Tham khảo: MARKETING

Marketing is important to every consumer

     One reason for studying marketing is that you—as a consumer—pay for the cost of marketing activities. In advanced economies, marketing costs about 50 cents of each consumer dollar. For some goods and services, the percentage is much higher.

     Another important reason for learning about marketing is that marketing affects almost every aspect of your daily life. All the goods and services you buy, the stores where you shop, and the radio and TV programs paid for by advertising are there because of marketing. Even your job resume is part of a marketing campaign to sell yourself to some employer! Some courses are interesting when you take them but never relevant again once they're over. Not so with marketing—you'll be a consumer dealing with marketing for the rest of your life.

Marketing will be important to your job

     Still another reason for studying marketing is that there are many exciting and rewarding career opportunities in marketing. Marketing is often the route to the top. Throughout this book you will find information about opportunities in different areas of marketing—in sales, advertising, product management, marketing research, distribution, and other areas. And Appendix C is all about career planning in marketing.

     Even if you're aiming for a nonmarketing job, you'll be working with marketing people. Knowing something about marketing will help you understand them better. It will also help you do your own job better. Throughout the book, we'll discuss ways that marketing relates to other functional areas—and Chapter 21 focuses on those issues. Further, remember that marketing is important to the success of every organization. A company that can't successfully sell its products doesn't need accountants, financial managers, production managers, personnel managers, computer programmers, or credit managers.

     Even if you're not planning a business career, marketing concepts and techniques apply to nonprofit organizations too. Many nonprofit organizations have a marketing manager. And the same basic principles used to sell soap are also used to "sell" ideas, politicians, mass transportation, health care services, conservation, museums, and even colleges. Think about the school where you take this course. If you didn't know about its offerings—or if they didn't interest you—you would simply pick some other school.

Marketing affects economic growth

     An even more basic reason for studying marketing is that marketing plays a big part in economic growth and development. Marketing stimulates research and new ideas—resulting in new goods and services. Marketing gives customers a choice among products. If these products satisfy customers, fuller employment, higher incomes, and a higher standard of living can result. An effective marketing system is important to the future of all nations.

Basic Marketing

Marketing's Role in the Global Economy

How Should We Define Marketing?

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     As we said earlier, some people think of marketing too narrowly as "selling and advertising." On the other hand, one author defined marketing as the "creation and delivery of a standard of living." That definition is too broad.

     An important difference between the two definitions may be less obvious. The first definition is a micro-level definition. It focuses on activities performed by an individual organization. The second is a macro-level definition. It focuses on the economic welfare of a whole society.

Micro- or macro-marketing?

     Which view is correct? Is marketing a set of activities done by individual firms or organizations? Or is it a social process?

     To answer this question, let's go back to our tennis racket example. We saw that a producer of tennis rackets has to perform many customer-related activities besides just making rackets. The same is true for an insurance company, an art museum, or a family-service agency. This supports the idea of marketing as a set of activities done by individual organizations.

     On the other hand, people can't live on tennis rackets and art museums alone! In advanced economies, it takes thousands of goods and services to satisfy the many needs of society. For example, a typical Wal-Mart store carries 75,000 different items. A society needs some sort of marketing system to organize the efforts of all the producers and middlemen needed to satisfy the varied needs of all its citizens. So marketing is also an important social process.

     The answer to our question is that marketing is both a set of activities performed by organizations and a social process. In other words, marketing exists at both the micro and macro levels. Therefore, we will use the definitions of marketing—one for micro-marketing and another for macro-marketing. Micro-marketing looks at customers and the organizations that serve them. Macro-marketing takes a broad view of our whole production-distribution system.

Basic Marketing

Marketing's Role in the Global Economy

Micro-Marketing Defined

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     Micro-marketing is the performance of activities that seek to accomplish an organization's objectives by anticipating customer or client needs and directing a flow of need-satisfying goods and services from producer to customer or client.

     Let's look at this definition.

Applies to profit and nonprofit organizations

     To begin with, this definition applies to both profit and nonprofit organizations. Profit is the objective for most business firms. But other types of organizations may seek more members—or acceptance of an idea. Customers or clients may be individual consumers, business firms, nonprofit organizations, government agencies, or even foreign nations. While most customers and clients pay for the goods and services they receive, others may receive them free of charge or at a reduced cost through private or government support.

More than just persuading customers

     You already know that micro-marketing isn't just selling and advertising. Unfortunately, many executives still think it is. They feel that the job of marketing is to "get rid of" whatever the company happens to produce. In fact, the aim of marketing is to identify customers' needs—and meet those needs so well that the product almost "sells itself." This is true whether the product is a physical good, a service, or even an idea. If the whole marketing job has been done well, customers don't need much persuading. They should be ready to buy. And after they do buy, they'll be satisfied and ready to buy the same way again the next time.

Begins with customer needs

     Marketing should begin with potential customer needs—not with the production process. Marketing should try to anticipate needs. And then marketing, rather than production, should determine what goods and services are to be developed—including decisions about product design and packaging; prices or fees; credit and collection policies; use of middlemen; transporting and storing policies; advertising and sales policies; and, after the sale, installation, customer service, warranty, and perhaps even disposal policies.

Does not do it alone

     This does not mean that marketing should try to take over production, accounting, and financial activities. Rather, it means that marketing—by interpreting customers' needs—should provide direction for these activities and try to coordinate them. After all, the purpose of a business or nonprofit organization is to satisfy customer or client needs. It is not to supply goods

and services that are convenient to produce and might sell or be accepted free.

Builds a relationship with the customer

     When marketing helps everyone in a firm really meet the needs of a customer both before and after a purchase, the firm doesn't just get a single sale. Rather, it has a sale and an ongoing relationship with the customer. Then, in the future, when the customer has the same need again—or some other need that the firm will meet—other sales, will follow. That's why we emphasize that marketing concerns a flow of need-satisfying goods and services to the customer. Often, that flow is not just for a single transaction but rather is part of building a long-lasting relationship that is beneficial to both the firm and the customer.

Basic Marketing

Marketing's Role in the Global Economy

The Focus of this Text—Management-Oriented Micro-Marketing

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     Since most of you are preparing for a career in management, the main focus of this text will be on micro-marketing. We will see marketing through the eyes of the marketing manager.

     It is important to keep in mind that the micro-marketing ideas and decision areas we will be discussing throughout this text apply to a wide variety of marketing management situations. They are important not only for large and small business firms but also for all types of public sector and nonprofit organizations. They apply to new ventures started by a single entrepreneur as well as to ongoing efforts by teams of people in corporations. They are useful in domestic markets and international markets and regardless of whether the organization focuses on marketing physical goods, services, or an idea or cause. They are equally critical whether the relevant customers or clients are individual consumers, businesses, or some other type of organization. In short, every organization needs to think about its markets and how effectively it meets its customers' or clients' needs. For editorial convenience, and to reflect the fact that most readers will work in business settings, when we discuss marketing concepts we will sometimes use the term firm as a shorthand way of referring to any type of organization, whether it is a political party, a religious organization, a government agency, or the like. However, to reinforce the point that the ideas apply to all types of organizations, throughout the book we will illustrate marketing management concepts with examples that represent a wide variety of marketing situations.

     Although micro-marketing is the primary focus of the text, marketing managers must remember that their organizations are just small parts of a larger macro-marketing system. Therefore, the rest of this chapter will took at the macro view of marketing. Let's begin by defining macro-marketing and reviewing some basic ideas. Then, in Chapter 2, we'll explain the marketing management decision areas we will be discussing in the rest of the book.

Basic Marketing

Marketing's Role in the Global Economy

Macro-Marketing Defined

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     Macro-marketing is a social process that directs an economy's flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.

Emphasis is on whole system

     Like micro-marketing, macro-marketing is concerned with the flow of need-satisfying goods and services from producer to consumer. However, the emphasis with macro-marketing is not on the activities of individual organizations. Instead, the emphasis is on how the whole marketing system works. This includes looking at how marketing affects society, and vice versa.

     Every society needs a macro-marketing system to help match supply and demand. Different producers in a society have different objectives, resources, and skills. Likewise, not all consumers share the same needs, preferences, and wealth. In other words, within every society there are both heterogeneous (highly varied) supply capabilities and heterogeneous demands for goods and services. The role of a macro-marketing system is to effectively match this heterogeneous supply and demand and at the same time accomplish society's objectives.

Is it effective and fair?

     The effectiveness and fairness of a particular macro-marketing system must be evaluated in terms of that society's objectives. Obviously, all nations don't share the same objectives. For example, Swedish citizens receive many "free" services— like health care and retirement benefits. Goods and services are fairly evenly distributed among the Swedish population. By contrast, Iraq places little emphasis on producing goods and services for individual consumers—and more on military spending. In India, the distribution of goods and services is very uneven—with a big gap between the "have-nots" and the elite "haves." Whether each of these systems is judged "fair" or "effective" depends on the objectives of the society.

     Let's look more closely at macro-marketing. And to make this more meaningful to you, consider (1) what kind of a macro-marketing system you have and (2) how effective and fair it is.

Basic Marketing

Marketing's Role in the Global Economy

Every Society Needs an Economic System

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     All societies must provide for the needs of their members. Therefore, every society needs some sort of economic system—the way an economy organizes to use scarce resources to produce goods and services and distribute them for consumption by various people and groups in the society.

     How an economic system operates depends on a society's objectives and the nature of its political institutions. But regardless of what form these take, all economic systems must develop some method—along with appropriate economic institutions—to decide what and how much is to be produced and distributed by whom, when, to whom, and why. How these decisions are made may vary from nation to nation. But the macro-level objectives are basically similar: to create goods and services and make them available when and where they are needed—to maintain or improve each nation's standard of living or other socially defined

objective.

Basic Marketing

Marketing's Role in the Global Economy

How Economic Decisions Are Made

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     There are two basic kinds of economic systems: planned systems and market-directed systems. Actually, no economy is entirely planned or market-directed. Most are a mixture of the two extremes.

Government planners may make the decisions

     In a planned economic system, government planners decide what and how much is to be produced and distributed by whom, when, to whom, and why. Producers generally have little choice about what goods and services to produce. Their main task is to meet their assigned production quotas. Prices are set by government planners and tend to be very rigid—not changing according to supply and demand. Consumers usually have some freedom of choice—it's impossible to control every single detail! But the assortment of goods and services may be quite limited. Activities such as market research, branding, and advertising usually are neglected. Sometimes they aren't done at all.

     Government planning may work fairly well as long as an economy is simple and the variety of goods and services is small. It may even be necessary under certain conditions—during wartime, drought, or political instability, for example. However, as economies become more complex, government planning becomes more difficult. It may even break down. Planners may be overwhelmed by too many complex decisions. And consumers may lose patience if the planners don't respond to their needs. The collapse of communism in Eastern Europe dramatically illustrates this. Citizens of what was the Soviet Union were not satisfied with the government's plan—because products consumers wanted and needed were not available. To try to reduce consumer dissatisfaction, government planners tried to put more emphasis on making consumer goods available, but they were not able to produce the results consumers wanted. In short, it was consumer dissatisfaction with decisions made by government planners that brought about a revolution— one that is leading to the development of market-directed economies in the new, independent republics of Eastern Europe.  

     Countries such as China, North Korea, and Cuba still rely primarily on planned economic systems. Even so, around the world there is a broad move toward market-directed economic systems—because they are more effective in meeting consumer needs.

A market-directed economy adjusts itself

     In a market-directed economic system, the individual decisions of the many producers and consumers make the macro-level decisions for the whole economy. In a pure market-directed economy, consumers make a society's production decisions when they make their choices in the marketplace. They decide what is to be produced and by whom—through their dollar "votes."

Price is a measure of value

     Prices in the marketplace are a rough measure of how society values particular goods and services. If consumers are willing to pay the market prices, then apparently they feel they are getting at least their money's worth. Similarly, the cost of labor and materials is a rough measure of the value of the resources used in the production of goods and services to meet these needs. New consumer needs that can be served profitably—not just the needs of the majority—will probably be met by some profit-minded businesses.

     In summary, in a market-directed economic system the prices in both the production sector (for resources) and the consumption sector (for goods and services) vary to allocate resources and distribute income according to consumer preferences. Over time, the result is a balance of supply and demand and the coordination of the economic activity of many individuals and institutions.

Greatest freedom of choice

     Consumers in a market-directed economy enjoy great freedom of choice. They are not forced to buy any goods or services, except those that must be provided for the good of society—things such as national defense, schools, police and fire protection, highway systems, and public-health services. These are provided by the community—and the citizens are taxed to pay for them.

     Similarly, producers are free to do whatever they wish-provided that they stay within the rules of the game set by government and receive enough dollar "votes" from consumers. If they do their job well, they earn a profit and stay in business. But profit, survival, and growth are not guaranteed.

Conflicts can result

     Producers and consumers making free choices can cause conflicts and difficulties. This is called the micro-macro dilemma: What is "good" for some producers and consumers may not be good for society as a whole.

     Gun control in the U.S. is an example. Each year, thousands of people are killed with handguns. Yet there are producers who make and sell handguns at a profit. And there are many consumers who feel strongly about their right to own guns. But others argue that handguns are a threat to society. They want handgun sales banned and sales of all weapons limited—as is the case in many countries. Should gun producers be allowed to sell guns to consumers who want them?

     Decisions don't have to involve life and death issues to be important. Many Americans want the convenience of disposable products and products in easy-to-use, small-serving packages. But these same "convenient" products and packages often lead to pollution of the environment and inefficient use of natural resources. Should future generations be left to pay the consequences of pollution that is the result of "free choice" by today's consumers?

     Questions like these are not easy to answer. The basic reason is that many different people may have a stake in the outcomes—and social consequences—of the choices made by individual managers and consumers in a market-directed system. As you read this book and learn more about marketing, you will also learn more about social responsibility in marketing—and why it must be taken seriously.

The role of government

     The American economy and most other Western economies are mainly market-directed—but not completely. Society assigns supervision of the system to the government. For example, besides setting and enforcing the "rules of the game," government agencies control interest rates and the supply of money. They also set import and export rules that affect international competition, regulate radio and TV broadcasting, sometimes control wages and prices, and so on. Government also tries to be sure that property is protected, contracts are enforced, individuals are not exploited, no group unfairly monopolizes markets, and producers deliver the kinds and quality of goods and services they claim to be offering.

     You can see that we need some of these government activities to make sure the economy runs smoothly. However, some people worry that too much government "guidance" threatens the survival of a market-directed system—and the economic and political freedom that goes with it. For example, in the past decade the U.S. government has done much less "interfering"—especially in markets for services such as banking, transportation, and communications. The vigorous competition among airlines is a good example of what follows. A few years ago, a government agency controlled airline prices and routes. Now that agency doesn't exist, and these decisions are made by marketing managers—and consumers. By contrast, recently there have been proposals in Congress that focus on a much more active government role in planning and controlling health care. Some consumers might benefit by such changes, yet more government control would reduce consumer choice.

Basic Marketing

Marketing's Role in the Global Economy

All Economies Need Macro-Marketing Systems

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     At this point, you may be saying to yourself. All this sounds like economics— where does marketing fit in? Studying a macro-marketing system is a lot like studying an economic system except we give more detailed attention to the "marketing" components of the system—including consumers and other customers, wholesalers and retailers, and other marketing specialists. We focus on the activities they perform—and how the interaction of the components affects the effectiveness and fairness of a particular system.

     In general, we can say that no economic system—whether centrally planned, market-directed, or a mix of the two—can achieve its objectives without an effective macro-marketing system. To see why this is true, we will look at the role of marketing in primitive societies. Then we will see how macro-marketing tends to become more and more complex in advanced economic systems.

Marketing involves exchange

     In a pure subsistence economy, each family unit produces everything it consumes. There is no need to exchange goods and services. Each producer-consumer unit is totally self-sufficient, although usually its standard of living is relatively low. No marketing takes place because marketing doesn't occur unless two or more parties are willing to exchange something for something else.

What is a market?

     The term marketing comes from the word market, which is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and/or services—that is, ways of satisfying those needs. Of course, some negotiation may be needed. This can be done face-to-face at some physical location (for example, a farmers' market). Or it can be done indirectly—through a complex network of middlemen who link buyers and sellers living far apart.

     In primitive economies, exchanges tend to occur in central markets. Central markets are convenient places where buyers and sellers can meet one-on-one to exchange goods and services. We can understand macro-marketing better by seeing how and why central markets develop. We'll start with a very simple case, but thinking about it will clarify what happens when a more complex system is involved.

Central markets help exchange

     Imagine a small village of five families—each with a special skill for producing some need-satisfying product. After meeting basic needs, each family decides to specialize. It's easier for one family to make two pots and another to make two baskets than for each one to make one pot and one basket. Specialization makes labor more efficient and more productive. It can increase

the total amount of form utility created. Specialization also can increase the task utility in producing services, but for the moment we'll focus on products that are physical goods.

     If these five families each specialize in one product, they will have to trade with each other. As Exhibit 1-2A shows, it will take the five families 10 separate exchanges to obtain some of each of the products. If the families live near each other, the exchange process is relatively simple. But if they are far apart, travel back and forth will take time. Who will do the traveling—and when?

     Faced with this problem, the families may agree to come to a central market and trade on a certain day. Then each family makes only one trip to the market to trade with all the others. This reduces the total number of trips to five, which makes exchange easier, leaves more time for producing and consuming, and also provides for social gatherings.

A money system simplifies trading

     While a central meeting place simplifies exchange, the individual bartering transactions still take a lot of time. Bartering only works when someone else wants what you have, and vice versa. Each trader must find others who have products of about equal value. After trading with one group, a family may find itself with extra baskets, knives, and pots. Then it has to find others willing to trade for these products.

     A common money system changes all this. Sellers only have to find buyers who want their products and agree on the price. Then sellers are free to spend this income to buy whatever they want. (if some buyers and sellers use different money systems—some use dollars and others use yen—they must also agree on the rate at which the money will be exchanged.)

Middlemen intermediaries help exchange even more

     The development of a central market and a money system simplifies the exchange process among the five families in our imaginary village. But the families still need to make 10 separate transactions. So it still takes a lot of time and effort for the five families to exchange goods.

     This clumsy exchange process is made much simpler by a middleman (or  intermediary) —someone who specializes in trade rather than production. A middleman is willing to buy each family's goods and then sell each family whatever it needs. The middleman intermediary charges for this service, of course. But this charge may be more than offset by savings in time and effort.

     In our simple example, using an intermediary at a central market reduces the necessary number of exchanges for all five families from 10 to 5. See  Exhibit l-2B. Each family has more time for production, consumption, and leisure. Also, each family can specialize in producing what it produces best—creating more form and task utility. Meanwhile, by specializing in trade,

the intermediary provides additional time, place, and possession utility. In total, all the villagers may enjoy greater economic utility—and greater consumer satisfaction—by using an intermediary in the central market.