AN INTRODUCTION

TO MARKETING
IN THE 21ST CENTURY
PART

1
In Part 1, we begin our study of marketing and discuss concepts that form the
basis for the rest of the book.

1  The Nature of Marketing

To begin our journey, we look at marketing’s dynamic nature, broadly define
“marketing,” and trace the evolution of marketing. Special attention is paid to
the marketing concept, a marketing philosophy, customer service, and custom-
er satisfaction and relationship marketing. We also examine the importance of
marketing, as well as marketing functions and performers.

2  The Environment in Which Marketing Operates

This chapter covers the complex environment within which marketing func-
tions, with an emphasis on both the factors that can be controlled and those
that cannot be controlled by an organization and its marketers. We show that
without adequate environmental analysis, a firm may function haphazardly or
be shortsighted.

3  Developing and Enacting Strategic Marketing Plans

After reading Part 1, you
should understand elements
Here, we first differentiate between strategic business plans and strategic 1–5 of the strategic marketing
marketing plans, and present the total quality approach to planning. Next, we plan outlined in Table 3-2
examine different kinds of strategic plans and the relationships between mar- (page 68).
keting and other functional areas. We then present the steps in the strategic
planning process. A sample outline for a strategic marketing plan is presented
and the actual strategic marketing plan of a small firm is highlighted.

4  Information for Marketing Decisions

In this chapter, we discuss why marketing decisions should be based on sound
information. We describe the role and importance of the marketing informa-
tion system—which coordinates marketing research, continuous monitoring,
and data storage and provides the basis for decision making. We also cover the
steps in the marketing research process, and show that marketing research may
involve surveys, observation, experiments, and/or simulation.
The Nature of Marketing

Chapter Objectives
CHAPTER

1
Chapter Outline
1. To illustrate the exciting, dynamic, and influential nature of marketing Overview
2. To define marketing and trace its evolution—with emphasis on the Marketing Defined
marketing concept, a marketing philosophy, customer service, and The Evolution of Marketing
customer satisfaction and relationship marketing
The Marketing Concept
3. To show the importance of marketing as a field of study
Selling Versus Marketing
4. To describe the basic functions of marketing and those who perform these Philosophies
functions
Customer Service
Customer Satisfaction
and Relationship Marketing
The Walt Disney Company (http://thewaltdisneycompany.com) is one of
The Importance of Marketing
the world’s best service marketing firms. It is consistently rated highly in
Fortune’s “Most Admired Companies” annual listing. And the firm has cer- Marketing Functions
tainly evolved over the years. Do you know what Disney is into these days? and Performers
As its Web site notes: Format of the Text
The Walt Disney Company, together with its subsidiaries and affiliates, Web Sites You Can Use
is a leading diversified international family entertainment and media en- Summary
terprise with five business segments: media networks, parks and resorts,
studio entertainment, consumer products, and interactive media. Key Terms
Review Questions
n Media Networks—comprise a vast array of broadcast, cable, radio,
publishing, and digital businesses across two divisions—the Disney/ Discussion Questions
ABC Television Group and ESPN Inc. Web Exercise
n Parks and Resorts—Walt Disney Parks and Resorts is one of the
Practice Quiz
world’s leading providers of family travel and leisure experiences,
giving millions of guests each year the chance to spend time with Notes
their families and friends, making memories that last a lifetime. Appendix
n The Walt Disney Studios—For more than 85 years, Walt Disney
Studios has been the foundation on which Walt Disney Company
was built. Today, the Studio brings quality movies, music, and stage
plays to consumers throughout the world.
n Disney Consumer Products—This is the business segment that ex-
tends the Disney brand to merchandise ranging from apparel, toys,
and home décor to books and magazines, foods and beverages, sta-
tionery, electronics, and animation art.
n Disney Interactive—Founded in 2008, Disney Interactive creates
high-quality interactive entertainment across digital media plat-
forms, including mobile, social, and console games, online virtual
worlds, and Web destinations Disney.com and the Moms and Fam-
ily network of Web sites.
Check out the Disney Facebook page (www.facebook.com/Disney). “Magic Awaits at the New
In this chapter, we will learn more about the importance of service in Fantasyland”
generating customer loyalty. We will also look at the roles of marketing, see http://youtu.be/
how marketing has evolved, and look at its scope. azaI92vXN-s
3

 OVERVIEW
Marketing is a dynamic The field of marketing is fast-paced, contemporary, and seldom boring. We engage in
field, encompassing many marketing activities or are affected by them on a daily basis, both in our business-related
activities. roles and as consumers. Okay, but what exactly does “marketing” mean? Well, it is not
just advertising or selling goods and services, although these are aspects of marketing.
And it is not just what we do as supermarket shoppers every week, although this, too, is
part of marketing.
“Marketing”—as formally defined later in the chapter—is involved with anticipating,
managing, and satisfying demand via the exchange process. As such, marketing encom-
passes all facets of buyer/seller relationships. Specific marketing activities include envi-
ronmental analysis and marketing research, broadening an organization’s scope, consum-
er analysis, product planning, distribution planning, promotion planning, price planning,
and marketing management.
In a less abstract manner, here are two examples of real-world marketing—one from a
business perspective and one from a consumer perspective:
Business perspective: Bill Norman, a 2007 BA with a graphic arts major, is a cre-
ative director for a large advertising agency. The agency serves both small businesses and
corporate accounts on a national basis. Norman oversees the creative end of all digital
advertising at his agency. This involves graphics, headlines, and copy. He is now ready
to open his own firm but must make a number of decisions: Who should his clients be?
What kinds of advertising services should he offer? Where should he open his office?
How will he attract clients? What fee schedule should he set? Is it ethical to try to attract
clients he worked with at his old firm? Each of these questions entails a business-related
marketing decision.
Let’s look at some of Bill Norman’s marketing options:
n Clients—He could target small or medium businesses (consistent with his work
experience).
n Kinds of advertising services—He could open a full-service agency and offer a
wide array of services for all kinds of print and online media, advice on media
selection, media buying, and so on; or he could focus on online ads, as he has done
before.
n Office location—He could have an office in a downtown office building, a
suburban professional building, or his home. He could also do client visits, making
the choice of location less important.
n Attracting clients—He must determine the best way to reach his potential clients,
such as paying for Google AdWords, sending direct mail pieces to prospective
clients, appearing at professional events (such as a local meeting of dentists),
running ads in local newspapers, and so on.
n Fee schedule—He must rely on his own experience with his previous firm and
look at what competitors are doing. Then, he could price similar to others or lower/
higher than them (depending on his desired image and a realistic reading of the
marketplace).
n Ethics—He must weigh the personal dilemma of “stealing” clients from his old
firm against the difficulty of starting a business from scratch without any client
base.
Consumer perspective: At the same time that Bill Norman is making decisions about
his new ad agency, Nancy Willis is reappraising her status as an advertising client. She
owns a five-unit restaurant chain and has been a client of a mid-sized ad agency for 10
years. That firm has prepared and placed all of Willis’ advertising. Willis spends $250,000
per year on ads; the agency fee is 15 percent of this. Yet, she is now unhappy. She feels
the agency takes her for granted. But before switching firms, these questions must be
answered: What kind of agency should she select? What services should she seek? Where

4 Part 1  An Introduction to Marketing in the 21st Century

should the new agency be located? How will she learn more about possible firms? What
fees should she be willing to pay? Is it ethical to show prospective firms the bills paid
to her present agency? Each of these questions addresses a consumer-related marketing
decision.
Let’s look at some of Nancy Willis’ marketing options:
n Kind of firm—She could select a small, medium, or large ad agency. Given her
current dissatisfaction, she might want to avoid medium and large firms.
n Advertising services—She could continue to have a single ad agency prepare and
place all advertising; or she could use one agency to prepare the advertising and
another to buy advertising space. And she could include more online advertising.
n Office location—She could look for an ad agency that makes on-site visits (as
her present firm does) or seek an agency that has an office near to one of her
restaurants.
n Learning about firms—She could ask prospective firms for references, check out
credentials, interview candidates, and/or require firms to perform a sample task.
n Fee schedule—She could continue to pay a standard 15 percent fee; or she could
negotiate for a lower amount. She recognizes that you get what you pay for; and
she wants great service.
n Ethics—Willis believes she, as the client, has the right to show any information
about her past advertising practices and fees to prospective agencies.
A marketing match? For “marketing” to operate well, buyers and sellers need to find
and satisfy each other (conduct exchanges). Do you think Bill Norman and Nancy Willis
would make a good marketing match? We do—but only if their strategy (Norman) and
expectations (Willis) are in sync.
The bottom line: Goods and service providers (“sellers”) make marketing-related deci-
sions such as choosing who their customers are, what goods and services to offer, where
to sell these goods and services, the features to stress in ads, and the prices to charge. They
also determine how to be ethical and socially responsible, and whether to sell products
globally in addition to domestically. Marketing-related activities are not limited to large
corporations or people called “marketers.” They are taken on by all types of companies
and people.
As consumers (“buyers”), the marketing practices of goods and service providers af- We are all involved with or
fect many of our choices, as well as those made by our parents, spouses, other family affected by marketing.
members, and friends and associates. For virtually every good and service we purchase,
the marketing process affects whom we patronize, the assortment of models and styles
offered in the marketplace, where we shop, the availability of knowledgeable sales per-
sonnel, the prices we pay, and other factors. Marketing practices are in play when we are
born (which doctor our parents select, the style of furniture they buy), while we grow (our
parents’ purchase of a domestic or foreign car or sports utility vehicle, our choice of a col- “Meet Raymond, a REAL
lege), while we conduct our everyday lives (the use of a particular brand of toothpaste, the Google Marketing Intern”
purchase of status-related items), and when we retire (our consideration of travel options, http://youtu.be/
a change in living accommodations). uhmLf2yk-Z4
An in-depth study of marketing requires an understanding of its definition, evolution
(including the marketing concept, a marketing philosophy, and customer service), im-
portance and scope, and functions. These principles are discussed throughout Chapter 1.

DIGITAL MARKETING IN PRACTICE

As we know, YouTube is a major phenomenon today. With that in mind: Is YouTube

popularity enduring? Or is YouTube popularity is a fad? Check out “YouTube Stars:
Where Are They Now?” (http://wp.me/p2qANL-1gS) and see.

Chapter 1  The Nature of Marketing 5


Marketing focuses on
anticipating, managing, and
satisfying demand.
Demand is affected by both
consumers and publics.
6 Part 1  An Introduction to Marketing in the 21st Century
MARKETING DEFINED
In late 2007, the American Marketing Association introduced an updated definition of
marketing, calling it “the activity, set of institutions, and processes for creating, com-
municating, delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large.”1
For purposes of clarity, this shorter, more direct definition of marketing forms the basis
of our text. It involves goods, services, organizations, people, places, and ideas:
Marketing is the anticipation, management, and satisfaction of demand through the
exchange process.
Anticipation of demand requires a firm to do consumer research on a regular basis so
it can develop and introduce offerings desired by consumers. Management of demand
includes stimulation, facilitation, and regulation tasks. Stimulation motivates consumers
to want a firm’s offerings due to attractive product designs, distinctive promotion, fair
prices, and other strategies. Facilitation is the process whereby the firm makes it easy to
buy its offering by having convenient locations, accepting credit cards, using informed
salespeople, and enacting other strategies. Regulation is needed when there are peak de-
mand periods rather than balanced demand throughout the year or when demand exceeds
supply. Then, the goal is to spread demand throughout the year or to demarket a good or
service (reduce overall demand). Satisfaction of demand involves product availability, ac-
tual performance upon purchase, safety perceptions, after-sale service, and other factors.
For consumers to be satisfied, goods, services, organizations, people, places, and ideas
must fulfill their expectations. See Figure 1-1.
Marketing can be aimed at consumers or at publics. Consumer demand refers to the
attributes and needs of final consumers, industrial consumers, wholesalers and retailers,
government institutions, international markets, and nonprofit institutions. A firm may
­appeal to one or a combination of these. Publics’ demand refers to the attributes and
needs of employees, unions, stockholders, the general public, government agencies, con-
sumer groups, and other internal and external forces that affect company operations.
FIGURE 1-1  Customer Satisfaction Is Job One
A lot of hard work goes into satisfying customers. But, if they are happy, they’re likely to return.
Source: Dusit/Shutterstock. Reprinted by permission.
FIGURE 1-2  The Societal Perspective of Marketing
Marketing is not only conducted by profit-driven firms but by nonprofit entities, such as the
Make-a-Wish Foundation (www.wish.org). “A wish can teach a sick child that anything is
possible. Even the future.”
Source: Reprinted by permission.

The marketing process is not concluded until consumers and publics exchange their Exchange completes the
money, their promise to pay, or their support for the offering of a firm, institution, person, process.
place, or idea. Exchanges must be done in a socially responsible way, with both the buyer
and the seller being ethical and honest—and considering the impact on society and the
environment.
A proper marketing definition should not be confined to economic goods and services.
It should cover organizations (Big Brothers Big Sisters, www.bbbs.org), people (politi-
cians), places (Hawaii), and ideas (the value of seat belts). See Figure 1-2 and Figure 1-3.
A consumer orientation must be central to any definition. And from a societal perspective,
a firm should ask if a good or service should be sold, besides whether it can be sold.

THE EVOLUTION OF MARKETING

Marketing’s evolution in an industry, country, or region of the world often entails a se-
quence of stages: barter era"production era"sales era"marketing department era"
­
marketing company era. In some industries, nations, and regions, marketing practices
have evolved through each stage and involve a good consumer orientation and high effi-
ciency; in others, marketing practices are still in infancy.

Chapter 1  The Nature of Marketing 7


Marketing can be traced to the
barter era.
8 Part 1  An Introduction to Marketing in the 21st Century
FIGURE 1-3  Marketing Savannah, Georgia, as an Attractive Place
for Business
Source: Reprinted by permission.
Marketing’s origins can be traced to people’s earliest use of the exchange process: the
barter era. With barter, people trade one resource for another—like food for animal pelts.
To accommodate exchanges, trading posts, traveling salespeople, general stores, and cit-
ies evolved along with a standardized monetary system. In the least developed nations of
the world, barter is still widely practiced.
The modern system of marketing begins with the industrialization of an industry, coun-
try, or region. For the world’s most developed nations, this occurred with the Industrial
Revolution of the late 1800s. For developing nations, efforts to industrialize are now un-
der way. Why is industrialization so important? Without it, exchanges are limited because
people do not have surplus items to trade. With the onset of mass production, better trans-
portation, and more efficient technology, products can be made in greater volume and
sold at lower prices. Improved mobility, densely populated cities, and specialization also
let more people share in the exchange process: They can turn from self-sufficiency (such
 Barter Production Sales Marketing Marketing
Era Era Era Department Company
Era Era

Demand Supply Supply Supply

Self-
exceeds equals exceeds exceeds
sufficiency
supply demand demand demand
Integrated,
Basic Selling Marketing
Output comprehensive
one-on-one process a subsidiary
expanded role for
trading important function
marketing

FIGURE 1-4  How Marketing Evolves

as making their own clothes) to purchases (such as buying clothes). In the initial stages
of industrialization, output is limited and marketing is devoted to physical distribution.
Because demand is high and competition is low, firms typically do not have to conduct
consumer research, modify products, or otherwise adapt to consumer needs. The goal is
to lift production to meet demand. This is the production era of marketing. In the production era, output
At the next stage, companies expand production capabilities to keep up with consumer increases to meet demand.
demand. Many firms hire a sales force and some use advertising to sell their inventory.
Yet, because competition is still rather low, when firms develop new products, consumer
tastes or needs receive little consideration. The role of the sales force and advertising is to
make consumer desires fit the features of the products offered. Thus, a shoe manufacturer
might make brown wingtip shoes and use ads and personal selling to persuade consumers
to buy them. That firm would rarely determine consumer tastes before making shoes or
adjust output to those tastes. This is the sales era of marketing. It still exists where com- In the sales era, firms
petition is limited, such as in nations recently converting to free-market economies. sell products without first
Supply begins to exceed demand as competition grows. Firms cannot prosper without determining consumer desires.
marketing input. They create marketing departments to conduct consumer research and
advise management on how to better design, distribute, promote, and price products. Un-
less firms react to consumer needs, competitors might better satisfy demand and leave
the firms with surplus inventory and falling sales. Although marketing departments share
in decisions, they may be in a subordinate position to production, engineering, and sales
departments. This is the marketing department era. It still exists where marketing has The marketing department era
been embraced, but not as the driving force in an industry or company. occurs when research is used to
Over the last several decades, firms in a growing number of industries, nations, and determine consumer needs.
regions have recognized marketing’s central role; marketing departments at those firms
are now the equal of others. The firms make virtually all key decisions after thorough
consumer analysis: Because competition is intense and sophisticated, consumers must be
aggressively drawn and kept loyal to a firm’s brands. Company efforts are well integrated
and regularly reviewed. This is the marketing company era. Figure 1-4 indicates the key The marketing company era
aspects of each era in marketing’s evolution. integrates consumer research
The marketing concept, a marketing philosophy, customer service, and customer satis- and analysis into all efforts.
faction and relationship marketing are the linchpins of the marketing company era. They
are examined next.

The Marketing Concept

As Figure 1-5 shows, the marketing concept is a consumer-oriented, market-driven, The marketing concept is
­value-based, integrated, goal-oriented philosophy for a firm, institution, or person.2 Here consumer-oriented, market-
is an example of it in action. According to Randy Fishkin of Internet company Moz (www driven, value-driven,
.moz.com): “Every great marketer uses a combination of the following characteristics:” integrated, and goal-oriented.

Transparency—By being transparent, users develop a trust in the brands that they inter-
act with and develop a deeper connection with them. So, it is far better to share highs
and lows. Authenticity—Customers can clearly see through fake messaging. Authentic

Chapter 1  The Nature of Marketing 9

 FIGURE 1-5  The Marketing Concept

brands develop the best connections with customers. Generosity—All good marketing
contains some element of generosity. This implies a willingness to give things away at
a discounted rate or free periodically. Fun—Even the most mundane topics should be
lightened up to be marketed correctly. Empathy—Good marketing sees the world from
the eye of the customer and tailors its message accordingly. Rather than a company
just listing its features, it should tell you exactly how it will solve your pain. Being
­Exceptional—In a world where everyone is copying each other, great marketers should
zag when everyone else is zigging. This means being the outlier in ways that make you
stand out from the crowd.3
The marketing concept’s five elements are crucial to the long-term success of a good,
service, organization, person, place, or idea: A consumer orientation means examin-
ing consumer needs, not production capability, and devising a plan to satisfy them. A
­market-driven approach means being aware of the structure of the marketplace, especial-
ly the attributes and strategies of competing firms. A value-based philosophy means of-
fering goods and services that consumers perceive to have superior value relative to their
costs and the offerings of competitors. With an integrated marketing focus, all the activ-
ities relating to goods and services are coordinated, including finance, production, engi-
neering, inventory control, research and development, and marketing. A goal-­oriented
firm employs marketing to achieve both short-and long-term goals—which may be profit,
funding to find a cure for a disease, increased tourism, election of a political candidate, a
better company image, and so on. Marketing helps attain goals by orienting a firm toward
pleasing consumers and offering desired goods, services, or ideas.
These are some of the things that managers can do to adhere to the spirit of the mar-
keting concept:
n Create a customer focus throughout the firm.
n Listen to customers.
n Define and cultivate distinctive competences.
n Define marketing as market intelligence.
n Target customers precisely.
n Manage for profitability, not sales volume.
n Make customer value the guiding star.
n Let the customer define quality.
n Measure and manage customer expectations.
n Build customer relationships and loyalty.
n Define the business as a service business.
n Commit to continuous improvement and innovation.

10 Part 1  An Introduction to Marketing in the 21st Century

 n Manage the company culture along with strategy and structure.
n Grow with partners and alliances.
n Destroy marketing bureaucracy.4
Through the marketing concept, a firm analyzes, maximizes, and satisfies consumer
demand. Yet, it is only a guide to planning. A firm must also consider its strengths and
weaknesses in production, engineering, and finance. Marketing plans need to balance
goals, customer needs, and resource capabilities. The impact of competition, government “Putting Customers In
regulations, and other external forces must also be evaluated. These factors are discussed Control”
in Chapters 2 and 3. http://youtu.be/
5ESjHdHzLLc
Selling Versus Marketing Philosophies
Figure 1-6 highlights the differences in selling and marketing philosophies. The benefits With a marketing
of a marketing, rather than a sales, orientation are many. Marketing stresses consumer orientation, selling helps
analysis and satisfaction, directs the firm’s resources to making goods and services con- to communicate with and
sumers want, and adapts to changes in consumer traits and needs. Under a marketing understand consumers.
philosophy, selling is used to communicate with and understand consumers; consumer
dissatisfaction leads to changes in policy, not a stronger or different sales pitch. Market-
ing looks for real differences in consumer tastes and devises offerings to satisfy them.
Marketing is geared to the long run, and marketing goals reflect overall company goals.
Finally, marketing views customer needs broadly (such as heating), not narrowly (such
as fuel oil).
Consider this observation from business writer Helen Akers:
Sales-driven firms focus on immediate results. A company that employs a sales-driven
strategy wants to secure business as soon as possible and emphasizes convincing the
customer to buy the product. In a sales-driven firm, sales representatives tend to high-
light what the product can do for the customer. In contrast, a market-oriented firm con-
centrates on finding out what the customer needs and puts less emphasis on short-term
results. With a market orientation, a firm seeks to position its product as distinctive and
gently encourage the customer to buy. Sales representatives in a sales-driven firm have a

FIGURE 1-6  The Focus of Selling and Marketing Philosophies

Chapter 1  The Nature of Marketing 11


Customer service tends
to be intangible, but quite
meaningful, to many
consumers.
To offer better customer
service, some firms are
empowering employees.
12 Part 1  An Introduction to Marketing in the 21st Century
tendency to micromanage the sales process. They see each customer as either a potential
success or a potential failure. The sales-driven strategy does not look at the big picture.
A market orientation attempts to focus on the firm’s entire customer base. Besides striv-
ing for long-term results, a strategy that is market-oriented includes a vision that spells
out how the firm’s product is going to be of value to the customer.5
Customer Service
Customer service involves the identifiable, but rather intangible, activities undertaken
by a seller in conjunction with the basic goods and/or services it offers.6 In today’s highly
competitive marketplace, the level of customer service a firm provides can greatly affect
its ability to attract and retain customers. Nonetheless, firms often have to make customer
service trade-offs. For instance, supermarkets must weigh the potential loss of business if
waiting lines are too long versus the cost of hiring more cashiers.
Unless a consumer is happy with both the basic good (such as a new PC) or service
(such as the installation of computer software) offered by a seller and the quality of cus-
tomer service (such as polite, expert sales personnel and on-time appointments), he or
she is not likely to patronize the seller—certainly not in the long run. And today, unhappy
consumers have more ways to vent their anger than ever before:
It’s every marketer’s worst nightmare: a social media crisis that has taken on a life of its
own and is posing a real threat to a brand’s reputation. It could be a negative comment
from a dissatisfied customer that’s gone viral on Twitter, an online reaction to a brand
action offline, or an accidental Facebook post by the brand’s agency. To develop rapid
response capabilities, companies are shifting emphasis to technologies and platforms
that make listening more important than messaging. However, a recent survey from J.D.
Power (www.jdpower.com) points to the risks associated with monitoring: 51 percent
of consumers simply do not want companies to eavesdrop on their conversations and
43 percent believe that monitoring is an intrusion on their privacy. The majority of con-
sumers, 64 percent, insist that they want companies to respond to social comments only
when spoken to.7
According to consumer surveys, perceptions about the overall level of customer ser-
vice at U.S. businesses are declining. Why? Let’s look at the case of the U.S. airline
industry. Since 2008, airlines have imposed a number of fees on many tickets, including
ones for baggage, prime seats in economy class, snacks, and more. The airlines view the
fees as a reasonable way to cover the soaring increase in their fuel costs and to reduce the
weight of their flights. Consumers, on the other hand, view the fees as another way that
the airlines are “nickel-and-diming” them.8
Despite the preceding comments, lots of firms do positively address the issue of cus-
tomer service. They also know it can be difficult. Consider these comments about a cus-
tomer service experience from a very happy consumer: “Recently, our three-year-old Cui-
sinart coffee maker started making noises akin to a strangled parrot, and then ended its life
with a theatrical puff of smoke, like a magician’s finale. When contacted about this, Cui-
sinart (www.cuisinart.com)—which is owned by the Conair Corporation—immediately
shipped us a newer and better machine, even though ours was long out of warranty. The
company also provided a box to ship the old one back, presumably for an autopsy. The
whole process took less than 5 days. Well done, Conair. You have a customer for life.”9
Some of the best practitioners of customer service, such as Ritz-Carlton and Federal
Express, are empowering employees, whereby workers are given broad leeway to sat-
isfy customer requests. With empowerment, employees are encouraged and rewarded
for showing initiative and imagination. They can “break the rules” if, in their judgment,
customer requests should be honored: All Ritz-Carlton hotel (www.ritzcarlton.com) em-
ployees (including housekeepers) are trained to listen for customer complaints and to be
familiar with possible solutions. Similarly, Federal Express (www.fedex.com) drivers
can help customers pack breakable items. PARKnSHOP (www.parknshop.com), Hong
Kong’s leading supermarket chain, has a strong customer service approach and allows
employees to be liberal with returns, as long as certain conditions are met.
 Ace Hardware (www.acehardware.com) has added customer coordinator positions to
facilitate the shopping experience. This is a recent job description for Sunshine Ace Hard-
ware in San Carlos Park, Florida: “The customer coordinator is an individual who pro-
vides support functions to the front end, sales floor, and management staff. Coordinators
strive hard to provide the best professional, high-level customer service for the customers
in the store. They assist in directing and managing ‘customer flow’ while developing
customer service standards.” The coordinator “assists customers promptly” and acts in a
“friendly, courteous, and knowledgeable manner.”10

Customer Satisfaction and Relationship Marketing

Customer satisfaction is a crucial element in successful marketing. It is the degree to Firms cannot usually prosper
which there is a match between a customer’s expectations of a good or service and the without a high level of
actual performance of that good or service, including customer service.11 As Qualtrics customer satisfaction.
(www.qualtrics.com) notes: “Customer satisfaction is one of the most essential elements
of customer retention, customer loyalty, and product repurchase. The art and science of
customer satisfaction involves strategically focusing on creating and reinforcing pleasur-
able experiences.”12 Figure 1-7 shows 11 representative factors that affect overall custom-
er satisfaction.
It is imperative that firms keep in touch with customers to determine what is necessary
to keep them fully satisfied:
Companies looking to generate a satisfied and loyal group of customers need to keep in
mind the different drivers that affect customers’ attitudes. For each factor, they should
measure, benchmark, and compare their performance with different customer groups
against past performance, the company’s overall goals, and the performance of major
competitors. The classic approach is to ask respondents to select an adjective that re-
flects their opinion, typically using a five-point scale; a similar survey can be conduct-
ed with the customers of competitors. By monitoring how well it is doing versus past
performance, competitors, and other benchmarks, a company can develop insights and
early warnings that will enable managers to make timely adjustments to their customer
relationship strategies.13
If a customer becomes upset, several actions can be taken: (1) “If you have answered
the phone on behalf of the company, you have accepted 100 percent responsibility. So
get off the ‘It’s not my fault’ syndrome.” (2) “Saying you’re sorry won’t fix the problem,

Friendly employees Courteous employees

Helpful employees Knowledgeable employees

Overall
Quick service Customer Accuracy of billing
Satisfaction

Billing clarity Billing timeliness

Good value Competitive pricing

Service quality

FIGURE 1-7  Factors That Affect Customer Satisfaction

Source: Steven Hokanson, “The Deeper You Analyze, the More You Satisfy Customers,” Marketing News
(January 2, 1995), p. 16. Reprinted by permission of the American Marketing Association.

Chapter 1  The Nature of Marketing 13

 ETHICS AND SOCIAL RESPONSIBILITY IN PRACTICE

In most cases, it is legally and ethically okay to charge Samoa Air has taken price variations to another lev-
different prices to different customers, such as when el by charging passengers based on their weight. Yes,
people pay more to fly on busy holidays or when they you read this right. Check out “On Samoa Air, Fatter
go to a show and sit in the first row of the theater. But People Pay More” (http://t.co/TSXNm4z9x7) and see.

Through relationship
marketing, companies try to
increase long-term customer
loyalty.
but it definitely does help to defuse it immediately.” (3) “When someone is angry or frus-
trated with your company, the one thing he or she needs is someone to agree with him or
her—or at least show understanding.” (4) “Don’t make a customer wait for good service.
Get him or her whatever is needed immediately.” (5) “Ask the customer what would make
him or her happy.” (6) “Service recovery is not just fixing the problem. It’s making sure it
won’t happen again.” (7) “After you feel the problem has been fixed, follow-up on it.”14
Companies with satisfied customers have a good opportunity to convert them into loy-
al customers who purchase from those firms over an extended period. From a consumer-­
oriented perspective, when marketing activities are performed with the conscious inten-
tion of developing and managing long-term, trusting customer relations, relationship
marketing is involved.15 Why is this so important? According to Ian Linton of Demand
Media (www.demandmedia.com). With relationship marketing, “you can increase the
opportunity for repeat sales to customers, while reducing the cost of sales and market-
ing.” This “helps to increase customer loyalty, reducing the need to allocate marketing
budget to acquire new customers. Satisfied customers may also recommend your goods
or services to other potential customers, increasing the potential for additional revenue
and profit.”16 See Figure 1-8.
Office Depot (www.officedepot.com), the giant chain of office supplies and equip-
ment stores, is one of many firms that has mastered relationship marketing, especially
with its Web sites. Its
Tech Depot (www.techdepot.com) is a direct marketer of computer and technology
products. We have over 100,000 business, government, and education customers. Our
account management team, combined with our robust online catalog, saves customers
time and money. We offer qualified customers many advantages such as flexible credit
terms, dedicated account managers, and Extranets. Multibillion Dollar Buying Power:

FIGURE 1-8  Good Relationship Marketing Brings Long-Term Success

(a) When companies grasp the importance of customer relationships and go out of their way to create and foster positive
experiences, chances are good that those customers will be loyal to the firms.
(b) On the other hand, bad interactions will lose future sales and lead to negative word of mouth.
Sources: (a) Andy Dean Photography/Shutterstock. (b) Lisa S./Shutterstock. Reprinted by permission.

14 Part 1  An Introduction to Marketing in the 21st Century

 As a subsidiary of Office Depot, we have direct relationships with leading manufac-
turers and distributors to ensure that our customers obtain the most competitive prices
each and every day. Broad Selection: 100,000+ products, including PC hardware, soft-
ware, networking, and supplies. Total Purchasing Convenience: Security and privacy
are assured; bill-when-ship policy; powerful search engine. Incomparable Service: Per-
sonalized, one-on-one account management; dedicated customer care teams; free sales
technical support; no restocking fees.17
Scion, one of Toyota’s auto divisions, is another leader in relationship marketing due to
its hassle-free sales process, its customer-friendly Web site (www.scion.com), and other
factors:
Scion is unique because both the products and buying process are designed to create a
whole new culture that will change the car buying experience. We respect your time by
creating a simple, straightforward, easy-to-understand approach called “Pure Price.”
This means no haggle, no hassle. Our customers told us they want a shorter, simpler pro-
cess with less pressure—and we listened. With the Scion Pure Price Solution, you don’t
have to negotiate price—or sit around the dealership waiting for someone to “crunch the
numbers.” In many cases, you’ll deal with only one person for the entire transaction—
start to finish. That makes it easier on you—and easier on us. We can devote more time
and attention to getting you the car you want—and getting you on your way.18
Sephora (www.sephora.com) is a retail concept intent on generating loyal customers.
Founded in France, Sephora is one of the world’s leading chains of perfume and cosmet-
ics stores. It operates 1,300 stores in 27 countries and is still rapidly expanding. Sephora
came to the United States in mid-1998 with its New York and Miami stores. There are
now more than 300 stores in North America. The key to Sephora’s success is its distinc-
tive selling approach:
Sephora’s unique, open-sell environment features an ever-increasing amount of classic
and emerging brands across a broad range of product categories including skincare,
color, fragrance, body, smile care, and haircare, in addition to Sephora’s own private
label. To build the most knowledgeable and professional team of product consultants
in the beauty industry, Sephora developed “Science of Sephora.” This program ensures
that our team is skilled to identify skin types, have knowledge of skin physiology, the
history of makeup, application techniques, the science of creating fragrances, and most
importantly, how to interact with Sephora’s diverse clientele. Owned by Louis Vuitton
Moet Hennessy (LVMH), the world’s leading luxury goods group, Sephora is highly re-
garded as a beauty trailblazer, thanks to its unparalleled assortment of prestige products,
unbiased service from experts, interactive shopping environment, and innovation.19
Many Web sites can help client firms improve their level of customer satisfaction and
relationship marketing. Examples include Business Research Lab (www.busreslab.com/
consult/custsat.htm), Confirmit CustomerSat (www.confirmit.com), Customer Value,
Inc. (www.cval.com), and Responsys (www.responsys.com).

THE IMPORTANCE OF MARKETING

This section discusses several reasons why the field of marketing should be studied: A Marketing stimulates
basic task for marketing is to generate consumer enthusiasm for goods and services be- consumers, constitutes a
cause a key marketing task is to stimulate demand. Worldwide, more than $90 trillion of large part of selling costs,
goods and services are produced annually (expressed in purchasing-power-parity), with employs many people,
supports industries, affects
the United States accounting for 18 to 19 percent of that sum.20 all consumers, and plays a
A large portion of each sales dollar goes to cover the costs related to such marketing major role in our lives.
activities as product development, packaging, distribution, advertising and personal sell-
ing, price marking, and administering consumer credit programs. Some estimates place
the costs of marketing as high as 50 percent or more of sales in certain industries. Yet,
it should not be assumed that the performance of certain marketing tasks by consumers
would automatically lead to lower prices. Could a small business really save money by

Chapter 1  The Nature of Marketing 15

 GLOBAL MARKETING IN PRACTICE

Now that the United States accounts for about 22 per- ample of this is General Motors’ emphasis on growing
cent of the worldwide market for auto sales—down foreign sales, with mixed results. Check out “GM Pulls
from about 33 percent 20 years ago, American auto Chevy from Europe as Opel Expands” (http://bloom
makers are stepping up their global efforts. A great ex- .bg/1iBJHoS) and see.

Marketing awareness is
invaluable for those in non-
marketing jobs.
having the owner fly to Detroit to buy a new truck directly from the maker rather than
from a local dealer? Would a family be willing to buy clothing in bulk to reduce a retail-
er’s transportation and storage costs?
Tens of millions of people work in marketing-related jobs in the United States alone.
They include those employed in the retailing, wholesaling, transportation, warehousing,
and communications industries (including the Internet), and those involved with market-
ing jobs for manufacturing, service, agricultural, mining, and other industries. Projections
indicate future employment in marketing will remain strong.
Marketing activities also involve entire industries, such as advertising and marketing
research. Total annual worldwide advertising expenditures are more than $600 billion.
Many agencies, such as Omnicom Group (www.omnicomgroup.com) and Interpublic
Group (www.interpublic.com) of the United States, WPP Group (www.wpp.com) of
Great Britain, Japan’s Dentsu (www.dentsu.com), and France’s Publicis Groupe (www
.publicisgroupe.com) have worldwide billings of several billion dollars each. About $35 bil-
lion worldwide is spent yearly on various types of commercial marketing research. U.S. firm
Nielsen (www.nielsen.com), Kantar (www.kantar.com) of Great Britain, GfK (www.gfk
.com) of Germany, and Ipsos (www.ipsos.com) of France each generate yearly world-
wide revenues of more than one billion dollars.
All people and organizations serve as consumers for various goods and services. By
understanding the role of marketing, consumers can become better informed, more se-
lective, and more efficient. Effective channels of communication with sellers can also be
established and complaints resolved more easily and favorably. Consumer groups have a
major impact on sellers.
Because resources are scarce, marketing programs and systems must function at their
peak. Thus, by optimizing customer service, inventory movement, advertising expendi-
tures, product assortments, and other areas of marketing, firms will better use resources.
Some industries may even require demarketing (lowering the demand for goods and ser-
vices). The latter often include energy consumption.
Marketing impacts strongly on people’s beliefs and lifestyles. In fact, it has been criti-
cized as fostering materialistic attitudes, fads, product obsolescence, a reliance on gadgets,
status consciousness, and superficial product differences—and for wasting resources.
Marketers reply that they merely address the desires of people and make the best goods
and services they can at the prices people will pay.
Marketing has a role to play in our quality of life. For example, marketing personnel
often encourage firms to make safer products, such as child-proof bottle caps. They create
public service messages on energy conservation, AIDS prevention, driver safety, alcohol
abuse, and other topics. They help new goods, ideas, and services (such as Apple iPhones
[www.apple.com/iphone], improved nutrition, and YouTube [www.youtube.com]) to be
recognized and accepted by people and organizations.
Knowledge of marketing is extremely valuable for those not directly involved in a
marketing job. Each profession and organization must address patient, client, consumer,
student, taxpayer, contributor, and other needs. And more of them than ever before are
performing marketing tasks such as research, advertising, and so on. Marketing decisions
must be made by:
n Doctors—What hours are most desirable to patients?
n Lawyers—How can new clients be attracted?

16 Part 1  An Introduction to Marketing in the 21st Century

 n Management consultants—Should fees be higher, lower, or the same as
competitors’ fees?
n Financial analysts—What investments should be recommended to clients?
n Research and development personnel—Is there demand for a potential
“breakthrough” product?
n Economists—What impact will the economy have on how various industries
market their offerings?
n Statisticians—How should firms react to predicted demographic shifts?
n Teachers—How can students become better consumers?
n City planners—How can businesses be persuaded to relocate to the city?
n Nonprofit institutions—How can donor contributions be increased?

MARKETING FUNCTIONS AND PERFORMERS

There are eight basic marketing functions: environmental analysis and marketing re- Basic marketing functions
search, broadening the scope of marketing, consumer analysis, product planning, distri- range from environmental
bution planning, promotion planning, price planning, and marketing management. They analysis to marketing
are shown in Figure 1-9, which also notes where they are discussed in the text. Here are management.
brief descriptions of the functions:
n Environmental analysis and marketing research—Monitoring and adapting
to external factors that affect success or failure, such as the economy and
competition; and collecting data to resolve specific marketing issues.
n Broadening the scope of marketing—Deciding on the emphasis on and approach
to societal/ethical issues and global marketing, as well as the role of the Web in a
marketing strategy.
n Consumer analysis—Examining and evaluating consumer characteristics, needs,
and purchase processes; and selecting the group(s) of consumers at which to aim
marketing efforts.
n Product planning (including goods, services, organizations, people, places, and
ideas)—Developing and sustaining products, product assortments, product images,
brands, packaging, and optional features; and deleting faltering products.
n Distribution planning—Forming logistical relations with distribution
intermediaries, physical distribution, inventory management, warehousing,
transportation, the allocation of goods and services, wholesaling, and retailing.
n Promotion planning—Communicating with customers, the general public, and
others through some form of advertising, public relations, personal selling, and/or
sales promotion.
n Price planning—Determining price levels and ranges, pricing techniques, terms of
purchase, price adjustments, and the use of price as an active or passive factor.
n Marketing management—Planning, implementing, and controlling the marketing
program (strategy) and individual marketing functions; appraising the risks and
benefits in decision making; and focusing on total quality.
Typically, a firm should first study its environment and gather relevant marketing in-
formation. The firm should determine how to act in a socially responsible and ethical
manner, consider whether to be domestic and/or global, and decide on the proper use
of the Web. At the same time, the firm should analyze potential customers to learn their
needs and select the group(s) on which to focus. It should next plan product offerings,
make distribution decisions, choose how to communicate with customers and others, and
set proper prices. These four functions (in combination, known as the marketing mix)
should be done in a coordinated manner, based on environmental, societal, and consumer
analysis. Through marketing management, the firm’s overall marketing ­program would
be planned and carried out in an integrated manner, with fine-tuning as needed.

Chapter 1  The Nature of Marketing 17

 See Chapter 3 See Chapter 22

See See
Chapters Environmental Chapters
Marketing Price
2&4 analysis & 20 & 21
management planning
marketing
research

See See
Chapters Broadening the Total Promotion Chapters
5–7 scope of Marketing planning 17–19
marketing Effort

Consumer Product Distribution

analysis planning planning

See Chapters See Chapters See Chapters

8–10 11–13 14–16

FIGURE 1-9  The Basic Functions of Marketing

Usually at least one marketing
performer must undertake each
basic marketing function.
“Goodmans Interior
Structures: A Lifetime
Experience”
http://youtu.be/
Tbvef98lPOU
Although many marketing transactions require the performance of similar tasks, such
as being ethical; analyzing consumers; and product, distribution, promotion, and price
planning, they can be enacted in many ways (such as a manufacturer distributing via
full-service retailers versus self-service ones, or a financial-services firm relying on tele-
phone contacts by its sales force versus in-office visits to potential small-business clients
by salespeople).
Marketing performers are the organizations or individuals that undertake one or
more marketing functions. Included are manufacturers and service providers, wholesal-
ers, retailers, marketing specialists, and organizational and final consumers. As Figure
1-10 shows, each performer has a distinct role. Although responsibility for marketing
tasks can be shifted in various ways, basic marketing functions usually must be done by
one performer or another. They often cannot be omitted.
Sometimes, one marketing performer decides to carry out all, or virtually all, mar-
keting functions (such as Boeing analyzing the marketplace, acting ethically, operating
domestically and globally, having a detailed Web site (www.boeing.com), seeking vari-
ous types of customers, developing aerospace and related products, distributing products
directly to customers, using its own sales force and placing ads in select media, and
setting prices). Yet, for the following reasons, one performer often does not undertake all
marketing functions:
n Many firms do not have the financial resources to sell products directly to
consumers. They need intermediaries to share in the distribution process.
n Marketing directly to customers may require goods and services producers to offer
complementary products or sell the complementary products of other firms so
distribution is carried out efficiently.
n A performer may be unable or unwilling to complete certain functions and may
seek a marketing specialist to fulfill them.
n Many performers are too small to do certain functions efficiently.
n For numerous goods and services, established distribution methods are in force
and it is difficult to set up other methods (such as bypassing independent soda
distributors to sell directly to retail stores).
n Some consumers may want to buy in quantity, visit self-service outlets, and pay
cash to save money.

18 Part 1  An Introduction to Marketing in the 21st Century

FIGURE 1-10  Who Performs Marketing Functions

FORMAT OF THE TEXT

Marketing in the 21st Century has eight parts. The balance of Part 1 focuses on the mar-
keting environment, preparing marketing plans, and the information needed for market-
ing decisions. Part 2 covers topics related to the broadened scope of marketing: societal,
ethical, and consumer issues; global marketing; and the Web. Parts 1 and 2 set the stage
for the specific aspects of marketing.
Part 3 deals with marketing’s central orientation: understanding consumers. It looks
at the demographics, social and psychological traits, and decision process of final con-
sumers; organizational consumer attributes and decision making; and developing a target
market strategy and sales forecasting. Parts 4 to 7 discuss the marketing mix (product,
distribution, promotion, and price planning) and the actions needed to enact a marketing
program in depth. Part 8 considers the marketing management implications of the topics
raised throughout Marketing and discusses how to integrate and analyze an overall mar-
keting plan.
Numerous illustrations of actual marketing practices by a variety of organizations and
individuals are woven into our discussions. And although such topics as marketing and
society, global marketing, marketing and the Web, organizational consumers, and goods
versus service marketing get separate chapter coverage to highlight certain points, appli-
cations in these areas are presented throughout the text.

CAREER TIPS

As you embark on your career, valuable lessons can be learned by looking at how
others got their start. So, check out “How Several Business Leaders Got Started”
(www.inc.com/how-i-got-started) and see what you can learn.

Chapter 1  The Nature of Marketing 19

Web Sites You Can Use n
In every chapter of Marketing in the 21st Century, we n Findspot (www.findspot.com)
present a variety of links to worthwhile Web sites related n Go.com (www.go.com)
to that chapter.
n Google (www.google.com)
An important tool for any Web “surfer” looking for in-
formation about a topic related to marketing is a search n HighBeam Research (www.highbeam.com/library/
engine. This tool enables the user to generate a clickable index.asp)
list of Web links on virtually any subject imaginable, from n Inbox Robot (www.inboxrobot.com)
advertising to zero-based budgeting. Dozens of free search n Internet Archive (www.archive.org)
engines are available on the Web. Because each one has a
n iTools (www.itools.com)
slightly different method of searching, you should rely on
multiple search engines if you want to do comprehensive n Iwon (www.iwon.com)
research on a subject. After experimenting with various n Ixquick (www.ixquick.com)
search engines, many users settle on a few that they really n Live Search (www.msn.com)
like. n Looksmart (http://search.looksmart.com)
Here are many of the most popular and useful search
engines. Visit them and see what they offer. n Lycos (www.lycos.com)
n Mamma (www.mamma.com)
n 1st Headlines (www.1stheadlines.com)
n Metacrawler (www.metacrawler.com)
n About.com (www.about.com)
n My Way (www.myway.com)
n Alexa (www.alexa.com)
n Scrub the Web (www.scrubtheweb.com)
n Ask (www.ask.com)
n Search Bug (www.searchbug.com)
n Business.com (www.business.com)
n Search.com (www.search.com)
n Dogpile (www.dogpile.com)
n Webcrawler (www.webcrawler.com)
n Excite (www.excite.com)
n Wikianswers (http://answers.wikia.com/wiki/
n ExpressFind (www.expressfind.com)
Wikianswers)
n Fagan Finder (www.faganfinder.com)
n Yahoo! (www.yahoo.com)
n Fazzle (www.fazzle.com)
n Yellow Book (www.yellowbook.com)

Summary n
In every chapter, the summary is linked to the objec- Marketing’s evolution can be traced to the earliest
tives stated at the beginning of that chapter. use of barter in the exchange process (the barter era);
but, it has truly developed since the Industrial Revolu-
1. To illustrate the exciting, dynamic, and influential na-
tion, as mass production and improved transportation
ture of marketing  Marketing may be viewed from
have enabled more transactions to occur. For many
both business and consumer perspectives; and it in-
firms, modern marketing has evolved via these eras:
fluences us daily. As goods and service providers, we
production, sales, marketing department, and market-
make such marketing-related decisions as choosing
ing company. Yet, in developing nations, marketing is
who customers are, what goods and services to offer,
still in its early stages.
where to sell them, what to stress in promotion, what
The marketing concept requires an organization
prices to charge, how to be ethical and responsible,
or individual to be consumer-oriented, market-driv-
and whether to operate globally. As consumers, the
en, and value-based; have an integrated effort; and be
marketing process affects whom we patronize, choices
goal-oriented. A marketing philosophy means assess-
in the marketplace, where we shop, the availability of
ing and responding to consumer wants, real differ-
sales personnel, the prices we pay, and other factors.
ences in consumer tastes, and long-run opportunities
2. To define marketing and trace its evolution—with
and threats—and to engaging in coordinated decision
emphasis on the marketing concept, a marketing phi-
making.
losophy, customer service, and customer satisfaction
For a company to do well, emphasis must be placed
and relationship marketing   Marketing involves an-
on customer service: the identifiable, rather intangi-
ticipating, managing, and satisfying demand via the
ble, acts performed by a seller in conjunction with
exchange process. It includes goods, services, organi-
the basic goods and/or services it offers. A number of
zations, people, places, and ideas.

20 Part 1  An Introduction to Marketing in the 21st Century

 firms now empower employees so as to improve the
level of customer service. Customer satisfaction oc-
curs when consumer expectations are met or exceed-
ed. After customer satisfaction is established, firms
then have opportunities to attract loyal customers by
paying attention to relationship marketing.
3. To show the importance of marketing as a field of
study   Marketing is a crucial field because it stim-
ulates demand; marketing costs can be high; a large
number of people work in marketing positions; it in-
volves entire industries, such as advertising and mar-
keting research; all organizations and people are con-
sumers in some situations; it is necessary to use scarce
resources efficiently; marketing impacts on people’s
beliefs and lifestyles; and marketing influences the
quality of our lives. Some marketing knowledge is
valuable to all of us, regardless of occupation.
4. To describe the basic functions of marketing and
those who perform these functions  The key mar-
keting functions are environmental analysis and mar-
keting research; broadening the scope of marketing;
consumer analysis; product, distribution, promotion,
and price planning; and marketing management. Re-
sponsibility for doing tasks can be shifted and shared
among manufacturers and service providers, whole-
salers, retailers, marketing specialists, and consumers.
Due to costs, assortment requirements, specialized
abilities, company size, established distribution meth-
ods, and consumer interests, one party usually does
not perform all functions.

Key Terms n
marketing (p. 6) sales era (p. 9) customer satisfaction (p. 13)
consumer demand (p. 6) marketing department era (p. 9) relationship marketing (p. 14)
publics’ demand (p. 6) marketing company era (p. 9) marketing functions (p. 17)
exchange (p. 7) marketing concept (p. 9) marketing performers (p. 18)
barter era (p. 8) customer service (p. 12)
production era (p. 9) empowering employees (p. 12)

Review Questions n
1. Explain the 4. What are the five components of the marketing con-
a. anticipation of demand. cept? Give an example of each component.
b. management of demand. 5. What is employment empowerment?
c. satisfaction of demand. 6. What is customer satisfaction? Why is it so important
d. exchange process. to any firm?
2. Give an example of a good, service, organization, per- 7. What is relationship marketing? Why is it so import-
son, place, and idea that may be marketed. ant to any firm?
3. Describe the five eras of marketing. 8. What are the basic functions performed by marketing?

Discussion Questions n
1. a. As Bill Norman, a new advertising agency owner, 2. As the manager of a local jewelry store, how would
what business-related marketing decisions would your customer services differ from those offered by a
you make? Why? national jewelry store chain? Why?
b. As Nancy Willis, an advertising agency client, 3. Develop a seven-item questionnaire to assess the
what consumer-related marketing decisions would quality of a dentist’s relationship marketing efforts.
you make? Why? 4. What would a liberal arts major learn by studying
c. Develop a plan for Bill Norman to attract Nancy marketing? Give examples for two distinct majors.
Willis as a client.

Web Exercise n
The American Marketing Association is the leading U.S. tions: (a) Resource Library and (b) Career Management.
professional association for marketers. Visit its Web site Discuss what you learn from your visit.
(www.marketingpower.com) and “surf” two of the sec-

Chapter 1  The Nature of Marketing 21

Practice Quiz n
1. Which activity is a central aspect of the definition of 9. Workers can “break the rules” to honor customer re-
marketing? quests with
a. Manufacturing a. motivated marketing.
b. Outsourcing b. employee empowerment.
c. The exchange process c. a selling philosophy.
d. Selling d. power selling.
2. During the production era of marketing, 10. Which statement is incorrect?
a. businesses increase supply to keep up with demand. a. Customer service has a large effect on customer
b. research becomes necessary to determine consum- satisfaction.
er desires and needs. b. Consumers today have many mechanisms by
c. consumer research and analysis are integrated into which to complain.
all efforts. c. Consumers today are more satisfied with customer
d. business manufactures and sells products without service than ever before.
first determining consumer desires. d. Employee empowerment often leads to greater
3. The current era is known as the customer satisfaction.
a. Internet era. 11. The degree to which there is a match between custom-
b. marketing company era. er expectations and the actual performance of a good
c. post-industrial era. or service is known as
d. sales era. a. customer service.
4. A value-based philosophy is a key component of b. consumer marketing.
a. barter. c. marketing functionality.
b. a selling philosophy. d. customer satisfaction.
c. mass marketing. 12. Which statement about relationship marketing is

d. the marketing concept. correct?
5. A consumer orientation does not usually focus on a. It places an emphasis on customer loyalty.
a. market needs. b. It is short-run oriented.
b. production capability. c. It cannot be conducted with final consumers.
c. planning. d. It is not a good policy for nonprofit organizations.
d. goals. 13. According to some estimates, marketing costs can be
6. Although the marketing concept enables an organiza- as high as what percentage of a firm’s sales?
tion to analyze, maximize, and satisfy consumer de- a. 10 percent
mand, it should be realized that the concept b. 20 percent
a. is only a theory. c. 40 percent
b. does not apply to nonprofit organizations. d. 50 percent
c. is only a guide to planning. 14. Basic marketing functions
d. is unnecessary in a competitive marketplace. a. can be eliminated in most situations.
7. The last step for a firm that practices a marketing phi- b. are usually performed by one party.
losophy is c. can be organized with only direct marketing.
a. feedback. d. can be shifted and shared.
b. consumption. 15. Marketing directly to customers would often require a
c. consumer satisfaction. company to
d. relationship marketing. a. seek a marketing specialist.
8. Customer service activities are b. make or sell complementary products.
a. unidentifiable, but relatively tangible. c. eliminate many marketing functions.
b. unimportant to consumers. d. share distribution of high-volume sales items.
c. identifiable, but relatively intangible.
d. unrelated to the success of goods and services. For the answers to these questions, please visit the online site
for this book at http://www.textbookmedia.com/textbook/
LearnMores/EvansBermanAnswersAndExercises.pdf.

22 Part 1  An Introduction to Marketing in the 21st Century

Notes n
1. American Marketing Association, “Marketing Defined,”
www.marketingpower.com/aboutama/pages/
definitionofmarketing.aspx (October 2007).
2. For an analysis of the marketing concept and its applications,
see Jordan Gamble, Audrey Gilmore, Danielle McCartan-Quinn,
and Paula Durkan, “The Marketing Concept in the 21st C ­ entury:
A Review of How Marketing Has Been Defined Since the
1960s,” Marketing Review, Vol. 11 (Fall 2011), pp. 227–248.
3. Naysawn Naderi, “Rand Fishkin’s 6 Ingredients for Great Mar-
keting,” GeekWire, http://t.co/uNAqAnT604 (July 11, 2013).
4. Frederick E. Webster, Jr., “Executing the New Marketing
Concept,” Marketing Management, Vol. 3 (Number 1, 1994),
pp. 9–16.
5. Helen Akers, “Sales-Driven Vs. Market-Oriented Firms,”
azcentral.com, http://t.co/oD8eAOGmpD (August 2, 2013).
6. “Dictionary,” www.marketingpower.com/_layouts/
Dictionary.aspx?dLetter=C (March 2, 2014).
7. Avi Dan, “When It Comes to Social Media, Consumers Tell
Brands to Speak Only When Spoken to,” Forbes, http://
onforb.es/1783RP3 (March 31, 2013).
8. See Miriam B. Weiner, “America’s Meanest Airlines: 2013,”
U.S. News & World Report, http://t.co/LmmGH1W6qi (April
08, 2013).
9. Jena McGregor, “Customer Service Champs,” Business
Week (March 3, 2008), p. 37.
10. “Careers—Sunshine Ace Hardware San Carlos,” www
.sunshineace.com/career-san-carlos.htm (January 26, 2014).)
CHAPTER 1 APPENDIX: Hints for Solving Cases
At the end of each part of Marketing, there are a number of
short cases and one longer, more provocative case. All of
the cases are intended to build on text discussions, improve
your reasoning skills, and stimulate class discussions.
For each case, there is a brief overview presented in
the book and a URL link to more in-depth information.
PLEASE visit the link and look at the online material before
answering the questions. This is an integral part of the case.
Our cases deal with actual marketing scenarios faced by
a variety of organizations and people. The facts, situations,
and people are all real. The questions following each case
are designed to help you pinpoint major issues, foster your
analysis, have you cite alternative courses of future action,
and have you develop appropriate marketing strategies. The
information necessary to answer the questions may be drawn
from the case and the text chapter(s) to which the case relates.
Keep these hints in mind when solving a case:
n Read (observe) all material carefully. Take notes on
important data and statements.
n List the key issues and company actions detailed in
the case.
n Do not make unrealistic or unsupported
assumptions.
11. “Dictionary,” www.marketingpower.com/_layouts/
Dictionary.aspx?dLetter=C (March 2, 2014).
12. “Customer Satisfaction 101: How to Execute a Smart Cus-
tomer Satisfaction Survey,” www.qualtrics.com/blog/
customer-satisfaction (February 22, 2014).
13. Rolph E. Anderson, Srinivasan Swaminathan, and Rajiv
­Mehta, “How to Drive Customer Satisfaction,” MIT Sloan
Management Review, Vol. 54, http://sloanreview.mit.edu/
article/how-to-drive-customer-satisfaction (Summer 2013).
14. Nancy Friedman, “Check Out These Seven Steps to a Ser-
vice Recovery,” http://t.co/p4sRE88MTY (August 6, 2013).
15. “Dictionary,” www.marketingpower.com/_layouts/
Dictionary.aspx?dLetter=R (March 2, 2014).
16. Ian Linton, “Does Maximizing Customer Satisfaction Max-
imize Profitability?” Chron, http://t.co/99APerOxWd (August
12, 2013).
17. “About Us,” www.techdepot.com/pro/static/aboutus.asp
?iid=211 (September 25, 2013).
18. “Pure Price—No Haggle—No Hassle Scion,” www
.scionofconcord.com/Pure-Price.aspx (September 25, 2013).
19. “About Sephora,” www.sephora.com/contentStore/media
ContentTemplate.jsp?mediaId=10800104 (September 25,
2013).
20. World Factbook, https://www.cia.gov/library/publica-
tions/the-world-factbook (June 30, 2014).
n Read each question following the case. Be sure you
understand the thrust of every question. Do not give
similar answers for two distinct questions.
n Write up tentative answers in outline form. Cover as
many aspects of each question as possible.
n Review relevant material in the appropriate
chapter(s) of the text. In particular, look for
information pertaining to the case questions.
n Expand your tentative answers, substantiating them
with data from the case and the chapter(s).
n Reread the case and your notes to be sure you have
not omitted any major concepts in your answers.
n Make sure your answers are clear and well written,
and that you have considered their ramifications for
the organization.
n Reread your solutions at least one day after
developing your answers. This ensures a more
objective review of your work.
n Make any necessary revisions.
n Be sure your answers are not just a summary
(“rehash”) of the case, but that you have presented a
real analysis and recommendations.
Chapter 1  The Nature of Marketing 23