile marketing, sending targeted ads, coupons, and information.
 Companies can improve purchasing, recruiting, training, and internal and
external communications.
 Companies can improve cost efficiency.
iii. New Competitive Environment
 Deregulation: Many countries have deregulated industries to create greater
competition and growth opportunities. In the United States, laws restricting
financial services, telecommunications, and electric utilities have all been
loosened in the spirit of greater competition.
 Privatization: Many countries have converted public companies to
private ownership and management to increase their efficiency.

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  Retail transformation. Store-based retailers face competition from
catalog houses; direct-mail firms; newspaper, magazine, and TV direct-
to-customer ads; home-shopping TV networks; and e-commerce.
 Disintermediation. Early dot-coms such as Amazon.com and
E*TRADE successfully created disintermediation in the delivery of
products and services by intervening in the traditional flow of goods.
 Private labels. Brand manufacturers are further buffeted by powerful
retailers that market their own store brands, increasingly
indistinguishable from any other type of brand.
 Mega-brands. Many strong brands have become mega-brands and
extended into related product categories, including new opportunities at
the intersection of two or more industries.
C. The Concept of Holistic Marketing
i. Holistic marketing recognizes and reconciles the scope and complexities of
marketing activities and offers an integrated approach to managing strategy and
tactics. See Fig. 1.4.
ii. Marketing must be more holistic and less departmental.
iii. Relationship Marketing: Aims to build mutually satisfying long-term
relationships with key constituents in order to earn and retain their business.
iv. Four key constituents for relationship marketing are customers, employees,
marketing partners, and members of the financial community (shareholders,
investors, analysts).
v. The ultimate outcome of relationship marketing is a marketing network
consisting of the company and its supporting stakeholders with whom it has
built mutually profitable business relationships.
vi. Integrated Marketing coordinates all marketing activities and marketing
programs and directs them toward creating, communicating, and delivering
consistent value and a consistent message for consumers, such that “the whole is
greater than the sum of its parts.”
vii. An integrated channel strategy should assess each channel option for its direct
effect on product sales and brand equity, as well as its indirect effect on
interactions with other channel options.
viii. Internal marketing, an element of holistic marketing, is the task of hiring, training,
and motivating able employees who want to serve customers well.
ix. Internal marketing requires vertical alignment with senior management and
horizontal alignment with other departments so everyone understands,
appreciates, and supports the marketing effort.
x. Performance Marketing: Requires understanding the financial and nonfinancial
returns to business and society from marketing activities and programs.
xi. Top marketers are increasingly going beyond sales revenue to examine the
marketing scorecard and interpret what is happening to market share, customer
loss rate, customer satisfaction, product quality, and other measures.
xii. They also consider the legal, ethical, social, and environmental effects of
marketing activities and programs.
III. The Role of Marketing in the Organization. See Table 1.1
A. A key task for any business is defining the role that marketing will play in the

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 organization.
i. The Production Concept: Suggests consumers prefer products that are widely
available and inexpensive. Management aims for high production efficiency,
low costs, and mass distribution.
ii. The Product Concept: Consumers favor products offering the most quality,
performance, or innovative features. Managers may commit the “better
mousetrap” fallacy, believing a better product will by itself lead people to beat a
path to their door.
iii. The Selling Concept: Consumers and businesses, if left alone, won’t buy
enough of the organization’s products. It is practiced most aggressively with
unsought goods—goods buyers don’t normally think of buying, such as
insurance and cemetery plots—and when firms with overcapacity aim to sell
what they make, rather than make what the market wants.
iv. The Marketing Concept: Find the right products for your customers. The
marketing concept holds that the key to achieving organizational goals is being
more effective than competitors in creating, delivering, and communicating
superior customer value to your target markets.
v. The market-value concept is based on the development, design, and
implementation of marketing programs, processes, and activities that recognize
their breadth and interdependencies.
IV. Organizing and Managing the Marketing Department
A. Organizing the Marketing Department
i. Functional Organization. In the most common form of a marketing organization,
functional specialists report to a chief marketing officer who coordinates their
activities. See Fig. 1.5.
ii. Geographic Organization. A company selling in a national market often
organizes its sales force (and sometimes its marketing) along geographic lines.
iii. Product or Brand Organization. Companies producing a variety of products and
brands often establish a product- or brand-management organization. See Fig.
1.6.
iv. Market Organization. Companies often develop diverse products and services to
target distinct target markets.
v. Matrix Organization. Companies that produce many products for many markets
may adopt a matrix structure employing both product and market managers. The
rub is that this choice is costly and often creates conflicts. Another disadvantage
is the potential lack of clear focus and accountability.
B. Managing the Marketing Department
i. The Role of the CEO and CMO. Only a select group of companies have
historically stood out as master marketers. These companies focus on the
customer and are organized to respond effectively to changing needs.
ii. Perhaps the most important role for any CMO is to infuse a customer perspective
in business decisions affecting any customer touch point (where a customer
directly or indirectly interacts with the company).
iii. Relationships with Other Departments. The firm’s success depends not only on
how well each department performs its work, but also on how well the company
coordinates departmental activities to conduct core business processes.

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 iv. Given the goal of providing positive customer experiences from start to finish, all
areas of the organization need to work effectively together.
C. Building a Customer-Oriented Organization
i. Creating a superior customer experience has become a priority for companies in
nearly every industry.
ii. Managers who believe the customer is the company’s only true “profit center”
consider the traditional organization chart in Figure 1.7(a)—a pyramid with the
president at the top, management in the middle, and frontline people and customers
at the bottom—to be obsolete.
iii. Successful marketing companies transform the traditional organization-hierarchy
chart to look like the chart in Figure 1.7(b). A company’s top priority is customers;
next in importance are the frontline people who meet, serve, and satisfy these
customers; then come service managers, whose job is to support the frontline people
so they can serve customers well; and finally, there is the top management.
iv. Although it’s necessary to be customer oriented, it’s not enough. The organization
must also be creative. See Table 1.2.

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