Chapter 1: The Marketing Management Process
Take-Aways
1. Marketing is pervasive. It is a social process involving the activities that facilitate exchanges
of goods and services among individuals and organizations.
2. Customers buy benefits, not products. The benefits a customer receives from a firm’s
offering, less the costs he or she must bear to receive those benefits, determine the offering’s
value to that customer.
3. Delivering superior value to one’s customers is the essence of business success. Because
delivering superior value is a multifunctional endeavor, both marketing and nonmarketing
managers must adopt a strong focus on the customer and coordinate their efforts to make it
happen.
4. A focus on satisfying customer needs and wants is not inconsistent with being
technologically innovative.
5. The marketing management process requires an understanding of the 4Cs: the company and
its mission, strategies, and resources; the macroenvironmental context in which it operates;
customers and their needs and wants; and competitors. Obtaining an objective, detailed,
evidence-based understanding of these factors is critical to effective marketing decision
making.
6. Marketing decisions—such as choices about what goods or services to sell, to whom, and
with what strategy—are made or approved at the highest levels in most firms, whether large
or small. Therefore, managers who occupy or aspire to strategic positions in their
organizations need marketing perspectives and analytical skills.
CHAPTER OUTLINE
I. Samsung—Building a Global Brand discusses the transformation of Samsung Electronics
from a low-cost manufacturer of technical components and me-too consumer products to the
most valuable consumer electronics brand today.
II. Marketing Challenges Addressed in Chapter 1
1. Chapter 1 addresses a number of broad but important questions all managers must
resolve in their own minds:
i. Are marketing decisions important?
ii. Does marketing create value for customers and shareholders?
iii. What constitutes effective marketing practice?
iv. Who does what in marketing and how much does it cost?
, v. And finally, what decisions go into the development of a strategic marketing
program for a particular good or service and how can those decisions be
summarized in an action plan?
III. Why Are Marketing Decisions Important?
1. Marketing attempts to measure and anticipate the needs and wants of a group of
customers and respond with a flow of need satisfying goods and services.
Accomplishing this requires the firm to:
i. Target those customer groups whose needs are most consistent with the firm’s
resources and capabilities.
ii. Develop products and/or services that meet the needs of the target market
better than competitors.
iii. Make its products and services readily available to potential customers.
iv. Develop customer awareness and appreciation of the value provided by the
company’s offerings.
v. Obtain feedback from the market as a basis for continuing improvement in the
firm’s offerings.
vi. Work to build long-term relationships with satisfied and loyal customers.
A. The Importance of the Top Line
1. In the financial markets it is a company’s bottom line—its profitability—that is
most important.
2. In the long run, all firms must make a profit to survive.
3. There can never be a positive bottom line without the ability to build and
sustain a healthy top line: sales revenue.
4. Everything a company does internally is a cost center. The only profit center is
a customer whose check does not bounce.
5. That is why the customer focus inherent in the marketing function is important.
IV. Marketing Creates Value by Facilitating Exchange Relationships
1. Marketing helps facilitate exchange relationships among people, organizations, and
nations.
2. Marketing is a social process involving the activities necessary to enable individuals
and organizations to obtain what they need and want through exchanges with others
and to develop ongoing exchange relationships.
3. Increased division and specialization of labor are some of the most important
changes that occur as societies move from a primitive economy toward higher levels
of economic development. But while increased specialization helps improve a
society’s overall standard of living, it leads to a different problem: Specialists are no
longer self-sufficient.
4. A society cannot reap the full benefits of specialization until it develops the means to
facilitate the trade and exchange of surpluses among its members. Similarly, a nation
cannot partake of the full range of goods and services available around the world or
penetrate all potential markets for the economic output of its citizens unless
exchanges can occur across national boundaries.
A. Who Markets and Who Buys? The Parties in an Exchange?
, 1. Virtually every organization and individual with a surplus of anything engages
in marketing activities to identify, communicate, and negotiate with potential
exchange partners.
2. Both individuals and organizations seek goods and services obtained through
exchange transactions.
3. Ultimate customers buy goods and services for their own personal use or the
use of others in their immediate household. These are called consumer goods
and services.
4. Organizational customers buy goods and services (1) for resale; (2) as inputs
to the production of other goods or services; or (3) for use in the day-to-day
operations of the organization. These are called industrial goods and
services.
B. Customer Needs and Wants
1. Needs are the basic forces that drive customers to take action and engage in
exchanges.
2. An unsatisfied need is a gap between a person’s actual and desired states on
some physical or psychological dimension.
3. Basic physical needs, such as food, drink, warmth, shelter, and sleep, are critical
to an individual’s survival.
4. Social and emotional needs, such as security, belonging, love, esteem, and self-
fulfillment are critical to an individual’s psychological well-being.
5. Those needs that motivate the consumption behavior of individuals are few and
basic. They are not created by marketers or other social forces; they flow from
our basic biological and psychological makeup as human beings.
6. Organizations also must satisfy needs to assure their survival and well-being.
7. Wants reflect a person’s desires or preferences for specific ways of satisfying a
basic need.
8. People’s many wants are shaped by social influences, their past history, and
consumption experiences.
9. Neither marketers nor any other single social force can create needs deriving
from the biological and emotional imperatives of human nature.
10. On the other hand, marketers—and many other social forces—influence
people’s wants.
11. A major part of a marketer’s job is to develop a new product or service and then
to stimulate customer wants for it by convincing people it can help them better
satisfy one or more of their needs.
12. The laws of probability dictate that some new products will succeed and more
will fail regardless of how much is spent on marketing research.
13. But the critics of a strong customer focus argue that paying too much attention
to customer needs and wants can stifle innovation and lead firms to produce
nothing but marginal improvements or line extensions of products and services
that already exist.
14. While many consumers may lack the technical sophistication necessary to
articulate their needs or wants for cutting-edge technical innovations, the same
is not true for industrial purchasers.
15. As for consumer markets, one way to resolve the conflict between the views of
technologists and marketers is to consider the two components of R&D: First
there is basic research and then there is development.
, 16. Most consumers have little knowledge of scientific advancements and emerging
technologies. Therefore, they usually don’t—and probably shouldn’t—play a
role in influencing how firms allocate their basic research dollars.
17. However, a customer focus is critical to development.
18. The importance of a customer focus often becomes clear when a firm attempts
to develop a variety of successful new product offerings from a single well-
established technology.
19. In the case of an innovative new technology, it often must be developed into a
concrete product concept before consumers can react to it and its commercial
potential can be assessed.
20. In other cases, consumers can express their needs or wants for specific benefits
even though they do not know what is technically feasible.
21. A strong customer focus is not inconsistent with the development of technically
innovative products, nor does it condemn a firm to concentrate on satisfying
only current, articulated customer wants.
22. More important, while firms can sometimes succeed in the short run even
though they ignore customer desires, a strong customer focus usually pays big
dividends in terms of market share and profit over the long haul.
C. What Gets Exchanged? Products and Services
1. Products and services help satisfy a customer’s need when they are acquired,
used, or consumed.
2. Products are essentially tangible physical objects that provide a benefit.
3. Services are less tangible and, in addition to being provided by physical objects,
can be provided by people, institutions, places, and activities.
D. How Exchanges Create Value
1. When people buy products to satisfy their needs, they are really buying the
benefits they believe the products provide, rather than the products per se.
2. The specific benefits sought vary among customers depending on the needs to
be satisfied and the situations where products are used.
3. Because different customers seek different benefits, they use different choice
criteria and attach different importance to product features when choosing
models and brands within a product category.
4. Services offered by the seller can also create benefits for customers by helping
them reduce their costs, obtain desired products more quickly, or use those
products more effectively.
5. Such services are particularly important for satisfying organizational buyers.
6. A customer’s estimate of a product’s or service’s benefits and capacity to satisfy
specific needs and wants determines the value he or she will attach to it.
7. Generally, after comparing alternative products, brands, or suppliers,
customers choose those they think provide the most need-satisfying benefits
per dollar.
8. Thus, value is a function of intrinsic product features, service, and price, and it
means different things to different people.
9. Customers’ estimates of products’ benefits and value are not always accurate.
10. A customer’s ultimate satisfaction with a purchase depends on whether the
product actually lives up to expectations and delivers the anticipated benefits.
This is why customer services—particularly those occurring after a sale—are
often critical for maintaining satisfied customers.
Take-Aways
1. Marketing is pervasive. It is a social process involving the activities that facilitate exchanges
of goods and services among individuals and organizations.
2. Customers buy benefits, not products. The benefits a customer receives from a firm’s
offering, less the costs he or she must bear to receive those benefits, determine the offering’s
value to that customer.
3. Delivering superior value to one’s customers is the essence of business success. Because
delivering superior value is a multifunctional endeavor, both marketing and nonmarketing
managers must adopt a strong focus on the customer and coordinate their efforts to make it
happen.
4. A focus on satisfying customer needs and wants is not inconsistent with being
technologically innovative.
5. The marketing management process requires an understanding of the 4Cs: the company and
its mission, strategies, and resources; the macroenvironmental context in which it operates;
customers and their needs and wants; and competitors. Obtaining an objective, detailed,
evidence-based understanding of these factors is critical to effective marketing decision
making.
6. Marketing decisions—such as choices about what goods or services to sell, to whom, and
with what strategy—are made or approved at the highest levels in most firms, whether large
or small. Therefore, managers who occupy or aspire to strategic positions in their
organizations need marketing perspectives and analytical skills.
CHAPTER OUTLINE
I. Samsung—Building a Global Brand discusses the transformation of Samsung Electronics
from a low-cost manufacturer of technical components and me-too consumer products to the
most valuable consumer electronics brand today.
II. Marketing Challenges Addressed in Chapter 1
1. Chapter 1 addresses a number of broad but important questions all managers must
resolve in their own minds:
i. Are marketing decisions important?
ii. Does marketing create value for customers and shareholders?
iii. What constitutes effective marketing practice?
iv. Who does what in marketing and how much does it cost?
, v. And finally, what decisions go into the development of a strategic marketing
program for a particular good or service and how can those decisions be
summarized in an action plan?
III. Why Are Marketing Decisions Important?
1. Marketing attempts to measure and anticipate the needs and wants of a group of
customers and respond with a flow of need satisfying goods and services.
Accomplishing this requires the firm to:
i. Target those customer groups whose needs are most consistent with the firm’s
resources and capabilities.
ii. Develop products and/or services that meet the needs of the target market
better than competitors.
iii. Make its products and services readily available to potential customers.
iv. Develop customer awareness and appreciation of the value provided by the
company’s offerings.
v. Obtain feedback from the market as a basis for continuing improvement in the
firm’s offerings.
vi. Work to build long-term relationships with satisfied and loyal customers.
A. The Importance of the Top Line
1. In the financial markets it is a company’s bottom line—its profitability—that is
most important.
2. In the long run, all firms must make a profit to survive.
3. There can never be a positive bottom line without the ability to build and
sustain a healthy top line: sales revenue.
4. Everything a company does internally is a cost center. The only profit center is
a customer whose check does not bounce.
5. That is why the customer focus inherent in the marketing function is important.
IV. Marketing Creates Value by Facilitating Exchange Relationships
1. Marketing helps facilitate exchange relationships among people, organizations, and
nations.
2. Marketing is a social process involving the activities necessary to enable individuals
and organizations to obtain what they need and want through exchanges with others
and to develop ongoing exchange relationships.
3. Increased division and specialization of labor are some of the most important
changes that occur as societies move from a primitive economy toward higher levels
of economic development. But while increased specialization helps improve a
society’s overall standard of living, it leads to a different problem: Specialists are no
longer self-sufficient.
4. A society cannot reap the full benefits of specialization until it develops the means to
facilitate the trade and exchange of surpluses among its members. Similarly, a nation
cannot partake of the full range of goods and services available around the world or
penetrate all potential markets for the economic output of its citizens unless
exchanges can occur across national boundaries.
A. Who Markets and Who Buys? The Parties in an Exchange?
, 1. Virtually every organization and individual with a surplus of anything engages
in marketing activities to identify, communicate, and negotiate with potential
exchange partners.
2. Both individuals and organizations seek goods and services obtained through
exchange transactions.
3. Ultimate customers buy goods and services for their own personal use or the
use of others in their immediate household. These are called consumer goods
and services.
4. Organizational customers buy goods and services (1) for resale; (2) as inputs
to the production of other goods or services; or (3) for use in the day-to-day
operations of the organization. These are called industrial goods and
services.
B. Customer Needs and Wants
1. Needs are the basic forces that drive customers to take action and engage in
exchanges.
2. An unsatisfied need is a gap between a person’s actual and desired states on
some physical or psychological dimension.
3. Basic physical needs, such as food, drink, warmth, shelter, and sleep, are critical
to an individual’s survival.
4. Social and emotional needs, such as security, belonging, love, esteem, and self-
fulfillment are critical to an individual’s psychological well-being.
5. Those needs that motivate the consumption behavior of individuals are few and
basic. They are not created by marketers or other social forces; they flow from
our basic biological and psychological makeup as human beings.
6. Organizations also must satisfy needs to assure their survival and well-being.
7. Wants reflect a person’s desires or preferences for specific ways of satisfying a
basic need.
8. People’s many wants are shaped by social influences, their past history, and
consumption experiences.
9. Neither marketers nor any other single social force can create needs deriving
from the biological and emotional imperatives of human nature.
10. On the other hand, marketers—and many other social forces—influence
people’s wants.
11. A major part of a marketer’s job is to develop a new product or service and then
to stimulate customer wants for it by convincing people it can help them better
satisfy one or more of their needs.
12. The laws of probability dictate that some new products will succeed and more
will fail regardless of how much is spent on marketing research.
13. But the critics of a strong customer focus argue that paying too much attention
to customer needs and wants can stifle innovation and lead firms to produce
nothing but marginal improvements or line extensions of products and services
that already exist.
14. While many consumers may lack the technical sophistication necessary to
articulate their needs or wants for cutting-edge technical innovations, the same
is not true for industrial purchasers.
15. As for consumer markets, one way to resolve the conflict between the views of
technologists and marketers is to consider the two components of R&D: First
there is basic research and then there is development.
, 16. Most consumers have little knowledge of scientific advancements and emerging
technologies. Therefore, they usually don’t—and probably shouldn’t—play a
role in influencing how firms allocate their basic research dollars.
17. However, a customer focus is critical to development.
18. The importance of a customer focus often becomes clear when a firm attempts
to develop a variety of successful new product offerings from a single well-
established technology.
19. In the case of an innovative new technology, it often must be developed into a
concrete product concept before consumers can react to it and its commercial
potential can be assessed.
20. In other cases, consumers can express their needs or wants for specific benefits
even though they do not know what is technically feasible.
21. A strong customer focus is not inconsistent with the development of technically
innovative products, nor does it condemn a firm to concentrate on satisfying
only current, articulated customer wants.
22. More important, while firms can sometimes succeed in the short run even
though they ignore customer desires, a strong customer focus usually pays big
dividends in terms of market share and profit over the long haul.
C. What Gets Exchanged? Products and Services
1. Products and services help satisfy a customer’s need when they are acquired,
used, or consumed.
2. Products are essentially tangible physical objects that provide a benefit.
3. Services are less tangible and, in addition to being provided by physical objects,
can be provided by people, institutions, places, and activities.
D. How Exchanges Create Value
1. When people buy products to satisfy their needs, they are really buying the
benefits they believe the products provide, rather than the products per se.
2. The specific benefits sought vary among customers depending on the needs to
be satisfied and the situations where products are used.
3. Because different customers seek different benefits, they use different choice
criteria and attach different importance to product features when choosing
models and brands within a product category.
4. Services offered by the seller can also create benefits for customers by helping
them reduce their costs, obtain desired products more quickly, or use those
products more effectively.
5. Such services are particularly important for satisfying organizational buyers.
6. A customer’s estimate of a product’s or service’s benefits and capacity to satisfy
specific needs and wants determines the value he or she will attach to it.
7. Generally, after comparing alternative products, brands, or suppliers,
customers choose those they think provide the most need-satisfying benefits
per dollar.
8. Thus, value is a function of intrinsic product features, service, and price, and it
means different things to different people.
9. Customers’ estimates of products’ benefits and value are not always accurate.
10. A customer’s ultimate satisfaction with a purchase depends on whether the
product actually lives up to expectations and delivers the anticipated benefits.
This is why customer services—particularly those occurring after a sale—are
often critical for maintaining satisfied customers.
