C H A P T E R

1
An Overview of
Contemporary
Marketing

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

After studying this chapter, you should be able to:

 Discuss what marketing is and why it is important to
organizations and individuals.
 Distinguish between marketing as an organizational
philosophy and a societal process.
 Understand the components of a marketing strategy and
the different activities involved in marketing products and
services.
 Be aware of the various types of marketing institutions
and the different marketing positions available in these
institutions.
 Understand the basic elements and relationships in the
contemporary marketing framework.

Bearden Marketing 5th Ed 1-2 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
 Amazon: An Entrepreneurial Story

Amazon.com represents an
interesting entrepreneurial story.
Jeff Bezos started Amazon.com as
a book retailer in 1995.
The company’s mission was to use
the Internet to transform book
buying into the fastest, easiest,
and most enjoyable shopping
experience available.
Sales have increased from about
$150 million in 1997 to over $7
billion today.
Bearden Marketing 5th Ed 1-3 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Amazon and Marketing

The Amazon.com story

illustrates a basic principle of
successful marketing:

 Identify market opportunities

and respond by developing and
executing marketing strategies
to take advantage of the
opportunities better than
competitors do.

Bearden Marketing 5th Ed 1-4 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing - Definition

What is 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.
- American Marketing Association

www.marketingpower.com

Bearden Marketing 5th Ed 1-5 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Why is marketing important?

Marketing is important to
many organizations.
For example, the Humane
Society uses advertising to
promote animal protection.

Bearden Marketing 5th Ed 1-6 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
The Importance of Marketing

Social
Entrepreneurs

Individuals Farmers
Different Types
of Organizations

Small Firms Nonprofit

Bearden Marketing 5th Ed 1-7 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Views of Marketing

Production
Philosophy

Marketing as
an Organizational
Philosophy
Marketing Selling
Philosophy Philosophy

Bearden Marketing 5th Ed 1-8 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing as an Organizational Philosophy

A production philosophy exists

Production
when an organization emphasizes
Philosophy the production function.

A selling philosophy
Selling
predominates where the selling
Philosophy function is most valued.

A marketing philosophy
Marketing suggests that the organization
Philosophy focuses on satisfying the needs
of customers.

Bearden Marketing 5th Ed 1-9 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Practicing the Marketing Concept

Marketing as an organizational philosophy has

been based on the marketing concept. This
concept consists of three interrelated principles:
 An organization’s basic purpose is to satisfy customer
needs.
 Satisfying customer needs requires integrated,
coordinated efforts throughout the organization.
 Organizations should focus on long-term success.

Bearden Marketing 5th Ed 1-10 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Developing a Market Orientation

A market orientation consists of creating norms

and values that encourage customer-oriented
behavior throughout the organization, including:

Generating Disseminating Responding to

Market Market Market
Intelligence Intelligence Intelligence

Bearden Marketing 5th Ed 1-11 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Customer Equity

Customer equity is the financial value of a firm’s

customer relationships. It consists of profits from first-
time customers plus expected profits from future sales to
these and other customers. Customer equity can be
increased in several ways:
 Acquire more profitable customers at a lower cost.
 Retain profitable customers longer.
 Win back profitable customers.
 Eliminate unprofitable customers.
 Sell more to profitable customers.
 Reduce service and operational costs.

Bearden Marketing 5th Ed 1-12 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Customer Equity Relationships

Marketing
Providing Achieving
Concept,
exceptional completely
market
customer satisfied
Orientation,
value customers
CRM

Earning Increasing
Building
high sales growth
customer
customer and
equity
loyalty profits

Bearden Marketing 5th Ed 1-13 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing as a Societal Process

Defined as a process that facilitates the flow of goods

and services from producers to consumers in a society.

Producers of Consumers of
Goods & Services Goods & Services

Emphasis on:

Institution involved
Activities performed
Effectiveness of system
Efficiency of system
Bearden Marketing 5th Ed 1-14 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Thinking Critically

Identify the most important benefits of the

1
societal marketing system in the United States.

What changes would you recommend for this

2 system to be more beneficial to U.S. society?

Identify the most negative effects of the societal

3 marketing system in the United States.

What changes would you recommend to reduce

4 these negative effects?

Bearden Marketing 5th Ed 1-15 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing as a Set of Processes

Marketing
Exchanges

Marketing Marketing
Institutions Marketing Strategies
Processes

Marketing Marketing
Positions Activities

Bearden Marketing 5th Ed 1-16 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Exchanges

Exchange is defined as the transfer of something

tangible or intangible, actual or symbolic, between two or
more social actors.

Bearden Marketing 5th Ed 1-17 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Strategies

Marketing strategies consist of selecting a target

market and developing a marketing mix to
satisfy that market’s needs.
 A target market is a defined group of consumers or
organizations with which a firm wants to create marketing
exchanges and relationships.
 A marketing mix is the overall marketing offer to appeal to
the target market.

Bearden Marketing 5th Ed 1-18 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Mix Decisions

Bearden Marketing 5th Ed 1-19 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Strategies

The cosmetics industry is a good place to look

for examples of different marketing strategies.

Bearden Marketing 5th Ed 1-20 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Activities

Bearden Marketing 5th Ed 1-21 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Positions

Marketing Directs all company’s marketing

manager activities, including planning, organizing,
staffing, directing, controlling, evaluating
performance

Product Develops goals, objectives, plans,

manager strategies, marketing mixes for product
line or brand

more

Bearden Marketing 5th Ed 1-22 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Positions (con’t)

Advertising Devises advertising policy and strategy,

manager selects advertising agencies, develops
promotional campaigns, selects media,
allocates advertising expenditures

Supply chain Manages distribution system, including

manager storage and transportation for all
products and services

more

Bearden Marketing 5th Ed 1-23 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Positions (con’t)

Purchasing Manages all purchasing activities,

manager including buying product ingredients or
components, supplies, equipment,
needed materials

Marketing Develops research designs for specific

research problems; collects, analyzes, interprets
manager data; presents results to top
management

more

Bearden Marketing 5th Ed 1-24 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Positions (con’t)

Public Manages all communications with media

relations and company stakeholders
manager to present favorable public image

Customer
Provides customer service, handles
service
customer complaints
manager

Sales Organizes, develops, directs, controls,

manager evaluates sales force

Bearden Marketing 5th Ed 1-25 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Institutions

Retailers

Wholesalers

Marketing
research firms

Advertising
agencies

Bearden Marketing 5th Ed 1-26 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Environment

Exhibit 1-9

Bearden Marketing 5th Ed 1-27 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Key Marketing Perceptive

Viewing the world as the potential

Global marketplace to include identifying and
responding both to market opportunities
around the world and to different cultural
groups within each market.

Building partnerships with firms outside the

Relationship organization and encouraging teamwork
among different functions within the
organization to develop long-term customer
relationships.

more

Bearden Marketing 5th Ed 1-28 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Key Marketing Perceptive (con’t)

Addressing the morality of marketing

Ethics decisions and practicing social
responsibility to include ecological
considerations.

Customer Constantly looking for ways to give customers

value more for less.

Trying to get the best return for each

Productivity marketing dollar spent.

more

Bearden Marketing 5th Ed 1-29 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Key Marketing Perceptive (con’t)

Translating new and emerging technologies

Technology into successful products and services, and
using technology to improve marketing
practice.

Entrepreneur- Focusing on innovation, on risk taking, and

ship on being proactive in marketing efforts.

Bearden Marketing 5th Ed 1-30 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Summary

After studying this chapter, you should be able to:

 Discuss what marketing is and why it is important to
organizations and individuals.
 Distinguish between marketing as an organizational
philosophy and a societal process.
 Understand the components of a marketing strategy
and the different activities involved in marketing
products and services.
 Be aware of the various types of marketing
institutions and the different marketing positions
available in these institutions.
 Understand the basic elements and relationships in
the contemporary marketing framework.
Bearden Marketing 5th Ed 1-31 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.