Chapter 1 the Nature of Marketing

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Chapter 1 The Nature of Marketing

C H A P T E R 1

The Nature of Marketing

CHAPTER SUMMARY

The function of marketing is to bring buyers and sellers together, and the primary emphasis of marketing is in the exchange process requiring two or more parties to trade things of value.

Learning Objective 1

Define marketing and discuss marketing in its broadened sense.

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that will satisfy individual and organizational objectives. Effective marketing consists of a consumer-oriented mix of business activities planned and implemented by a marketer to facilitate an exchange so that both parties profit in some way. Consumers may exchange money, votes, or something else to obtain the marketer’s offering.

Learning Objective 2

Identify the elements of the marketing mix.

The marketing mix consists of four major elements: product, place (distribution), promotion, and. price. These are basic to any organization and are adjusted and combined by the marketing manager to achieve the organization’s goals.

Learning Objective 3

Understand that marketers must contend with external environmental forces.

The marketing environment consists of uncontrollable forces that influence consumer behavior and represent both opportunities for, and constraints, to an organization. The marketing manager’s task is to adjust an organization’s marketing mix to cope with the external environment. This involves anticipating environmental changes that will affect the organization. Correct environmental assessment makes marketing decisions more successful.

Learning Objective 4

Explain the marketing concept.

The marketing concept is a philosophy of business and a set of objectives enabling organizations to offer superior customer value. According to this concept, marketing-oriented organizations can succeed by focusing on consumers’ wants and needs, long-term profitability, and an integrated marketing effort. Marketing-oriented organizations embrace the idea that they can satisfy customers needs better than their competitors. Product orientation and sales orientation are less effective alternative philosophies.

Learning Objective 5

Recognize the contribution of marketing to a country’s economy and way of life.

Marketing delivers a standard of living to society. The aggregate of all organizations’ marketing activities, especially their transportation and distribution activities, affects a society’s economic well-being. The efficiency of the system for moving goods from producers to consumers is an important factor determining a country’s quality of life.

Learning Objective 6

Define the societal marketing concept.

The societal marketing concept, which can be in perfect harmony with the marketing concept, stresses the need for marketers to consider the collective needs of society as well as individual consumer desires and the organization’s need for profits. It recognizes that every consumer, as a member of society, has both long-term and short-term needs.

Learning Objective 7

Explain the importance of studying marketing.

Marketing offers many possible career opportunities to students (see Appendix A at the end of the book). In addition, marketing knowledge and skills can help you to become a more knowledgeable consumer.

VOCABULARY QUIZ

The purpose of this quiz is to determine how familiar you are with the key concepts in this chapter. From the list of vocabulary, select the one that most accurately describes the definitions of the concept or marketing term. Write the letter in the space provided.

A.Exchange processAA.Marketing

B.Societal marketing conceptBB.Market

C.Marketing mixCC.Four Ps of marketing

D.Superior customer valueDD.Product

E.Place (distribution)EE.Channel of distribution

F.PriceFF.Promotion

G.Uncontrollable variableGG.Production orientation

H.Sales orientationHH.Marketing concept

I.Cross-functional activityII.Marketing orientation

J.RetailerJJ.Macromarketing

K.Relationship marketingKK.Wholesaler

L.ManufacturerLL.Ultimate consumer

1. Transaction

_____1.The amount of money or other consideration--that is, something of value--given in exchange for a product.

_____2.Marketing activities aimed at building long-term relationships with the people (especially customers)and organizations that contribute to the company’s success.

_____3.An individual who buys or uses a product for personal consumption.

_____4.The basic elements of the marketing mix: product, place (distribution), price, and

promotion; also called the controllable variables of marketing because they can be controlled and manipulated by the marketer.

_____5.A force or influence external to the organization and beyond its control.

_____6.Organizational philosophy that stresses the importance of considering the collective needs of society, as well as individual consumer’s desires and organizational profits.

_____7.A group of potential customers that may want the product offered and that has the resources, the willingness, and the ability to purchase it.

_____8.The element of the marketing mix that encompasses all aspects of getting products to the consumer in the right location at the right time.

_____9.A good, service, or idea that offers a bundle of tangible and intangible attributes to

satisfy consumers.

_____10.The element of the marketing mix that includes all forms of marketing communication.

_____11.The consumer’s attribution of greater worth or better ability to fulfill a need to a

certain product compared to its competitors.

_____12.The aggregate of marketing activities in an economy or the marketing system of a

society, rather than the marketing activities in a single firm (micromarketing).

_____13.Organizational philosophy that emphasizes selling existing products, whether or not

they meet consumer needs, often through aggressive sales techniques and advertising.

_____14.Product, Place (distribution), Promotion, and Price

_____15.The interchange of something of value between two or more parties.

_____16.Organizational philosophy that stresses consumer orientation, long-range profitability, and the integration of marketing and other organizational functions. The marketing concept, which focuses on satisfying consumers’ wants and needs, is the foundation of a marketing orientation.

_____17.A single exchange agreement; the completion of a one-time sale.

_____18.The sequence of marketing organizations involved in bringing a product from the producer to the consumer.

_____19.Organizational philosophy that emphasizes physical production and technology,

rather than sales or marketing.

_____20.Organizational philosophy that emphasizes developing exceptional skill in

understanding and satisfying customers so that the organization can offer superior customer value.

_____21.An organization that recognizes a consumer need and produces a product from raw

materials, component parts, or labor to satisfy that need.

_____22.An organization that serves as an intermediary between manufacturer and retailer to

facilitate the transfer of products or the exchange of title to those products.

_____23.An activity carried out by individuals from various departments within an

organization and from out-side the organization, all of whom have a common purpose.

_____24.An organization that sells products it has obtained from a manufacturer or wholesaler

to the ultimate consumer. Retailers neither produce nor consume the product.

_____25.The process of planning and executing the conception, pricing, promotion, and

distribution of ideas, goods, and services to create exchanges that will satisfy

individual and organizational objectives.

LEARNING OBJECTIVES QUIZ

Learning Objective 1

Define marketing and discuss marketing in its broadened sense.

1.It is best to begin discussing ______from a business perspective.(marketing)

2.Marketing activities are aimed at bringing ______and ______together. (buyers, sellers)

3.A major marketing ______is paying ______attention to customers’ ______. (activity, continuous, needs.)

4.The marketing process begins with ______even before the product is manufactured. (customer analysis)

5.Broadening the marketing concept to include not-_____-______organizations places the

primary emphasis on the ______process.(for-profit, exchange)

6.Each party must gain ______. Each party contributes something of ______because

each expects to be ______by the exchange.(something, value, satisfied)

7.Effective marketers view making a sale not as the ______of the process, but as a start of

the organization’s ______with a customer.(end, relationship)

8.Marketers want customers for ______.(life)

9.Effective marketers work to build ______-______relationships with their customers.

(long-term)

10.A ______is a group of ______customers for a particular product who

are ______and ______to spend money or exchange other resources to obtain

the product.(market, potential, willing, able)

Learning Objective 2

Identify the elements of the marketing mix.

11.Product, place, price and promotion are referred to as the ______of ______. (four Ps of marketing)

12.______may be a tangible good or an intangible idea.(Products)

13.How goods get to the customer involves ______or ______activity.

(place, distribution)

14.Selecting ______, ______, and other types of distributors is also a place

______.(retailers, wholesalers, activity)

15.A ______of distribution is the sequence of marketing

organizations involved in bringing a product from ______to ______.

(channel, producer, consumer)

16.Marketing specialists, or ______, are hired because they can more

______or more ______perform a certain marketing activity for an

organization in a basic marketing channel.(collaborators, efficiently, effectively)

17.______is the means by which marketers “talk to” existing customers and

potential ______.(Promotion, buyers)

18.______, personal ______, ______, and sales promotion are all forms of

promotion.(Advertising, selling, publicity)

19.The amount of money given in exchange for something is its ______.(price)

20.In ______-______-______situations, price may be expressed in terms of

volunteered time or effort, votes, or donations.(not-for-profit)

21.According to economists, prices are always ______.(on trial)

22.In selecting a marketing mix, each manager realizes that there is “______” to

mix ingredients.(no best way)

Learning Objective 3

Understand that marketers must contend with external environmental forces.

23.All organizations operate within an external ______.(environment)

24.Managers contend with and cannot govern ______forces called ______

variables which affect both consumers’ behavior and organizations’ development

of effective marketing mixes.(external, uncontrollable)

25.______and other ______forces might lead to a decline in homebuilding. (Inflation, economic)

26.Changes in ______and lifestyles have lead to a change in eating

habits.(social values)

27.To plan marketing mixes compatible with the external ______, marketing

managers must be able to recognize and ______uncontrollable variables.

(environment, analyze)

28.Determining the correct ______to ______and to exit the market may rest on

an analysis of the ______environment.(time, enter, external)

Learning Objective 4

Explain the marketing concept.

29.Marketing managers operating with a ______orientation focus their efforts on

physical production.(production)

30.The philosophy of an organization with a ______orientation is to change

consumers’ minds to fit the product.(sales)

31.Companies that have superior skills in understanding and satisfying customers

are ______-oriented, or market- ______.( marketing-, -driven)

32.The philosophy known as the ______is central to all effective marketing, thinking, planning and action. (marketing concept)

33.______is the first aspect of the marketing concept.

(Consumer orientation)

34.Organizations that have accepted the marketing concept try to create goods and

services with the ______needs in mind.(customer’s)

35.Implicit in the marketing concept is the assumption that the organization wishes to continue

to exist. Therefore, ______-______profits are accented in this philosophy.

(long-term)

36.Marketing personnel cannot be isolated from other company ______.

Successful organizations view marketing as an ______function, not an isolated

business function, hence the term ______-______activity is essential in

the study of marketing activities.(activities, integral, cross-functional)

Learning Objective 5

Recognize the contribution of marketing to a country’s economy and way of life.

37.Marketing must be viewed not only in terms of its ______in the individual

organization but also in terms of the important role it plays in ______. (role, society)

38.Therefore, marketing should be viewed as the activity that ______a standard of

______to society.(delivers, living)

39.A society’s well being is dependent on the efficiency of the system for ______goods

from ______to consumers.(moving, producers)

40.To reach a ______level of well being, a country must improve its ______.

(higher, macromarketing)

Learning Objective 6

Define the societal marketing concept.

41.The societal marketing concept can be in perfect ______with the marketing concept.

(harmony)

42.The marketing concept stresses ______consumer needs at a profit.

(satisfying)

43.Conflicts exist between customers’ expressed ______for immediate fulfillment, and

the ______interpretation of what is good for society.(preferences, organization’s)

Learning Objective7

Explain the importance of studying marketing.

44.One reason for studying marketing is that marketing offers many ______

opportunities, including advertising, sales, product management, retail store management, and others. (career)

45.Knowledge of marketing also will help you to become a more knowledgeable

______.(consumer)

Multiple Choice Quiz

1.Which group is a target for the marketing of goods?

A.Buyers

B.Sellers

C.Government purchasing agents

D.All of the above

2.Which of the following is a fundamental aspect of marketing?

A.Something that is received by each party

B.Something that is given up by each party

C.Some communication between the parties

D.All of the above

3.The marketing mix as an activity involves:

A.getting and keeping customers.

B.products and distributors.

C.promotion and price.

D.The 4 Ps of marketing.

4.Not-for-profit organizations:

A.attract clients for the government.

B.attract clients on the basis of high price.

C.attract clients on the basis of service.

D.attract clients on the basis of inconvenient location.

5.Which is NOTa form of promotion?

A.Personal selling

B.Notoriety

C.Advertising

D.Sales promotion

6.Michelin is most likely to use which marketing mix to element to introduce a new tire:

A.Higher quality, better performance, safety for the driver (product development)

B.“The most expensive tire in the world” (promotion)

C.Shipped directly to Wal-Mart (channel of distribution)

D.Appearance on the David Letterman Show (publicity)

7.Which of the following would be considered an uncontrollable variable?

A.Location near a shopping mall

B.Government regulation sought by our industry

C.Adverse weather

D.Market share

8.Production-orientation includes all of the following EXCEPT:

A.any color as long as its black.

B.pick from our existing product line.

C.one size fits all.

D.substitutions are welcome.

9.Which of the following does NOT support the marketing concept?

A.Long-run profitability

B.Warranties and service contracts eliminated

C.Integrated marketing and corporate functions

D.Customer satisfaction is our overall purpose

10.______is the aggregate of marketing activities within an economy.

A.Microeconomics

B.Macroorganism

C.Macroeconomics

D.Macrocosm

11.Which of the following is NOT an example of supporting the societal concept?

A.Using returnable containers for a discount

B.Supplying biodegradable plastic bags

C.Using all natural ingredients

D.Supporting clear cutting in the rain forests

12.A product’s package is primarily part of which aspect of the marketing mix?

A.Place (distribution)

B.Price

C.Promotion

D.Product

13.Which services are NOT usually available while flying on a cross-country flight?

A.Telephone service

B.Movies

C.Fax & receiving voice mail

D.Food & beverage

14.A magazine advertisement that reminds you to “Enjoy Coca-Cola” is part of which aspect of the marketing mix?

A.Price

B.Product

C.Promotion

D.Place

15.Major League Baseball’s market-orientation includes all EXCEPT:

A.changes in food and beverages at parks.

B.special fan appreciation nights.

C.allowing fans to choose the starting pitcher.

D.luxury corporate boxes.

True/False Quiz

_____1.All that is necessary to be successful in marketing is a superior product.

_____2.When a Girl Scout sells cookies door-to-door, this is an example of personal selling within a promotion strategy.

_____3.Many successful companies have evolved from production- or sales-orientation

organizations to marketing-oriented firms.

_____4.When Garth Brooks (singer) gives a free concert in Central Park in New York City, this is an example of publicity.

_____5.When eBay allows consumers to bid over the Internet what they are willing to pay for a product, this is an example of a pricing strategy for these products.

_____6.The economic environment of the U.S. is an example of a controllable variable.

_____7.An economic transfer of goods or services in exchange, for a price expressed in

monetary terms, is the marketing exchange most frequently analyzed.

_____8.The election of public officials represents significant marketing efforts in the area of

ideas and services.

_____9.Inflation is an example of a controllable variable in the marketing mix.

_____10.A “total product” includes not only the basic good or service, but all the “extras” that

go with it.

_____11.Organizations that have a “production-orientation” typically do best in a buyer’s market.

_____12.The “marketing orientation” of a company is captured in the slogan: Push! Push! Sell! Sell!

_____13.The 4 Ps are product, price, property, and promotion.

_____14.The marketing concept includes a consumer-orientation, an emphasis on long-run profits, and a cross-functional perspective.

_____15.The increased emphasis on the societal concept should increase the success of a

market-oriented company which has strong consumer support.

Critical Thinking and Writing Activities

1. Not-for-profit organizations need to do marketing just as much as (and some people would argue that they need to do it even more than) for-profit organizations. Take an organization such as The St. Louis Art Museum. What are the important aspects of the marketing mix for this museum if it is trying to attract more college students as visitors?

Product:

Place:

Promotion:

Price:

1. The process of marketing requires five fundamental aspects in order for marketing to occur. Describe these five aspects as they would apply to a college student who was attempting to purchase a CD over the Internet from Amazon.com.

Two or more parties:

Something that is given up by each party:

Something that is received by each party:

Some communication between the parties:

A mechanism that will perform the exchange:

1. Describe what is meant by “relationship marketing” as it apples to the relationship that you have with your college or university. What is your college or university attempting to do in terms of its relationship with you in order to establish and to nurture this type of relationship?

CHAPTER ONE QUIZ ANSWERS:

Vocabulary Quiz

1.F14.C

2.K15.A

3.LL16.HH

4.CC17.M

5.G18.EE

6.B19.GG

7.BB20.II

8.E21.L

9.DD22.KK

10.FF23.I

11.D24.J

12.JJ25.AA

13.H

Multiple Choice Quiz

1.D6.A11.D

2.D7.C12.D

3.D8.D13.C

4.C9.B14.C

5.B10.C15.C

True/False Quiz

1.F6.F11.F

2.T7.T12.F

3.T8.T13.F

4.T9.F14.T

5.T10.T15.T

Chapter 1 Cross Word Puzzle

Page for Marketing Notes

Chapter 1 Cross Word Solution