realChoicesPeopleMARKETING 7EMichael R. SOLOMONSAI.docx

realChoices
People
MARKETING 7E
Michael R. SOLOMON
SAINT JOSEPH’S UNIVERSITY
Greg W. MARSHALL
ROLLINS COLLEGE
Elnora W. STUART
THE UNIVERSITY OF SOUTH CAROLINA
UPSTATE
Prentice Hall
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Marketing: Real People, Real Choices, Seventh Edition, by
Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart.
Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education,
Inc.
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Solomon, Michael R.
Marketing : real people, real choices / Michael R. Solomon,
Greg W. Marshall, Elnora W. Stuart. – 7th ed.
p. cm.
ISBN-13: 978-0-13-217684-2
ISBN-10: 0-13-217684-X
1. Marketing--Vocational guidance. I. Marshall, Greg W. II.
Stuart, Elnora W. III. Title.
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realChoices
People
MARKETING 7E
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Part One
Welcome to the first set of chapters in
Marketing: Real People, Real Choices! The book
is divided into five major sections called
“Parts.” Each of these Parts focuses on a key element of market-
ing as a value-adding element to any organization’s success.
Each
Part Opener (like this one) provides you with a brief overview
of
the learning opportunities within that Part. Then, through a
ficti-
tious company called S&S Smoothie (which is published in its
en-
tirety in the book’s Appendix), you will learn how the pieces of
a
marketing plan come together so that “You Can Do It Too!”
Whether or not you are assigned a marketing plan as a class
project, you will find the Part Openers worth reading because
link-
ing each Part’s content to the bigger picture of marketing
planning

will help you understand the “five W’s and an H”—who, what,
when, where, why, and how—related to the way the particular
material in that Part fits into the big picture of marketing. Don’t
be
concerned right now if the notion of a marketing plan is brand-
new to you. In Chapter 2 we’ll focus on them and bring you up
to
speed on what marketing planning is all about. There we include
a useful tear-out that serves as a roadmap for how each
chapter’s
content fits into the process of developing a marketing plan.
Part One offers three chapters that kick off your study of
marketing, with an overall focus on making marketing value de-
cisions. In Chapter 1 you will learn what value is, as well as
pick
up a lot of great insights on the contemporary field of marketing
to pique your interest in the course. You will notice right away
that this book is about people doing marketing, as opposed to
merely being a narrative about products, firms, and other inan-
Make Marketing Value Decisions
Part One
Overview
2
Make marketing value decisions
(Part One)
Understand consumers’ value needs
(Part Two)
Create the value proposition
(Part Three)

Communicate the value proposition
(Part Four)
Deliver the value proposition
(Part Five)
P
ro
ce
ss
You are here
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imate objects. The Real People, Real Choices vignettes that
begin
each chapter help you connect marketing to actual people mak-
ing decisions. As such, marketing truly comes alive! As men-
tioned, Chapter 2 takes you through the entire process of
marketing planning. Finally, Chapter 3 addresses the fact that

to-
day all marketing is global. You’ll get to see the various
elements
of the external environment that impact marketers’ ability to do
successful planning in both domestic and global markets.
Marketing Plan Connection:
Tricks of the Trade
As mentioned earlier, the Appendix at the end of the book pro-
vides you with an abbreviated marketing plan example for the
fictitious S&S Smoothie Company. That plan is flagged to indi-
cate what elements from the plan correspond to each of the
Parts
within the book. In addition, in Chapter 2 you will find a tear-
out guide called “Build a Marketing Plan,” which can be used as
a template for marketing planning. It is also cross-referenced to
chapters by section of the marketing plan.
In the chapters within Part One, there are major learning ele-
ments that guide you in developing four initial parts of a
market-
ing plan: internal environmental analysis, external
environmental
analysis, SWOT analysis, and setting marketing objectives.
Let’s
take a look at each of these elements.
Internal Environmental Analysis
Chapter 2 provides an overview of marketing planning from the
perspective of a marketing firm. It might surprise you to learn
that accomplishing a useful internal environmental analysis is
of-
ten more challenging than is the analysis of the external
environ-
ment. It’s like the old saying, “We have found the enemy and it
is

us!” Some firms do not have a culture that supports honest self-
reflection, and instead they tend to just sweep problems under
the rug. This is, of course, very dangerous, since future market-
ing planning depends on a realistic assessment of the firm and
its
internal capabilities.
When you review the case of S&S Smoothie, take special
note of their mission, how the firm is set up and who the key
players are, the nature of their organizational culture, and how
they are currently deploying the 4 Ps of the marketing mix.
What
is evidently working well for them already? What likely could
be improved through marketing planning?
External Environmental Analysis
In Chapter 3 you will gain solid knowledge of the global envi-
ronment in which marketers today do business. In contrast to
the internal environment, the external environment consists of
elements that are largely outside the direct control of a firm and
its managers. The company operates within the context of its
ex-
ternal environment, but in most instances it can do little directly
to shape and form that environment. Because of this, it becomes
incredibly important that firms accurately identify the external
factors that are likely to have the greatest impact on success and
then work to develop approaches to proactively take these fac-
tors into account when developing plans and forecasts.
Key elements in the external environment include the
following:
• Competitive environment—Who do you compete with
and how?

• Economic environment—In what ways do economic forces
impact the marketing success of the firm?
• Technological environment—What is the role of advancing
technology on the business?
• Political and legal environment—How do these elements im-
pact decisions the firm makes about products and markets?
• Sociocultural environment—What is the impact of changing
societal tastes and values on the marketplace?
One of the most challenging aspects of doing external envi-
ronmental analysis is that the information gathered is not static.
It is constantly changing! This means that marketers need to
continually scan the elements of the external environment for
trends and (hopefully) make changes to their marketing plans
before the trends get away from them. As you review S&S
Smoothie’s marketing plan, try to imagine which of the external
environmental elements identified are most likely to change in
the near future, and how the changes would impact their plan.
SWOT Analysis
A SWOT analysis (for Strengths, Weaknesses, Opportunities,
and Threats) is a convenient way of summarizing your situation
analysis. You will note that the S&S Smoothie example has a
very succinct set of 3–4 bulleted items under each of the SWOT
subheadings. This is what you should strive for in a SWOT—a
succinct prioritization of the main internal and external situa-
tional factors that you believe, based on your analysis, are most
important to future planning for the firm.
Marketing Objectives
An objective is something that you set out to accomplish. You
will learn in Chapter 2 that for objectives to be useful they must
meet several important criteria in the way they are written. A

well-stated objective is specific, measurable, and realistically
at-
tainable. Objectives are not very useful to marketers for plan-
ning purposes if they are vague, if you don’t know what metrics
tell you that you’ve succeeded, or if they are impossible to ac-
complish. S&S Smoothie has identified four important market-
ing objectives. See if you think they meet these criteria.
3
>>You Can Do It Too!
Now, if you are working on a marketing plan as part of your
course, you can go to mymarketinglab to apply what you learn
in Part One to your own marketing plan project.
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Chapter | 1
Welcome to the World
of Marketing

Create and Deliver Value
Real People Profiles
A Decision Maker
at Pandora
Joe Kennedy is chief executive officer and
president of Pandora, the Internet radio
company that more than 65 million people
use to create personalized radio stations
that they can listen to from their comput-
ers, phones, TVs, and cars. Just type the
name of one of your favorite songs or
artists into Pandora and it will instantly
generate a station with music pulled from
its collection of more than 800,000 songs. Enter Rihanna and
connect to similar artists
like Loer Velocity and The Cab. Is Ludacris more your speed?
Discover 112 or Sensational.
How does Pandora customize stations to each individual
listener? It all has to do
with the Music Genome Project; Pandora describes it as the
most comprehensive
analysis of music ever undertaken. Over the last decade the
MGP’s team of musician-
analysts has classified each song based on up to 400 distinct
musical characteristics.
It takes an analyst 20–30 minutes to analyze a song and record
the details that de-
fine it, such as melody, harmony, instrumentation, rhythm,
vocals, and lyrics. Artists
receive royalties from Pandora every time one of their songs is
played on a station.

Joe Kennedy joined Pandora in 2004 following a five-year stint
at E-LOAN,
where he was president and chief operating officer. From 1995
to 1999, he was the
vice president of sales, service and marketing for Saturn
Corporation, which he grew
to more than $4 billion in revenue and established as the top
brand for customer
satisfaction in the auto industry. Joe joined the initial startup
team at Saturn, four
months after it was founded, as a marketing manager and held
positions of increas-
ing marketing responsibility over the course of his 11-year
tenure there.
Joe has an MBA from Harvard Business School and a BS degree
in electrical en-
gineering and computer science from Princeton University,
where he dabbled in mu-
sic theory and learned to compose his own Gregorian chants.
According to his bio
on the Pandora site, he is Pandora’s resident pop music junkie.
Joe has also been
playing the piano for more than 30 years, spending a majority of
that time attempt-
ing to master Gershwin’s “Rhapsody in Blue.”
Joe’s Info
What do I do when I’m not working?
A) Working on my tennis game, trying to finally reach that
elusive
top 10 national ranking in my age group.
Business book I’m reading now?
A) Checklist Manifesto by Atul Gawande.

My hero?
A) Skip LeFauve, the president of Saturn from 1986 to 1995.
What drives me?
A) I love to bring about game-changing innovation in categories
consumers are passionate about.
My management style?
A) Hire senior, experienced, self-motivated leaders who know
more
about their functional areas than I do and let them do their
thing.
My pet peeve?
A) People who are always running late. It’s a clear sign of self-
centeredness when someone always keeps other people waiting.
Profile Info
Joe Kennedy
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The company was founded in January 2000 by Tim
Westergren, a pianist who played in rock and jazz
bands for 10 years before he became a film composer. As he
analyzed mu-
sic to decide what film directors would like, he got the idea of
creating a
technology that would reflect people’s tastes and deliver music
that fit those
tastes. Tim raised $1.5 million and started Savage Beast
Technologies, which
sold music recommendations services to
companies like Best Buy. But the company
struggled as the dot-com boom of the late
1990s burst. Tim and his employees worked
on an unpaid basis for several years before
they got more financial backing in 2004 (af-
ter Tim made 347 unsuccessful pitches to in-
vestors!). Tim paid his employees, switched
the company’s name to Pandora, and
changed its focus to consumers instead of
businesses. To lead this strategic shift the
newly christened Pandora hired Joe Kennedy,
who had solid experience building consumer
products. The company knew it was on to
something when it first released Pandora in a
beta version for family and friends. Within a
week, 5,000 people had used the service to
discover new music.
That was encouraging, but a 5,000-user
base isn’t nearly enough to entice advertisers

to buy space on the site. Pandora needed to
make money by attracting enough people to
capture the interest of potential advertising
clients; these companies in turn would pay to
place ads that would reach Pandora’s users.
The challenge was to avoid the fate of many
other Internet startups that offered cool fea-
tures but never grew to the scale where they
could turn a profit. Joe needed to build a solid
customer base so he could develop a firm
business model for Pandora. He knew that if
he could just make music lovers aware of the
value Pandora offered, he would be able to
turn the fledgling service into a marketing
success.
Joe considered his Options 1 • 2 • 3
Launch an advertising campaign on radio stations, in
music magazines, and at record stores. Advertising is a great
way to create awareness of a new product or service, but it
takes a lot of money to cut through the clutter of competing
messages. To afford advertising, Pandora would have had to
convince financial backers that a substantial up-front invest-
ment would pay off as droves of users flocked to the site once
they heard
or read about it.
See what option Joe chose on page 33
Build a buzz about Pandora through word of mouth. Put
Tim Westergen, the company’s founder, in front of groups of
mu-
sic lovers to tell the unique story of Pandora and how the Music
Genome Project makes it work. Cultivate a dedicated fan base
by

reaching out to social networks on Twitter and Facebook, and
then rely on these converts to spread the word to their friends.
A buzz-building strategy is very inexpensive, and if done well,
it can create a
large group of devoted followers almost overnight. On the other
hand, a
startup has to compete with the thousands of others that are
trying to recruit
fans, and it might be difficult to reach a mass audience as
opposed to hard-core
music lovers without any catchy advertising.
Sell the service to a large chain of record stores, a music
magazine, or even a record label. Pandora could return to its
roots as a music recommendation service for businesses. If a
large company (like Virgin Records) could offer the service
exclu-
sively to its customers, almost instantly Pandora would have
access to many thousands of music buyers. In the same way that
USA Today is able to claim a huge circulation (and thus attract
a lot of adver-
tising dollars) because it is distributed free to hotel guests
across the coun-
try, Pandora would inherit an impressive distribution network.
However, this
choice would entail giving up control of the unique Music
Genome Project
and its sophisticated database that the company had worked so
hard to
build. Hardcore music fans might accuse Pandora of “selling
out,” and they
might question how objective its recommendations were.
Now, put yourself in Joe’s shoes: Which option would you

consider,
and why?
You Choose
Which Option would you choose, and why?
1. YES NO 2. YES NO 3. YES NO
Here’s my problem. . .
5
Option
Option
Option
Things to remember
Pandora doesn’t charge
people to use its service. It
makes its money by attracting
advertisers who want to reach
users. In order for the
company to entice companies
to advertise, it has to offer
them access to large numbers
of consumers who are likely
to tune in on the ads they will
encounter on the site.
Part of Pandora’s unique
product offering is the ability
to customize music for each

individual user. Everyone who
registers can create their own
“stations” that play songs
with similar characteristics.
This enables users to learn
about artists they might not
otherwise stumble upon, so
potentially Pandora can create
new audiences for
independent musicians and
for music labels.
Word of mouth is the least
expensive way to attract large
numbers of web surfers to
Pandora’s site. However, it’s
difficult to build buzz in an
environment where many
other products and services
compete for the consumer’s
scarce attention.
Real People, Real Choices
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Welcome to Brand You
Alex wakes up with a groan as Vampire Weekend belts
out a song from the next bedroom. Why does her room-
mate have to download these loud ringtones onto her cell
phone and then leave it on so early in the morning? She
throws back the Ralph Lauren sheets and rolls off her new
Sleep Number mattress. As Alex stumbles across the room
in her VS Signature pajamas from Victoria’s Secret, her
senses are further assaulted as she catches wafts of
Amanda’s trademark Juicy Couture perfume. She pours
herself a steaming cup of Starbucks Verona Blend coffee from
the Capresso
CoffeeTeam Luxe coffeemaker and stirs in a heaping mound of
Splenda. As she
starts to grab a Yoplait from the SubZero, she checks her
iPhone and suddenly
remembers: Big job interview with Sprout Networks today!
Yeah for LinkedIn!
Good thing she gChatted her friends last night to get advice
about what to
wear so she won’t have to think about it this morning. Alex
does a quick scan
of the New York Times on her Apple iPad, checks the forecast
on Weather.com,
and for one last time googles the executive who will be
interviewing her. Hope-
fully he won’t remember to check out her Facebook page; those
photos she
posted from her trip to Cancun don’t exactly communicate a
professional im-
age! Well, he’ll be more impressed by the volunteer work she’s
doing with

Sweatshopwatch.org to build a buzz about horrific labor
conditions in devel-
oping countries. Just in case, she glances down at her wrist to
be sure she’s
wearing her turquoise advocacy bracelet (which new cause was
that for,
anyway?).
Alex slips into her sleek new BCBG suit, slides on her Prada
shoes, grabs
her Coach briefcase that was a graduation present from her
parents, and climbs
into her Jeep Grand Cherokee. As she listens to the Coke ad
blaring over the
loudspeakers while she gasses up at the Exxon station, Alex
finds herself look-
ing forward to tomorrow. The pressure will be off, and she can
throw on her
Madewell dress, Ray-Ban Aviators, and of course those new
Frye wedges. Then,
it’ll be out to that hot new bar to look for Mr. Right—or maybe
a few Mr. Wrongs.
Oh yes, and perhaps a quick check on Craigslist for a new
roommate.
Marketing is all around us. Indeed, some might say we live in a
branded world. Like Alex, you have encounters with many
marketers even
before you leave for the day: ads, products, TV, the Web,
charitable causes,
podcasts.
What’s more, like Alex, you are a product. That may sound
weird, but
companies like LinkedIn couldn’t exist if you were not a
product with

value. We’re going to use that word a LOT in this book, so let’s
define it
now: Value refers to the benefits a customer receives from
buying a good
or service.
You have “market value” as a person—you have qualities that
set you
apart from others and abilities other people want and need.
After you finish
this course, you’ll have even more value because you’ll know
about the field
of marketing and how this field relates to you both as a future
businessper-
son and as a consumer. In addition to learning about how
marketing influ-
ences each of us, you’ll have a better understanding of what it
means to be
“Brand You”—and hopefully some ideas about what you can do
to increase
your value to employers and maybe even to society.
Chapter 1
6 PA RT O N E | M A K E M A R K E T I N G VA L U E D
E C I S I O N S
Objective Outline
1. Understand who marketers are,
where they work, and marketing’s
role in a firm.
WELCOME TO BRAND YOU (p. 6)
THE WHO AND WHERE OF MARKETING (p. 7)

2. Explain what marketing is and how it
provides value to everyone involved
in the marketing process.
MARKETING CREATES VALUE (p. 8)
3. Explain the evolution of the
marketing concept.
WHEN DID MARKETING BEGIN? THE EVOLUTION
OF A CONCEPT (p. 13)
4. Understand the range of services
and goods that organizations
market.
WHAT CAN WE MARKET? (p. 18)
5. Understand value from the
perspectives of customers,
producers, and society.
THE VALUE OF MARKETING AND THE MARKETING
OF VALUE (p. 21)
6. Explain the basics of marketing
planning and the marketing mix
tools we use in the marketing
process.
MARKETING AS A PROCESS (p. 30)
(pp. 30–32)
(pp. 21–29)

(pp. 18–21)
(pp. 13–18)
(pp. 8–12)
(pp. 6–8)
Check out chapter 1 Study Map on page 33
1
OBJECTIVE
Understand who
marketers are, where
they work, and
marketing’s role in a
firm.
(pp. 6–8)
value
The benefits a customer receives from buying a
good or service.
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C H A P T E R 1 | W E L C O M E T O T H E W O R L D O
F M A R K E T I N G : C R E AT E A N D D E L I V E R
VA L U E 7
Although it may seem strange to think about the mar-
keting of people, in reality we often talk about ourselves
and others in marketing terms. It is common for us to
speak of “positioning” ourselves for job interviews or to
tell our friends not to “sell themselves short.” Some people
who are cruising for potential mates even refer to them-
selves as “being on the market.” In addition, many con-
sumers hire personal image consultants to devise a
“marketing strategy” for them, while others undergo plas-
tic surgery or makeovers to improve their “product im-
ages.” The desire to package and promote ourselves is the
reason for personal goods and services markets ranging
from cosmetics and exercise equipment to résumé special-
ists and dating agencies.1
So the principles of marketing apply to people, just as
they apply to coffee, convertibles, and computer processors.
Sure, there are differences in how we go about marketing each
of these, but the general idea
remains the same: Marketing is a fundamental part of our lives
both as consumers and as
players in the business world. We’ll tell you why throughout
this book. But first, we need to
answer the basic questions of marketing: Who? Where? What?
When? and Why? Let’s start

with Who and Where.
The Who and Where of Marketing
Marketers come from many different backgrounds. Although
many have earned marketing
degrees, others have backgrounds in areas such as engineering
or agriculture. Retailers and
fashion marketers may have training in merchandising or
design. Advertising copywriters
often have degrees in English. E-marketers who do business
over the Internet may have
studied computer science.
Marketers work in a variety of locations. They work in
consumer goods companies
such as General Mills or at service companies like The
Philadelphia 76ers basketball team.
You’ll see them in retail organizations like Sam’s Club and at
companies that manufacture
products for other companies to use like NCR. You’ll see them
at philanthropic companies
like Product (RED) and at cutting-edge advertising and social
media agencies like Campfire
and Pandora. We’ll get to know these and other companies
better as we make our way
through this book.
And, although you may assume that the typical marketing job is
in a large, consumer-
oriented company like Disney, marketers work in other types of
organizations too. There
are many exciting marketing careers in companies that sell to
other businesses. In small
organizations, one person (perhaps the owner) may handle all
the marketing responsi-
bilities. In large organizations, marketers work on different

aspects of the marketing
strategy.
No matter where they work, all marketers are real people who
make choices that
affect themselves, their companies, and very often thousands or
even millions of
consumers. At the beginning of each chapter, we’ll introduce
you to marketing profes-
sionals like Joe Kennedy of Pandora in a feature we call “Real
People, Real Choices.” We’ll
tell you about a decision the marketer had to make and give you
the possible options he
or she considered. Think about these options as you read
through the chapter so you can
build an argument for selecting an option. At the end of each
chapter, we’ll tell you what
option the marketer chose and why in a feature called “Real
People, Real Choices: How
It Worked Out.”
You are a product—hopefully a successful one!
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Marketing’s Role in the Firm:
Cross-Functional Relationships
What role do marketers play in a firm? The importance
organizations assign to marketing
activities varies a lot. Top management in some firms is very
marketing-oriented (especially
when the chief executive officer comes from the marketing
ranks), whereas in other compa-
nies marketing is an afterthought. However, analysts estimate
that at least one-third of
CEOs come from a marketing background—so stick with us!
Sometimes a company uses the term marketing when what it
really means is sales or ad-
vertising. In some organizations, particularly small, not-for-
profit ones, there may be no one

in the company specifically designated as “the marketing
person.” In contrast, some firms
realize that marketing applies to all aspects of the firm’s
activities. As a result, there has been
a trend toward integrating marketing with other business
functions (such as management
and accounting) instead of making it a separate function.
No matter what size the firm, a marketer’s decisions affect—and
are affected by—the
firm’s other operations. Marketing managers must work with
financial and accounting
officers to figure out whether products are profitable, to set
marketing budgets, and to de-
termine prices. They must work with people in manufacturing to
be sure that products are
produced on time and in the right quantities. Marketers also
must work with research-and-
development specialists to create products that meet consumers’
needs.
Where Do You Fit In? Careers in Marketing
Marketing is an incredibly exciting, diverse discipline that
brims with opportunities. There
are many paths to a marketing career; we’ve tried to summarize
the most typical ones here.
Check out Table 1.1 to start thinking about which path might be
best for you. Okay, now that
you’ve gotten a glimpse of who marketers are and where they
work, it’s time to dig into
what marketing really is.
Marketing Creates Value
Marketing. Lots of people talk about it, but what is it? When
you ask
people to define marketing, you get many answers. Some people

say,
“That’s what happens when a pushy salesman tries to sell me
some-
thing I don’t want.” Other people say, “Oh, that’s simple—TV
commer-
cials.” Students might answer, “That’s a course I have to take
before
I can get my business degree.” Each of these responses has a
grain
of truth in it, but the official definition of marketing the
American
Marketing Association adopted in late 2007 is as follows:
“Marketing is the activity, set of institutions, and processes for
cre-
ating, communicating, delivering, and exchanging offerings that
have
value for customers, clients, partners, and society at large.”2
The basic idea of this somewhat complicated definition is that
marketing is all about
delivering value to everyone who is affected by a transaction.
Let’s take a closer look at some
of the different ideas that relate to this definition.
Marketing Meets Needs
One important part of our definition of marketing is that it
meets the needs of diverse stake-
holders. The term stakeholders here refers to buyers, sellers, or
investors in a company, com-
munity residents, and even citizens of the nations where goods
and services are made or
sold—in other words, any person or organization that has a
“stake” in the outcome. Thus,
marketing is about satisfying everyone involved in the
marketing process.

marketing
An organizational function and a set of
processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders.
2
OBJECTIVE
Explain what
marketing is and
how it provides value
to everyone involved
in the marketing
process.
(pp. 8–12)
stakeholders
Buyers, sellers, or investors in a company,
community residents, and even citizens of the
nations where goods and services are made or
sold—in other words, any person or
organization that has a “stake” in the outcome.
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Table 1.1 | Careers in Marketing
Marketing
Field Where Can I Work?
What Entry-Level Position
Can I Get? What Course Work Do I Need?
Advertising Advertising agency: Media,
research, and creative departments;
account work
Large corporation: Advertising
department: brand/product
management
Media: Magazine, newspaper,
radio, and television selling;
management consulting;
marketing research
Account coordinator (traffic
department); assistant account
executive; assistant media buyer;
research assistant; assistant brand
manager

Undergraduate business degree
Brand
Management
Any size corporation: Coordinate
the activities of specialists in
production, sales, advertising,
promotion, R&D, marketing
research, purchasing, distribution,
package development, and finance
Associate brand manager M.B.A. preferred, but a few com-
panies recruit undergraduates. Expect
a sales training program in the field
from one to four months and
in-house classes and seminars.
Business-to-
Business
Marketing
Any size corporation: Only a
few companies recruit on
campus, so be prepared to search
out job opportunities on your
own, as well as interview on
campus.
Sales representative; market research
administrator; product manager;
pricing administrator; product
administrator; assistant marketing
manager; sales administrator;
assistant sales manager; sales service
administrator

Undergraduate business degree. A
broad background of subjects is
generally better than concentrating
on just one area. A technical degree
may be important or even required in
high-technology areas. Courses in
industrial marketing and marketing
strategy are very helpful.
Direct–Response
Marketing
Any size corporation:
Marketing-oriented firms,
including those offering
consumer goods, industrial
products, financial institutions,
and other types of service
establishments. Entrepreneurs
seeking to enter business for
themselves.
Direct-response marketing is
expanding rapidly and includes direct
mail; print and broadcast media,
telephone marketing, catalogues, in-
home presentations, and door-to-
door marketing.
Seek counsel from officers and directors
of the Direct Marketing Association and
the Direct Selling Association.
Undergraduate business degree.
Supplemental work in

communications, psychology, and/or
computer systems recommended.
Supply-Channel
Management
Any size corporation,
including transportation
corporations: The analysis,
planning, and control of activities
concerned with the procurement
and distribution of goods. The
activities include transportation,
warehousing, forecasting, order
processing, inventory control,
production planning, site
selection, and customer service.
Physical distribution manager; supply
chain manager; inventory-control
manager; traffic manager;
distribution-center manager;
distribution-planning analyst;
customer service manager;
transportation marketing and
operations manager
Undergraduate business degree and
M.B.A. Broad background in the
core functional areas of business,
with particular emphasis in
distribution related topics such as
logistics, transportation, purchasing,
and negotiation.
International

Marketing
Large corporations: Marketing
Department at corporate
headquarters
Domestic sales position with an
international firm may be the best first
step toward international opportunities.
M.B.A. A broad background in
marketing is recommended, with
some emphasis on sales
management and market research.
Marketing
Models and
Systems
Analysis
Large corporations: Consult
with managers who are having
difficulty with marketing
problems.
Undergraduate: Few positions
available unless you have prior work
experience. Graduate: market analyst,
market research specialist, and
management scientist.
M.B.A. Preparation in statistics,
mathematics, and the behavioral
sciences.
(continued)

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One important stakeholder is YOU. A consumer is the ultimate
user of a good or
service. Consumers can be individuals or organizations, whether
a company, govern-
ment, sorority, or charity. We like to say that the consumer is
king (or queen), but it’s im-
portant not to lose sight of the fact that the seller also has
needs—to make a profit, to
remain in business, and even to take pride in selling the highest-
quality products possi-
ble. Products are sold to satisfy both consumers’ and marketers’
needs—it’s a two-way
street. When you strip away the big words, try this as a bumper
sticker: Marketers do it to

satisfy needs.
Needs, Wants, and Benefits
Most successful firms today practice the marketing concept—
that is, marketers first iden-
tify consumer needs and then provide products that satisfy those
needs, ensuring the firm’s
long-term profitability. A need is the difference between a
consumer’s actual state and some
ideal or desired state. When the difference is big enough, the
consumer is motivated to take
consumer
The ultimate user of a good or service.
marketing concept
A management orientation that focuses on
identifying and satisfying consumer needs to
ensure the organization’s long-term profitability.
need
The recognition of any difference between a
consumer’s actual state and some ideal or
desired state.
Table 1.1 | Careers in Marketing
Marketing
Field Where Can I Work?
What Entry-Level Position
Can I Get? What Course Work Do I Need?
Marketing
Research

Any size corporation: Provide
management with information
about consumers, the marketing
environment, and the
competition
Assistant market analyst or assistant
product analyst level.
M.B.A. or an M.S. in Marketing
Research although prior experience
and training may improve an
undergraduate’s chances.
New Product
Planning
Any size corporation:
Marketing of consumer products,
consumer industries, advertising
agencies, consulting firms, public
agencies, medical agencies,
retailing management
Assistant manager or director of
product planning or new product
development.
M.B.A.
Retail
Management
Retail corporations Assistant buyer positions; department
manager positions

Undergraduate business degree
Sales and Sales
Management
Profit and nonprofit
organizations: Financial,
insurance, consulting, and
government
Trade sales representative who sells
to a wholesaler or retailer; missionary
sales representative in manufacturing
who sells to retailers or decision
makers (e.g., pharmaceutical
representative); technical sales
representative who sells to specified
accounts within a designated
geographic area.
Undergraduate business degree;
M.B.A.; Helpful courses: consumer
behavior, psychology, sociology,
economics, anthropology, cost
accounting, computer science,
statistical analysis, communications,
drama, creative writing. Language
courses, if you’re interested in
international marketing; engineering
or physical science courses if you’re
interested in technical selling.
Services
Marketing
Any size corporation: Banking

and financial service institutions,
health care organizations, leisure-
oriented businesses, and in
various other service settings.
Assistant brand manager; assistant
sales manager
Undergraduate business degree;
M.B.A.; Additional course work in
management policy, research,
advertising and promotion,
quantitative analysis, consumer
behavior, and the behavioral
sciences should prove useful.
Source: This information was based on an excellent compilation
prepared by the marketing faculty of the Marshall School of
Business, University of Southern California at
http://www.marshall.usc.edu/marketing/resources/resources-
overview.htm (accessed June 11, 2010). For average salaries
broken down by job type and state consult
the Aquent/AMA Survey of Marketing Professionals at
http://www.marketingsalaries.com/aquent/Home.form or
commercial websites such as payscale.com and
rileyguide.com.
(continued)
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action to satisfy the need. When you’re hungry, you buy a
snack. If you’re not
happy with your hair, you get a new hairstyle. When you need a
job (or perhaps
just get mad at your boss), you check out LinkedIn.
Needs relate to physical functions (such as eating) or to
psychological ones
(such as social acceptance). Levi Strauss & Company is one
company that tries to
meet the psychological needs of consumers to look good (as
well as their basic
need to be clothed). The company’s research indicates that
people wear Levi’s
jeans to say important things about themselves and their desired
image. From time
to time, the company even receives a beat-up, handed-down pair
in the mail, with
a letter from the owner requesting that the jeans be given a
proper burial—that’s a
pretty “deep-seated” attachment to a pair of pants!3 The
specific way a person sat-
isfies a need depends on his or her unique history, learning
experiences, and cul-
tural environment. That explains why Nestlé’s Kit Kat is the
No. 1 candy brand in
Japan—but the flavors you buy there include green tea, soy
sauce, yubari melon,

and sweet potato.4
A want is a desire for a particular product we use to satisfy a
need in specific
ways that are culturally and socially influenced. For example,
two classmates’
stomachs rumble during a lunchtime lecture, and both need
food. However, each
of the two may satisfy this need in quite a different way. The
first student may be a
health nut who fantasizes about gulping down a big handful of
trail mix, while the
second person may lust for a greasy cheeseburger and fries. The
first student’s want
is trail mix, whereas the second student’s want is fast food (and
some antacid for
dessert).
A product delivers a benefit when it satisfies a need or want.
For marketers to
be successful, they must develop products that provide one or
more benefits that are impor-
tant to consumers. The challenge is to identify what benefits
people look for and then de-
velop a product that delivers those benefits while also
convincing consumers that their
product is better than a competitor’s product—making the
choice of which product to buy
obvious. As the late management guru Peter Drucker observed,
“The aim of marketing is to
make selling superfluous.”5
Everyone can want your product, but that doesn’t ensure sales
unless consumers have
the means to obtain it. When you couple desire with the buying
power or resources to sat-

isfy a want, the result is demand. So the potential customers
looking for a snappy red BMW
convertible are the people who want the car minus those who
can’t afford to buy or lease
one (no, stealing the car doesn’t count). A market consists of all
the consumers who share a
common need that can be satisfied by a specific product and
who have the resources, will-
ingness, and authority to make the purchase.
A marketplace used to be a location where buying and selling
occurs face to face. In
today’s “wired” world, however, buyers and sellers might not
even see each other. The
modern marketplace may take the form of a glitzy shopping
mall, a mail-order catalog, a
television shopping network, an eBay auction, or an e-
commerce Web site. In developing
countries, the marketplace may be a street corner or an open-air
market where people sell
fruits and vegetables much as they did thousands of years ago.
Indeed, a marketplace may
not even exist in the physical world—as players of online games
will tell you. Residents of
cyberworlds like Second Life and Habbo Hotel buy and sell
virtual real estate, home furnish-
ings, and bling for their digital avatars; in 2010 alone they
bought about $1.6 billion worth
of virtual goods that exist only on a computer server.
Marketing Creates Utility
Marketing transactions create utility, which refers to the sum of
the benefits we receive when
we use a good or service. When it ensures that people have the
type of product they want,
where and when they want it, the marketing system makes our

lives easier. Utility is what
Marketers create value for society when they help to promote
worthy causes.
want
The desire to satisfy needs in specific ways that
are culturally and socially influenced.
benefit
The outcome sought by a customer that
motivates buying behavior—that satisfies a
need or want.
demand
Customers’ desires for products coupled with
the resources needed to obtain them.
market
All the customers and potential customers who
share a common need that can be satisfied by a
specific product, who have the resources to
exchange for it, who are willing to make the
exchange, and who have the authority to make
the exchange.
VA L U E 11
APPLYING Demand
Joe needs to understand the potential
demand for Pandora’s services so he can
develop a plan to maximize the number of
these consumers who actually visit the site

on a regular basis.
Joe
Kennedy
Co
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creates value. Marketing processes create several different
kinds of utility to provide value to
consumers:
• Form utility is the benefit marketing provides by transforming
raw materials into
finished products, as when a dress manufacturer combines silk,
thread, and zippers to
create a bridesmaid’s gown.
• Place utility is the benefit marketing provides by making
products available where
customers want them. The most sophisticated evening gown
sewn in New York’s
garment district is of little use to a bridesmaid in Kansas City if
it isn’t shipped to her
in time.
• Time utility is the benefit marketing provides by storing
products until they are needed.

Some women rent their wedding gowns instead of buying them
and wearing them only
once (they hope!).
• Possession utility is the benefit marketing provides by
allowing the consumer to
own, use, and enjoy the product. The bridal store provides
access to a range of styles
and colors that would not be available to a woman outfitting a
bridal party on her
own.
As we’ve seen, marketers provide utility in many ways. Now,
let’s see how customers
“take delivery” of this added value.
Marketing and Exchange
At the heart of every marketing act—big or small—is something
we refer to
as an “exchange relationship.” An exchange occurs when a
person gives
something and gets something else in return. The buyer receives
an object,
service, or idea that satisfies a need, and the seller receives
something he or
she feels is of equivalent value. A product is a good, a service,
an idea, a place,
a person—whatever is offered for sale in the exchange.
For an exchange to occur, at least two people or organizations
must be
willing to make a trade, and each must have something the other
wants. Both
parties must agree on the value of the exchange and how it will
be carried
out. Each party also must be free to accept or reject the other’s

terms for the
exchange. Under these conditions, a gun-wielding robber’s offer
to “ex-
change” your money for your life does not constitute a valid
exchange. In
contrast, although someone may complain that a store’s prices
are “highway
robbery,” an exchange occurs if he still forks over the money to
buy some-
thing there—even if he still grumbles about it weeks later.
To complicate things a bit more, everyone does not always
agree on the
terms of the exchange. Think, for example, about music piracy,
which is a
huge headache for music labels. On the one hand, they claim
that they lose
billions of dollars a year when consumers download songs
without paying
for them. On the other hand, a lot of people who engage in this
practice don’t
feel that they participate in an unfair exchange that deprives
manufacturers
of the value of their products. They argue that music piracy is
the fault of
record companies that charge way too much for new songs.
What do you
think?
The debate over music downloading reminds us that an agreed
upon
transfer of value must occur for an exchange to take place. A
politician can
agree to work toward certain goals in exchange for your vote, or
a minister
can offer you salvation in return for your faith. Today, most

exchanges occur
as a monetary transaction in which currency (in the form of
cash, check, or
credit card) is surrendered in return for a good or a service.
exchange
The process by which some transfer of value
occurs between a buyer and a seller.
product
A tangible good, service, idea, or some
combination of these that satisfies consumer or
business customer needs through the exchange
process; a bundle of attributes including
features, functions, benefits, and uses.
Rent the Runway is a new service started by two recent business
school
grads. It rents high-end dresses from designers like Diane Von
Furstenberg, for about one-tenth of the cost of buying the same
garment
in a store. A woman can rent a dress for four nights; it’s
shipped directly
to her doorstep much like a Netflix video. The customer returns
the dress
in a prepaid envelope and the rental price includes the cost of
dry
cleaning. Place utility at work!6
virtual goods
Digital products consumers buy for use in online
contexts.
utility
The usefulness or benefit consumers receive
from a product.

marketplace
Any location or medium used to conduct an
exchange.
©
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VA L U E 13

When Did Marketing Begin?
The Evolution of a Concept
Now that we have an idea of how the marketing process works,
let’s
take a step back and see how this process worked (or didn’t
work) in
“the old days.” Although it just sounds like common sense to
us, be-
lieve it or not, the notion that businesses and other
organizations
succeed when they satisfy customers’ needs actually is a pretty
recent
idea. Before the 1950s, marketing was basically a means of
making
production more efficient. Let’s take a quick look at how the
marketing discipline has
developed. Table 1.2 tells us about some of the more recent
events in this marketing
history.
The Production Era
Many people say that Henry Ford’s Model T changed America
forever. Even from the
start in 1908, when the “Tin Lizzie,” or “flivver” as the T was
known, sold for $825, Henry
Ford continued to make improvements in production. By 1912,
Ford got so efficient that
the car sold for $575, a price even the Ford employees who
made the car could afford.7
As the price continued to drop, Ford sold even more flivvers.
By 1921, the Model T Ford
had 60 percent of the new-car market. In 1924, the ten millionth
Model T rolled off the
assembly line. The Model T story is perhaps the most well-

known and most successful
example of an organization that focuses on the most efficient
production and distribution
of products.
Ford’s focus illustrates a production orientation, which works
best in a seller’s market
when demand is greater than supply because it focuses on the
most efficient ways to pro-
duce and distribute products. Essentially, consumers have to
take whatever is available—
there weren’t a whole lot of other Tin Lizzies competing for
drivers in the 1920s. Under these
conditions, marketing plays a relatively insignificant role—the
goods literally sell them-
selves because people have no other choices. In the former
Soviet Union, the centralized
government set production quotas, and weary shoppers lined up
(often for hours) to pur-
chase whatever happened to be on a store’s shelves at the time.
Firms that focus on a production orientation tend to view the
market as a homogeneous
group that will be satisfied with the basic function of a product.
Sometimes this view is too
narrow. For example, Procter & Gamble’s Ivory soap has been
in decline for some time be-
cause the company viewed the brand as plain old soap, not as a
cleansing product that could
provide other benefits as well. Ivory soap lost business to newer
deodorant and “beauty”
soaps containing cold cream that “cleaned up” in this market.8
The Sales Era
When product availability exceeds demand in a buyer’s market,
businesses may engage

in the “hard sell” in which salespeople aggressively push their
wares. During the Great
Depression in the 1930s, when money was scarce for most
people, firms shifted their focus
from a product orientation to moving their goods in any way
they could.
This selling orientation means that management views
marketing as a sales function,
or a way to move products out of warehouses so that inventories
don’t pile up. The selling
orientation gained in popularity after World War II. During the
war, the United States dra-
matically increased its industrial capacity to manufacture tanks,
combat boots, parachutes,
and countless other wartime goods. After the war, this industrial
capacity was converted to
producing consumer goods.
Consumers eagerly bought all the things they couldn’t get
during the war years, but once
they satisfied these initial needs and wants they got more
selective. The race for consumers’
production orientation
A management philosophy that emphasizes the
most efficient ways to produce and distribute
products.
3
OBJECTIVE
Explain the evolution
of the marketing

concept.
(pp. 13–18)
selling orientation
A managerial view of marketing as a sales
function, or a way to move products out of
warehouses to reduce inventory.
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Table 1.2 | Marketing History
Year Marketing Event
1955 Ray Kroc opens his first McDonald’s.
1956 Lever Brothers launches Wisk, America’s first liquid
laundry detergent.
1957 Ford rolls out Edsel, loses more than $250 million in two
years.

1959 Mattel introduces Barbie.
1960 The FDA approves Searle’s Enovid as the first oral
contraceptive.
1961 Procter & Gamble launches Pampers.
1962 Walmart, Kmart, Target, and Woolco open their doors.
1963 The Pepsi Generation kicks off the cola wars.
1964 Blue Ribbon Sports (now known as Nike) ships its first
shoes.
1965 Donald Fisher opens The Gap, a jeans-only store in San
Francisco.
1971 Cigarette advertising is banned on radio and television.
1973 Federal Express begins overnight delivery services.
1976 Sol Price opens the first warehouse club store in San
Diego.
1980 Ted Turner creates CNN.
1981 MTV begins.
1982 Gannett launches USA Today.
1983 Chrysler introduces minivans.
1984 Apple Computer introduces the Macintosh.
1985 New Coke is launched; Old Coke is brought back 79 days

later.
1990 Saturn, GM’s first new car division since 1919, rolls out
its first car.
1993 Phillip Morris reduces price of Marlboros by 40 cents a
pack and loses $13.4 billion in stock market value in one day.
1994 In the largest switch in ad history, IBM yanks its business
from scores of agencies worldwide and hands its entire account
to Ogilvy & Mather.
1995 eBay goes online as an experimental auction service.
1997 McDonald’s gives away Teenie Beanie Babies with Happy
Meals. Consumer response is so overwhelming that McDonald’s
is forced to take out ads apologizing for its inability to meet
demand. Nearly 100 million Happy Meals are sold during the
promotion.a
1998 Germany’s Daimler-Benz acquires America’s Chrysler
Corporation for more than $38 billion in stock to create a new
global automaking giant called Daimler-Chrysler.b
2003 Amazon debuts its “Search Inside the Book” feature that
allows you to search the full text of more than 33 million pages
from over 120,000 printed books.
2004 Online sales in the United States top $100 billion.c
2007 About 30 open source companies were purchased for more
than $1 billion.d
2008 MySpace boasts over 225 million members worldwide.d
2010 Apple launches the iPad; sells 300,000 of the tablets on

the first day and one million iPads in 28 days —less than
half of the 74 days it took to sell one million iPhones.
Consumers watch more than 30 billion videos online per
month.e
Sources: Patricia Sellers, “To Avoid Trampling, Get Ahead of
the Mass,” Fortune, 1994, 201–2 except as noted. a Tod Taylor,
“The Beanie Factor,” Brandweek, June 16, 1997,
22–27. b Jennifer Laabs, “Daimler-Benz and Chrysler: A
Merger of Global HR Proportions,” Workforce, July 1998, 13. c
Keith Regan, “Report: Online Sales Top $100 Billion,”
E-Commerce Times, June 1, 2004,
www.ecommercetimes.com/story/34148.html. d Frank Rose,
“Wired Business Trends 2008,” Wired
http://www.wired.com/techbiz/it/
magazine/16-04/bz_opensource, December 2007. e Eliot Van
Buskirk, “Apple iPad Reaches ‘1 Million Sold’ Twice as Fast as
iPhone” (May 3, 2010), Wired, http://www
.wired.com/epicenter/2010/05/apple-ipad-reaches-one-million-
sold-twice-as-fast-as-iphone/#ixzz0qBrfv3tj, accessed June 7,
2010; Mashable.com (April 5, 2010),
http://mashable.com/2010/04/05/ipad-stats-300000-sold/,
accessed June 7, 2010; “30 Billion Videos Watched Online in
April” (June 11, 2010), Center for Media Research,
http://www.mediapost.com/publications/?fa�Articles.showArtic
le&art_aid�129561, accessed June 11, 2010.
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hearts and pocketbooks was on. The selling orientation
prevailed well into the 1950s. But con-
sumers as a rule don’t like to be pushed, and the hard sell gave
marketing a bad image.
Companies that still follow a selling orientation tend to be more
successful at making
one-time sales rather than at building repeat business. We are
most likely to find this focus
among companies that sell unsought goods—products that
people don’t tend to buy without
some prodding. For example, most of us aren’t exactly “dying”
to shop for cemetery plots,
so some encouragement may be necessary to splurge on a final
resting place.
The Relationship Era
At Direct Tire Sales in Watertown, Massachusetts, customers
discover an unusual sight:
The customer lounge is clean, there is free coffee with fresh
cream and croissants, employ-
ees wear ties, and the company will even pay your cab fare
home if your car isn’t ready on
time. People don’t mind paying 10 to 15 percent more for these
extra services.9 Direct Tire
Sales has found that it pays to have a consumer orientation that

satisfies customers’ needs
and wants.
As the world’s most successful firms began to adopt a consumer
orientation, marketers
had a way to outdo the competition—and marketing’s
importance was also elevated in the
firm. Marketers did research to understand the needs of
different consumers, assisted in tai-
loring products to the needs of these various groups, and did an
even better job of design-
ing marketing messages than in the days of the selling
orientation.
The marketing world was humming along nicely, but then
inflation in the 1970s and re-
cession in the 1980s took their toll on company profits. The
marketing concept needed a
boost. Firms had to do more than meet consumers’ needs—they
had to do this better than
the competition and do it repeatedly. They increasingly
concentrated on improving the qual-
ity of their products. By the early 1990s, many in the marketing
community followed an ap-
proach termed Total Quality Management (TQM). The TQM
perspective takes many forms,
but essentially it’s a management philosophy that involves all
employees
from the assembly line onward in continuous product quality
improvement.
Indeed, rapid improvements in manufacturing processes give
forward-
thinking firms—even small ones—a huge edge in the
marketplace because
they are more nimble and thus able to create products

consumers want when
they want them and at the price they want. One way they do is
to manufac-
ture on demand—this means that they don’t actually produce a
product until
a customer orders it. The Japanese pioneered this idea with their
just-in-time
model that we’ll learn more about in Chapter 15.
Today, however, even small mom and pop companies can
compete in
this space. Technology is creating a new class of business
person that we
call an instapreneur. All you need is a design; even amateurs
can produce
jewelry, T-shirts, furniture, and indeed almost anything we can
imagine.
They don’t have to pay to store their inventory in huge
warehouses and
they don’t need any money down. For example, the German firm
Spread-
shirt hosts 500,000 individual T-shirt shops. You see a design
you like,
place an order, and bam—it gets produced and sent to your
door.10
Spreadshirt even partnered with Stardoll, a Swedish virtual
world that
lets girls create fashion designs and see what they look like on
virtual
celebrities. Now, they can actually transfer their own designs to
the real
world.
The Triple Bottom Line Orientation
Over time, many forward-thinking organizations began to see

their commit-
ment to quality even more intensely than “just” satisfying
consumers’ needs
during a single transaction. A few realized that making
monetary profit is
consumer orientation
A business approach that prioritizes the
satisfaction of customers’ needs and wants.
Total Quality Management (TQM)
A management philosophy that focuses on
satisfying customers through empowering
employees to be an active part of continuous
quality improvement.
Marketing messages like this Romanian one for the World
Wildlife Fund
focus on the environmental bottom line.
instapreneur
A businessperson who only produces a product
when it is ordered.
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important—but there’s more to think about than just the
financial bottom line. Instead, they
began to focus on a triple bottom line orientation that meant
building long-term bonds with
customers rather than merely selling them stuff today.11 This
new way of looking at business
emphasizes the need to maximize three components:
1. The financial bottom line: Financial profits to stakeholders
2. The social bottom line: Contributing to the communities in
which the company operates
3. The environmental bottom line: Creating sustainable business
practices that minimize
damage to the environment or that even improve it
Is it possible to contribute in a positive way to society and the
earth and still contribute
to your paycheck? Walmart, the nation’s largest retailer, seems
to think so. The huge com-
pany announced in 2010 its goal to cut 20 million metric tons of
greenhouse gas emissions
from its supply chain by the end of 2015—the equivalent of
removing more than 3.8 million
cars from the road for a year. It’s asking suppliers to take a hard
look at the carbon their
products emit. Walmart will work with its vendors to make their
manufacturing processes
more efficient—and hopefully pass cost savings on to
customers. The chain has introduced
more modest initiatives already; for example, it’s working to
change the labels on clothing
it sells to indicate the products can be washed in cold water
(therefore lowering customers’
electricity bills) and in partnership with 20th Century Fox Home

Entertainment it elimi-
nated the plastic knob in the center of CD cases to cut
greenhouse gas emissions.12
One outgrowth of this new way of thinking was the concept of
customer relationship
management (CRM), which involves systematically tracking
consumers’ preferences and
behaviors over time in order to tailor the value proposition as
closely as possible to each indi-
vidual’s unique wants and needs. With the advent of the
Internet, a CRM approach got a lot
easier to implement as more and more firms started to rely
heavily on the Web to connect with
consumers. The Internet provides the ultimate opportunity for
implementation of the market-
ing concept because it allows a firm to personalize its messages
and products to better meet the
needs of each individual consumer. More on this in Chapter 12.
Although dot-com companies took a beating in the marketplace
during
the first “bubble” in the early 1990s, many analysts believe that
this was just
a preliminary shakeout—the heyday of the Internet is yet to
come. More
recent success stories like Google, Twitter, Facebook, and
Flickr seem to be
proving analysts right. Indeed, some marketing analysts suggest
that the
Internet creates a paradigm shift for business. This means that
companies
must adhere to a new model to profit in a wired world. They
argue that
we live in an attention economy, one in which a company’s
success will be

measured by its share of mind rather than share of market,
where companies
make money when they attract eyeballs rather than just dollars.
For
example, Google sells advertising to many other companies, so
the more
consumers it can persuade to “google” rather than “bing” or
“yahoo,” the
more it can charge to place ads on search pages.
This means that companies must find new and innovative ways
to
stand out from the crowd and become an integral part of
consumers’ lives
rather than just being a dry company that makes and sells
products. For ex-
ample, major consumer packaged foods companies are drawing
many more
customers to their Web sites than in the past. More important,
the sites are
“sticky,” meaning that they tend to keep visitors long enough to
make a last-
ing impression on them and motivate people to come back for
more.
Another result of this new way of long-term thinking is the
social
marketing concept, which maintains that marketers must satisfy
customers’
needs in ways that also benefit society while still delivering a
profit to the
firm. This perspective is even more important since the terrorist
attacks of
triple bottom line orientation
A business orientation that looks at financial

profits, the community in which the organization
operates, and creating sustainable business
practices.
customer relationship management
(CRM)
A systematic tracking of consumers’ preferences
and behaviors over time in order to tailor the
value proposition as closely as possible to each
individual’s unique wants and needs. CRM
allows firms to talk to individual customers and
to adjust elements of their marketing programs
in light of how each customer reacts.
attention economy
A company’s success is measured by its share of
mind rather than share of market, where
companies make money when they attract
eyeballs rather than just dollars.
social marketing concept
A management philosophy that marketers must
satisfy customers’ needs in ways that also
benefit society and also deliver profit to the firm.
Green Mountain Coffee uses sustainable business practices.
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2001, which led many people and firms to reexamine their
values and redouble their commitments to community and
country.
Many big and small firms alike practice this philosophy.
Their efforts include satisfying society’s environmental and so-
cial needs for a cleaner, safer environment by developing recy-
clable packaging, adding extra safety features such as car air
bags, voluntarily modifying a manufacturing process to reduce
pollution, and sponsoring campaigns to address social prob-
lems. Servus Credit Union, a Canadian bank, even handed out

$200,000 in $10 increments to finance small good deeds.13
A very important trend now is for companies to think of
ways to design and manufacture products with a focus on
sustainability, which we define as “meeting present needs
without compromising the ability of future generations to
meet their needs.”14 Some refer to this philosophy as “cradle to
cradle”; this term describes the
ideal condition where a product is made from natural materials
and is fully reusable, recy-
clable, or biodegradable so the net depletion of resources a
company needs to make it is zero.
When players in the 2010 World Cup ran onto the field, many
wore Nike jerseys made from
plastic bottles the company retrieved from landfills in Japan and
Taiwan. Walmart is a leader
in sustainability practices. The giant retail chain makes and
sells photo frames from plastic
waste products it creates and recycles materials left over from
manufacturing its private la-
bel diapers into building materials when it constructs new
stores. Sustainability is good
business because it reduces costs while conserving resources;
Walmart estimates savings of
$100 million in one year when it switched to a recyclable
variety of cardboard it uses to ship
goods to its stores. Consumers love it too: In the United States
alone we spend more than
$500 billion per year on sustainable products.15
Sustainability applies to many aspects of doing business,
including social and eco-
nomic practices (e.g., humane working conditions and
diplomacy to prevent wars that de-
plete food supplies, atmospheric quality, and of course lives).
One other crucial pillar of

sustainability is the environmental impact of the product. Green
marketing, the develop-
ment of marketing strategies that support environmental
stewardship by creating an en-
vironmentally founded differential benefit in the minds of
consumers, is being practiced
by most forward-thinking firms today. Green marketing is one
aspect of a firm’s overall
commitment to sustainability. A recent study on the impact of
green marketing uncovered
some interesting results:
• About half the companies reported that they are consciously
taking steps to become
more green.
• More than 80 percent of respondents indicated they expect to
spend more on green mar-
keting in the future.
• Companies with smaller marketing budgets tend to spend more
on green marketing
and also think green marketing is more effective than larger
companies do.
• By far the most popular medium for green marketing was the
Internet, with 74.2 percent
of respondents having spent money online.
• Marketers that track marketing spending and its relation to
sales believe people will
pay more for green products.
• Marketers tend to lead green initiatives; 50 percent of firm
managers surveyed agree
that control of the green (sustainability) program is in the hands

of marketers.16
In addition to building long-term relationships and focusing on
social responsibility,
triple bottom line firms place a much greater focus on
accountability—measuring just how
sustainability
A product design focus that seeks to create
products that meet present consumer needs
without compromising the ability of future
generations to meet their needs.
Game sites like Candystand are “sticky” (this one is built
around candy, after all) so many
advertisers find these media outlets an attractive place to
advertise.
green marketing
A marketing strategy that supports
environmental stewardship, thus creating a
differential benefit in the minds of consumers.
©
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return on investment (ROI)
The direct financial impact of a firm’s
expenditure of a resource such as time
or money.
much value marketing activities create. This means that
marketers at these
organizations ask hard questions about the true value of their
efforts and
their impact on the bottom line. These questions all boil down
to the simple
acronym of ROI (return on investment). Marketers now realize
that if they
want to assess just how much value they create for the firm,
they need to
know exactly what they are spending and what the concrete
results of their
actions are.
However, it’s not always so easy to assess the value of
marketing ac-
tivities. Many times managers state their marketing objectives
using

vague phrases like “increase awareness of our product” or
“encourage
people to eat healthier snacks.” These goals are important, but
their lack of
specificity makes it pretty much impossible for senior
management to de-
termine marketing’s true impact. Because management may
view these ef-
forts as costs rather than investments, marketing activities often
are
among the first to be cut out of a firm’s budget. To win
continued support
for what they do (and sometimes to keep their jobs), marketers
in triple
bottom line firms do their best to prove to management that they
are gen-
erating measurable value by aligning marketing activities with
the firm’s
overall business objectives.17
What Can We Market?
Marketers’ creations surround us. It seems that everywhere we
turn
we get bombarded by advertisements, stores, and products that
compete fiercely and loudly for our attention and our dollars.
Mar-
keters filter much of what we learn about the world, such as
when
we see images of rich or beautiful people on television
commercials
or magazines. Ads show us how we should act and what we
should
own. Marketing’s influence extends from “serious” goods and
serv-
ices such as health care to “fun” things such as extreme
skateboard-

ing equipment and hip-hop music (though many people take
these products as
seriously as their health).
Lasers to Lady Gaga
Popular culture consists of the music, movies, sports, books,
celebrities, and other forms of
entertainment that the mass market consumes. The relationship
between marketing and
popular culture is a two-way street. The goods and services that
are popular at any time
often mirror changes in the larger society. Consider, for
example, some U.S. products that
reflected underlying cultural changes at the time they were
introduced:
• The TV dinner signaled changes in family structure, such as a
movement away from the
traditional family dinner hour filled with conversation about the
day’s events.
• Cosmetics made of natural materials and not tested on animals
reflected social concerns
about pollution and animal rights.
• Condoms marketed in pastel carrying cases intended for
female buyers signaled chang-
ing attitudes toward sexual responsibility.
Marketing messages often communicate myths, stories
containing symbolic ele-
ments that express the shared emotions and ideals of a culture.
Consider, for example,
popular culture

The music, movies, sports, books, celebrities, and
other forms of entertainment consumed by the
mass market.
Green marketing in action.
myths
Stories containing symbolic elements that express
the shared emotions and ideals of a culture.
©
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4
OBJECTIVE
Understand the range
of services and goods
that organizations
market.
(pp. 18–21)

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how McDonald’s takes on mythical qualities. To some, the
golden arches are virtually synonymous with American
culture.18 These familiar structures offer sanctuary to
Americans in foreign lands who are grateful to know ex-
actly what to expect once they enter. Basic struggles of
good versus evil play out in the fantasy world of McDon-
ald’s advertising, as when Ronald McDonald confounds
the Hamburglar. McDonald’s even runs Hamburger
University, where fast-food majors learn how to make the
perfect burger.
Is there any limit to what marketers can market?
Marketing applies to more than just canned peas or cola
drinks. Some of the best marketers come from the ranks
of services companies such as American Express or not-
for-profit organizations such as Greenpeace. Politicians,
athletes, and performers use marketing to their advantage

(just think about that $30 T-shirt you may have bought at
a baseball game or rock concert). Ideas such as political systems
(democracy,
totalitarianism), religion (Christianity, Islam), and art (realism,
abstract)
also compete for acceptance in a “marketplace.” In this book,
we’ll refer to
any good, service, or idea that can be marketed as a product,
even though
what you’re buying may not take a physical form.
Consumer Goods and Services
Consumer goods are the tangible products that individual
consumers purchase for
personal or family use. Services are intangible products that we
pay for and use but
never own. Service transactions contribute on average more
than 60 percent to the
gross national product of all industrialized nations. Marketers
need to understand
the special challenges that arise when marketing an intangible
service rather than a
tangible good.19
In both cases, though, keep in mind that the consumer looks to
obtain
some underlying value, such as convenience, security, or status,
from a mar-
keting exchange. That value can come from a variety of
competing goods and
services, even those that don’t resemble one another on the
surface. For exam-
ple, a new CD and a ticket to a local concert may cost about the
same, and each
may provide the benefit of musical enjoyment, so consumers
often have to

choose among competing alternatives if they can’t afford (or
don’t want) to
buy them all.
Business-to-Business Goods and Services
Business-to-business marketing is the marketing of goods and
services from
one organization to another. Although we usually relate
marketing to the
thousands of consumer goods begging for our dollars every day,
the reality is that busi-
nesses and other organizations buy a lot more goods than
consumers do. They purchase
these industrial goods for further processing or to use in their
own business operations.
For example, automakers buy tons of steel to use in the
manufacturing process, and they
buy computer systems to track manufacturing costs and other
information essential to
operations.
Similarly, there is a lot of buzz about e-commerce and the
buying and selling of products—
books, CDs, cars, and so forth—on the Internet. However, just
like in the off-line world, much of
the real online action is in the area of business-to-business
marketing.
Marketing messages sometimes refer to familiar cultural stories,
like this ad from Chile that
borrows imagery from Little Red Riding Hood.
consumer goods
The goods individual consumers purchase for
personal or family use.

Marketing an intangible service like the assistance this British
realtor offers poses unique challenges.
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Br

ah
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services
Intangible products that are exchanged directly
between the producer and the customer.
business-to-business marketing
The marketing of goods and services from one
organization to another.
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Shrinkage
Someone steals from a store every five seconds. Shrinkage is
the industry term for inventory
and cash losses from shoplifting and employee theft. As we’ll
see in Chapter 16, this is a
massive problem for businesses that they in turn pass on to
consumers in the form of higher
prices. Analysts attribute about 40 percent of the losses to
employees rather than shoppers.
Anticonsumption
Some types of destructive consumer behavior are
anticonsumption, when people deliber-
ately deface products. This practice ranges from relatively mild
acts like spray-painting
graffiti on buildings and subways, to serious incidences of
product tampering or even the
release of computer viruses that can bring large corporations to
their knees.
Not-for-Profit Marketing
As we noted earlier, you don’t have to be a businessperson to
use marketing principles.
Many not-for-profit organizations, including museums, zoos,
and even churches, practice
the marketing concept. Local governments are adopting
marketing techniques to create
more effective taxpayer services and to attract new businesses
and industries to their coun-
ties and cities. Even states are getting into the act: We’ve
known for a long time that I ♥
NY, but recently Kentucky and Oregon hired advertising

agencies to develop statewide
branding campaigns (the official state motto of Oregon is now
“Oregon. We love dream-
ers.”).22 The intense competition for support of civic and
charitable activities means that
only the not-for-profits that meet the needs of their constituents
and donors will survive.
Idea, Place, and People Marketing
Marketing principles also encourage people to endorse ideas or
to change their behaviors in
positive ways. Many organizations work hard to convince
consumers to use seat belts, not
to litter our highways, to engage in safe sex, or to believe that
one political system is prefer-
able to another. In addition to ideas, places and people also are
marketable. We are all famil-
iar with tourism marketing that promotes exotic resorts like
Club Med (“the antidote for
civilization”). For many developing countries like Thailand,
tourism provides an important
opportunity for economic growth.
You may have heard the expression, “Stars are made, not born.”
There’s a lot of truth
to that. Lady Gaga may have a killer voice and Ryan Howard
may have a red-hot baseball
anticonsumption
The deliberate defacement of products.
Ripped from the Headlines!
Ethical/Sustainable Decisions in the Real World
Back in the day, the “typical” marijuana smoker (or at least the
stereotype) was

a bearded, bell-bottomed hippie who zoned out in front of the
TV watching re-
runs on Nick at Night and eating Oreos by the bagful.Today,
there’s a good chance
a user is a senior citizen or a suburban housewife who smokes
joints to fight the
negative effects of glaucoma or chemotherapy. Pot is going
mainstream.The drug
is legal with a prescription in 14 states including California,
Colorado, and New
Jersey, and some feel it’s only a matter of time be-
fore American voters decide in favor of full-scale
legalization.
Some businesspeople smell opportunity
through the smoke. One consulting firm called
CannBe (advocates prefer the term cannabis to
marijuana) offers seminars to budding marketers
(pun intended) who want to learn about the best techniques to
merchandise the
drug and related paraphernalia in a cleaned-up context. The
firm’s president ob-
serves, “If we can’t demonstrate professionalism and
legitimacy, we’re never going
to gain the trust of our citizens.” Taking a page from marketers
like General Motors
and General Mills, the firm is diversifying its product line as it
offers a weaker ver-
sion of weed to attract first-time potheads. California
dispensaries (there are more
in the state than there are Starbucks outlets) offer regular
promotions including
coupons and even free parking to lure customers.20 At the
Harborside Health Cen-

ter in Oakland, customers can check out different strains on
display under a glass
counter with brand names like Blue Dreams, Super Diesel, and
Original Purple.
Shoppers who enjoy reading detailed wine reviews will feel at
home with write-ups
of recommended varieties like this one: “. . . lush and spicy . . .
reminiscent of Cali
mist yet fatter and more body. The high is up and giggly and
long lived as well. I
was baked for four hours after smoking some.”21
ETHICS CHECK:
Find out what other students
taking this course would
do and why on www
.mypearsonmarketinglab
.com
YES NO
not-for-profit organizations
Organizations with charitable, educational,
community, and other public service goals that
buy goods and services to support their
functions and to attract and serve their
members.
Should marijuana
be marketed like
makeup or milk?
Would you open a
cannabis dispensary in
your community?

industrial goods
Goods individuals or organizations buy for
further processing or for their own use when
they do business.
e-commerce
The buying or selling of goods and services
electronically, usually over the Internet.
shrinkage
Losses experienced by retailers due to
shoplifting, employee theft, and damage to
merchandise.
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bat, but talent alone doesn’t make thousands or even millions of
people buy
CDs or stadium seats. Entertainment events do not just happen.

People plan
them. Whether for a concert or a baseball game, the application
of sound
marketing principles helps ensure that patrons will continue to
support the
activity and buy tickets. Today, sports and the arts are hotbeds
of marketing
activity. Many of the famous people you pay to see became
famous with the
help of shrewd marketing: They and their managers developed a
“product”
that they hoped would appeal to some segment of the
population. To appre-
ciate how far these efforts can go (maybe too far!), recently
reports circulated
that the Russian government plans to rebrand the infamous
dictator Josef
Stalin as part of an effort to improve its global image. Since
Stalin “purged”
(i.e., executed) about 20 million people, this campaign may be a
bit ambi-
tious.23
Some of the same principles that go into “creating” a celebrity
apply to
you. An entertainer—whether Adam Lambert or Tony Bennett—
must
“package” his talents, identify a market that is likely to be
interested, and
work hard to gain exposure to these potential customers by
appearing in the
right musical venues.
In the same way, everyday people like Alex “package”
themselves
when they sum up their accomplishments on LinkedIn and join

professional
groups to link with as many “buyers” as they can. And this
person market-
ing perspective is more valid than ever—now that almost
everyone can find “15 minutes of
fame” on a Web site, a blog, or a YouTube video. We even have
a new word—microcelebrity—
to describe those who are famous, not necessarily to millions of
people, but certainly to hun-
dreds or even thousands who follow their comings and goings
on Facebook, Flickr, or
Twitter. Some of these stories reveal heartbreak and despair—
including the chronicle of a
woman named Jennifer who described her husband’s betrayal in
intimate detail to the
55,000 readers of her blog, NakedJen.com.24 Others focus on
more crucial issues like how to
handle a bad hair day—Blogger.com lists more than 4,000
postings that ask readers:
“Should I cut my hair?” In a way, when you post some text
about how you spent your day
on your blog or Facebook wall, you’re basically sending out a
press release about yourself
(we’ll find out more about those in Chapter 13). So, be careful
what you broadcast—you
might make the news sooner than you think!25
The Value of Marketing
and the Marketing of Value
So far, we’ve talked a lot about marketing practices that deliver
value
to customers. As we noted at the beginning of this chapter,
value
refers to the benefits a customer receives from buying a good or
ser-
vice. Marketers communicate these benefits to the customer in

the
form of a value proposition, a marketplace offering that fairly
and ac-
curately sums up the value that the customer will realize if he or
she
purchases the product. The challenge to the marketer is to create
an at-
tractive value proposition. A big part of this challenge is to
convince
customers that this value proposition is superior to others they
might choose from
competitors.
How do customers (such as your potential employers) decide
how much value they
will get from a purchase? One way to look at value is to think
of it simply as a ratio of
benefits to costs—that is, customers “invest” their precious time
and money to do business
with a firm, and they expect a certain bundle of benefits in
return.
Not-for-profit organizations also use marketing tools.
5
OBJECTIVE
Understand value
from the perspectives
of customers,
producers, and

society.
(pp. 21–29)
value proposition
A marketplace offering that fairly and accurately
sums up the value that will be realized if the
good or service is purchased.
Ill
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tra
tio
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by
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k
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ua
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IS
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5

2
1
B
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E C I S I O N S
But here’s the tricky part: Value is in the eye of the beholder;
this means that
something (or someone) may be worth a lot to one person but
not to another.
Your mother may believe that you are the greatest person on the
planet, but a
prospective employer may form a different opinion. A big role
marketers play
in an organization is to ensure that consumers appreciate the
value of a product,
service, or idea. Let’s look at value from the different
perspectives of the parties
that are involved in an exchange: the customers, the sellers, and
society.
Value from the Customer’s Perspective
Think about something you would like to buy, say, a new pair of
shoes. You have
narrowed the choice down to several options. Your purchase
decision no doubt
will be affected by the ratio of costs versus benefits for each
type of shoe. When
you buy a pair of shoes, you consider the price (and other costs)
along with all
the other benefits (utilities) that each competing pair of shoes
provides you.

As we noted previously, the value proposition includes the
whole bundle
of benefits the firm promises to deliver, not just the benefits of
the product itself.
For example, although most people probably couldn’t run faster
or jump higher
if they were wearing Nikes versus Reeboks, many die-hard
loyalists swear by
their favorite brand. These archrival brands are largely
marketed in terms of
their images—meanings their respective advertising agencies
have carefully
crafted with the help of legions of athletes, slickly produced
commercials, and
millions of dollars. When you buy a Nike “swoosh,” you’re
doing more than
choosing shoes to wear to the mall—you may also be making a
statement about
the type of person you are or wish you were. In addition to
providing comfort
or letting you run faster, that statement also is part of the value
the product delivers to you.
You can probably think of possessions you own with which
you’ve “bonded” in some
way—that is, their value to you goes beyond their function.
Marketers who understand this
know that in the long run, their value proposition will be
successful if they manage to build
a relationship between their product and the people who buy it.
Value from the Seller’s Perspective
We’ve seen that marketing transactions produce value for
buyers, but how do sellers expe-

rience value, and how do they decide whether a transaction is
valuable? One answer is
obvious: They determine whether the exchange is profitable to
them. Has it made money
for the company’s management, its workers, and its
shareholders?
That’s a very important factor, but not the only one. Just as we
can’t measure value from
the consumer’s perspective only in functional terms, value from
the seller’s perspective can
take many forms. For example, in addition to making a buck or
two, many firms measure
value along other dimensions, such as prestige among rivals or
pride in doing what they do
well. Some firms by definition don’t even care about making
money, or they may not even be
allowed to make money; nonprofits like Greenpeace, the
Smithsonian Institution, or National
Public Radio regard value in terms of their ability to motivate,
educate, or delight the public.
Because value is such a complicated but important concept, now
more than ever mar-
keters search for new and better ways to accurately measure just
what kind of value they
deliver. They also try to learn how this stacks up to the
competition, and—as we’ll see next—
in some cases even whether the relationship they have with a
customer possesses enough
value for them to continue it.
Build Value: Market with Customers, Not to Them
Smart companies today understand that making money from a
single transaction doesn’t pro-

vide the kind of value they desire. Instead, their goal is to
satisfy the customer over and over
again so that they can build a long-term relationship rather than
just having a “one-night stand.”
Marketing strategies exert an important influence on major
social
problems such as finding a cure for cancer.
Co
ur
te
sy
o
f S
us
an
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om
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Inc.
T
O
N
E
Y
,
A
D

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