Report

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 1/19

What is Marketing?

What makes a business idea work? Does it only take money? Why are some

products a huge success and similar products a dismal failure? How was Apple, a

computer company, able to create and launch the wildly successful iPod, yet

Microsoft's first foray into digital audio players was a total disaster? If the size of

the company and the money behind a product's launch were the difference,

Microsoft would have won. But for Microsoft to have won, it would have needed

something it has not had in a while—good marketing, so it could produce and sell

products that consumers want.

So how does good marketing get done?

Defining Marketing

Marketing is defined by the American Marketing Association as "the activity, set

of institutions, and processes for creating, communicating, delivering, and

exchanging offerings that have value for customers, clients, partners, and society

at large" (American Marketing Association, n.d.). If you read the definition closely,

you see that there are four activities, or components, of marketing:

creating—the process of collaborating with suppliers and customers to

create offerings that have value

communicating—broadly, describing those offerings, as well as learning from

customers

delivering—getting those offerings to the consumer in a way that optimizes

value

exchanging—trading value for those offerings

The traditional way of viewing the components of marketing is via the four Ps:

product—goods and services (creating offerings)

promotion—communication

place—getting the product to a point at which the customer can purchase it

(delivering)

price—the monetary amount charged for the product (exchanging)

Introduced in the early 1950s, the four Ps were called the marketing mix,

meaning that a marketing plan is a mix of these four components.

Learning Resource

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 2/19

If the four Ps are the same as creating, communicating, delivering, and

exchanging, you might be wondering why there was a change. The answer is that

they are not exactly the same. Product, price, place, and promotion are nouns. As

such, these words fail to capture all the activities of marketing. For example,

exchanging requires mechanisms for a transaction, which consist of more than

simply a price or place. Exchanging requires, among other things, the transfer of

ownership. For example, when you buy a car, you sign documents that transfer

the car's title from the seller to you. That's part of the exchange process.

Even the term product, which seems pretty obvious, is limited. Does the product

include services that come with your new car purchase (such as free

maintenance for a certain period of time on some models)? Or does the product

mean only the car itself?

Finally, none of the four Ps describes particularly well what marketing people do.

However, one of the goals of this book is to focus on exactly what marketing

professionals do.

Value

Value is at the center of everything marketers do. What does value mean?

When we use the term value, we mean the benefits buyers receive that meet

their needs. In other words, value is what the customer gets by purchasing and

consuming a company's offering. Although the offering is created by the

company, the value is determined by the customer.

Furthermore, our goal as marketers is to create a profitable exchange for

consumers. By profitable, we mean that the consumer's personal value equation

is positive. The personal value equation is

value = benefits received – [price + hassle].

Hassle is the time and effort the consumer puts into the shopping process. The

equation reflects personal impressions, because each consumer will judge the

benefits of a product differently, as with the time and effort he or she puts into

shopping. Value, then, varies for each consumer.

One way to think of value is to imagine a meal in a restaurant. If you and three

friends go to a restaurant and order the same dish, each of you will like it more

or less depending on your personal tastes. Yet the dish was exactly the same,

priced the same, and served exactly the same way. Because your tastes varied,

the benefits you received varied. Therefore, the value varied for each of you.

That's why we call it a personal value equation.

Value varies from customer to customer based on each customer's needs. The

marketing concept, a philosophy underlying all that marketers do, requires that

marketers seek to satisfy customer wants and needs. Firms operating with that

philosophy are said to be market oriented. At the same time, market-oriented

firms recognize that the exchange must be profitable for the company to be

successful. A marketing orientation is not an excuse to fail to make profit.

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 3/19

Firms don't always embrace the marketing concept and a market orientation.

Beginning with the Industrial Revolution in the late 1800s, companies were

production oriented. They believed that the best way to compete was by

reducing production costs. In other words, companies thought that good

products would sell themselves. Perhaps the best example of such a product was

Henry Ford's Model A automobile, the first product of his production line

innovation. Ford's production line made the automobile cheap and affordable for

many more people. The production era lasted until the 1920s, when production-

capacity growth began to outpace demand growth, and new strategies were

called for. There are, however, companies that still focus on production as the

way to compete.

From the 1920s until after World War II, companies tended to be selling

oriented, meaning they believed it was necessary to push their products by

heavily emphasizing advertising and selling. Consumers during the Great

Depression and World War II did not have as much money, so the competition

for their available dollars was stiff. The result was this push approach during the

selling era. Companies like the Fuller Brush Company and Hoover Vacuum began

selling door-to-door, and the vacuum-cleaner salesperson position was created.

Just as with production, some companies still operate with a push focus.

In the post–World War II environment, demand for goods increased as the

economy soared. Some products, limited in supply during World War II, were

now plentiful to the point of surplus. Companies believed that to compete, they

had to sell different products than the competition, so many focused on product

innovation. This focus on product innovation is called the product orientation.

Companies like Procter & Gamble created many products that served the same

basic function as one another, but with a slight twist or difference in order to

appeal to a different consumer, and as a result products proliferated. But as

consumers had many choices available to them, companies had to find new ways

to compete. Which products were best to create? Why create them? The answer

was to create what customers wanted, leading to the development of the

marketing concept, and from about 1950 to 1990, businesses operated in the

marketing era.

So what era would you say we're in now? Some call it the value era, a time when

companies emphasize creating value for customers. Is that really different from

the marketing era, in which the emphasis was on fulfilling the marketing

concept? Maybe not. Others call today's business environment the one-to-one

era, meaning that the way to compete is to build relationships with customers

one at a time and to serve each customer's needs individually. For example, the

longer you are a customer of Amazon, the more details they gain about your

purchasing habits and the better they can target you with offers of new

products. With the advent of social media and the empowerment of consumers

through ubiquitous information from consumer reviews, there is clearly greater

emphasis on meeting customer needs. But is that substantially different from the

marketing concept?

Still others argue that this is the time of service-dominant logic, and that we are

in the service-dominant logic era.

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 4/19

Service-dominant logic is an approach to business that recognizes that consumers want value no matter how it is delivered, whether it's via a product, a service, or a combination of the two.

Although there is merit in this belief, there is also merit to the value approach

and the one-to-one approach, and all three beliefs are intertwined. Perhaps,

then, the name for this era has yet to be decided.

Whatever era we're in now, most historians would agree that defining and

labeling it is difficult. Value and one-to-one approaches are both natural

extensions of the marketing concept, so we may still be in the marketing era. To

make matters more confusing, not all companies adopt the philosophy of the era.

For example, in the 1800s, Singer and National Cash Register adopted strategies

rooted in sales, so they operated in the selling era forty years before it existed.

Some companies are still in the selling era. Recently, many believed automobile

manufacturers had fallen into trouble because they had been working too hard

to sell or push product and not hard enough on delivering value.

Creating Offerings That Have Value

Marketing creates goods and services that the company offers at a price to its

customers or clients. The entire bundle consisting of the tangible good, the

intangible service, and the price is the company's offering. When you compare

one car to another, for example, you can evaluate each of these dimensions—the

tangible, the intangible, and the price—separately. However, you can't buy one

manufacturer's car, another manufacturer's service, and a third manufacturer's

price when you actually make a choice. Together, the three make up a single

firm's offer.

Marketing people do not create the offering alone. For example, when the iPad

was created, Apple's engineers were also involved in its design. Apple's financial

personnel had to review the costs of producing the offering and provide input on

how it should be priced. Apple's operations group needed to evaluate the

manufacturing requirements the iPad would need. The company's logistics

managers had to evaluate the cost and timing of getting the offering to retailers

and consumers. Apple's dealers also likely provided input regarding the iPad's

service policies and warranty structure. Marketing, however, has the biggest

responsibility because it is their responsibility to ensure that the new product

delivers value.

Communicating Offerings

Communicating is a broad term in marketing that means describing the offering

and its value to your potential and current customers, as well as learning from

customers what they want and like. Sometimes communicating means educating

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 5/19

potential customers about the value of an offering, and sometimes it means

simply making customers aware of where they can find a product.

Communicating also means that customers get a chance to tell the company

what they think. Today, companies are finding that to be successful, they need a

more interactive dialogue with their customers. For example, Comcast customer

service representatives monitor Twitter. When they observe consumers tweeting

problems with Comcast, the customer service reps will post resolutions to their

problems. Similarly, JCPenney has created consumer groups that talk among

themselves on JCPenney-monitored websites. The company might post

questions, send samples, or engage in other activities designed to solicit

feedback from customers.

Mobile devices, like iPads and Droid smartphones, make mobile marketing

possible too. For example, if consumers check in at a shopping mall on

Foursquare or Facebook, stores in the mall can send coupons and other offers

directly to their phones and computers.

Companies use many forms of communication, including advertising on the

internet or television, on billboards or in magazines, through product placements

in movies, and through salespeople. Other forms of communication include

attempting to have news media cover the company's actions (part of public

relations), participating in special events such as the annual International

Consumer Electronics Show in which Apple and other companies introduce their

newest gadgets, and sponsoring special events like the Susan G. Komen Race for

the Cure.

Delivering Offerings

Marketing can't just promise value, it also has to deliver value. Delivering an

offering that has value is much more than simply getting the product into the

hands of the user; it also entails making sure the user understands how to get

the most out of the product and that he or she is taken care of if service is

required later on. Value is delivered in part through a company's supply chain.

The supply chain includes a number of organizations and functions that mine,

make, assemble, or deliver materials and products from a manufacturer to

consumers. The actual group of organizations can vary greatly from industry to

industry, and include wholesalers, transportation companies, and retailers.

Logistics, or the actual transportation and storage of materials and products, is

the primary component of supply-chain management, but there are other

aspects of supply-chain management that we will discuss later.

Exchanging Offerings

In addition to creating an offering, communicating its benefits to consumers, and

delivering the offering, there is the actual transaction, or exchange, that has to

occur. In most instances, we consider the exchange to be cash for products and

services. However, if you were to fly to Louisville, Kentucky, for the Kentucky

Derby, you could pay for your airline tickets using frequent-flier miles. You could

also use Hilton Honors points to pay for your hotel, and cash-back points on

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 6/19

your Discover card to pay for meals. None of these transactions would actually

require cash. Other exchanges, such as information about your preferences

gathered through surveys, might not involve cash.

When consumers acquire, consume, and dispose of products and services, an

exchange occurs. For example, via Apple's One-to-One program, you can pay a

yearly fee in exchange for additional periodic product training sessions with an

Apple professional. Each time a training session occurs, another transaction takes

place. A transaction also occurs when you are finished with a product. For

example, you might sell your old iPhone to a friend, trade in a car, or ask the

Salvation Army to pick up your old refrigerator.

Disposing of products has become an important ecological issue. Batteries and

other components of cell phones, computers, and high-tech appliances can be

very harmful to the environment, and many consumers don't know how to

dispose of these products properly. Some companies, such as Office Depot, have

created recycling centers where customers can take their old electronics.

Apple has a web page where consumers can fill out a form, print it, and ship it to

Apple along with their old cell phones and MP3 players. Apple then pulls out the

materials that are recyclable and properly disposes of those that aren't. By

reducing the hassle associated with disposing products, Office Depot and Apple

add value to their product offerings.

The focus of marketing has changed from emphasizing the

product, price, place, and promotion mix to one that emphasizes

creating, communicating, delivering, and exchanging value. Value is

a function of the benefits an individual receives, and consists of

the price the consumer paid and the time and effort the person

expended making the purchase.

Key Points

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 7/19

Question 1

What is the personal value equation?

value = benefits received – [price + hassle]

value = product + service

value = product + price + promotion + place

value = creating + communicating + delivering + exchanging

Question 2

What is the American Marketing Association’s current definition of

marketing?

value = benefits received – [price + hassle]

value = product + service

product, price, promotion, and place

creating, communicating, delivering, and exchanging

Question 3

Identify the two marketing mix terms that relate to offerings.

product and creating

promotion and communicating

place and delivering

price and exchanging

Who Does Marketing?

Check Your Knowledge

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 8/19

The short answer to the question of who does marketing is "everybody!" But let's

take a moment and consider in greater detail how different types of

organizations engage in marketing.

For-Profit Companies

The obvious answer to the question, who does marketing? is for-profit

companies like McDonald's, Procter & Gamble (the makers of Tide detergent and

Crest toothpaste), and Walmart. For example, McDonald's creates a new

breakfast chicken sandwich for $1.99 (the offering), launches a television

campaign (communicating), makes the sandwiches available on certain dates

(delivering), and then sells them in its stores (exchanging). When Procter &

Gamble (P&G) creates a new Crest tartar-control toothpaste, it launches a direct-

mail campaign in which it sends information and samples for dentists to offer to

their patients. P&G then sells the toothpaste through retailers like Walmart,

which has a panel of consumers sample the product and provide feedback

through an online community. These are all examples of marketing activities.

For-profit companies can be defined by the nature of their customers. A

business-to-consumer (B2C) company like P&G sells products to be used by

consumers like you, while a business-to-business (B2B) company sells products

to be used within another company's operations, as well as by government

agencies and entities. To be sure, P&G sells toothpaste to other companies like

Walmart (and probably to the army, prisons, and other government agencies), but

the end user is an individual person.

Another way to categorize companies that engage in marketing is by the

functions they fulfill. P&G is a manufacturer, Walmart is a retailer, and Grocery

Supply Company is a wholesaler of grocery items that buys from companies like

P&G in order to sell to small convenience store chains. Though they have

different functions, all these types of for-profit companies engage in marketing

activities. Walmart, for example, advertises to consumers.

Grocery Supply Company salespeople will call on convenience store owners to

take orders and will build in-store displays. P&G might help Walmart or Grocery

Supply Company with templates for advertising or suggest special cartons to use

in an in-store display, but all the companies are using marketing to help sell

P&G's toothpaste.

Similarly, all the companies engage in dialogue with their customers to

understand what to sell. For Walmart and Grocery Supply, the dialogue may

result in changing what they buy and sell. For P&G, customer feedback may yield

a new product or a change in pricing strategy.

Nonprofit Organizations

Nonprofit organizations also engage in marketing. When the American Heart

Association (AHA) created a heart-healthy diet for people with high blood

pressure, it bound the diet into a small book, along with access to a special

website that people could use to plan their meals and record their health-related

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 9/19

activities. The AHA then sent copies of the diet to doctors to give to patients.

When does an exchange take place, you might be wondering? And what does the

AHA get out of the transaction?

From a financial standpoint, the AHA does not directly benefit. Nonetheless, the

organization is meeting its mission, or purpose, of getting people to live heart-

healthy lives and considers the campaign a success when doctors give the books

to their patients. The point is that the AHA is engaged in the marketing activities

of creating, communicating, delivering, and exchanging. This won't involve the

same kind of exchange as a for-profit company, but it is still marketing.

When a nonprofit organization engages in marketing activities, this is called nonprofit marketing.

Some schools offer specific courses in nonprofit marketing, and many marketing

majors begin their careers with nonprofit organizations.

Government entities also engage in marketing activities. For example, when the

US Army advertises to parents of prospective recruits, sends brochures to high

schools, or brings a Bradley Fighting Vehicle to a state fair, the army is engaging

in marketing. The US Army also listens to its constituencies, as evidenced by

recent research aimed at understanding how to serve military families more

effectively. One result was advertising aimed at improving parents' responses to

their children's interest in joining the army. Another was a program aimed at

encouraging spouses of military personnel to access counseling services when

their spouse is serving overseas.

Similarly, the Environmental Protection Agency (EPA) runs a number of

advertising campaigns designed to promote environmentally friendly activities.

One such campaign promoted the responsible disposal of motor oil instead of

simply pouring it on the ground or into a storm sewer.

There is a difference between these two types of activities. When the army is

promoting the benefits of enlisting, it hopes young men and women will join the

army. By contrast, when the EPA runs commercials about how to properly

dispose of motor oil, it hopes to change people's attitudes and behaviors so that

social change occurs. Social marketing, which can be done by government

agencies, nonprofit institutions, religious organizations, and others, is conducted

in an effort to achieve certain social objectives. Convincing people that global

warming is a real threat via advertisements and commercials is social marketing,

as is the example regarding the EPA's campaign to promote the responsible

disposal of motor oil.

Individuals

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 10/19

If you create a résumé, are you using marketing to communicate the value you

have to offer prospective employers? If you sell yourself in an interview, is that

marketing? When you work for a wage, you are delivering value in exchange for

pay. Is this marketing, too?

Some people argue that these are not marketing activities and that individuals do

not necessarily engage in marketing. (Some people also argue that social

marketing really isn't marketing either.) What do you think? Can individuals

market themselves and their ideas?

Marketing can be thought of as a set of business practices that

for-profit organizations, nonprofit organizations, government

entities, and individuals can use. When a nonprofit organization

engages in marketing activities, this is called nonprofit marketing.

Marketing conducted in an effort to achieve certain social

objectives is called social marketing.

What types of companies engage in marketing?

What is the difference between nonprofit marketing and

social marketing?

What can individuals do for themselves that would be

considered marketing?

Why Study Marketing?

Products don't sell themselves. Generally, the "build it and they will come"

philosophy doesn't work. Good marketing educates customers so that they can

find the products they want, make better choices about those products, and

extract the most value from them. In this way, marketing helps facilitate

exchanges between buyers and sellers for the mutual benefit of both parties.

Likewise, good social marketing provides people with information and helps

them make healthier decisions for themselves and others.

Of course, all business students should understand all functional areas of the

firm, including marketing. There is more to marketing, however, than simply

understanding its role in the business. Marketing has a tremendous impact on

society.

Marketing Delivers Value

Key Points

Ask Yourself

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 11/19

Marketing not only delivers value to customers, it also creates value for the firm

as it develops a reliable customer base and increases its sales and profitability.

Franklin D. Roosevelt, the US president with perhaps the greatest influence on

our economic system, once said, "If I were starting life over again, I am inclined

to think that I would go into the advertising business in preference to almost any

other. The general raising of the standards of modern civilization among all

groups of people during the past half century would have been impossible

without the spreading of the knowledge of higher standards by means of

advertising" (Famous Quotes and Authors, n.d.). Roosevelt referred to

advertising, but advertising alone is insufficient for delivering value. Marketing

finishes the job by ensuring that what is delivered is valuable.

Marketing Benefits Society

Marketing benefits society in general by improving people's lives in two ways.

First, as we mentioned, it facilitates trade. As you have learned, or will learn, in

economics, being able to trade makes people's lives better. Because better

marketing means more successful companies, jobs are created. This growth

generates wealth for workers, who are then able to make purchases, which, in

turn, creates more jobs.

The second way marketing improves the quality of life is through the function of

the value-delivery approach in creating choices for consumers. When you add all

the marketers together who are trying to deliver offerings of greater value to

consumers and are effectively communicating that value, consumers are able to

make more informed decisions about a wider array of choices. From an economic

perspective, more choices and smarter consumers are indicative of a higher

quality of life.

Marketing Costs Money

Marketing can sometimes be the largest expense associated with producing a

product. In the soft drink business, marketing expenses account for about one-

third of a product's price—about the same as the ingredients used to make the

soft drink itself.

Some people argue that society does not benefit from marketing when it

represents such a huge chunk of a product's final price. In some cases, that

argument is justified. Yet when marketing results in more informed consumers

receiving a greater amount of value, the cost is justified.

Marketing Offers People Career Opportunities

Marketing is the interface between producers and consumers, shouldering the

responsibility for both making money for the company and delivering satisfaction

to customers. In addition, because marketing can be such an expensive part of a

business and is so critical to its success, companies actively seek strong

marketing employees. There are a variety of jobs available in the marketing

profession. The following positions represent only a few of the opportunities

available in the field.

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 12/19

marketing research—Personnel in marketing research are responsible for

studying markets and customers in order to understand what strategies or

tactics might work best for firms.

merchandising—In retailing, merchandisers are responsible for developing

strategies regarding what products wholesalers should carry to sell to

retailers such as Target and Walmart.

sales—Salespeople meet with customers, determine their needs, propose

offerings, and make sure that the customer is satisfied. Sales departments

can also include sales support teams who work on creating the offering.

advertising—Whether it's for an advertising agency or inside a company,

some marketing personnel work on advertising. Television commercials and

print ads are only part of the advertising mix. Many people who work in

advertising spend all their time creating advertising for electronic media,

such as websites and their pop-up ads, podcasts, etc.

product development—People in product development are responsible for

identifying and creating features that meet the needs of a firm's customers.

They often work with engineers or other technical personnel to ensure that

value is created.

direct marketing—Professionals in direct marketing communicate directly

with customers about a company's product offerings via channels such as e-

mail, chat lines, telephone, or direct mail.

digital media—Digital media professionals combine advertising, direct

marketing, and other areas of marketing to communicate directly with

customers via social media, the web, and mobile media (including texts).

They also work with statisticians in order to determine which consumers

receive which message, and with IT professionals to create the right look

and feel of digital media.

event marketing—Some marketing personnel plan special events,

orchestrating face-to-face conversations with potential and current

customers in a special setting.

nonprofit marketing—Nonprofit marketers often don't get to do everything

listed previously, as nonprofits typically have smaller budgets. But their

work is always very important as they try to change behaviors without

having a product to sell.

A career in marketing can begin in a variety of ways. Entry-level positions for

new college graduates are available in many of the roles previously mentioned.

A growing number of CEOs are people with marketing backgrounds. Some

legendary CEOs, like Ross Perot and Mary Kay Ash, got their start in marketing.

More recently, CEOs like Mark Hurd, CEO of Oracle, and Jeffrey Immelt at GE,

are showing how marketing careers can lead to the highest position of an

organization.

Criticisms of Marketing

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 13/19

Marketing is not without its critics. We already mentioned that one reason to

study marketing is because it is costly, and business leaders need to understand

the cost/benefit ratio of marketing in order to make wise investments. Yet that

cost is precisely why some criticize marketing. Some allege that if that money

could be put into research and development of new products, perhaps the

consumers would be better satisfied. Or, some critics argue, prices could be

lowered. But marketing executives do not intentionally waste money on

marketing, and are always on the lookout for less expensive ways to have the

same performance.

Another criticism is that marketing creates wants among consumers for products

and services that aren't really needed. For example, fashion marketing creates

demand for high-dollar jeans when much less expensive jeans can fulfill the same

basic function. Taken to the extreme, consumers may take on significant credit

card debt to satisfy wants created by marketing, with serious negative

consequences. When marketers target their messages carefully so an audience

that can afford such products is the only group reached, such extreme

consequences can be avoided.

By facilitating transactions, marketing delivers value to both

consumers and firms. At the broader level, this process creates

jobs and improves the quality of life in a society. Marketing can be

costly, so firms need to hire strong employees to manage their

marketing activities. Being responsible for both making money for

your company and delivering satisfaction to your customers makes

marketing a great career.

Why study marketing?

How does marketing provide value?

Why does marketing cost so much? Is marketing worth it?

What is the main cost of marketing?

Themes in Marketing

We previously discussed marketing as a set of activities that anyone can do.

Marketing is also a functional area in companies, just like operations and

accounting. Within a company, marketing might be the title of a department, but

some marketing functions, such as sales, might be handled by another

department. Marketing activities do not occur separately from the rest of the

company, however.

Key Points

Ask Yourself

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 14/19

As we have explained, pricing an offering, for example, will involve a company's

finance and accounting departments in addition to the marketing team. Similarly,

a marketing strategy is not created solely by a firm's marketing personnel.

Instead, it flows from the company's overall strategy.

Everything Starts with Customers

Most organizations start with an idea of how to serve customers better. Apple's

engineers began working on the iPod by looking at the available technology and

thinking about how customers would like to improve the availability and

affordability of their music, through downloading.

Many companies think about potential markets and customers when they start.

John Deere, for example, founded his company on the principle of serving

customers. When admonished for making constant improvements to his

products even though farmers would take whatever they could get, Deere

reportedly replied, "They haven't got to take what we make and somebody else

will beat us, and we will lose our trade" (John Deere, n.d.). He recognized that if

his company failed to meet customers' evolving needs, someone else would.

Here are a few mission statements from other companies. Note that they all refer

to their customers, directly or indirectly. Note also how these are written to

inspire employees and others who interact with the company.

Company Mission Statements

IBM

IBM will be driven by these values:

Dedication to every client's success.

Innovation that matters, for our company

and for the world.

Trust and personal responsibility in all

relationships. (IBM, n.d.)

Coca-Cola

Everything we do is inspired by our enduring

mission:

To refresh the world in body, mind, and

spirit.

To inspire moments of optimism through our

brands and our actions.

To create value and make a difference

everywhere we engage. (Coca-Cola

Company, n.d.)

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 15/19

Not all companies create mission statements that reflect a marketing orientation.

Note Apple's mission statement: "Apple ignited the personal computer revolution

in the 1970s with the Apple II and reinvented the personal computer in the

1980s with the Macintosh. Today, Apple continues to lead the industry in

innovation with its award-winning computers, OS X operating system and iLife

and professional applications. Apple is also spearheading the digital media

revolution with its iPod portable music and video players and iTunes online store,

and has entered the mobile phone market with its revolutionary iPhone" (Apple,

Inc, 2009). This mission statement reflects a product orientation, or an operating

philosophy based on the premise that Apple's success is due to great products

and that simply supplying them will lead to demand for them. Apple, and for that

matter, many other companies, have fallen prey to thinking that they knew what

a great product was without asking their customers. In fact, Apple's first attempt

at a graphic user interface (GUI) was the LISA, a dismal failure.

The Marketing Plan

The marketing plan is the strategy for implementing the components of

marketing: creating, communicating, delivering, and exchanging value. Once a

company has decided what business it is in and expressed that in a mission

statement, the firm then develops a corporate strategy. Marketing strategists

subsequently use the corporate strategy and mission and combine that with an

understanding of the market to develop the company's marketing plan.

Marketers also want to know their customers—who they are and what they like

to do—so as to uncover this information. Generally, this requires marketing

researchers to collect sales and other related customer data and analyze it. In

this pursuit, there are three important goals: understanding the customer's wants

and needs, understanding how the customer wants to acquire, consume, and

dispose of the offering, and determining what makes up their personal value

equation.

McDonald’s

To be our customers' favorite place and way to

eat (McDonald's, n.d.).

Merck

To provide innovative and distinctive products

and services that save and improve lives and

satisfy customer needs, to be recognized as a

great place to work, and to provide investors

with a superior rate of return (Merck & Co., n.d.).

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 16/19

Once this information is gathered and digested, the planners can work to create

the right offering. Products and services are developed, bundled together at a

price, and then tested in the market. Decisions have to be made about when to

alter the offerings, add new ones, or drop old ones. These decisions are the focus

of the next set of chapters and are the second step in marketing planning.

Following the material on offerings, we explore the decisions associated with

building the value chain. Once an offering is designed, the company has to be

able to make it and then be able to get it to the market. This step, planning for

the delivery of value, is the third step in the marketing plan.

The fourth step is creating the plan for communicating value. How does the firm

make consumers aware of the value it has to offer? How can it help them

recognize that value and decide that they should purchase products? These are

important questions for marketing planners.

Once a customer has decided that her personal value equation is likely to be

positive, she will decide to purchase the product. That decision still has to be

acted on, however, which is the exchange. As exchanges occur, marketing

planners then refine their plans based on the feedback they receive from their

customers, as well as what their competitors are doing and how market

conditions are changing.

The Changing Marketing Environment

We previously mentioned that the view of marketing has changed from a static

set of four Ps to a dynamic set of processes that involve marketing professionals

as well as many other employees in an organization. The way business is being

conducted today is changing, too, and marketing is changing along with it. There

are several themes that underscore these changes.

ethics and social responsibility—Businesses exist only because society

allows them to. When businesses begin to fail society, society will punish

them or revoke their license. The crackdown on companies in the subprime

mortgage–lending industry is one example. These companies created and

sold loans (products) that could only be paid back under ideal circumstances,

and when consumers couldn't pay these loans back, the entire economy

suffered greatly. Scandals such as these illustrate how society responds to

unethical business practices. However, whereas ethics require only that you

do no harm, the concept of social responsibility requires that you actively

seek to improve the lives of others. Today, people are demanding businesses

take a proactive stance in terms of social responsibility, and companies are

being held to ever-higher standards of conduct.

sustainability—An example of social responsibility, sustainability involves

engaging in practices that do not diminish the earth's resources. Coca-Cola,

for example, is working with governments in Africa to ensure clean water

availability, not just for manufacturing Coke products but for all consumers

in that region. Further, the company seeks to engage the participation of

American by offering opportunities to contribute to clean-water programs.

Right now, companies do not have to engage in these practices, but because

firms represent the people behind them (their owners and employees),

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 17/19

forward-thinking executives are seeking ways to reduce the impact their

companies are having on the planet.

service-dominant logic—You might have noticed that we use the word

offering a lot instead of the term product. That's because of service-

dominant logic, the approach to business that recognizes that consumers

want value no matter how it is delivered—whether through a tangible

product or through intangible services. This emphasis on value drives the

functional approach to value that we've taken—that is, creating,

communicating, delivering, and exchanging value.

metrics—Technology has increased the amount of information available to

decision makers. As such, the amount and quality of data for evaluating a

firm's performance is increasing. Earlier in our discussion of the marketing

plan, we explained that customers communicate via transactions. Although

this sounds both simple and obvious, better information technology has

given us a much more complete picture of each exchange. Cabela's, for

example, combines data from Web browsing activity with purchase history

in order to determine the likely next-best offer. Using data from many

sources, we can build more-effective metrics that can then be used to

create better offerings, better communication plans, and so forth.

a global environment—Every business is influenced by global issues. The

price of oil, for example, is a global concern that affects everyone's prices

and even the availability of some offerings. We already mentioned Coke's

concern for clean water. But Coke also has to be concerned with

distribution systems in areas with poor or nonexistent roads, a myriad of

government policies and regulations, workforce availability, and many more

issues associated with selling and delivering Coke around the world. Even

companies with smaller markets source some or all their offerings from

companies in other countries or else face some sort of direct competition

from companies based in other countries. Every business professional,

whether working in marketing or elsewhere, needs some understanding of

the global environment in which companies operate.

A company's marketing plan flows from its strategic plan. Both

begin with a focus on customers. The essential components of the

plan are understanding customers, creating an offering that

delivers value, communicating the value to the customer,

exchanging with the customer, and evaluating the firm's

performance. A marketing plan is influenced by environmental

trends such as social responsibility, sustainability, service-

dominant logic, the increased availability of data and effective

metrics, and the global nature of the business environment.

Key Points

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 18/19

Why does everything start with customers? Or is it only

marketing that starts with customers?

What are the key parts of a marketing plan?

What is the relationship between social responsibility,

sustainability, service-dominant logic, and the global business

environment? How does the concept of metrics fit?

References

American Marketing Association. (n.d.). Definition of marketing. Retrieved from

http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx?

sq=definition+of+marketing

Apple, Inc. (2009). Apple's app store downloads top 1.5 billion in first year.

Retrieved from http://www.apple.com/hk/en/pr/library/ 2009/07/14apps.html

Coca-Cola Company. (n.d.). Mission, vision & values. Retrieved from

http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html

Famous Quotes and Authors. (n.d.). Franklin D. Roosevelt quotes and quotations.

Retrieved from

http://www.famousquotesandauthors.com/authors/franklin_d__roosevelt_quotes.html

IBM. (n.d.). About IBM. Retrieved from http://www.ibm.com/ibm/us/en

John Deere (n.d.). John Deere: A biography. Retrieved from

http://www.deere.com/en_US/compinfo/history/johndeere2.html

McDonald's. (n.d.). Our company. Retrieved from

http://aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html#1

Merck & Co. (n.d.). The new Merck. Retrieved from

http://www.merck.com/about/Merck%20Vision%20Mission.pdf

Licenses and Attributions

Chapter 1: What Is Marketing?

(https://2012books.lardbucket.org/books/marketing-principles-v2.0/s04-what-

is-marketing.html) from Marketing Principles is available under a Creative

Commons Attribution-NonCommercial-ShareAlike 3.0 Unported

(https://creativecommons.org/licenses/by-nc-sa/3.0/) license without

attribution as requested by the site’s original creator or licensee. UMUC has

modified this work and it is available under the original license.

© 2020 University of Maryland Global Campus

Ask Yourself

3/26/2020 What is Marketing?

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2202/learning-resourcelist/what-is-marketing.html?ou=447146 19/19

All links to external sites were verified at the time of publication. UMGC is not responsible for the validity or

integrity of information located at external sites.