KINE 4020 Chapter 1: Chapter 1 - What is Marketing Notes

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AP/ ADMS 2200
Contemporary Marketing
Week 1: Chapter 1 – What is Marketing?
What is Marketing?
Production and marketing of goods and services. Marketing had its origin in
economics, later, marketing borrowed concepts from areas such as psychology
and sociology to explain how people made purchase decisions. Mathematics,
anthropology and other disciplines also contributed to the evolution of marketing.
Economists contributed to the concept of utility.
oUtility: The want-satisfying power of a good or service.
Type Description Examples Organizational
Form Utility Conversation of raw
materials and
components into
finishes goods and
Dinner at Swiss
Chalet, iPod, shirt
from Mark’s
Time Utility Availability of goods
and services when
consumers want
Dental appointment,
digital photographs,
Canada post
express, etc.
Place Utility Availability of goods
and services at
Soft-drink machines
outside of gas
stations, on-site
daycare, banks in
grocery stores.
Ownership Utility Ability to transfer
title to goods or
services from
marketer to buyer.
Retail sales. Marketing
How does an organization create a customer? Most take a three-step approach:
Identifying needs in the marketplace, finding out which needs the organization
can profitably serve, and developing goods and services to convert potential
buyers into customers.
Marketing specialist are responsible for most activities:
i. Identifying customer needs
ii. Designing products that meet those needs.
iii. Communicating information about those goods and services to
prospective buyers.
iv. Making the items available at times and places that meet customers’
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v. Pricing the merchandise and services to reflect costs, competition, and
customers’ ability to buy.
vi. Providing the necessary service and follow-up to ensure customer
satisfaction after the purchase.
A Definition of Marketing
Marketing: 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.
Organizations conduct their marketing efforts ethically and that these efforts
serve the best interest of both society and the organization.
Marketing variables – Product, price, promotion, and distribution.
Todays Global Marketplace
Several factors have forced marketers-an entire nations-to extend their economic
views to events outside their own national borders.
i. International agreements are being negotiated in attempts to expand
trade among nations.
ii. The growth of electronic commerce and related computer technologies is
bringing previously isolated countries into the marketplace for buyers and
sellers around the globe.
iii. The interdependence of the world’s economies is a reality because no
nation produces all the raw materials and finished goods its citizens need
or consumes all its output without exporting some to other countries.
Mexico has taken the lead as the lowest-cost country for outsourced production,
with India and Vietnam second and third, respectively; China stands in sixth
Canada is also an attractive market for foreign competitors because of its size,
proximity to the United States, and the high standard of living that Canadian
consumers enjoy.
75% of all Canadian exports go to the United States, while about 50% percent of
Canadian imports come from there. Nearly $1.4 billion in trade crosses the
Canada-U.S. border every day.
Four Eras in the History of Marketing
The essence of marketing is the Exchange process.
oExchange process: in which two or more parties give something of value
to each other to satisfy perceived needs.
There are four eras in the history of marketing: the production era, the sales era,
the marketing era, and the relationship era.
i. The Production Era:
Before 1925, most firms – even those operating in highly
developed economies in Western Europe and North America-
focused narrowly on production. Manufacturers stresses
production of equality products and then looked for people to
purchase them.
Production orientation: Business philosophy stressing efficiency in
producing a quality product, with the attitude toward marketing
that “a good product will sell itself”.
ii. The Sales Era:
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Output grew during the period from 1920s into the early 1950s.
Firms attempted their emphasis on effective sales forces to find
customers who would want it.
Sales Orientation: Beliefs that consumer will resist purchasing
nonessential goods and services, with the attitude toward
marketing that only creative advertising and personal selling can
overcome consumers’ resistance and persuade them to buy.
iii. The Marketing Era and the Emergence of the Marketing Concept:
The marketing concept, a crucial change in management
philosophy, can be linked to the shift from a seller’s market to a
buyer’s market.
i. Seller’s market: Market in which there are more buyers for
fewer goods and services.
ii. Buyer’s market: Market in which there are more goods and
services than people willing to buy them.
iii. Consumer orientation: business philosophy incorporating
the marketing concept that emphasized first determining
unmet consumer needs and then designing a system for
satisfying them.
iv. Marketing concept: Company-wide consumer orientation
with the objective of achieving long-run success.
iv. The Relationship Era:
The fourth era in the history of marketing emerged during the final
decade of the 20th century and continues to grow in importance.
Organizations now build on the marketing era’s customer
orientation by focusing on establishing and maintaining
relationships with both customers and suppliers.
Relationship marketing: Development and maintenance of long-
term, cost-effective relationships with individual’s customers,
suppliers, employees, and other partners for mutual benefit.
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