Part 1 Marketing

What is marketing?

What does the term marketing mean? Many people mistakenly think of marketing only as selling and promotion. And no wonder—every day, Americans are bombarded with television commercials, newspaper ads, direct mail, and sales calls. Someone is always trying to sell us something. It seems that we cannot escape death, taxes, or selling.

Therefore, many students are surprised to learn that selling is only the tip of the marketing iceberg: It is but one of several marketing functions—and often not the most important one. If the marketer does a good job of identifying consumer needs, developing good products, and pricing, distributing, and promoting them effectively, these goods will sell very easily.

Everyone knows something about "hot" products. When Polaroid designed its Spectra camera, when Coleco first sold Cabbage Patch dolls, and when Ford introduced its Taurus model, these manufacturers were swamped with orders. They had designed the "right" products—not "me-too" products, but ones offering new benefits. Peter Drucker, a leading management thinker, has put it this way: "The aim of marketing is to make selling superfluous. The aim is to know and understand the customer so well that the product or service fits . . . and sells itself."

This does not mean that selling and promotion are unimportant, but rather that they are part of a larger "marketing mix"—a set of marketing tools that work together to affect the marketplace. We define marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. To explain this definition, we examine the following important terms: needs, wants, demands, products, exchange, transactions. and markets.

Needs. The most basic concept underlying marketing is that of human needs. A human need is a state of felt deprivation. Humans have many complex needs. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. These needs are not invented on Madison Avenue: They are a basic part of the human makeup.

When a need is not satisfied, a person will do one of two things—look for an object that will satisfy it or try to reduce the need. People in industrial societies may try to find or develop objects that will satisfy their desires. People in less developed societies may try to reduce their desires and satisfy them with what is available.

Wants. A second basic concept in marketing is that of human wants—the form taken by human needs as they are shaped by culture and individual personality. A hungry person in Bali may want mangoes, suckling pig. and beans. A hungry person in the United States may want a hamburger, French fries, and a Coke. Wants are described in terms of objects that will satisfy needs. As a society evolves, the wants of its members expand. As people are exposed to more objects that arouse their interest and desire, producers try to provide more want-satisfying products and services.

Many sellers confuse wants and needs. A manufacturer of drill bits may think that the customer needs a drill bit, but what the customer really needs is a hole. Tnese sellers may suffer from "marketing myopia."3 They are so taken with their products that they focus only on existing wants and lose sight of underlying customer needs. They forget that a physical product is only a tool to solve a consumer problem. These sellers have trouble if a new product comes along that serves the need better or cheaper. The customer with the same need will want the new product. As a classic example, Hollywood fell on hard times because it concentrated on its products (movies) rather than underlying consumer needs (entertainment). The television industry grew rapidly at Hollywood's expense because it found a new and better way to serve consumers' entertainment needs.

Demands. People have almost unlimited wants but limited resources. Thus, they want to choose products that provide the most satisfaction for their money. When backed by buying power, wants become demands.

Listing the demands in a society at a given time is easy. In a single year. 246 million Americans may purchase 61 billion eggs, 200 million chickens, 29 million telephones, 341 billion domestic air-passenger miles, and more than 20 million lectures by college English professors. These and other consumer goods and services lead in turn to a demand for more than 100 million tons of steel, 38 million tons of paper, 4 billion tons of cotton, and many other industrial goods. These are but a few of the demands in a 5.3 trillion economy.

Consumers view products as bundles of benefits and choose products that give them the best bundle for their money. Thus, a Ford Escort means basic transportation, a low price, and fuel economy. A Mercedes means comfort, luxury, and status. Given their wants and resources, people choose the product with the benefits that add up to the most satisfaction.

Products. Human needs, wants, and demands suggest that products are available to satisfy them.

A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a need or want.

Suppose a person feels the need to be more attractive. We will call all the products that can satisfy this need the product choice set. This set may include new clothes, hair-styling services, a Caribbean suntan, exercise classes, and many other items or services. These products are not all equally desirable. Those that are more available and less expensive, such as clothing and a new haircut, are likely to be purchased first. Moreover, the closer products come to matching consumers' wants, the more successful they will be. Thus, producers must know what consumers want and must provide products that come as close as possible to satisfying those wants.

The concept of product is not limited to physical objects. Anything capable of satisfying a need can be called a product. In addition to goods and services, products include persons, places, organizations, activities, and ideas. A consumer decides which entertainers to watch on television, which places to go on a vacation, which organizations to contribute to, and which ideas to support. To the consumer, these are all products. If at times the term product does not seem to fit, we could substitute such terms as "satisfier," "resource," or "offer." All describe something of value to someone.

Exchange. Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return. Exchange is only one of many ways people can obtain a desired object. For example, hungry people can find food by hunting, fishing, or gathering fruit. They could beg for food or take food from someone else. Finally, they could offer money, another good, or a service in return for food.

As a means of satisfying needs, exchange has much in its favor. People do not have to prey on others or depend on donations. Nor must they possess the skills to produce every necessity for themselves. They can concentrate on making things they are good at making and trade them for needed items made by others. Thus, the society produces much more than with any alternative system.

Exchange is the core concept of marketing.9 For an exchange to take place, several conditions must be satisfied. Of course, at least two parties must participate, and each must have something of value to the other. Each party must want to deal with the other party; each must be free to accept or reject the other's offer. Finally, each party must be able to communicate and deliver.

These conditions simply make exchange possible. Whether exchange actually takes place depends on the parties' coming to an agreement. If they agree, we must conclude that the act of exchange has left both of them better off (or at least not worse off).

After all, each was free to reject or accept the offer. In this sense, just as production creates value, exchange creates value: It gives people more consumption possibilities.

Transactions. Whereas exchange is the core concept of marketing, a transaction is marketing's unit of measurement. A transaction consists of a trade of values between two parties. In a transaction, we must be able to say that A gives X to В and gets Y in return. For example, you pay Sears $400 for a television set. This is a classic monetary transaction. But not all transactions involve money. In a barter transaction, you might trade your old refrigerator in return for a neighbor's second-hand television set. A barter transaction can also involve services as well as goods—for example, when a lawyer writes a will for a doctor in return for a medical exam (see Marketing Highlight 1-1). A transaction involves at least two things of value, conditions that are agreed upon, a time of agreement, and a place of agreement.

In this broadest sense, the marketer tries to bring about a response to some offer. And the response may be more than simply "buying" or "trading" goods and services in the narrow sense. A political candidate, for instance, wants a response called "votes." a church wants "membership," a social-action group wants "idea acceptance." Marketing consists of actions taken to obtain a desired response from a target audience toward some product, service, idea, or other object.

Markets. The concept of transactions leads to the concept of a market. A market is the set of actual and potential buyers of a product. To understand the nature of a market, imagine a primitive economy consisting of only four people: a fisherman, a hunter, a potter, and a farmer. Figure i-2 shows the three different ways in which these traders could meet their needs. In the first case, self-sufficiency, they gather the needed goods for themselves. Thus, the hunter spends most of the time hunting, but also must take time to fish, make pottery, and farm to obtain the other goods. The hunter is thereby less efficient at hunting, and the same is true of the other traders.

In the second case, decentralized exchange, each person sees the other three as potential "buyers" who make up a market. Thus the hunter may make separate trips to trade meat for the goods of the fisherman, the potter, and the farmer.

In the third case, centralized exchange, a new person called a merchant appears and locates in a central area called a marketplace. Each trader brings goods to the

THE DEVELOPMENT OF MODERN MARKETING PHILOSOPHY

Marketing scholars have identified four main approaches to business: product orientation, sales orientation, marketing orientation and societal marketing orientation. Product and sales orientation do not place the customer at the center of an organization's strategy. Although certain firms still use these two approaches, they are viewed often primarily as historical phenomena.

Product Orientation: Make What You Know How to Make. Exchan­ge has taken place ever since humans agreed to satisfy their ne­eds by means other than brute force, but it was not until the mid-eighteenth century that labor specialization and mass-pro­duction techniques brought about massive increases in producti­vity and lower prices for goods. Prom the industrial revolution until the 1920s and 1930s - the product orientation came into full flow. In this period, demand generally exceeded supply; producers could expect to sell whatever they could make.

According to the product orientation, consumers have little product choice. If a product is available and if consumers can afford it, they will purchase it. As philosophy of business, product orientation focuses primarily on a firm's own resources and products. Management strives to improve production efficien­cy and to lower prices in the belief that profits result from lowered manufacturing costs. One of the most famous disciples of product orientation was carmaker Henry Ford. Ford initially pro­duced only one model in one color - the black Model T - thereby reducing hie unit price and putting the customer's price within reach of many U.S. families.

More recently, makers of television sets, air conditioners, food processors, and digital watches have adopted a product orientation. These manufacturers lowered production costs - and, in turn, prices to appeal to a wide range of consumers. Texas Instruments, for example, succeeded for a time in garnering a large share of the market for small electronic calculators by using rapidly advancing technology to lower costs and prices. However, few firms followed a pure product orientation in the 1980s. Initially, demand exceeded supply for the product mentioned above, but clever later entries in these markets quickly expanded consumers' choices and forced the original producers to shift to a sales orientation.

Sales Orientation: Get Rid Of What You Have. A sales orientation focuses primarily on how a firm promotes and sells its products. If management is sales-oriented, it assumes that cus­tomers will not buy a product (or will not buy enough of it) unless intensive persuasive promotional efforts induce them to buy. The sales orientation had its heyday between the 1930s and 1950s, a period known as the "sales era". Except for the years during and immediately after World War II, supply generally ex­ceeded demand during this period. Many firms developed large sales staffs and concentrated their efforts on advertising and promotion, although management continued to focus on the product rather than on consumers.

Certain industries still favor the sales approach, among them encyclopedia publishing, life insurance, and magazine sub­scriptions. Companies using hard-sell techniques argue that their methods "help" consumers to discover unrealized wants and needs. These firms insist that their central concern is the con­sumer's welfare, but the truth of this claim varies widely.

Marketing Orientation: Have What You Can Get Rid Of. As an important step forward from the sales orientation, a marketing orientation focuses primarily on satisfying consumers' needs. This is the heart of the marketing concept: identifying and of­fering products that will satisfy customers. Indeed, the purpose of marketing is to make selling superfluous. According to this ideal, you should not need to persuade consumers that they want and need your product. If your marketing efforts have been on target, you will have exactly what the consumer want, and they will take the goods away from you.

Of course, this ideal is easier to write in a textbook than to put into practice in the competitive world of business. Marketers must correctly identify their target markets (the spe­cific group of consumers that they propose to serve). Then they must correctly describe what is wanted to the design and produc­tion departments, and see to it that what is produced is actual­ly what is wanted. All these steps are essential in applying a marketing orientation and satisfying the needs of consumers.

Societal Marketing Orientation: Have What You Can Get Rid Of - Responsibly. A societal marketing orientation adds an ad­ditional consideration to the marketing concept: the impact of a firm's activities on society's well-being. Products (and espe­cially the by-products of manufacturing or processing) may not always take the long-term interests of consumers even though they satisfy immediate wants. No-return bottles consume resourc­es and intensify litter problems; refinery by-products may pol­lute the atmosphere; certain processed foods have little nutri­tional value.

The last two decades have seen wide and sometimes intense debate regarding the possible negative effects of marketing on society as a whole and on individuals. It is unfortunate but true that socially responsible marketing can be costly. Automo­bile pollution controls, for example, are expensive to manufac­ture. Additional production costs lead to higher prices for consumers and lower profits for manufactureres. Moreover, compa­nies may find it difficult to compete in the marketplace if they fail to produce popular (but possibly harmful) goods. Many con­sumers want no-return bottles and processed foods with little nutrition. If firms reduce their profit goals, they may endanger their survival and thus cause harm to their stockholders (who are also consumers).

Some firms have attempted to implement the societal mar­keting concept by considering the needs of all their "stake­holders" - that is, all persons who have a stake in the business

Among these stakeholders are consumers, owners, the public, and the firm's employees. These companies recognize the need to co­pe with all four groups.

Perhaps, the best hope for an acceptable compromise bet­ween the goal of social responsibility and the need for profits lies in the combined efforts .of businesses and consumers. For their part, consumers must learn to think realistically about the difficulties of making and selling products that have no negative side effects. When the public wants and is ready to pay for air bags to protect automobile passengers during accidents, automakers will undoubtedly produce cars with air bags. However, marketers must learn to regard societal concerns as opportuni­ties rather than problems. In the future, some innovative marke­ters may reap handsome profits by offering new and improved pro­ducts that enhance societal well-being while satisfying the im­mediate needs of consumers.

Как применяется концепция маркетингового подхода в корпорации McDonald's?

Корпорация McDonald's, сеть предприятий общественного питания, где основным блюдом является гамбургер, — настоящий профессионал в области маркетинга. Имея 18000 филиалов в 90 странах, где в целом за год работы совершается продаж на сумму 23 миллиарда долларов, каждые три часа в каком-нибудь уголке земного шара корпорация McDonald's, открывает новый ресторан. Причины такого положения дел кроются в четкой ориентации на маркетинг: в McDonald's, знают, как обслуживать посетителей и как реагировать на изменение потребительских запросов.

До появления McDonald's, американцы могли отведать гамбургер в ресторане или в столовой. Но частенько потребители сталкивались с плохим качеством пищи, с нерасторопностью и грубостью обслуживающего персонала, с убогим интерьером и даже с неудовлетворительными санитарными условиями, а также с шумом. В 1955 году Рэй Крок (Кау Кгос), 52-летний торговец аппаратами для приготовления молочных коктейлей, заинтересовался сетью из семи небольших ресторанов, владельцами которых были Ричард и Морис Мак-Дональды. Кроку пришлась по душе их идея быстрого обслуживания, и он приобрел всю сеть за 2,7 миллиона долларов. Затем он решил расширить сеть за счет продажи права на использование торговой марки McDonald's, другим предприятиям, и благодаря этому количество ресторанов быстро увеличилось. Менялись времена, менялись и заведения McDonald's. В них появились залы с сидячими местами, улучшился интерьер, в меню появились блюда для завтрака, расширился ассортимент, открылись новые заведения в оживленных местах.

Философия маркетинга Крока выражается в девизе корпорации McDonald's, который звучит как Q.S.C. & V. — quality, service, cleanliness and value (качество, сервис, чистота и цена). Посетители заходят в безупречно чистое помещение, их встречает приветливый обслуживающий персонал, они быстро получают вкусную пишу, которую съедают тут же или в симпатичной упаковке уносят с собой. В помещениях McDonald's нет музыкальных автоматов и таксофонов, поэтому там не "тусуются" подростки. Отсутствуют также автоматы по продаже сигарет и газетные стойки. McDonald's — рестораны семейного типа, и они особенно нравятся детям.

В McDonald's уровень обслуживания клиентов граничит с искусством; этому искусству тщательно обучают служащих и владельцев лицензий корпорации. Все владельцы таких лицензий проходят курсы подготовки в "Гамбургеровом университе­те" в Елк Гроув Виллидж, штат Иллинойс. По окончании обучения выпускники получают степень по основному предмету "гамбургерология" и дополнительному — "жареный хрустящий картофель". Руководство McDonald's постоянно следит за качеством продукции и обслуживания с помощью регулярных опросов посетителей и не жалеет сил на совершенствование способов приготовления гамбургеров.— это делается для упрощения работы, снижения цен, ускорения обслуживания и максимального удовлетворения посетителей. Помимо этих усилий, каждый ресторан McDonald's принимает участие в различных общественных мероприятиях.