Online with
Louise Ripley

 
Introductory Marketing
Introduction
Chapter 1 Armstrong/Kotler Marketing: An Introduction

Marketing: Creating and Capturing Customer Value
Return to Course Syllabus
 

These web pages have been constructed by Professor Louise Ripley to parallel the readings in the Canadian edition of the Armstrong, Kotler et. al. text Marketing: An Introduction. (Note now as you start the course: you should know the authors of your textbook: it is important to know whose view of Marketing you are studying. I always ask you on the test). These web pages clarify difficult terms and provide you with additional views on some of the topics covered. The Learning Units each contain a number of Waving Hand Exercises to aid your learning; You will be posting your answers to each Waving Hand Exercise in Moodle. Note that the Exercise contains the word "Moodle" which, if you click on it, will take you to Moodle. The web pages are up to date with the newest, 5th, edition, but you can use them with the fourth as well.

Some of the Waving Hand exercises offer you opportunities to explore Marketing concepts in one of the largest laboratories you'll ever find in any course - the "real world" of shopping and buying, where you can try applying the theories you're reading. Some of them ask you just to think about what you would do in certain situations. Some of them ask you to apply concepts you are learning to the Marketing Plan product you are working on (this is provided to encourage you to get working early on your Final Exam Substitute group project). Work with these pages as you read the chapters.

*Exercise
Testing the System
Practice sending a message. Think about something you like or dislike about Marketing: perhaps a favourite ad and why you like it, or a retail store that drives you crazy because they... do what? What don't you like about Marketing?  Post your answer in the Moodle Discussion Group.

*I. What Is Marketing? 

How Five Different Marketing Scholars Have Seen Marketing
One of the things you get to do when you become a big name in a scientific field is to create your own model of how you see the field in which you work. Five major names in Marketing you should know are Hunt, Borden, Levitt, Bagozzi, and Arndt. (note: It is important to know about the scholars who shape the field you are studying; I always ask about these on the test, and I always ask the name of the authors of your textbook)

Hunt's Three Dichotomies Model Shelby Hunt maintains that ANY Marketing question will fit into one of these 8 cells. While reading for this course, keep Hunt's model in mind and see if you find any marketing questions that do NOT fit. Hunt has a reasonably broad view of Marketing, meaning that its study covers a lot of areas. 

  Positive Normative
  Micro Macro Micro Macro
Profit
e.g.: How does Walmart set prices? Do the poor pay more? How should Walmart set prices? Should the poor pay more?
Not-for-Profit

Art Gallery of Ontario
How does the AGO set prices? Do TV ads affect elections? How should the AGO set prices? Should politicians be sold like toothpaste?
A dichotomy is just an academic word for two-way split. Male/female is a dichotomy. Yes/No is a dichotomy. In-House/Outside Agency is the dichotomy on which I did a logistic regression analysis for my doctoral thesis in advertising strategy (I often referred to it privately as the Inhouse/Outhouse question). 
The term Profit/Not-for-Profit should be self-evident. How do you start a non-profit business in the technology sector today? Start one and wait. That not-so-funny joke is representative of why we now use the term not-for-profit - it implies a certain deliberate intent.  

The Positive/Normative dichotomy deals with whether we're talking about how things are (positive) or how they should be (normative). A positive statement tells how something works (we replace the stock on our shelves at the end of each day). A normative statement says how you think things should be done (we ought to institute a just-in-time inventory policy). Note: Ethical questions are ALWAYS normative. 

The Micro/Macro dichotomy as used in Hunt's model refers to things that happen within the firm and affect the firm in its everyday operations versus things that the firm does that relate to the larger environment, to society. A micro (normative) question for the tobacco companies would be how much it ought to spend to have the printing done on their cigarette cartons. A macro (normative) question would be whether they should get rid of the Joe Camel ads when research shows an overwhelming increase in the number of young teens smoking Camels after Joe arrived in the magazines. This micro/macro dilemma, the conflict between what is good for the firm and what is good for society, is a very old question. In the 1950's, Thorstein Veblen wrote a book exposing the fact that in poverty-stricken areas of large cities, poor people often pay more for their basic food necessities because stores know they can't afford to drive elsewhere. 
Exercise
Dichotomies
Test yourself with the sample questions (and answers) about Hunt's Model on the Test Policy Page
Reactions? Post your answer in the Moodle Discussion Group. 

Borden's Four P's Model 

We know now that Marketing is far more complicated that just those 4 P's and how they relate to customer and intended positioning, but at the time (1959) it was a pretty revolutionary idea. Neil H. Borden first put it into formal words in his presidential speech to the American Marketing Association.

 

Levitt on Marketing Myopia  Levitt, Theodore (1975) "Marketing Myopia" Harvard Business Review (September-October):26-48. 

Theodore Levitt's article, now more than forty-five years old, is still relevant today. Myopia means short-sightedness and Levitt claims most failures of firms are due to short-sighted lack of vision in top management. His view of marketing is long-range vision, anticipation of change, and planning for the future. There are numbers of companies and whole industries that went bankrupt or nearly failed due to lack of vision. 

The railroads thought they were in the railroad business instead of the transportation business and failed to adapt when airplanes came in. Hollywood film companies nearly went broke before they realized they weren't in the film business, but the entertainment business. Now you can rent a video about a month after the film comes out because they've changed from being in the business of producing movies for the theatre to being in the business of providing entertainment that meets our needs. Early grocery stores refused to recognize the popularity of the large supermarkets until it was too late. They said people would never give up the small personal Mom-and-Pop store for a cold anonymous super-store. But it happened. Interestingly, today, many people with hectic life styles are returning to small stores with personal attention where the shopkeepers know you. Things are always changing, and the good marketer needs the vision to be on top of changes and trends. 

At the heart of this is the need to think creatively as a marketer. A marketer needs to know theories and terminology and the way that things work, but s/he also needs to be able to think outside the box. 

Exercise
Marketing Myopia
From your own experience as a consumer, name a product that you buy now that you think could not ever be replaced by another product in the future. NOTE: This is not about what you personally like and can't live without; it means some product (good or service) for which you believe there would be absolutely NO substitute, ever); explain your choice briefly.
Post your answer in the Moodle Discussion Group.

to Definitions of Marketing

 

Bagozzi - Marketing as Exchange  Richard Bagozzi has perhaps the broadest view of Marketing of any of our top scholars in the field. He contends that ANY exchange is Marketing, whether it is the exchange of money for a bar of soap or the exchange of a drink for consideration of a sales pitch, or exchange of quitting smoking for a healthier life. 

Arndt - Needs, Wants, and Demands The main role of the marketer is to move the consumer from need to want to demand

Specificity Level Matching Field Influencing Factors
  Supply Demand  
High Brand DEMAND Competition
Medium Product Class WANT Social, Consumer Resources
Low Product Group NEED Personality, Culture
While Bagozzi sees Marketing very broadly, Johan Arndt has a much narrower view of what we do as marketers. Arndt says that marketers must concentrate on doing what we do best, which is matching supply and demand. He claimed that the role of the marketer is to move the consumer from need to want to demand. As a consumer, you start in a position of need - very basic, not very specific, influenced mainly by personality and cultural factors, looking at product group only such as something to keep your teeth clean, maybe baking soda. 
Arndt sees the marketer moving you up into a stage of more specific wants, influenced by what you can afford and what society expects, where you begin to think about a product class - you want toothpaste; any brand will do, what's on sale this week?
And finally Arndt's marketer moves you up to the state of demand, influenced by competition, where you walk into the drugstore and purchase a tube of a specific brand of toothpaste. The influencing factors are cumulative. Personality and culture continue to influence us at the level of wants and demands, as well as needs. 

These theories and terms aren't just academic games for professors who have nothing better to do. Real-life marketers use them; we just put a name to it so we can be more precise and speak a common language when discussing issues. There is a clothing store on Avenue Road in Toronto called simply, "Wants".  A recent ad for a cigarette whose target market is women, says, "When it comes to clothes, want and need mean exactly the same thing." Consider what is the difference between a need and a want.

Exercise
Need/Want
If they meant exactly the same thing, they wouldn't be two different words. What is the difference between NEED and WANT?
Post your answer in the Moodle Discussion Group.

Marketing Defined

Exercise
Definitions
Look at the ads/pictures below and how they illustrate the different definitions of Marketing. Which definition best fits your own idea of what Marketing is? 
Post your answer in the Moodle Discussion Group.

American Marketing Association

The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives
What idea is being promoted in this old ad, and to whom? What objectives does it fulfill and for what organization? What pricing is involved? 

Malcolm McNair

The creation and delivery of a standard of living

 

 

Think about and respect the need for creativity in Marketing that this definition requires!
What new standard of living is being promoted in this ad?
What creative thinking preceded the invention of the airplane, or of any product?
What new wants and demands arose from the introduction of the airplane?  

Philip Kotler in a Marketing Article

Getting the right goods and services to the right people at the right place at the right time at the right price with the right communication and promotion
Many people thought this infamous trip was the right idea. Why did they go? What services and experiences were they seeking? What value and satisfaction did they feel they got for their money? (BEFORE the ship hit the iceberg!)

Armstrong/Kotler (in your textbook)

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
Think about the number of Canadian dollars that go south every spring, including your professor shown here with her dog Amber. We brought her to Myrtle Beach several Spring Breaks, after I'd been there for academic conferences and thought it would be a nice place to go in mid March.  

What exchange or transaction is going on here between the professor and the city? What relationship developed?

In Fifteen Words (Professor Lee Li, York University)

Marketing colleague Professor Lee Li, tells his students that if you truly understand a subject, you should be able to describe it in about 15 words. 

Try these for Marketing:

 

Exercise
What is Marketing?
In your own words, now as you start the course, what do you think Marketing is? 
Post your answer in the Moodle Discussion Group.

The Marketing Process

Understand the marketplace and customer needs and wants.
Design a customer-driven marketing strategy.
Construct a marketing program that delivers superior value.
Build profitable relationships and create customer delight.
Capture value from customers to create profits and customer equity.

II. Understanding the Marketplace and Customer Needs

Needs, Wants, and Demands Check out what a summer Consumer Behaviour class had to say about Needs and Wants in a rap song.

Marketing Offers - Products, Services, and Experiences

A product is anything that can be offered to a market to satisfy a need or want. It may be a good such as a nail which is a physical tangible piece of stuff that you can hold. It may be a service, like a haircut which is intangible and ephemeral. It may be a mixture of the two as when a restaurant provides you with food (tangible) and service  - the chef cooks your chateaubriand and the waiter brings it to your table, accompanied by wine steward, maitre d'hotel, depending on how fancy you want to get. 

Be sure not to get caught up in the traditional trap of referring to "products and services." Services are products too. Refer instead to "goods and services."

Look now at the Product Class and begin to think about what product you will work with.  

Exercise: Plan 
Kind of Product
Look at the suggested Product Classes for your Marketing Plan, and list one example each of a good, a service, and an experience that would fit in one of those classes. 
Post your answer in the Moodle Discussion Group.

Value and Satisfaction Perception is the key word here. A satisfied customer is one who perceives your product to be of value and to have satisfied the need felt.  

Exchange, Transactions, and Relationships

Remembering Bagozzi who contends that ANY exchange is Marketing: What made the other side of the road enticing enough to lure the chicken over? A Far Side cartoon maintained it was "Marketing." Everything is marketing and marketing is everything (Ripley's interpretation of Bagozzi)
Exercise
Exchange 
Describe three different "exchanges" you experienced in registering for and beginning this course.
Post your answer in the Moodle Discussion Group. 

Markets A market is simply the entire set of people or organizations who might or will buy or obtain your product offering. We will investigate this concept in depth when we examine Market Targeting in the unit on segmentation. Long before that, you will be asked to begin to decide on a market for your product in the Marketing Plan assignment


III. Designing a Customer-Driven Marketing Strategy

Selecting Customers to Serve
As a marketer, you're not always trying to increase demand. Some marketing jobs involve de-marketing, or reducing demand for a particular product or service. 

Exercise
Demand 
Management
Name some products in your own experience for which the marketer has good reason to want you to consume LESS.
Post your answer in the Moodle Discussion Group. 

Choosing a Value Proposition How will the company differentiate itself from its competitors? This will be important in your Marketing Plan project. You will want to find a way to be significantly different from others who sell similar products to yours.


Marketing Management Orientations

Production Concept When demand is high, keep producing enough of the item to reduce the cost of producing it. Sometimes this approach is effective, and even today some things are most effectively marketed this way (but generally it's not a good way to sell something)

Henry Ford said of his early automobile that people could have it in any colour they wanted as long as it was black. 
Exercise
Henry Ford
Why was Ford able to make this statement?
Post your answer in the Moodle Discussion Group.
Texas Instruments brought down the price of the calculator and made it accessible to the ordinary person. When I worked in Finance in Chicago in the 1970's, calculators were only on the desks and private hands of chartered accountants. When I started my MBA programme in 1972, calculators began to be available but they were too expensive (I earned $500/month; a calculator that did 4 functions cost $150). 

They soon dropped in price to $79, at which point I bought one. It was huge and did only 4 functions. Recently I received one free to encourage me to use my store account; it was the size of a credit card, solar powered, and also did percent, square root, and logarithms. 

Exercise
P
roduction Concept
Think of a product sold today that sells well mainly because it is inexpensive and there are lots of them everywhere.
Post your answer in the Moodle Discussion Group. 

Product Concept

Defining your business by the product you sell rather than by what your customer needs is the classic "Better Mousetrap" trap. Just because you build it does NOT mean they will come. 
Field of Dreams
Exercise
Product Concept
It was Ralph Waldo Emerson who first popularized the saying, "Build a better mousetrap and the world will beat a path to your door." What do you buy simply because it is an excellent product, a product that that needed no marketing to get you out to buy it .
Post your answer in the Moodle Discussion Group.

Selling Concept

Some things still have to be sold. 

There's an insurance company ad that maintains that most people would rather deal with bugs than with life insurance. 

Marketing Concept

The basis of marketing in the sixties through the 1980's, this model of three cornerstones is still a cornerstone itself in marketing management theory, although we now put more emphasis on customer, competition and other factors. The idea is a simple one -- the whole firm works together to meet the needs of the consumer, at a profit to the firm. Remember this concept - it will show up often. 
Exercise
Marketing Concept
Think about your shampoo. What does the company that makes it do to meet your needs? In what ways do you think that company all works together as a team to produce a good shampoo? What ensures a profit? 
Post your answer in the Moodle Discussion Group.
Marketing Plan Hint - You will need to consider the concept of thinking first of your customer's needs when planning your Marketing Plan product. A link in your Marketing Plan Assignment sends you here when you get to that part.  

Societal Marketing Concept

  Marketing today includes the obligation to practice sustainable marketing and to examine societal issues, and there are many, including the fact that the fastest growing market for cigarettes is 12 year-old girls
Then there's the marketing of war

Exercise
Societal Marketing Concept
Give an example of a product you yourself purchase which involves a conflict between consumer's short-term wants and their long-run welfare (e.g. for cigarettes: short term want - satisfy craving; long-term welfare - your good looks (when you're 50, your face is going to look like an old shoe).
Post your answer in the Moodle Discussion Group.

IV. Preparing a Marketing Plan and Programme

Take a few minutes now to look at the Marketing Plan in Unit 12


V. Building Customer Relationships
The Changing Nature of Customer Relationship
Connecting with fewer but more profitable customers
Exercise
Relationship Marketing
Describe a relationship you have with someone who markets a good or service you buy. Why do you have this relationship? What caused it? What keeps it going?
Post your answer in the Moodle Discussion Group.
My most recent relationship marketing story is about something called "the gear ring". I saw it advertised in a magazine and, having often been told that I think like an engineer, and having fallen in love with the little working gears, I bought one online. If you ever buy something online that has to be sized, like a ring, i hope you find a company as sympathetic and helpful as Kinekt. Throughout the process they made me feel as if I'd known them personally for years and that of course they'd keep trying until we got a ring that fit. If you see me at a meeting on campus you'll probably see me fiddling with something, a beautiful little thing made of stainless steel with gears that work to turn the edges. It comes with a warning notice:
Gear Ring
Warning: The spinning of this ring may inadvertently cause a lack of productivity and work-related progress. Please enjoy responsibly.
 
Another relationship story is my former Ford dealer, Freeway Ford. I bought my beloved purple Taurus there in 1992 and they looked after it for 12 more years. One bitter cold Friday evening at 5 pm the guys at the gas station I'd stopped at dropped and lost the oil cap for my engine. After twenty minutes in the cold while they unsuccessfully nattered about trying to figure out what to do, I called my Ford dealer and asked if they could bring me an oil cap. Within ten minutes, Dan was there with a cap he'd charged to his own account, said I could come by the next day and pay for it. Freeway Ford is no longer there but now I get excellent service for my Mazda Miata at Agincourt Mazda. 

Agincourt Mazda - Good Service
A little further from home is Tom Natvig in Sweden, a wood technologist who runs the one-man business that sells the wonderful little Ear Bag (If you see me in person outdoors between October and May I'm likely to have them on). This is a side business from his regular work as a certified engineer in in the forest industry, a rather rare occupation that has taken him to 27 countries in his career including Ethiopia, Guinea Bissau, and Sri Lanka. It was in the freezing cold of the 1994 winter Olympics in Norway that he came up with the idea for the ear bag. His is the first site from which I ever ordered anything on the Internet, and he is a true example of what customer service is all about. Check it out at Earbags.

 

Partnership Relationship Marketing
Connections with Marketing Partners
Supply Chain Management
Strategic Alliances
Working with partners in other company departments and outside the company to jointly bring greater value to the customers.
Every department in an organization contributes to customer satisfaction.
Suppliers are carefully controlled through supply chain management.
Strategic alliances create new opportunities to delight customers.

VI. Capturing Value From Customers

Creating Customer Loyalty and Retention - We need to consider the value of all purchases over a consumer's lifetime, not just what they're buying today
Growing Share of Customer - Percentage of customers who buy your product out of all customers who buy in the product category
Companies strive to increase share of customer
Grow share of customer by creating brand extensions
Building Customer Equity  - Combined customer lifetime value of all of a company's customers
This measure is often a more accurate measure than sales or market share
It is a combination of marketing share, share of customer, and lifetime customer value

VII. The Changing Marketing Landscape

The Changing Economic Environment
Since 2008, everyone is tightening the purse strings and finding ways to save money. We're also looking for more sensible consumption.
Money Bag
The Digital Age has transformed the way we do marketing and the way we live our lives.


The Growth of Not-for-Profit Marketing
Using Marketing techniques to promote good causes is a growing concern
Rapid Globalization
Connecting with fewer but more profitable customers
Sustainable Marketing: The Call for More Social Responsibility
Developing a conscience about Marketing
Extending Marketing to more than just consumer goods firms. The copy on this "quit smoking" campaign ad says, "Having A little trouble quitting smoking?"
Exercise
Connections

Which of these areas interests you most? Where might you like to work in Marketing in one of these growing areas? What would you like to do?
Post your answer in the Moodle Discussion Group.


VIII. So What Is Marketing? Pulling It All Together

Exercise
What is Marketing?

What do you think Marketing is all about?
Post your answer in the Moodle Discussion Group.


IX. The Marketing Area Take this moment as you start the course to learn a little about the Marketing Area of the School of Administrative Studies. It is a presentation we put together for a SAS retreat on the topic of Research. It was done very much to emphasize the fact that so many people think Marketing is all about glitz and glamour and colour and light and sound - all of these things being, of course, important in a good Marketing presentation, but not perhaps to the extent they are deliberately used here! In this, you will find a brief serious description of some of the research interests of all the colleagues in Marketing.

The Marketing Area of the School of Administrative Studies


Other Units

Introduction Strategy Society Environments Research Buyers
Segmentation Product Price Place Promotion The Marketing Plan

Return to Course Syllabus

AP/ADMS 2200 3.0 Introductory Marketing
York University, Toronto
M Louise Ripley, M.B.A., Ph.D.