marketing

ÔĽŅ
marketing
/mahr"ki ting/, n.
1. the act of buying or selling in a market.
2. the total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.
[1555-65; MARKET + -ING1]

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Activities that direct the flow of goods and services from producers to consumers.

In advanced industrial economies, marketing considerations play a major role in determining corporate policy. Once primarily concerned with increasing sales through advertising and other promotional techniques, corporate marketing departments now focus on credit policies (see credit), product development, customer support, distribution, and corporate communications. Marketers may look for outlets through which to sell the company's products, including retail stores, direct-mail marketing, and wholesaling. They may make psychological and demographic studies of a potential market, experiment with various marketing strategies, and conduct informal interviews with target audiences. Marketing is used both to increase sales of an existing product and to introduce new products. See also merchandising.

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‚Ė™ business
Introduction

      the sum of activities involved in directing the flow of goods and services from producers to consumers.

      Marketing's principal function is to promote and facilitate exchange. Through marketing, individuals and groups obtain what they need and want by exchanging products and services with other parties. Such a process can occur only when there are at least two parties, each of whom has something to offer. In addition, exchange cannot occur unless the parties are able to communicate about and to deliver what they offer. Marketing is not a coercive process: all parties must be free to accept or reject what others are offering. So defined, marketing is distinguished from other modes of obtaining desired goods, such as through self-production, begging, theft, or force.

      Marketing is not confined to any particular type of economy, because goods must be exchanged and therefore marketed in all economies and societies except perhaps in the most primitive. Furthermore, marketing is not a function that is limited to profit-oriented business; even such institutions as hospitals, schools, and museums engage in some forms of marketing. Within the broad scope of marketing, merchandising is concerned more specifically with promoting the sale of goods and services to consumers (i.e., retailing) and hence is more characteristic of free-market economies.

      Based on these criteria, marketing can take a variety of forms: it can be a set of functions, a department within an organization, a managerial process, a managerial philosophy, and a social process.

The evolving discipline of marketing
      The marketing discipline had its origins in the early 20th century as an offspring of economics. Economic science had neglected the role of middlemen and the role of functions other than price in the determination of demand levels and characteristics. Early marketing economists examined agricultural and industrial markets and described them in greater detail than the classical economists. This examination resulted in the development of three approaches to the analysis of marketing activity: the commodity, the institution, and the function.

      Commodity analysis studies the ways in which a product or product group is brought to market. A commodity analysis of milk, for example, traces the ways in which milk is collected at individual dairy farms, transported to and processed at local dairy cooperatives, and shipped to grocers and supermarkets for consumer purchase. Institutional analysis describes the types of businesses that play a prevalent role in marketing, such as wholesale or retail institutions. For instance, an institutional analysis of clothing wholesalers examines the ongoing concerns that wholesalers face in order to ensure both the correct supply for their customers and the appropriate inventory and shipping capabilities. Finally, a functional analysis examines the general tasks that marketing performs. For example, any marketing effort must ensure that the product is transported from the supplier to the customer. In some industries, this transportation function may be handled by a truck, while in others it may be done by mail, facsimile, television signal, or airline. All these institutions perform the same function.

¬†¬†¬†¬†¬†¬†As the study of marketing became more prevalent throughout the 20th century, large companies (corporation)‚ÄĒparticularly mass consumer manufacturers‚ÄĒbegan to recognize the importance of market research, better product design, effective distribution, and sustained communication with consumers in the success of their brands. Marketing concepts and techniques later moved into the industrial (industry)-goods sector and subsequently into the services sector. It soon became apparent that organizations and individuals market not only goods and services but also ideas (social marketing), places (location marketing), personalities (celebrity marketing), events (event marketing), and even the organizations themselves (public relations).

Roles of marketing
      As marketing developed, it took a variety of forms. It was noted above that marketing can be viewed as a set of functions in the sense that certain activities are traditionally associated with the exchange process. A common but incorrect view is that selling and advertising are the only marketing activities. Yet, in addition to promotion, marketing includes a much broader set of functions, including product development, packaging, pricing, distribution, and customer service.

      Many organizations and businesses (business organization) assign responsibility for these marketing functions to a specific group of individuals within the organization. In this respect, marketing is a unique and separate entity. Those who make up the marketing department may include brand and product managers, marketing researchers, sales representatives, advertising and promotion managers, pricing specialists, and customer service personnel.

¬†¬†¬†¬†¬†¬†As a managerial process, marketing is the way in which an organization determines its best opportunities in the marketplace, given its objectives and resources. The marketing process is divided into a strategic and a tactical phase. The strategic phase has three components‚ÄĒsegmentation, targeting, and positioning (STP). The organization must distinguish among different groups of customers in the market (segmentation), choose which group(s) it can serve effectively (targeting), and communicate the central benefit it offers to that group (positioning). The marketing process includes designing and implementing various tactics, commonly referred to as the ‚Äúmarketing mix,‚ÄĚ or the ‚Äú4 Ps‚ÄĚ: product, price, place (or distribution), and promotion. The marketing mix is followed by evaluating, controlling, and revising the marketing process to achieve the organization's objectives (see below the section Marketing-mix planning (marketing)).

      The managerial philosophy of marketing puts central emphasis on customer satisfaction as the means for gaining and keeping loyal customers. Marketers urge their organizations to carefully and continually gauge target customers' expectations and to consistently meet or exceed these expectations. In order to accomplish this, everyone in all areas of the organization must focus on understanding and serving customers; it will not succeed if all marketing occurs only in the marketing department. Marketing, consequently, is far too important to be done solely by the marketing department. Marketers also want their organizations to move from practicing transaction-oriented marketing, which focuses on individual exchanges, to relationship-driven marketing, which emphasizes serving the customer over the long term. Simply getting new customers and losing old ones will not help the organization achieve its objectives.

      Finally, marketing is a social process that occurs in all economies, regardless of their political structure and orientation. It is the process by which a society organizes and distributes its resources to meet the material needs of its citizens. However, marketing activity is more pronounced under conditions of goods surpluses than goods shortages. When goods are in short supply, consumers are usually so desirous of goods that the exchange process does not require significant promotion or facilitation. In contrast, when there are more goods and services than consumers need or want, companies must work harder to convince customers to exchange with them.

The marketing process
      The marketing process consists of four elements: strategic marketing analysis, marketing-mix planning, marketing implementation, and marketing control.

Strategic marketing analysis
Market segments
¬†¬†¬†¬†¬†¬†The aim of marketing in profit-oriented organizations is to meet needs profitably. Companies must therefore first define which needs‚ÄĒand whose needs‚ÄĒthey can satisfy. For example, the personal transportation (automotive industry) market consists of people who put different values on an automobile's cost, speed, safety, status, and styling. No single automobile can satisfy all these needs in a superior fashion; compromises have to be made. Furthermore, some individuals may wish to meet their personal transportation needs with something other than an automobile, such as a motorcycle, a bicycle, or a bus or other form of public transportation. Because of such variables, an automobile company must identify the different preference groups, or segments, of customers and decide which group(s) they can target profitably.

Market niches
      Segments can be divided into even smaller groups, called subsegments or niches. A niche is defined as a small target group that has special requirements. For example, a bank may specialize in serving the investment needs of not only senior citizens but also senior citizens with high incomes and perhaps even those with particular investment preferences. It is more likely that larger organizations will serve the larger market segments (mass marketing) and ignore niches. As a result, smaller companies typically emerge that are intimately familiar with a particular niche and specialize in serving its needs.

Marketing to individuals
¬†¬†¬†¬†¬†¬†A growing number of companies are now trying to serve ‚Äúsegments of one.‚ÄĚ They attempt to adapt their offer and communication to each individual customer. This is understandable, for instance, with large industrial companies that have only a few major customers. For example, The Boeing Company (United States) designs its 747 planes differently for each major customer, such as United Airlines, Inc., or American Airlines, Inc. Serving individual customers is increasingly possible with the advent of database marketing, through which individual customer characteristics and purchase histories are retained in company information systems. Even mass-marketing companies, particularly large retailers and catalog houses, compile comprehensive data on individual customers and are able to customize their offerings and communications.

Positioning
¬†¬†¬†¬†¬†¬†A key step in marketing strategy, known as positioning, involves creating and communicating a message that clearly establishes the company or brand in relation to competitors. Thus, Volvo Aktiebolaget (Sweden) has positioned its automobile as the ‚Äúsafest,‚ÄĚ and Daimler-Benz AG (Germany), manufacturer of Mercedes-Benz vehicles, has positioned its car as the best ‚Äúengineered.‚ÄĚ Some products may be positioned as ‚Äúoutstanding‚ÄĚ in two or more ways. However, claiming superiority along several dimensions may hurt a company's credibility because consumers will not believe that any one offering can excel in all dimensions. Furthermore, although the company may communicate a particular position, customers may perceive a different image of the company as a result of their actual experiences with the company's product or through word of mouth.

Marketing-mix planning
¬†¬†¬†¬†¬†¬†Having developed a strategy, a company must then decide which tactics will be most effective in achieving strategy goals. Tactical marketing involves creating a marketing mix of four components‚ÄĒproduct, price, place, promotion‚ÄĒthat fulfills the strategy for the targeted set of customer needs.

Product development
      The first marketing-mix element is the product, which refers to the offering or group of offerings that will be made available to customers. In the case of a physical product, such as a car, a company will gather information about the features and benefits desired by a target market. Before assembling a product, the marketer's role is to communicate customer desires to the engineers who design the product or service. This is in contrast to past practice, when engineers designed a product based on their own preferences, interests, or expertise and then expected marketers to find as many customers as possible to buy this product. Contemporary thinking calls for products to be designed based on customer input and not solely on engineers' ideas.

¬†¬†¬†¬†¬†¬†In traditional economies, the goods produced and consumed often remain the same from one generation to the next‚ÄĒincluding food, clothing, and housing. As economies develop, the range of products available tends to expand, and the products themselves change. In contemporary industrialized societies, products, like people, go through life cycles: birth, growth, maturity, and decline. This constant replacement of existing products with new or altered products has significant consequences for professional marketers. The development of new products involves all aspects of a business‚ÄĒproduction, finance, research and development, and even personnel administration and public relations.

packaging and branding
¬†¬†¬†¬†¬†¬†Packaging and branding are also substantial components in the marketing of a product. Packaging in some instances may be as simple as customers in France carrying long loaves of unwrapped bread or small produce dealers in Italy wrapping vegetables in newspapers or placing them in customers' string bags. In most industrialized countries, however, the packaging of merchandise has become a major part of the selling effort, as marketers now specify exactly the types of packaging that will be most appealing to prospective customers. The importance of packaging in the distribution of the product has increased with the spread of self-service purchases‚ÄĒin wholesaling as well as in retailing. Packaging is sometimes designed to facilitate the use of the product, as with aerosol containers for room deodorants. In Europe such condiments as mustard, mayonnaise, and ketchup are often packaged in tubes. Some packages are reusable, making them attractive to customers in poorer countries where metal containers, for instance, are often highly prized.

Marketing a service product
      The same general marketing approach about the product applies to the development of service offerings as well. For example, a health maintenance organization (HMO) must design a contract for its members that describes which medical procedures will be covered, how much physician choice will be available, how out-of-town medical costs will be handled, and so forth. In creating a successful service mix, the HMO must choose features that are preferred and expected by target customers, or the service will not be valued in the marketplace.

¬†¬†¬†¬†¬†¬†The second marketing-mix element is price. Ordinarily companies determine a price by gauging the quality or performance level of the offer and then selecting a price that reflects how the market values its level of quality. However, marketers also are aware that price can send a message to a customer about the product's presumed quality level. A Mercedes-Benz vehicle is generally considered to be a high-quality automobile, and it therefore can command a high price in the marketplace. But, even if the manufacturer could price its cars competitively with economy cars, it might not do so, knowing that the lower price might communicate lower quality. On the other hand, in order to gain market share, some companies have moved to ‚Äúmore for the same‚ÄĚ or ‚Äúthe same for less‚ÄĚ pricing, which means offering prices that are consistently lower than those of their competitors. This kind of discount pricing has caused firms in such industries as airlines and pharmaceuticals (which used to charge a price premium based on their past brand strength and reputation) to significantly reevaluate their marketing strategies.

      Place, or where the product is made available, is the third element of the marketing mix and is most commonly referred to as distribution. When a product moves along its path from producer to consumer, it is said to be following a channel of distribution. For example, the channel of distribution for many food products includes food-processing plants, warehouses, wholesalers, and supermarkets. By using this channel, a food manufacturer makes its products easily accessible by ensuring that they are in stores that are frequented by those in the target market. In another example, a mutual funds organization makes its investment products available by enlisting the assistance of brokerage houses and banks, which in turn establish relationships with particular customers. However, each channel participant can handle only a certain number of products: space at supermarkets is limited, and investment brokers can keep abreast of only a limited number of mutual funds. Because of this, some marketers may decide to skip steps in the channel and instead market directly to buyers through direct mail, telemarketing, door-to-door selling, shopping via television (a growing trend in the late 20th century), or factory outlets.

      Promotion, the fourth marketing-mix element, consists of several methods of communicating with and influencing customers. The major tools are sales force, advertising, sales promotion, and public relations.

Sales force
¬†¬†¬†¬†¬†¬†Sales representatives are the most expensive means of promotion, because they require income, expenses, and supplementary benefits. Their ability to personalize the promotion process makes salespeople most effective at selling complex goods, big-ticket items, and highly personal goods‚ÄĒfor example, those related to religion or insurance. Salespeople are trained to make presentations, answer objections, gain commitments to purchase, and manage account growth. Some companies have successfully reduced their sales-force costs by replacing certain functions (for example, finding new customers) with less expensive methods (such as direct mail and telemarketing).

      Advertising includes all forms of paid, nonpersonal communication and promotion of products, services, or ideas by a specified sponsor. Advertising appears in such media as print (printing) (newspapers, magazines, billboards, flyers) or broadcast (radio, television). Print advertisements typically consist of a picture, a headline, information about the product, and occasionally a response coupon. Broadcast (broadcasting) advertisements consist of an audio or video narrative that can range from short 15-second spots to longer segments known as infomercials, which generally last 30 or 60 minutes.

      While advertising presents a reason to buy a product, sales promotion offers a short-term incentive to purchase. Sales promotions often attract brand switchers (those who are not loyal to a specific brand) who are looking primarily for low price and good value. Thus, especially in markets where brands are highly similar, sales promotions can cause a short-term increase in sales but little permanent gain in market share. Alternatively, in markets where brands are quite dissimilar, sales promotions can alter market shares more permanently. The use of promotions has risen considerably during the late 20th century. This is due to a number of factors within companies, including an increased sophistication in sales promotion techniques and greater pressure to increase sales. Several market factors also have fostered this increase, including a rise in the number of brands (especially similar ones) and a decrease in the efficiency of traditional advertising due to increasingly fractionated consumer markets.

¬†¬†¬†¬†¬†¬†Public relations, in contrast to advertising and sales promotion, generally involves less commercialized modes of communication. Its primary purpose is to disseminate information and opinion to groups and individuals who have an actual or potential impact on a company's ability to achieve its objectives. In addition, public relations specialists are responsible for monitoring these individuals and groups and for maintaining good relationships with them. One of their key activities is to work with news and information media to ensure appropriate coverage of the company's activities and products. Public relations specialists create publicity by arranging press conferences, contests, meetings, and other events that will draw attention to a company's products or services. Another public relations responsibility is crisis management‚ÄĒthat is, handling situations in which public awareness of a particular issue may dramatically and negatively impact the company's ability to achieve its goals. For example, when it was discovered that some bottles of Perrier sparkling water might have been tainted by a harmful chemical, Source Perrier, SA's public relations team had to ensure that the general consuming public did not thereafter automatically associate Perrier with tainted water. Other public relations activities include lobbying, advising management about public issues, and planning community events.

      Because public relations does not always seek to impact sales or profitability directly, it is sometimes seen as serving a function that is separate from marketing. However, some companies recognize that public relations can work in conjunction with other marketing activities to facilitate the exchange process directly and indirectly. These organizations have established marketing public relations departments to directly support corporate and product promotion and image management.

Philip Kotler Kent A. Grayson Jonathan D. Hibbard

Marketing implementation
      Companies have typically hired different agencies to help in the development of advertising, sales promotion, and publicity ideas. However, this often results in a lack of coordination between elements of the promotion mix. When components of the mix are not all in harmony, a confusing message may be sent to consumers. For example, a print advertisement for an automobile may emphasize the car's exclusivity and luxury, while a television advertisement may stress rebates and sales, clashing with this image of exclusivity. Alternatively, by integrating the marketing elements, a company can more efficiently utilize its resources. Instead of individually managing four or five different promotion processes, the company manages only one. In addition, promotion expenditures are likely to be better allocated, because differences among promotion tools become more explicit. This reasoning has led to integrated marketing communications, in which all promotional tools are considered to be part of the same effort, and each tool receives full consideration in terms of its cost and effectiveness.

Marketing evaluation and control
      No marketing process, even the most carefully developed, is guaranteed to result in maximum benefit for a company. In addition, because every market is changing constantly, a strategy that is effective today may not be effective in the future. It is important to evaluate a marketing program periodically to be sure that it is achieving its objectives.

Marketing control
      There are four types of marketing control, each of which has a different purpose: annual-plan control, profitability control, efficiency control, and strategic control.

Annual-plan control
¬†¬†¬†¬†¬†¬†The basis of annual-plan control is managerial objectives‚ÄĒthat is to say, specific goals, such as sales and profitability, that are established on a monthly or quarterly basis. Organizations use five tools to monitor plan performance. The first is sales analysis, in which sales goals are compared with actual sales and discrepancies are explained or accounted for. A second tool is market-share analysis, which compares a company's sales with those of its competitors. Companies can express their market share in a number of ways, by comparing their own sales to total market sales, sales within the market segment, or sales of the segment's top competitors. Third, marketing expense-to-sales analysis gauges how much a company spends to achieve its sales goals. The ratio of marketing expenses to sales is expected to fluctuate, and companies usually establish an acceptable range for this ratio. In contrast, financial analysis estimates such expenses (along with others) from a corporate perspective. This includes a comparison of profits to sales (profit margin), sales to assets (asset turnover), profits to assets (return on assets), assets to worth (financial leverage), and, finally, profits to worth (return on net worth). Finally, companies measure customer satisfaction as a means of tracking goal achievement. Analyses of this kind are generally less quantitative than those described above and may include complaint and suggestion systems, customer satisfaction surveys, and careful analysis of reasons why customers switch to a competitor's product.

Profitability control
      Profitability control and efficiency control allow a company to closely monitor its sales, profits, and expenditures. Profitability control demonstrates the relative profit-earning capacity of a company's different products and consumer groups. Companies are frequently surprised to find that a small percentage of their products and customers contribute to a large percentage of their profits. This knowledge helps a company allocate its resources and effort.

Efficiency control
      Efficiency control involves micro-level analysis of the various elements of the marketing mix, including sales force, advertising, sales promotion, and distribution. For example, to understand its sales-force efficiency, a company may keep track of how many sales calls a representative makes each day, how long each call lasts, and how much each call costs and generates in revenue. This type of analysis highlights areas in which companies can manage their marketing efforts in a more productive and cost-effective manner.

Strategic control
      Strategic control processes allow managers to evaluate a company's marketing program from a critical long-term perspective. This involves a detailed and objective analysis of a company's organization and its ability to maximize its strengths and market opportunities. Companies can use two types of strategic control tools. The first, which a company uses to evaluate itself, is called a marketing-effectiveness rating review. In order to rate its own marketing effectiveness, a company examines its customer philosophy, the adequacy of its marketing information, and the efficiency of its marketing operations. It will also closely evaluate the strength of its marketing strategy and the integration of its marketing tactics.

Marketing audit
      The second evaluation tool is known as a marketing audit. This is a comprehensive, systematic, independent, and periodic analysis that a company uses to examine its strengths in relation to its current and potential market(s). Such an analysis is comprehensive because it covers all aspects of the marketing climate (unlike a functional audit, which analyzes one marketing activity), looking at both macro-environment factors (demographic, economic, ecological, technological, political, and cultural) and micro- or task-environment factors (markets, customers, competitors, distributors, dealers, suppliers, facilitators, and publics). The audit includes analyses of the company's marketing strategy, marketing organization, marketing systems, and marketing productivity. It must be systematic in order to provide concrete conclusions based on these analyses. To ensure objectivity, a marketing audit is best done by a person, department, or organization that is independent of the company or marketing program. Marketing audits should be done not only when the value of a company's current marketing plan is in question; they must be done periodically in order to isolate and solve problems before they arise.

Kent A. Grayson Jonathan D. Hibbard Philip Kotler

The marketing actors
      The elements that play a role in the marketing process can be divided into three groups: customers, distributors, and facilitators. In addition to interacting with one another, these groups must interact within a business environment that is affected by a variety of forces, including governmental, economic, and social influences.

Customers
      In order to understand target customers, certain questions must be answered: Who constitutes the market segment? What do they buy and why? And how, when, and where do they buy? Knowing who constitutes the market segment is not simply a matter of knowing who uses a product. Often, individuals other than the user may participate in or influence a purchasing decision. Several individuals may play various roles in the decision-making process. For instance, in the decision to purchase an automobile for a small family business, the son may be the initiator, the daughter may be an influencer, the wife may be the decider, the purchasing manager may be the buyer, and the husband may be the user. In other words, the son may read in a magazine that businesses can save money and decrease tax liability by owning or leasing company transportation. He may therefore initiate the product search process by raising this issue at a weekly business meeting. However, the son may not be the best-qualified to gather and process information about automobiles, because the daughter worked for several years in the auto industry before joining the family business. Although the daughter's expertise and research efforts may influence the process, she may not be the key decision maker. The mother, by virtue of her position in the business and in the family, may make the final decision about which car to purchase. However, the family uncle may have good negotiation skills, and he may be the purchasing agent. Thus, he will go to different car dealerships in order to buy the chosen car at the best possible price. Finally, despite the involvement of all these individuals in the purchase process, none of them may actually drive the car. It may be purchased so that the father may use it for his frequent sales calls. In other instances, an individual may handle more than one of these purchasing functions and may even be responsible for all of them. The key is that a marketer must recognize that different people have different influences on the purchase decision, and these factors must be taken into account in crafting a marketing strategy.

¬†¬†¬†¬†¬†¬†In addition to knowing to whom the marketing efforts are targeted, it is important to know which products target customers tend to purchase and why they do so. Customers do not purchase ‚Äúthings‚ÄĚ as much as they purchase services or benefits to satisfy needs. For instance, a conventional oven allows users to cook and heat food. Microwave oven manufacturers recognized that this need could be fulfilled‚ÄĒand done so more quickly‚ÄĒwith a technology other than conventional heating. By focusing on needs rather than on products, these companies were able to gain a significant share in the food cooking and heating market.

      Knowledge of when, where, and how purchases are made is also useful. A furniture store whose target customers tend to make major purchases in the spring may send its mailings at the beginning of this season. A food vendor may set up a stand near the door of a busy office complex so that employees must pass the stand on their way to lunch. And a jeweler who knows that customers prefer to pay with credit cards may ensure that all major credit cards are accepted at the store. In other cases, marketers who understand specifics about buying habits and preferences also may try to alter them. Thus, a remotely situated wholesale store may use deeply discounted prices to lure customers away from the more conveniently located shopping malls.

      Customers can be divided into two categories: consumer customers, who purchase goods and services for use by themselves and by those with whom they live; and business customers, who purchase goods and services for use by the organization for which they work. Although there are a number of similarities between the purchasing approaches of each type of customer, there are important differences as well.

Consumer customers

Factors influencing consumers
      Four major types of factors influence consumer buying behaviour: cultural, social, personal, and psychological.

Cultural factors
      Cultural factors have the broadest influence, because they constitute a stable set of values, perceptions, preferences, and behaviours that have been learned by the consumer throughout life. For example, in Western cultures consumption is often driven by a consumer's need to express individuality, while in Eastern cultures consumers are more interested in conforming to group norms. In addition to the influence of a dominant culture, consumers may also be influenced by several subcultures. In Quebec the dominant culture is French-speaking, but one influential subculture is English-speaking. Social class is also a subcultural factor: members of any given social class tend to share similar values, interests, and behaviours.

Social factors
¬†¬†¬†¬†¬†¬†A consumer may interact with several individuals on a daily basis, and the influence of these people constitutes the social factors that impact the buying process. Social factors include reference groups‚ÄĒthat is, the formal or informal social groups against which consumers compare themselves. Consumers may be influenced not only by their own membership groups but also by reference groups of which they wish to be a part. Thus, a consumer who wishes to be considered a successful white-collar professional may buy a particular kind of clothing because the people in this reference group tend to wear that style. Typically, the most influential reference group is the family. In this case, family includes the people who raised the consumer (the ‚Äúfamily of orientation‚ÄĚ) as well as the consumer's spouse and children (the ‚Äúfamily of procreation‚ÄĚ). Within each group, a consumer will be expected to play a specific role or set of roles dictated by the norms of the group. Roles in each group generally are tied closely to status.

Personal factors
      Personal factors include individual characteristics that, when taken in aggregate, distinguish the individual from others of the same social group and culture. These include age, life-cycle stage, occupation, economic circumstances, and lifestyle. A consumer's personality and self-conception will also influence his or her buying behaviour.

Psychological factors (psychology)
¬†¬†¬†¬†¬†¬†Finally, psychological factors are the ways in which human thinking and thought patterns influence buying decisions. Consumers are influenced, for example, by their motivation to fulfill a need. In addition, the ways in which an individual acquires and retains information will affect the buying process significantly. Consumers also make their decisions based on past experiences‚ÄĒboth positive and negative.

Consumer (consumption) buying tasks
      A consumer's buying task is affected significantly by the level of purchase involvement. The level of involvement describes how important the decision is to the consumer; high involvement is usually associated with purchases that are expensive, infrequent, or risky. Buying also is affected by the degree of difference between brands in the product category. The buying task can be grouped into four categories based on whether involvement is high or low and whether brand differences are great or small.

High-involvement purchases
      Complex buying behaviour occurs when the consumer is highly involved with the purchase and when there are significant differences between brands (trademark). This behaviour can be associated with the purchase of a new home or of an advanced computer. Such tasks are complex because the risk is high (significant financial commitment), and the large differences among brands or products require gathering a substantial amount of information prior to purchase. Marketers who wish to influence this buying task must help the consumer process the information as readily as possible. This may include informing the consumer about the product category and its important attributes, providing detailed information about product benefits, and motivating sales personnel to influence final brand choice. For instance, realtors may offer consumers a book or a video featuring photographs and descriptions of each available home. And a computer salesperson is likely to spend time in the retail store providing information to customers who have questions.

      Dissonance-reducing buying behaviour occurs when the consumer is highly involved but sees little difference between brands. This is likely to be the case with the purchase of a lawn mower or a diamond ring. After making a purchase under such circumstances, a consumer is likely to experience the dissonance that comes from noticing that other brands would have been just as good, if not slightly better, in some dimensions. A consumer in such a buying situation will seek information or ideas that justify the original purchase.

Low-involvement purchases
      There are two types of low-involvement purchases. Habitual buying behaviour occurs when involvement is low and differences between brands are small. Consumers in this case usually do not form a strong attitude toward a brand but select it because it is familiar. In these markets, promotions tend to be simple and repetitive so that the consumer can, without much effort, learn the association between a brand and a product class. Marketers may also try to make their product more involving. For instance, toothpaste was at one time purchased primarily out of habit, but Proctor and Gamble Co. introduced a brand, Crest toothpaste, that increased consumer involvement by raising awareness about the importance of good dental hygiene.

Brand differences
      Variety-seeking buying behaviour occurs when the consumer is not involved with the purchase, yet there are significant brand differences. In this case, the cost of switching products is low, and so the consumer may, perhaps simply out of boredom, move from one brand to another. Such is often the case with frozen desserts, breakfast cereals, and soft drinks. Dominant firms in such a market situation will attempt to encourage habitual buying and will try to keep other brands from being considered by the consumer. These strategies reduce customer switching behaviour. Challenger firms, on the other hand, want consumers to switch from the market leader, so they will offer promotions, free samples, and advertising that encourage consumers to try something new.

The consumer buying process
      The purchase process is initiated when a consumer becomes aware of a need. This awareness may come from an internal source such as hunger or an external source such as marketing communications. Awareness of such a need motivates the consumer to search for information about options with which to fulfill the need. This information can come from personal sources, commercial sources, public or government sources, or the consumer's own experience. Once alternatives have been identified through these sources, consumers evaluate the options, paying particular attention to those attributes the consumer considers most important. Evaluation culminates with a purchase decision, but the buying process does not end here. In fact, marketers point out that a purchase represents the beginning, not the end, of a consumer's relationship with a company. After a purchase has been made, a satisfied consumer is more likely to purchase another company product and to say positive things about the company or its product to other potential purchasers. The opposite is true for dissatisfied consumers. Because of this fact, many companies continue to communicate with their customers after a purchase in an effort to influence post-purchase satisfaction and behaviour.

      For example, a plumber may be motivated to consider buying a new set of tools because his old set of tools is getting rusty. To gather information about what kind of new tool set to buy, this plumber may examine the tools of a colleague who just bought a new set, read advertisements in plumbing trade magazines, and visit different stores to examine the sets available. The plumber then processes all the information collected, focusing perhaps on durability as one of the most important attributes. In making a particular purchase, the plumber initiates a relationship with a particular tool company. This company may try to enhance post-purchase loyalty and satisfaction by sending the plumber promotions about new tools.

Business customers
      Business customers, also known as industrial customers, purchase products or services to use in the production of other products. Such industries include agriculture, manufacturing, construction, transportation, and communication, among others. They differ from consumer markets in several respects. Because the customers are organizations, the market tends to have fewer and larger buyers than consumer markets. This often results in closer buyer-seller relationships, because those who operate in a market must depend more significantly on one another for supply and revenue. Business customers also are more concentrated; for instance, in the United States more than half of the country's business buyers are concentrated in only seven states. Demand for business goods is derived demand, which means it is driven by a demand for consumer goods. Therefore, demand for business goods is more volatile, because variations in consumer demand can have a significant impact on business-goods demand. Business markets are also distinctive in that buyers are professional purchasers who are highly skilled in negotiating contracts and maximizing efficiency. In addition, several individuals within the business usually have direct or indirect influence on the purchasing process.

Factors influencing business customers
¬†¬†¬†¬†¬†¬†Although business customers are affected by the same cultural, social, personal, and psychological factors that influence consumer customers, the business arena imposes other factors that can be even more influential. First, there is the economic environment, which is characterized by such factors as primary demand, economic forecast, political and regulatory developments, and the type of competition in the market. In a highly competitive market such as airline travel, firms may be concerned about price and therefore make purchases with a focus on saving money. In markets where there is more differentiation among competitors‚ÄĒe.g., in the hotel industry‚ÄĒmany firms may make purchases with a focus on quality rather than on price.

¬†¬†¬†¬†¬†¬†Second, there are organizational factors, which include the objectives, policies, procedures, structures, and systems that characterize any particular company. Some companies are structured in such a way that purchases must pass through a complex system of checks and balances, while other companies allow purchasing managers to make more individual decisions. Interpersonal factors are more salient among business customers, because the participants in the buying process‚ÄĒperhaps representing several departments within a company‚ÄĒoften have different interests, authority, and persuasiveness. Furthermore, the factors that affect an individual in the business buying process are related to the participant's role in the organization. These factors include job position, risk attitudes, and income.

The business buying process
      The business buying process mirrors the consumer buying process, with a few notable exceptions. Business buying is not generally need-driven and is instead problem-driven. A business buying process is usually initiated when someone in the company sees a problem that needs to be solved or recognizes a way in which the company can increase profitability or efficiency. The ensuing process follows the same pattern as that of consumers, including information search, evaluation of alternatives, purchase decision, and post-purchase evaluation. However, in part because business purchase decisions require accountability and are often closely analyzed according to cost and efficiency, the process is more systematic than consumer buying and often involves significant documentation. Typically, a purchasing agent for a business buyer will generate documentation regarding product specifications, preferred supplier lists, requests for bids from suppliers, and performance reviews.

Kent A. Grayson Jonathan D. Hibbard Philip Kotler

Marketing intermediaries:the distribution channel
¬†¬†¬†¬†¬†¬†Many producers do not sell products or services directly to consumers and instead use marketing intermediaries to execute an assortment of necessary functions to get the product to the final user. These intermediaries, such as middlemen (wholesalers, retailers, agents, and brokers), distributors, or financial intermediaries, typically enter into longer-term commitments with the producer and make up what is known as the marketing channel, or the channel of distribution. Manufacturers use raw materials to produce finished products, which in turn may be sent directly to the retailer, or, less often, to the consumer. However, as a general rule, finished goods flow from the manufacturer to one or more wholesalers before they reach the retailer and, finally, the consumer. Each party in the distribution channel usually acquires legal possession of goods during their physical transfer, but this is not always the case. For instance, in consignment selling, the producer retains full legal ownership even though the goods may be in the hands of the wholesaler or retailer‚ÄĒthat is, until the merchandise reaches the final user or consumer.

¬†¬†¬†¬†¬†¬†Channels of distribution tend to be more direct‚ÄĒthat is, shorter and simpler‚ÄĒin the less industrialized nations. There are notable exceptions, however. For instance, the Ghana Cocoa Marketing Board collects cacao beans in Ghana and licenses trading firms to process the commodity. Similar marketing processes are used in other West African nations. Because of the vast number of small-scale producers, these agents operate through middlemen who, in turn, enlist sub-buyers to find runners to transport the products from remote areas. Japan's marketing organization was, until the late 20th century, characterized by long and complex channels of distribution and a variety of wholesalers. It was possible for a product to pass through a minimum of five separate wholesalers before it reached a retailer.

      Companies have a wide range of distribution channels available to them, and structuring the right channel may be one of the company's most critical marketing decisions. Businesses may sell products directly to the final customer, as Land's End, Inc., does with its mail-order goods and as is the case with most industrial capital goods. Or they may use one or more intermediaries to move their goods to the final user. The design and structure of consumer marketing channels and industrial marketing channels can be quite similar or vary widely.

¬†¬†¬†¬†¬†¬†The channel design is based on the level of service desired by the target consumer. There are five primary service components that facilitate the marketer's understanding of what, where, why, when, and how target customers buy certain products. The service variables are quantity or lot size (the number of units a customer purchases on any given purchase occasion), waiting time (the amount of time customers are willing to wait for receipt of goods), proximity or spatial convenience (accessibility of the product), product variety (the breadth of assortment of the product offering), and service backup (add-on services such as delivery or installation provided by the channel). It is essential for the designer of the marketing channel‚ÄĒtypically the manufacturer‚ÄĒto recognize the level of each service point that the target customer desires. A single manufacturer may service several target customer groups through separate channels, and therefore each set of service outputs for these groups could vary. One group of target customers may want elevated levels of service (that is, fast delivery, high product availability, large product assortment, and installation). Their demand for such increased service translates into higher costs for the channel and higher prices for customers. However, the prosperity of discount and warehouse stores demonstrates that customers are willing to accept lower service outputs if this leads to lower prices.

Channel functions and flows
      In order to deliver the optimal level of service outputs to their target consumers, manufacturers are willing to allocate some of their tasks, or marketing flows, to intermediaries. As any marketing channel moves goods from producers to consumers, the marketing intermediaries perform, or participate in, a number of marketing (market research) flows, or activities. The typical marketing flows, listed in the usual sequence in which they arise, are collection and distribution of marketing research information (information), development and dissemination of persuasive communications (promotion), agreement on terms for transfer of ownership or possession (negotiation), intentions to buy (ordering), acquisition and allocation of funds (financing (finance)), assumption of risks (risk taking), storage and movement of product (physical possession), buyers paying sellers (payment), and transfer of ownership (title).

      Each of these flows must be performed by a marketing intermediary for any channel to deliver the goods to the final consumer. Thus, each producer must decide who will perform which of these functions in order to deliver the service output levels that the target consumers desire. Producers delegate these flows for a variety of reasons. First, they may lack the financial resources to carry out the intermediary activities themselves. Second, many producers can earn a superior return on their capital by investing profits back into their core business rather than into the distribution of their products. Finally, intermediaries, or middlemen, offer superior efficiency in making goods and services widely available and accessible to final users. For instance, in overseas markets it may be difficult for an exporter to establish contact with end users, and various kinds of agents must therefore be employed. Because an intermediary typically focuses on only a small handful of specialized tasks within the marketing channel, each intermediary, through specialization, experience, or scale of operation, can offer a producer greater distribution benefits.

Management of channel systems
¬†¬†¬†¬†¬†¬†Although middlemen can offer greater distribution economy to producers, gaining cooperation from these middlemen can be problematic. Middlemen must continuously be motivated and stimulated to perform at the highest level. In order to gain such a high level of performance, manufacturers need some sort of leverage. Researchers have distinguished five bases of power: coercive (threats if the middlemen do not comply), reward (extra benefits for compliance), legitimate (power by position‚ÄĒrank or contract), expert (special knowledge), and referent (manufacturer is highly respected by the middlemen).

      As new institutions emerge or products enter different life-cycle phases, distribution channels change and evolve. With these types of changes, no matter how well the channel is designed and managed, conflict is inevitable. Often this conflict develops because the interests of the independent businesses do not coincide. For example, franchisers, because they receive a percentage of sales, typically want their franchisees to maximize sales, while the franchisees want to maximize their profits, not sales. The conflict that arises may be vertical, horizontal, or multichannel in nature. When General Motors Corporation comes into conflict with its dealers, this is a vertical channel conflict. Horizontal channel conflict arises when a franchisee in a neighbouring town feels a fellow franchisee has infringed on its territory. Finally, multichannel conflict occurs when a manufacturer has established two or more channels that compete against each other in selling to the same market. For example, a major tire manufacturer may begin selling its tires through mass merchandisers, much to the dismay of its independent tire dealers.

Wholesalers (wholesaling)
      Wholesaling includes all activities required to sell goods or services to other firms, either for resale or for business use, usually in bulk quantities and at lower-than-retail prices. Wholesalers, also called distributors, are independent merchants operating any number of wholesale establishments. Wholesalers are typically classified into one of three groups: merchant wholesalers, brokers and agents, and manufacturers' and retailers' branches and offices.

Merchant wholesalers
      Merchant wholesalers, also known as jobbers, distributors, or supply houses, are independently owned and operated organizations that acquire title ownership of the goods that they handle. There are two types of merchant wholesalers: full-service and limited-service.

Full-service wholesalers
      Full-service wholesalers usually handle larger sales volumes; they may perform a broad range of services for their customers, such as stocking inventories, operating warehouses, supplying credit, employing salespeople to assist customers, and delivering goods to customers. General-line wholesalers carry a wide variety of merchandise, such as groceries; specialty wholesalers, on the other hand, deal with a narrow line of goods, such as coffee and tea, cigarettes, or seafood.

Limited-service wholesalers
¬†¬†¬†¬†¬†¬†Limited-service wholesalers, who offer fewer services to their customers and suppliers, emerged in order to reduce the costs of service. There are several types of limited-service wholesalers. Cash-and-carry wholesalers usually handle a limited line of fast-moving merchandise, selling to smaller retailers on a cash-only basis and not delivering goods. Truck wholesalers or jobbers sell and deliver directly from their vehicles, often for cash. They carry a limited line of semiperishables such as milk, bread, and snack foods. Drop shippers do not carry inventory or handle the merchandise. Operating primarily in bulk industries such as lumber, coal, and heavy equipment, they take orders but have manufacturers ship merchandise directly to final consumers. Rack jobbers, who handle nonfood lines such as housewares or personal goods, primarily serve drug and grocery retailers. Rack jobbers typically perform such functions as delivery, shelving, inventory stacking, and financing. Producers' cooperatives‚ÄĒowned by their members, who are farmers‚ÄĒassemble farm produce to be sold in local markets and share profits at the end of the year.

      In less-developed countries, wholesalers are often the sole or primary means of trade; they are the main elements in the distribution systems of many countries in Latin America, East Asia, and Africa. In such countries the business activities of wholesalers may expand to include manufacturing and retailing, or they may branch out into nondistributive ventures such as real estate, finance, or transportation. Until the late 1950s, Japan was dominated by wholesaling. Even relatively large manufacturers and retailers relied principally on wholesalers as their intermediaries. However, in the late 20th century, Japanese wholesalers have declined in importance. Even in the most highly industrialized nations, however, wholesalers remain essential to the operations of significant numbers of small retailers.

Brokers and agents
¬†¬†¬†¬†¬†¬†Manufacturers may use brokers and agents, who do not take title possession of the goods, in marketing their products. Brokers and agents typically perform only a few of the marketing flows, and their main function is to ease buying and selling‚ÄĒthat is, to bring buyers and sellers together and negotiate between them. Brokers, most commonly found in the food, real estate, and insurance industries, may represent either a buyer or a seller and are paid by the party who hires them. Brokers often can represent several manufacturers of noncompeting products on a commission basis. They do not carry inventory or assume risk.

      Unlike merchant wholesalers, agent middlemen do not take legal ownership of the goods they sell; nor do they generally take physical possession of them. The three principal types of agent middlemen are manufacturers' agents, selling agents, and purchasing agents. Manufacturers' agents, who represent two or more manufacturers' complementary lines on a continuous basis, are usually compensated by commission. As a rule, they carry only part of a manufacturer's output, perhaps in areas where the manufacturer cannot maintain full-time salespeople. Many manufacturers' agents are businesses of only a few employees and are most commonly found in the furniture, electric, and apparel industries. Sales agents are given contractual authority to sell all of a manufacturer's output and generally have considerable autonomy to set prices, terms, and conditions of sale. Sometimes they perform the duties of a manufacturer's marketing department, although they work on a commission basis. Sales agents often provide market feedback and product information to the manufacturers and play an important role in product development. They are found in such product areas as chemicals, metals, and industrial machinery and equipment. Purchasing agents, who routinely have long-term relationships with buyers, typically receive, inspect, store, and ship goods to their buyers.

Manufacturers' and retailers' branches and offices
      Wholesaling operations conducted by the sellers or buyers themselves rather than by independent wholesalers comprise the third major type of wholesaling. Manufacturers may engage in wholesaling through their sales branches and offices. This allows manufacturers to improve the inventory control, selling, and promotion flows. Numerous retailers also establish purchasing offices in major market centres such as Chicago and New York City that play a role similar to that of brokers and agents. The major difference is that they are part of the buyer's own organization.

Retailers
¬†¬†¬†¬†¬†¬† retailing, the merchandising aspect of marketing, includes all activities required to sell directly to consumers for their personal, nonbusiness use. The firm that performs this consumer selling‚ÄĒwhether it is a manufacturer, wholesaler, or retailer‚ÄĒis engaged in retailing. Retailing can take many forms: goods or services may be sold in person, by mail, telephone, television, or computer, or even through vending machines. These products can be sold on the street, in a store, or in the consumer's home. However, businesses that are classified as retailers secure the vast majority of their sales volume from store-based retailing.

The history of retailing
      For centuries most merchandise was sold in marketplaces or by peddlers. In many countries, hawkers still sell their wares while traveling from one village to the next. Marketplaces are still the primary form of retail selling in these villages. This was also true in Europe until the Renaissance, when market stalls in certain localities became permanent and eventually grew into stores and business districts.

      Retail chains are known to have existed in China several centuries before the Christian era and in some European cities in the 16th and 17th centuries. However, the birth of the modern chain store can be traced to 1859, with the inauguration of what is now the Great Atlantic & Pacific Tea Company, Inc (Great Atlantic & Pacific Tea Company, Inc.). (A&P), in New York City. During the 15th and 16th centuries the Fugger family of Germany was the first to carry out mercantile operations of a chain-store variety. In 1670 the Hudson's Bay Company chartered its chain of outposts in Canada.

      Department stores also were seen in Europe and Asia as early as the 17th century. The famous Bon Marché in Paris grew from a large specialty store into a full-fledged department store in the mid-1800s. By the middle of the 20th century, department stores existed in major U.S. cities, although small independent merchants still constitute the majority of retailers.

 Shopping malls (shopping centre), a late 20th-century development in retail practices, were created to provide for a consumer's every need in a single, self-contained shopping area. Although they were first created for the convenience of suburban populations, they can now also be found on main city thoroughfares. A large branch of a well-known retail chain usually serves as a mall's retail flagship, which is the primary attraction for customers. In fact, few malls can be financed and built without a flagship establishment already in place.

 Other mall proprietors have used recreation and entertainment to attract customers. Movie theatres, holiday displays, and live musical performances are often found in shopping malls. In Asian countries, malls also have been known to house swimming pools, arcades, and amusement parks. Hong Kong's City Plaza shopping mall includes one of the territory's two ice rinks. Some malls, such as the Mall of America in Bloomington, Minn., U.S., may offer exhibitions, sideshows, and other diversions.

      Although there is a great variety of retail enterprises, with new types constantly emerging, they can be classified into three main types: store retailers, nonstore retailers, and retail organizations.

Store retailers
      Several different types of stores participate in retail merchandising. The following is a brief description of the most important store retailers.

Specialty stores
      A specialty store carries a deep assortment within a narrow line of goods. Furniture stores, florists, sporting-goods stores, and bookstores are all specialty stores. Stores such as Athlete's Foot (sports shoes only) and Tall Men (clothing for tall men) are considered superspecialty stores because they carry a very narrow product line.

Department stores (department store)
      Department stores carry a wider variety of merchandise than most stores but offer these items in separate departments within the store. These departments usually include home furnishings and household goods, as well as clothing, which may be divided into departments according to gender and age. Department stores in western Europe and Asia also have large food departments, such as the renowned food court at Harrods in the United Kingdom. Departments within each store are usually operated as separate entities, each with its own buyers, promotions, and service personnel. Some departments, such as restaurants and beauty parlours, are leased to external providers.

      Department stores generally account for less than 10 percent of a country's total retail sales, but they draw large numbers of customers in urban areas. The most influential of the department stores may even be trendsetters in various fields, such as fashion. Department stores such as Sears, Roebuck and Company have also spawned chain organizations. Others may do this through mergers or by opening branch units within a region or by expanding to other countries.

      Supermarkets are characterized by large facilities (15,000 to 25,000 square feet [1,394 to 2,323 square metres] with more than 12,000 items), low profit margins (earning about 1 percent operating profit on sales), high volume, and operations that serve the consumer's total needs for items such as food (groceries, meats, produce, dairy products, baked goods) and household sundries. They are organized according to product departments and operate primarily on a self-service basis. Supermarkets also may sell wines and other alcoholic beverages (depending on local licensing laws) and clothing.

      The first true supermarket was opened in the United States by Michael Cullin in 1930. His King Kullen chain of large-volume food stores was so successful that it encouraged the major food-store chains to convert their specialty stores into supermarkets. When compared with the conventional independent grocer, supermarkets generally offered greater variety and convenience and often better prices as well. Consequently, in the two decades after World War II, the supermarket drove many small food retailers out of business, not only in the United States but throughout the world. In France, for example, the number of larger food stores grew from about 50 in 1960 to 4,700 in 1982, while the number of small food retailers fell from 130,000 to 60,000.

Convenience stores
¬†¬†¬†¬†¬†¬†Located primarily near residential areas, convenience stores are relatively small outlets that are open long hours and carry a limited line of high-turnover convenience products at high prices. Although many have added food services, consumers use them mainly for ‚Äúfill-in‚ÄĚ purchases, such as bread, milk, or miscellaneous goods.

Superstores
      Superstores, hypermarkets, and combination stores are unique retail merchandisers. With facilities averaging 35,000 square feet, superstores meet many of the consumer's needs for food and nonfood items by housing a full-service grocery store as well as such services as dry cleaning, laundry, shoe repair, and cafeterias. Combination stores typically combine a grocery store and a drug store in one facility, utilizing approximately 55,000 square feet of selling space. Hypermarkets combine supermarket, discount, and warehousing retailing principles by going beyond routinely purchased goods to include furniture, clothing, appliances, and other items. Ranging in size from 80,000 to 220,000 square feet, hypermarkets display products in bulk quantities that require minimum handling by store personnel.

Discount stores (discount store)
      Selling merchandise below the manufacturer's list price is known as discounting. The discount store has become an increasingly popular means of retailing. Following World War II, a number of retail establishments in the United States began to pursue a high-volume, low-profit strategy designed to attract price-conscious consumers. A key strategy for keeping operating costs (and therefore prices) low was to locate in low-rent shopping districts and to offer minimal service assistance. This no-frills approach was used at first only with hard goods, or consumer durables, such as electrical household appliances, but it has since been shown to be successful with soft goods, such as clothing. This practice has been adopted for a wide variety of products, so that discount stores have essentially become department stores with reduced prices and fewer services. In the late 20th century, discount stores began to operate outlet malls. These groups of discount stores are usually located some distance away from major metropolitan areas and have facilities that make them indistinguishable from standard shopping malls. As they gained popularity, many discount stores improved their facilities and appearances, added new lines and services, and opened suburban branches. Coupled with attempts by traditional department stores to reduce prices in order to compete with discounters, the distinction between many department and discount stores has become blurred. Specialty discount operations have grown significantly in electronics, sporting goods, and books.

Off-price retailers
      Off-price retailers offer a different approach to discount retailing. As discount houses tried to increase services and offerings in order to upgrade, off-price retailers invaded this low-price, high-volume sector. Off-price retailers purchase at below-wholesale prices and charge less than retail prices. This practice is quite different from that of ordinary discounters, who buy at the market wholesale price and simply accept lower margins by pricing their products below retail costs. Off-price retailers carry a constantly changing collection of overruns, irregulars, and leftover goods and have made their biggest forays in the clothing, footwear, and accessories industries. The three primary examples of off-price retailers are factory outlets, independent carriers, and warehouse clubs. Stocking manufacturers' surplus, discontinued, or irregular products, factory outlets are owned and operated by the manufacturer. Independent off-price retailers carry a rapidly changing collection of higher-quality merchandise and are typically owned and operated by entrepreneurs or divisions of larger retail companies. Warehouse (or wholesale) clubs operate out of enormous, low-cost facilities and charge patrons an annual membership fee. They sell a limited selection of brand-name grocery items, appliances, clothing, and miscellaneous items at a deep discount. These warehouse stores, such as Wal-Mart-owned Sam's, Price Club, and Costco (in the United States), maintain low costs because they buy products at huge quantity discounts, use less labour in stocking, and typically do not make home deliveries or accept credit cards.

Nonstore retailers
      Some retailers do not operate stores, and these nonstore businesses have grown much faster than store retailers. With some market observers predicting that by the year 2000 nonstore retailing will handle 30 percent of all general merchandise sold, nonstore channels may become a powerful force in the retailing industry. The major types of nonstore retailing are direct selling, direct marketing, and automatic vending.

Direct selling
      This form of retailing originated several centuries ago and has mushroomed into a $9 billion industry consisting of about 600 companies selling door-to-door, office-to-office, or at private-home sales meetings. The forerunners in the direct-selling industry include The Fuller Brush Company (brushes, brooms, etc.), Electrolux (vacuum cleaners), and Avon (cosmetics). In addition, Tupperware pioneered the home-sales approach, in which friends and neighbours gather in a home where Tupperware products are demonstrated and sold. Network marketing, a direct-selling approach similar to home sales, is also gaining prevalence in markets worldwide. Network marketing companies such as Amway and Shaklee reward their distributors not only for selling products but also for recruiting others to become distributors. In 2007 Amway's parent company tested an Internet recruitment model by launching Fanista, a Web site that sells entertainment media such as books, movies, and music, while rewarding users for bringing other customers to the site.

      Direct marketing is direct contact between a seller (manufacturer or retailer) and a consumer. Generally speaking, a seller can measure response to an offer because of its direct addressability. Although direct marketing gained wide popularity as a marketing strategy only in the late 20th century, it has been successfully utilized for more than one hundred years. Sears, Roebuck and Company and the now-defunct Montgomery Ward & Co. began as direct marketers in the late 1880s, selling their products solely by mail order (mail-order business). A century later, however, both companies were conducting most of their business in retail stores; Montgomery Ward ceased operations in the early 21st century. Many contemporary department stores and specialty stores supplement their store operations with direct-marketing transactions by mail, telephone, or the Internet. Mail-order firms grew rapidly in the 1950s and '60s in continental Europe, Great Britain, and certain other highly industrialized nations. Modern direct marketing is generally supported by advanced database technologies that track each customer's purchase behaviour. These technologies are used by established retail firms, such as Quelle and Neckermann in Germany, and are the foundation of mail-order businesses such as J. Crew, The Sharper Image, and L.L. Bean (all in the United States). Direct marketing is not a worldwide business phenomenon, however, because mail-order operations require infrastructure elements that are still lacking in many countries, such as efficient transportation networks and secure methods for transmitting payments.

      Direct marketing has expanded from its early forms, among them direct mail and catalog mailings, to include such vehicles as telemarketing, direct-response radio and television, and electronic shopping. Unlike many other forms of promotion, a direct-marketing campaign is quantitatively measurable.

Automatic vending (vending machine)
      Automatic vending is a unique area in nonstore merchandising because the variety of merchandise offered through automatic vending machines continues to grow. Initially, impulse goods with high convenience value such as cigarettes, soft drinks, candy, newspapers, and hot beverages were offered. However, a wide array of products such as hosiery, cosmetics, food snacks, postage stamps, paperback books, record albums, camera film, and even fishing worms are becoming available through machines.

      Vending-machine operations are usually offered in sites owned by other businesses, institutions, and transportation agencies. They can be found in offices, gasoline stations, large retail stores, hotels, restaurants, and many other locales. In Japan, vending machines now dispense frozen beef, fresh flowers, whiskey, jewelry, and even names of prospective dating partners. In Sweden, vending machines have developed as a supplementary channel to retail stores, where hours of business are restricted by law. High costs of manufacturing, installation, and operation have somewhat limited the expansion of vending-machine retailing. In addition, consumers typically pay a high premium for vended merchandise.

Retail organizations
      While merchants can sell their wares through a store or nonstore retailing format, retail organizations can also structure themselves in several different ways. The major types of retail organizations are corporate chains, voluntary chains and retailer cooperatives, consumer cooperatives, franchise organizations, and merchandising conglomerates.

Corporate chains (chain store)
      Two or more outlets that have common ownership and control, centralized buying and merchandising operations, and similar lines of merchandise are considered corporate chain stores. Corporate chain stores appear to be strongest in the food, drug, shoe, variety, and women's clothing industries. Managed chain stores have a number of advantages over independently managed stores. Because managed chains buy large volumes of products, suppliers are willing to offer cost advantages that are not usually available to other stores. These savings can be passed on to consumers in the form of lower prices and better sales. In addition, because managed chains operate on such a large scale, they can hire more specialized and experienced personnel, who may be better able to take full advantage of purchasing and promotion opportunities. Chain stores also have the opportunity to take advantage of economies of scale in the areas of advertising, store design, and inventory control. However, a corporate chain may have disadvantages as well. Its size and bureaucracy often weaken staff members' personal interest, drive, creativity, and customer-service motivation.

Voluntary chains and retailer cooperatives
      These are associations of independent retailers, unlike corporate chains. Wholesaler-sponsored voluntary chains of retailers who engage in bulk buying and collective merchandising are prevalent in many countries. True Value hardware stores represent this type of arrangement in the United States. In western Europe in the 1980s there were several large wholesaler-sponsored chains of retailers, each including more than 15,000 stores. These retail stores were located across 18 countries, each store using the same name and, as a rule, offering the same brands of products but remaining an independent enterprise. Wholesaler-sponsored chains offer the same types of services for their clients as do the financially integrated retail chains. Retailer cooperatives, such as ACE hardware stores, are grouped as independent retailers who establish a central buying organization and conduct joint promotion efforts.

Consumer cooperatives (cooperative)
      Consumer cooperatives, or co-ops, are retail outlets that are owned and operated by consumers for their mutual benefit. The first consumer cooperative store was established in Rochdale, Eng., in 1844, and most co-ops are modeled after the same, original principles. They are based on open consumer membership, equal voting among members, limited customer services, and shared profits among members in the form of rebates generally related to the amounts of their purchases. Consumer cooperatives have gained widespread popularity throughout western and northern Europe, particularly in Denmark, Finland, Iceland, Norway, Sweden, and Great Britain. Co-ops typically emerge because community residents believe that local retailers' prices are too high or service is substandard.

Franchise organizations
      Franchise arrangements are characterized by a contractual relationship between a franchiser (a manufacturer, wholesaler, or service organization) and franchisees (independent entrepreneurs who purchase the right to own and operate any number of units in the franchise systems). Typified by a unique product, service, business method, trade name, or patent, franchises have been prominent in many industries, including fast foods, video stores, health and fitness centres, hair salons, auto rentals, motels, and travel agencies. McDonald's Corporation is a prominent example of a franchise retail organization, with franchises all over the world.

Merchandising conglomerates
      Merchandising conglomerates combine several diversified retailing lines and forms under central ownership, as well as integrate distribution and management of functions. Merchandising conglomerates are relatively free-form corporations.

Jonathan D. Hibbard Kent A. Grayson Philip Kotler

Marketing facilitators
      Because marketing functions require significant expertise, it is often both efficient and effective for an organization to use the assistance of independent marketing facilitators. These are organizations and consultants whose sole or primary responsibility is to handle marketing functions. In many larger companies, all or some of these functions are performed internally. However, this is not necessary or justifiable in most companies, which usually require only part-time or periodic assistance from marketing facilitators. Also, most companies cannot afford to support the salaries and operating expenses required to maintain marketing facilitators as a permanent part of their staff. Furthermore, independent marketing contractors can be more effective than an internal department because nonemployee facilitators can have broader expertise and more objective perspectives. In addition, independent contractors often are more motivated to perform at high standards, because competition in the facilitator market is usually aggressive, and poor performance could mean lost business.

      There are four major types of marketing facilitators: advertising agencies, market research firms, transportation firms, and warehousing firms.

Advertising agencies
      Advertising agencies are responsible for initiating, managing, and implementing paid marketing communications. In addition, some agencies have diversified into other types of marketing communications, including public relations, sales promotion, interactive media, and direct marketing. Agencies typically consist of four departments: account management, a creative division, a research group, and a media planning department. Those in account management act as liaisons between the client and the agency, ensuring that client needs are communicated to the agency and that agency recommendations are clearly understood by the client. Account managers also manage the flow of work within the agency, making sure that projects proceed according to schedule. The creative department is where advertisements are conceived, developed, and produced. Artists, writers, and producers work together to craft a message that meets agency and client objectives. In this department, slogans, jingles, and logos are developed. The research department gathers and processes data about the target market and consumers. This information provides a foundation for the work of the creative department and account management. Media planning personnel specialize in selecting and placing advertisements in print and broadcast media.

      Market research firms gather and analyze data about customers, competitors, distributors, and other actors and forces in the marketplace. A large portion of the work performed by most market research firms is commissioned by specific companies for particular purposes. However, some firms also routinely collect a wide spectrum of data and then attempt to sell some or all of it to companies that may benefit from such information. For example, the A.C. Nielsen Co. in the United States specializes in supplying marketing data about consumer television viewing habits, and Information Resources, Inc. (IRI), has an extensive database regarding consumer supermarket purchases.

      Marketing research may be quantitative, qualitative, or a combination of both. Quantitative research is numerically oriented, requires significant attention to the measurement of market phenomena, and often involves statistical analysis. For example, when a restaurant asks its customers to rate different aspects of its service on a scale from 1 (good) to 10 (poor), this provides quantitative information that may be analyzed statistically. Qualitative research focuses on descriptive words and symbols and usually involves observing consumers in a marketing setting or questioning them about their product or service consumption experiences. For example, a marketing researcher may stop a consumer who has purchased a particular type of detergent and ask him why that detergent was chosen. Qualitative and quantitative research each provides different insights into consumer behaviour, and research results are ordinarily more useful when the two methods are combined.

      Market research can be thought of as the application of scientific method to the solution of marketing problems. It involves studying people as buyers, sellers, and consumers, examining their attitudes, preferences, habits, and purchasing power. Market research is also concerned with the channels of distribution, with promotion and pricing, and with the design of the products and services to be marketed.

Transportation firms
      As a product moves from producer to consumer, it must often travel long distances. Many products consumed in the United States have been manufactured in another area of the world, such as Asia or Mexico. In addition, if the channel of distribution includes several firms, the product must be moved a number of times before it becomes accessible to consumers. A basic home appliance begins as a raw material (iron ore at a steel mill, for example) that is transported from a processing plant to a manufacturing facility.

      Transportation firms assist marketers in moving products from one point in a channel to the next. An important matter of negotiation between companies working together in a channel is whether the sender or receiver of goods is responsible for transportation. Movement of products usually involves significant cost, risk, and time management. Thus, when firms consider a transportation option, they carefully weigh its dependability and price, frequency of operation, and accessibility. A firm that has its own transportation capabilities is known as a private carrier. There are also contract carriers, which are independent transportation firms that can be hired by companies on a long- or short-term basis. A common carrier provides services to any and all companies between predetermined points on a scheduled basis. The U.S. Postal Service is a common carrier, as are Federal Express and the Amtrak railway system.

Warehousing firms
      Because products are not usually sold or shipped as soon as they are produced or delivered, firms require storage facilities. Two types of warehouses meet this need: storage warehouses hold goods for longer periods of time, and distribution warehouses serve as way stations for goods as they pass from one location to the next. Like the other marketing functions, warehouses can be wholly owned by firms, or space can be rented as needed. Although companies have more control over wholly owned facilities, warehouses of this sort can tie up capital and firm resources. Operations within warehouses usually require inspecting goods, tracking inventories, repackaging goods, shipping, and invoicing.

Kent A. Grayson Philip Kotler Jonathan D. Hibbard

Marketing in different sectors
      Although the basic principles of marketing apply to all industries, the ways in which these principles are best applied can differ considerably based on the kind of product or service sold, the kind of buying behaviour associated with the purchase, and the sector ( government, consumer goods, services, etc.).

The government market
      This market consists of federal, state, and local governmental units that purchase or rent goods to fulfill their functions and responsibilities for the public. Government agencies purchase a wide range of products and services, including helicopters, paintings, office furniture, clothing, alcohol, and fuel. Most of the agencies manage a significant portion of their own purchasing.

The civilian establishment
      One prominent sector of the government market is the federal civilian buying establishment. In the United States this establishment consists of six categories: departments (e.g., the Department of Commerce), administration (e.g., the General Services Administration), agencies (e.g., the Federal Aviation Administration), boards (e.g., the Railroad Retirement Board), commissions (e.g., the Federal Communications Commission), and the executive office (e.g., the Office of Management and Budget). In addition there are several miscellaneous civilian buying establishments, such as, for example, the Tennessee Valley Authority.

The military establishment
      Another governmental purchasing sector is the federal military (military-industrial complex) buying establishment, represented in the United States by the Department of Defense, which purchases primarily through the Defense Supply Agency and the army, navy, and air force. The Defense Supply Agency operates six supply centres, which specialize in construction, electronics, fuel, personnel support, and industrial and general supplies.

Purchasing procedures
      Government purchasing procedures fall into two categories: the open bid and the negotiated contract. Under open-bid buying, the government disseminates very specific information about the products and services required and requests bids from suppliers. Contracts generally are awarded to the lowest bidder. In negotiated-contract buying, a government agency negotiates directly with one or more companies regarding a specific project or supply need. In most cases, contracts are negotiated for complex projects that involve major research-and-development costs and in matters where there is little effective competition.

Consumer-goods marketing
      Consumer goods (consumer good) can be classified according to consumer shopping habits.

Convenience goods
      Convenience goods are those that the customer purchases frequently, immediately, and with minimum effort. Tobacco products, soaps, and newspapers are all considered convenience goods, as are common staples like ketchup or pasta. Convenience-goods purchasing is usually based on habitual behaviour, where the consumer will routinely purchase a particular product. Some convenience goods, however, may be purchased impulsively, involving no habit, planning, or search effort. These goods, usually displayed near the cash register in a store in order to encourage quick choice and purchase, include candy, razors, and batteries. A slightly different type of convenience product is the emergency good, which is purchased when there is an urgent need. Such goods include umbrellas and snow shovels, and these are usually distributed at a wide variety of outlets so that they will be readily available when necessary.

Shopping goods
      A second type of product is the shopping good, which usually requires a more involved selection process than convenience goods. A consumer usually compares a variety of attributes, including suitability, quality, price, and style. Homogeneous shopping goods are those that are similar in quality but different enough in other attributes (such as price, brand image, or style) to justify a search process. These products might include automobile tires or a stereo or television system. Homogeneous shopping goods are often sold strongly on price.

      With heterogeneous shopping goods, product features become more important to the consumer than price. Such is often the case with the purchase of major appliances, clothing, furniture, and high-tech equipment. In this situation, the item purchased must be a certain size or colour and must perform very specific functions that cannot be fulfilled by all items offered by every supplier. With goods of this sort, the seller has to carry a wide assortment to satisfy individual tastes and must have well-trained salespeople to provide both information and advice to consumers.

Specialty goods
      Specialty goods have particularly unique characteristics and brand identifications for which a significant group of buyers is willing to make a special purchasing effort. Examples include specific brands of fancy products, luxury cars, professional photographic equipment, and high- fashion clothing. For instance, consumers who favour merchandise produced by a certain shoe manufacturer or furniture maker will, if necessary, travel considerable distances in order to purchase that particular brand. In specialty-goods markets, sellers do not encourage comparisons between options; buyers invest time to reach dealers carrying the product desired, and these dealers therefore do not necessarily need to be conveniently located.

Unsought goods
¬†¬†¬†¬†¬†¬†Finally, an unsought good is one that a consumer does not know about‚ÄĒor knows about but does not normally think of buying. New products, such as new frozen-food concepts or new communications equipment, are unsought until consumers learn about them through word-of-mouth influence or advertising. In addition, the need for unsought goods may not seem urgent to the consumer, and purchase is often deferred. This is frequently the case with life insurance, preventive car maintenance, and cemetery plots. Because of this, unsought goods require significant marketing efforts, and some of the more sophisticated selling techniques have been developed from the challenge to sell unsought goods.

Services (service industry) marketing
      A service is an act of labour or a performance that does not produce a tangible commodity and does not result in the customer's ownership of anything. Its production may or may not be tied to a physical product. Thus, there are pure services that involve no tangible product (as with psychotherapy), tangible goods with accompanying services (such as a computer software package with free software support), and hybrid product-services that consist of parts of each (for instance, restaurants are usually patronized for both their food and their service).

¬†¬†¬†¬†¬†¬†Services can be distinguished from products because they are intangible, inseparable from the production process, variable, and perishable. Services are intangible because they can often not be seen, tasted, felt, heard, or smelled before they are purchased. A person purchasing plastic surgery cannot see the results before the purchase, and a lawyer's client cannot anticipate the outcome of a case before the lawyer's work is presented in court. To reduce the uncertainty that results from this intangibility, marketers may strive to make their service tangible by emphasizing the place, people, equipment, communications, symbols, or price of the service. For example, consider the insurance slogans ‚ÄúYou're in good hands with Allstate‚ÄĚ or Prudential's ‚ÄúGet a piece of the Rock.‚ÄĚ

      Services are inseparable from their production because they are typically produced and consumed simultaneously. This is not true of physical products, which are often consumed long after the product has been manufactured, inventoried, distributed, and placed in a retail store. Inseparability is especially evident in entertainment services or professional services. In many cases, inseparability limits the production of services because they are so directly tied to the individuals who perform them. This problem can be alleviated if a service provider learns to work faster or if the service expertise can be standardized and performed by a number of individuals (as H&R Block, Inc., has done with its network of trained tax consultants throughout the United States).

¬†¬†¬†¬†¬†¬†The variability of services comes from their significant human component. Not only do humans differ from one another, but their performance at any given time may differ from their performance at another time. The mechanics at a particular auto service garage, for example, may differ in terms of their knowledge and expertise, and each mechanic will have ‚Äúgood‚ÄĚ days and ‚Äúbad‚ÄĚ days. Variability can be reduced by quality-control measures. These measures can include good selection and training of personnel and allowing customers to communicate dissatisfaction (e.g., through customer suggestion and complaint systems) so that poor service can be detected and corrected.

¬†¬†¬†¬†¬†¬†Finally, services are perishable because they cannot be stored. Because of this, it is difficult for service providers to manage anything other than steady demand (supply and demand). When demand increases dramatically, service organizations face the problem of producing enough output to meet customer needs. When a large tour bus unexpectedly arrives at a restaurant, its staff must rush to meet the demand, because the food services (taking orders, making food, taking money, etc.) cannot be ‚Äúwarehoused‚ÄĚ for such an occasion. To manage such instances, companies may hire part-time employees, develop efficiency routines for peak demand occasions, or ask consumers to participate in the service-delivery process. On the other hand, when demand drops off precipitously, service organizations are often burdened with a staff of service providers who are not performing. Organizations can maintain steady demand by offering differential pricing during off-peak times, anticipating off-peak hours by requiring reservations, and giving employees more flexible work shifts.

Kent A. Grayson Jonathan D. Hibbard Philip Kotler

Business marketing
      Business marketing, sometimes called business-to-business marketing or industrial marketing, involves those marketing activities and functions that are targeted toward organizational customers. This type of marketing involves selling goods (and services) to organizations (public and private) to be used directly or indirectly in their own production or service-delivery operations. Some of the major industries that comprise the business market are construction, manufacturing, mining, transportation, public utilities, communications, and distribution. One of the key points that differentiates business from consumer marketing is the magnitude of the transactions. For example, in the mid-1990s, a Boeing 747 airliner, selling for about $155 million, could take up to four years to manufacture and deliver once the order was placed. Often, a major airline company will order several aircraft at one time, making the purchase price as high as a billion dollars.

¬†¬†¬†¬†¬†¬†Customers for industrial goods can be divided into three groups: user customers, original-equipment manufacturers, and resellers. User customers make use of the goods they purchase in their own businesses. An automobile manufacturer, for example, might purchase a metal-stamping press to produce parts for its vehicles. Original-equipment manufacturers incorporate the purchased goods into their final products, which are then sold to final consumers (e.g., the manufacturer of television receivers buys tubes and transistors). Industrial resellers are middlemen‚ÄĒessentially wholesalers but in some cases retailers‚ÄĒwho distribute goods to user customers, to original-equipment manufacturers, and to other middlemen. Industrial-goods wholesalers include mill-supply houses, steel warehouses, machine-tool dealers, paper jobbers, and chemical distributors.

Nonprofit marketing
      Marketing scholars began exploring the application of marketing to nonprofit organizations in 1969. Since then, nonprofit organizations have increasingly turned to marketing for growth, funding, and prosperity.

¬†¬†¬†¬†¬†¬†Although it is difficult to define ‚Äúnonprofit‚ÄĚ organizations because of the existence of a number of quasi-governmental organizations, a study in the mid-1990s found more than one million private, nonprofit organizations in the United States. Some experts believe that the way to distinguish between organizations is according to their sources of funding. The three major sources are profits, government revenues (such as grants or taxes), and voluntary donations. In addition, a legally defined nonprofit organization is one that has been granted tax-exempt status by the Internal Revenue Service. However, while nonprofit groups can be defined legally, it is more helpful to focus on the specific marketing activities that need to be performed within the organization's environment. Museums, hospitals, universities, and churches are all examples of nonprofit organizations. Although many individuals may believe that nonprofit organizations have only a small impact on the economy, the operating expenditures of private nonprofit organizations now represent a significant percentage of the U.S. gross national product. In addition, many of these are substantial enterprises. For example, Girl Scout cookies, sold by Girl Scouts of America, constitute 10 percent of all cookies sold in the United States.

Social marketing
¬†¬†¬†¬†¬†¬†Social marketing employs marketing principles and techniques to advance a social cause, idea, or behaviour. It entails the design, implementation, and control of programs aimed at increasing the acceptability of a social idea or practice that would benefit the adoptors or society. Social ideas can take the form of beliefs, attitudes, and values, such as human (human behaviour) rights. Whether social marketers are promoting ideas or social practices, their ultimate goal is to alter behaviour. In order to accomplish this behaviour change, social marketers set measurable objectives, research their target group's needs, target their ‚Äúproducts‚ÄĚ to these particular ‚Äúconsumers,‚ÄĚ and effectively communicate their benefits. In addition, social-marketing organizations have to be constantly aware of changes in their environments and must be able to adapt to these changes.

Place marketing
¬†¬†¬†¬†¬†¬†Place marketing employs marketing principles and techniques to advance the appeal and viability of a place (town, city, state, region, or nation) to tourists, businesses, investors, and residents. Among the ‚Äúplace sellers‚ÄĚ are economic development agencies, tourist promotion agencies, and mayors' offices. Place sellers must gain a deep understanding of how place buyers make their purchasing decisions. Place-marketing activities can be found in both the private and public sectors at the local, regional, national, and international levels. They can range from activities involving downtrodden cities trying to attract businesses to vacation spots seeking to attract tourists. In implementing these marketing activities, each locale must adapt to external shocks and forces beyond its control (intergovernmental power shifts, increasing global competition, and rapid technological change) as well as to internal forces and decline cycles.

Jonathan D. Hibbard Philip Kotler

Economic and social aspects of marketing
      Sometimes criticized for its impact on personal economic and social well-being, marketing has been said to affect not only individual consumers but also society as a whole. This section briefly examines some of the criticisms raised and how governments, individuals, and marketers have addressed them.

Marketing and individual welfare
      Criticisms have been leveled against marketers, claiming that some of their practices may damage individual welfare. While this may be true in certain circumstances, it is important to recognize that, if a business damages individual welfare, it cannot hope to continue in the marketplace for long. As a consequence, most unfavourable views of marketing are criticisms of poor marketing, not of strategically sound marketing practices.

¬†¬†¬†¬†¬†¬†Others have raised concerns about marketing by saying that it increases prices by encouraging excessive markups. Marketers recognize that consumers may be willing to pay more for a product (trademark)‚ÄĒsuch as a necklace from Tiffany and Co.‚ÄĒsimply because of the associated prestige. This not only results in greater costs for promotion and distribution, but it allows marketers to earn profit margins that may be significantly higher than industry norms. Marketers counter these concerns by pointing out that products provide not only functional benefits but symbolic ones as well. By creating a symbol of prestige and luxury, Tiffany's offers a symbolic benefit that, according to some consumers, justifies the price. In addition, brands may symbolize not only prestige but also quality and functionality, which gives consumers greater confidence when they purchase a branded product. Finally, advertising and promotions are often very cost-effective methods of informing the general public about items and services that are available in the marketplace.

¬†¬†¬†¬†¬†¬†A few marketers have been accused of using deceptive practices, such as misleading promotional activities or high-pressure selling. These deceptive practices have given rise to legislative and administrative remedies, including guidelines offered by the Federal Trade Commission (FTC) regarding advertising practices, automatic 30-day guarantee policies by some manufacturers, and ‚Äúcooling off‚ÄĚ periods during which a consumer may cancel any contract signed. In addition, professional marketing associations, such as the Direct Marketing Association, have promulgated a set of professional standards for their industry.

Marketing and societal welfare
¬†¬†¬†¬†¬†¬†Concern also has been raised that some marketing practices may encourage excessive interest in material possessions, create ‚Äúfalse wants,‚ÄĚ or promote the purchase of nonessential goods. For example, in the United States, children's Saturday morning television programming came under fire for promoting materialistic values. The Federal Communications Commission (FCC) responded in the early 1990s by regulating the amount of commercial time per hour. In many of these cases, however, the criticisms overstate the power of marketing communications to influence individuals and portray members of the public as individuals unable to distinguish between a good decision and a bad one. In addition, such charges cast marketing as a cause of social problems when often the problems have much deeper societal roots.

      Marketing activity also has been sometimes criticized because of its control by strong private interests and its neglect of social and public concern. While companies in the cigarette, oil, and alcohol industries may have significant influence on legislation, media, and individual behaviour, organizations that focus on environmental, health, or education concerns are not able to wield such influence and often fail to receive appropriate recognition for their efforts. While there is clearly an imbalance of power between private interests and public ones, in the late 20th century, private companies have received more praise for their marketing efforts for social causes.

Philip Kotler Kent A. Grayson Jonathan D. Hibbard

Marketing's contribution to individuals and society
¬†¬†¬†¬†¬†¬†Although some have questioned the appropriateness of the marketing philosophy in an age of environmental deterioration, resource shortages, world hunger and poverty, and neglected social services, numerous firms are commendably satisfying individual consumer demands as well as acting in the long-term interests of the consumer and society. These dual objectives of many of today's companies have led to a broadening of the ‚Äúmarketing concept‚ÄĚ to become the ‚Äúsocietal marketing concept.‚ÄĚ Generating customer satisfaction while at the same time attending to consumer and societal well-being in the long run are the core concepts of societal marketing.

¬†¬†¬†¬†¬†¬†In practicing societal marketing, marketers try to balance company profits, consumer satisfaction, and public interest in their marketing policies. Many companies have achieved success in adopting societal marketing. Two prominent examples are The Body Shop International PLC, based in England, and Ben & Jerry's Homemade Inc., which produces ice cream and is based in Vermont. Body Shop's cosmetics and personal hygiene products, based on natural ingredients, are sold in recycled packaging. The products are formulated without animal testing, and a percentage of profits each year is donated to animal rights groups, homeless shelters, Amnesty International, rain-forest preservation groups, and other social causes. Ben & Jerry's donates a percentage of its profits to help alleviate social and environmental problems. The company's corporate concept focuses on ‚Äúcaring capitalism,‚ÄĚ which involves the product as well as social and economic missions.

      Marketing has had many other positive benefits for individuals and society. It has helped accelerate economic development and create new jobs. It has also contributed to technological progress and enhanced consumers' choices.

Philip Kotler Jonathan D. Hibbard

Additional Reading
The most widely used textbook is Philip Kotler, Marketing Management: Analysis, Planning, Implementation, and Control, 8th ed. (1994). Robert Bartels, History of Marketing Thought, 3rd ed. (1988), provides an overview of marketing through the years and contains an extensive bibliography. A more conceptual and theoretical treatment may be found in the work by Wroe Alderson, Dynamic Marketing Behavior: A Functionalist Theory of Marketing (1965).Various strategic and tactical aspects of marketing are explored in the following studies: Steven P. Schnaars, Marketing Strategy: A Customer-Driven Approach (1991); Jack Trout and Al Reis, Positioning: The Battle for Your Mind, rev. ed. (1986); Thomas T. Nagle and Reed K. Holden, The Strategy and Tactics of Pricing, 2nd ed. (1994); Gilbert A. Churchill, Jr., Neil M. Ford, and Orville C. Walker, Jr., Sales Force Management, 4th ed. (1993); Don E. Schultz, Stanley I. Tannenbaum, and Robert F. Lauterborn, Integrated Marketing Communications (1992); Mary Lou Roberts and Paul D. Berger, Direct Marketing Management (1989); David A. Aaker, Strategic Market Management, 3rd ed. (1991); Glen L. Urban and John Hauser, Design and Marketing of New Products, 2nd ed. (1993); and Stan Rapp and Thomas L. Collins, Beyond Maximarketing (1994). The importance of marketing intermediaries is outlined by Louis W. Stern and Adel I. El-Ansary, Marketing Channels, 4th ed. (1992).Theodore Levitt, The Marketing Imagination, new, expanded ed. (1986); and Regis McKenna, Relationship Marketing: Successful Strategies for the Age of the Customer (1991), discuss the evolving discipline of marketing.The role of marketing research is investigated in the extended work by Gilbert A. Churchill, Jr., Marketing Research: Methodological Foundations, 5th ed. (1991). The role the consumer plays in the marketing process is examined in Michael R. Solomon, Consumer Behavior, 2nd ed. (1994); and David A. Aaker and George S. Day, Consumerism: Search for Consumer Interest, 4th ed. (1982).Advertising's role in the marketing process is explored in David Ogilvy, Ogilvy on Advertising (1983); John Lyons, Guts: Advertising from the Inside Out (1987); and William Wells, John Burnett, and Sandra Moriarty, Advertising: Principles and Practice, 2nd ed. (1992).Marketing in several different sectors is dealt with in the following selected works: David A. Aaker and Alexander L. Biel, Brand Equity & Advertising (1993); David A. Aaker, Managing Brand Equity (1991); Christopher H. Lovelock, Services Marketing, 2nd ed. (1991), and Managing Services: Marketing, Operations, and Human Resources, 2nd ed. (1991); Michael D. Hutt and Thomas W. Speh, Business Marketing Management: A Strategic View of Industrial and Organizational Markets, 4th ed. (1992); Philip Kotler and Alan R. Andreasen, Strategic Marketing for Nonprofit Organizations, 4th ed. (1991); Philip Kotler and Roberta N. Clarke, Marketing for Healthcare Organizations (1986); Philip Kotler and Eduardo Roberto, Social Marketing: Strategies for Changing Public Behavior (1989); Philip Kotler, Donald H. Heider, and Irving Rein, Marketing Places: Attracting Investment, Industry, and Tourism to Cities, States, and Nations (1993); and Michael R. Czinkota and Ilkka A. Ronkainen, International Marketing, 3rd ed. (1993).Current marketing trends are reported in a number of trade journals and newspapers, including Marketing News (biweekly); Marketing Management (quarterly); Journal of Retailing (quarterly); Advertising Age (weekly); Business Marketing (monthly); Harvard Business Review (bimonthly); Wall Street Journal (daily); Business Week (weekly); Fortune (biweekly); California Management Review (quarterly); and Business Horizons (bimonthly). More scholarly research journals include Journal of Marketing Research (quarterly); Journal of Marketing (quarterly); Journal of Consumer Research (quarterly); and Journal of the Academy of Marketing Science (quarterly).Jonathan D. Hibbard Philip Kotler Kent A. Grayson

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