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Unit I: Marketing Structure

and Environment

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Table of Contents

Unit Lesson

References

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Glossary

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Unit I: Marketing Structure and Environment

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Hello, and welcome to the course. In this unit, we will focus on what marketing is and why it is important. Marketing encompasses a wide variety of jobs or activities that are associated with identifying the particular wants and needs of a target market of customers and then going about satisfying those customers with a product or service that is better than the competitors. Marketing involves market researching target customers; analyzing their needs; and then based on that research, making strategic decisions about product design, pricing, promotion, and distribution. Careers in the marketing, sales, and service fields require the ability to build and maintain strong client relationships. Developing and maintaining good relationships with clients is essential for the success of a marketing company. These organizations place a premium on hiring trustworthy personnel who work well with others and consistently deliver high-quality work. If you choose marketing, sales, or service as a potential career option, you will need to develop excellent interpersonal skills.

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Unit I: Marketing Structure and Environment

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Marketing is important because it affects our lives every day. It provides answers and potential solutions to satisfy our perceived needs and wants. It provides us with information as to where to find the products and services we need or want. The media and the internet are filled with messages and stories about these products and services and their availability. These marketing messages are placed strategically and conveniently so that those demanding their offerings will easily find them. In fact, a firm’s marketing effort can be so important to the success of an offering that it can represent up to 50% of its cost. Also, marketing is not just about sales and selling. It is much more than that. Marketing is about understanding and stimulating demand. The American Marketing Association (n.d.) defines marketing 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” (para. 2).

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Unit I: Marketing Structure and Environment

The four marketing elements that are illustrated here and consistently throughout this course include creating, communicating, delivering, and exchanging. You can learn more about each element by clicking the icons for the marketing elements image on this screen.

MARKETING ELEMENTS

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Creating is the process of identifying offers with value through collaborating with suppliers, distributors, and customers.

Delivering is the process of moving those offerings to the customers in the most valued way.

Communicating is the two-fold process of broadly describing those offerings as well as continuing to learn from customers.

Exchanging is the process of trading something of value from the customer to the seller for those offerings.

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Check for Understanding

Marketing is not just about sales and selling; marketing is about __________ and __________ demand.

lowering cost and increasing

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understanding and stimulating

efficiency and lowering

supply and high

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That is correct. Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and

exchanging offerings that have value.

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Unit I: Marketing Structure and Environment

Marketing and marketers strive to meet human and social needs. Typically, marketers are successful when they meet their markets’ needs profitably.

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Peter Drucker, the great 20th century management theorist, places marketing in the forefront of marrying sellers to buyers. He admonishes sellers to find out what buyers want, and then he creates offerings for them. This will minimize the need for selling and produce a happy and profitable relationship between the two (Drucker, 1973). So, if marketers can develop product offerings that completely satisfy the perceived needs and wants of their identified target market segments, then it would stand to reason that selling would play a minimal role in the marketing process. Since people have different tastes and perceived needs and wants, the scenario of the perfect product offering is not likely or economically feasible. Selling is a significant step, but it is not the only (or even the most important) step in the marketing process. Rather, selling should be considered as one of the final positive outcomes of a successful marketing effort.

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Unit I: Marketing Structure and Environment

Stimulating demand is the main objective of marketers. In the past, this process was defined by E. Jerome McCarthy under what he coined as marketing’s four Ps: product, promotion, place, and price (McCarthy & Perreault, 2002).

● Product includes the offerings, goods, and/or services (the creation of offerings).

● Promotion is the communication between the marketing and the potential buyers (target market).

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 Place is ensuring the product is available for purchase at the time the buyer wants or needs it (channel distribution).

● Price is the amount charged in order for the buyer to purchase the item (the exchange process).

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Unit I: Marketing Structure and Environment

Marketing processes include analyzing current and potential market opportunities, formulating marketing strategies, making marketing mix decisions, and creating and implementing the marketing plan. Within these activities, the marketer usually creates a situation analysis. This involves identifying opportunities to satisfy consumer or customer needs, and strategy formulation involves planning how to pursue the identified opportunities. The next step is implementing the marketing plan to achieve stated company goals.

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The marketing concept emerged in the 1950s as a customer-focused sense-and-respond way of thinking. It turned the idea of selling products on its head, and instead of finding the right customer for your products, the new paradigm was to find the right product for your customers. It has provided a solid marketing foundation from the post-World War II years until now. Emerging in the 21st century from the marketing concept era is a newer, more inclusive set of ideas called the holistic marketing concept (Achrol & Kotler, 2012). During the 1960s, Harvard’s Theodore Levitt drew a perceptive contrast between the selling and marketing concepts, essentially defining the power of the customer. In a famous Harvard Business Review article, Levitt described how satisfying the needs of the customer would now be the pathway to marketing success. He went on to state that no longer could the firm compete effectively for customers by only focusing on the selling process. Now, customers had choices, and they tended to choose those offerings that best satisfied their perceived needs and wants. If the marketer wanted to participate and also compete for these customers, creating offerings and delivering them creatively at the right time would now be essential (Levitt, 1960).

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What is the next step after creating and implementing the marketing plan?

Writing a business plan

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Creating a stock analysis

Creating a situation analysis

Writing the ad campaign

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That is correct. This involves identifying opportunities to satisfy consumer or customer needs, and strategy

formulation involves planning how to pursue the identified opportunities.

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Unit I: Marketing Structure and Environment

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In those days, technology did not exist for a large number of buyers to connect daily with marketers. Marketers tended to measure and consider target markets as groups defined only by their general attributes rather than knowing individuals’ exact identities. With the development and increasing power of the internet, marketers must consider target markets as those that can be identified by their similarities and their unique identities. This has given new power and authority to individual consumers. The new holistic marketing concept is based on the development, design, and implementation of a company’s marketing programs. These programs and new processes recognize the scope of target markets and what the interdependencies are. This holistic marketing concept recognizes that all things matter in marketing and that a broad, integrated perspective is often necessary (Achrol & Kotler, 2012). The term holistic means whole or complete. Holistic marketing attempts to develop multiple perspectives and encompasses the complexities of marketing activities. It provides a schematic overview of four broad components characterizing holistic marketing: relationship marketing, integrated marketing, internal marketing, and performance marketing. Successful companies regularly update their marketing according to the changes in their marketplace and market space (Achrol & Kotler, 2012).

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What are the four broad components that characterize holistic marketing?

Relationship, integrated, external, and performance marketing

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Relationship, integrated, external, and performance marketing

Correlational, integrated, external, and performance marketing

Relationship, integrated, internal, and personal marketing

Relationship, integrated, internal, and performance marketing

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That is correct. Holistic marketing attempts to develop multiple perspectives and encompasses the complexities

of marketing activities.

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Unit I: Marketing Structure and Environment

Philip Kotler now describes the new four Ps of marketing this way: Given the complexity of marketing today, the holistic view clearly shows that the four Ps are not the whole story anymore. A more realistic update to better align the four Ps with a company’s holistic marketing concept would be to encompass modern marketing realities: people, processes, programs, and performance (Achrol & Kotler, 2012). Essentially, the holistic marketing concept places people at the center of the company’s decision-making. People within the company across all levels and departments reflect offering promises and the associated services to its customers. Therefore, the company’s employees and the service(s) and support they provide must be as good as the marketing supporting the

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offering. The added benefit demonstrates that marketers have now begun to view target markets as people with rich, dynamic lives rather than viewing markets as one-dimensional entities created solely for purchasing. In this new people-oriented approach, marketing tasks overlap and often blend together. Processes represent creativity and all of its necessary elements and discipline. After the fact, reactive planning is the antithesis of what is required to making this comprehensive process successful. This means the company must create the work environment where creativity, operations, and management are mutually understood as a means to achieving stated marketing goals. Improving current offerings, enhancing innovation, and building long-term market relationships must result from this all-inclusive approach.

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Unit I: Marketing Structure and Environment

A marketing program must encompass all of the company’s consumer-directed activities. Not only must the four Ps be taken into consideration, but all other marketing activities must be considered as well (e.g., social media, which may not fit in with the traditional views of marketing). This encompasses all activities (i.e., online, offline, traditional, and nontraditional). All of these activities matter individually, but together, they should represent a synergistic effect where the whole effort is greater than the sum of its parts.

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The holistic marketing concept performance, as defined, encompasses all outcome measures related to the marketing effort. This would include financial and non-financial performance, which, in part, affects profitability along with brand and customer equity. There are additional external measures to be considered. These include social responsibility and legal, ethical, and community-related effects created by the marketing performance. The marketing field has evolved steadily over the past century and has moved toward the current holistic marketing concept. It did not start out this way. It has become fundamentally different as a result of the convergence of technology and societal forces impacting opportunities for new and additional market challenges.

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Unit I: Marketing Structure and Environment

As the field of marketing has grown and progressed, other company concept orientations toward the marketplace have developed over time. The production concept is one of the first business concepts. It began to develop on the heels of mass manufacturing advances in the late 19th century that yielded mass-produced items that were also able to be distributed at a low cost.

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Within the production concept, customers are inclined to purchase goods that are value priced, give good performance, and contain reliable rather than innovative features. Offerings produced under the production concept may be successful over extended periods, giving managers the false impression that they might automatically sell themselves as a result of this seemingly endless demand. However, if the product is not optimally priced, distributed, advertised, and sold properly, its chances of success are doubtful. As consumers were provided with more and varied offerings, some of which were sophisticated and unsought, the selling concept evolved. The selling concept represents the concern of marketers that customers will not purchase enough of the seller’s offerings, so advanced high pressure and creative sales efforts must be created. Rather than making only what the market wants, firms may reach over capacity in their production effort. The selling concept becomes important in quickly selling this excess capacity to consumers. This is high pressure and risky. Since most of the sales are transactional in nature, marketers doubt there will be repeat purchases. Unsought offerings such as insurance, financial products, and cemetery plots also fall into this category.

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Unit I: Marketing Structure and Environment

During the years following World War II, the marketing concept evolved and matured into the present. Today, companies that recognize that everything is important in order to remain competitive utilize the holistic marketing concept.

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Value is the key to this new and current concept. Value, the total sum of benefits received that meet a buyer’s needs, has become the essential part of the holistic marketing concept. Value is what a customer gets by purchasing and consuming a company’s offering. Value is measured by the customer rather than the seller. Again, technology has provided the customer with additional influence over the marketing process. Companies ignore this new reality at their own peril and profitability. Customer satisfaction is a measurement of the buyer’s feelings of pleasure, displeasure, and degree of loyalty. If satisfaction meets expectations, then they are fulfilled and loyalty increases. If the product fails to meet their expectations or they are dissatisfied, loyalty declines or even results in negative word-of-mouth reviews about the product and company. This also coincides with the value or perceived value that the customer has placed on the product or service experience. High customer satisfaction generally yields a higher level of perceived value (Oliver, 1980).

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What two factors have driven the marketing field toward the holistic marketing concept in the past century?

The divergence of technology and societal forces

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The divergence of technology and quality products

The convergence of technology and quality products

The convergence of technology and societal forces

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That is correct. It has become fundamentally different as a result of the convergence of technology and societal forces

impacting opportunities for new and additional market challenges.

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Unit I: Marketing Structure and Environment

As it can be shown, customers have become more demanding, forcing organizations to adapt to this new environment. This has led into Industry 4.0 and the era of marketing convergence. In this new era, it has led to technology changing the way consumers and producers interact and experience products and services. These new technologies include the following components:

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References

Achrol, R. S., & Kotler, P. (2012). Frontiers of the marketing paradigm in the third millennium. Academy of Marketing Science Journal, 40(1),

3552. American Marketing Association. (n.d.). Definitions of marketing. https://www.ama.org/the-definition- of-marketing-what-is-marketing/ Drucker, E. (1973). Management: Tasks, responsibilities, practices. Harper and Row. Levitt, T. (1960, JulyAugust). Marketing myopia. Harvard Business Review.

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http://www1.ximb.ac.in/users/fac/MNT/mnt.nsf/23e5e39594c064ee852564ae004fa010/0f7c7e 867eb152b465257011001ec050/$FILE/MARKETING%20MYOPIA.pdf

McCarthy, E. J., & Perreault, W. D. (2002). Basic marketing: A global-managerial approach (14th ed.). McGraw-Hill. Oliver, R. L. (1980). A cognitive model of the antecedents and consequences of satisfaction decisions. Journal of Marketing Research,

17(11), 460469.

Tuten, T. L. (2020). Principles of marketing for a digital age. SAGE. https://bookshelf.vitalsource.com/#/books/9781526485359

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Unit Glossary

Channel Distribution A distribution (or marketing) channel is the path traveled by a product from the manufacturer through any middlemen to the end user. A channel includes all of the activities involved in transferring the ownership of goods from the point of production to the point of consumption. Holistic Marketing Concept The term holistic means whole or complete. Holistic marketing attempts to develop multiple perspectives and encompass the complexities of marketing activities. It provides a schematic overview of four broad components characterizing holistic marketing: relationship marketing, integrated marketing, internal marketing, and performance marketing.

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Marketing Marketing is 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. Market Communication Communicating is the two-fold process of broadly describing those offerings as well as continued learning from customers. (Tuten, 2020)

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Unit Glossary

Market Creation Creating is the process of identifying offers with value through collaborating with suppliers, distributors, and customers. Market Delivery Delivering is the process of moving those offerings to the customers in the most valued way. Market Exchange Exchanging is the process of trading something of value from the customer to the seller for those offerings.

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Target Market A target market is a particular portion of the total population which is identified (i.e., targeted) by the marketer or retailer to be the most likely to purchase its products or services to the customers in the most valued way. (Tuten, 2020)

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