Chapter 1: Marketing Principles and Society

Learning Outcomes
Define the marketing concept. Explain how marketing has developed over the twentieth century. Describe the three major contexts of marketing application, i.e. consumer goods, business to business and services marketing. Understand the contribution marketing makes to society. Assess critically the impact marketing has on society.

Case Insight Systembolaget

Systembolaget is Swedens exclusive distributor for the sale and serving of alcoholic drinks. Systembolaget was the worlds first alcohol monopoly and remains the only retailer of alcohol in Sweden. But in 2002, only 48% of Swedes supported the monopoly. How does an alcohol monopoly like Systembolaget increase public support for its existence without promoting alcohol consumption?

Definitions of Marketing
The management process of anticipating, identifying and satisfying customer requirements profitably (CIM, 2001). 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 (AMA, 2007) Marketing is the endeavour of adapting organisations to their competitive markets in order to influence, in their favour, the behaviour of their publics, with an offer whose perceived value is durably superior to that of the competition (French trans.: Lendrevie, Lvy and Lindon, 2006).

The Three Components of Market Orientation

The Marketing Process

The Development of Marketing

Production period, 1890s-1920s characterized by a focus on physical production and supply, where demand exceeded supply. This phase took place after the industrial revolution. Sales period, 1920s-1950s characterized by a focus on personal selling supported by market research and advertising. This phase took place after the First World War. Marketing period, 1950s 1980s characterized by a more advanced focus on the customers needs. This phase took place after the Second World War.

Societal marketing period, 1980s to present characterized by a stronger focus on social and ethical concerns in marketing. This phase is taking place during the information revolution of the late twentieth century.

Marketing and Sales Compared

Marketing Sales

Tends towards long-term satisfaction of customer needs

Tends towards short-term satisfaction of customer needs; part of the value delivery process as opposed to designing and development of customer value processes Tends to lesser input into customer design of offering (co-creation)

Tends to greater input into customer design of offering (co-creation)

Tends to high focus on stimulation of demand

Tends to low focus on stimulation of demand, more focused on meeting existing demand

A Functional Map for Marketing

Source: The Marketing and Sales Standards Setting Board (2006)

The Marketing Mix

The Original developed by Borden in his teaching but not written up until 1964: Product planning Pricing Branding Channels of distribution Personal selling Advertising Promotions Packaging Display Servicing Physical handling Fact finding and analysis (Borden, 1964). The Shortened simplified version by Eugene McCarthy and now more commonly used: Product Place (distribution) Price and Promotion (McCarthy, 1960).

The 4Ps of the Marketing Mix

Extension from 4-7 Ps for Services

Physical evidence to emphasize that the tangible components of services were strategically important since customers used these to infer what the quality of society might be. Process because service delivery is inseparable from the customer consumption process, we include process because of the need to manage customer expectations and satisfaction which becomes strategically important in this context. Where processes are standardized, it is easier to manage customer expectations. People included to emphasize that services are delivered by customer service personnel, sometimes experts and often professionals who interact with the customer sometimes in an intimate manner.

Simple Marketing Exchange Processes

Marketing Exchange: European Airlines

The Marketing Mix: the Airline Industry

Table 1.3

The Relationship Pyramid

Types of Products and Services

Some Modern Consumer Products and Their Dates of Inventions

Consumer product Ketchup (from the Chinese word Ketsiap) Television Product Attribute A food condiment, derived from the Chinese fishbased sauce, Ketsiap, but adapted for western taste, using tomatoes Consumer Need Designed to improve the consumers enjoyment of their food by improving the taste, and reducing the dryness of some foodstuffs. Information, education entertainment and Inventors/ Pioneers* F. & J. Heinz Co., USA Yr. of invention 1876

Transmission of moving images

Baird Television Development Company, UK/Telefunken, Germany Culter, Finland

1929/1932

Artificial sweeteners Karaoke sing-along system

Xylitol, as the sweetener is known, is used to sweeten food products such as sugar-free chewing gum and toothpastes A TV system linked to music player, with words of music tracks displayed on screen, allows a person with a microphone to sing to a tracks musical background

It sweetens food products without damaging teeth Designed to entertain small groups in house parties and large groups of individuals at venues who typically enjoy singing themselves and listening to others, or laughing at their friends efforts The ability to stay in telephone contact with others regardless of ones location Provides easy and instantaneous communication between two or more people in multiple locations around the world

1969

Roberto Rosario/Trebel Corporation, Phillipines

del Music the

1975

Mobile phone Social networking

A hand held device for making telephone calls while in motion A website designed for personal interaction between friends and acquaintances

NTT, Japan

1979

Facebook, Inc, USA

2004

The Aggregate Marketing System

The aggregate marketing system impedes products because they dont meet consumer needs. So, it serves a number of benefits to society including the following:
the promotion and delivery of desired products and services; the provision of a forum for market learning (we can see what does and what doesnt get through the system; the stimulation of market demand; the offering of a wide scope for choice of products and services by offering a close/ customized fi t with consumer needs; facilitates purchases (or acquisitions generally, e.g. if no payment is made directly as in the case of public services); saves times and promotes efficiency in customer requirement matching; brings new products and services, and improvements, to market to meet latent and unserved needs and; seeks customer satisfaction for repeat purchases (Wilkie and Moore, 1999).

Controversies in Marketing
Consider the following questions?
What is a fair price for companies and organizations in wealthier countries to pay suppliers in poorer countries (see Market Insight 1.5)? Where is the line between persuading customers and manipulating customers to purchase products, services, and ideas? Is some marketing promotion really corporate propaganda? To what extent should the goods, services, and ideas of one country be marketed over the goods, services, and ideas of another country? What are the cultural implications? How much should we consume of any one particular good, service, or idea? When should governments step in to limit consumption? Are some groups more susceptible than others to certain types of marketing promotion? If they are, at what point and how should they be protected? Are some producers or buyer groups more powerful than others, and what impact, if any, does this have upon society? Does the aggregate marketing system itself advantage some groups over others and what are the implications for society?

Summary
Defined the marketing concept. Explained how marketing has developed over the twentieth century. Described the three major contexts of marketing application, i.e. consumer goods, business-to-business and services marketing. Understood the contribution marketing makes to society. Assessed critically the impact marketing has on society.