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MARKETING AND MANAGEMENT
Pearson is the world’s leading learning company. Our education business combines 150 years of experience in
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MANAGEMENT:
Defined, Explained and Applied

Compiled by Malliga Marimuthu

9780655702412_C.indd 1 3/4/20 8:30 AM

MARKETING AND
MANAGEMENT: DEFINED,
EXPLAINED AND APPLIED

Compiled by
Malliga Marimuthu

9780655702412_FM.indd 1 3/3/20 5:31 PM

Pearson Australia
707 Collins Street
Melbourne VIC 3008
www.pearson.com.au

Copyright © 2020 This Custom Book Edition, Pearson Australia (a division of Pearson
Australia Group Pty Ltd).
Copyright © 2018 by Pearson Education Inc. for Principles of Marketing, 7th ed.
by Armstrong, Kotler, Adam & Denize.
Copyright © 2019 by Pearson Education Inc. for Management: the essentials, 4th ed.
by Robbins, DeCenzo, Coulter & Woods.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without the written permission of the publisher.

Project Management Team Leader: Jill Gillies

Courseware Associate: Jessica Darnell
Production Controller: Yoke Lian Yong
Copyeditor: Sandra Goodall

ISBN: 978 0 6557 0241 2

ISBN: 978 0 6557 0242 9 (uPDF)

9780655702412_FM.indd 2 3/3/20 5:31 PM

Brief contents

Session 1 Introduction to marketing and sustainable marketing 1

1 Marketing: Creating and capturing customer value 2
2 Sustainable marketing: Social responsibility, ethics and legal compliance 36

Session 2 Understanding the marketplace and buyer behaviour 67

3 The marketplace and customers: Analysing the environment 68
4 Buyer behaviour: Understanding consumer and business buyers 102

Session 3 Marketing analytics 139

5 Marketing analytics: Gaining customer insights 140

Session 4 Products and services 175

6 Customer-driven marketing strategy: Creating value for target customers 176
7 Products, services and brands: Offering customer value 204
8 New products: Developing and managing innovation 228

Session 5 Price and placement 251

9 Pricing: Capturing customer value 252
10 Placement: Customer value fulfilment 276

Session 6 Integrated marketing communication 319

11 Communicating customer value: Advertising and public relations 320
12 Salespeople and sales promotion: Creating value in relationships 344
13 Direct and digital marketing: Interactivity and fulfilment 370

Session 7 Managers, management and managerial sustainable

responsibilities393
14 Managers and management 394
History Module: A brief history of management’s roots 416
15 The managerial environment 424
Ethics and Social Responsibility Module: Managing socially responsible
and ethical behaviour 442

Session 8 Managing the business 453

16 Foundations of planning 454
17 Foundations of decision making 470

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iv Brief contents

Session 9 Managing the organisation and individual 489

18 Organisational structure and design 490
19 Foundations of individual behaviour 520

Session 10 Managing people 553

20 Managing human resources 554
21 Motivating and rewarding employees 582

Session 11 Leading and managing groups 603

22 Leadership and trust 604
23 Understanding groups and managing work teams 630

Session 12 Control and change management 655

24 Foundations of control 656
25 Managing change and innovation 680
Entrepreneurship Module: Managing entrepreneurial ventures 706

Appendix 1 Case studies 719

Appendix 2 The marketing plan: An introduction 732
Appendix 3 Marketing analytics spotlights 740
Appendix 4 Careers in marketing 764
Glossary 770
Index 790

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Contents

Session 1
Introduction to marketing Capturing value from customers 18
and sustainable Creating customer loyalty and retention 18
marketing 1 Growing share of customer 19
Chapter 1 Building customer equity 20
Marketing: Creating and capturing Building the right relationship with the
customer value 2 right customers 20
Learning Objectives 2 The changing marketing landscape 21
Concept map 3 The digital age: Online, mobile and
What is marketing? 4 social media marketing 21
Marketing defined 4 The challenging world economy 23
The marketing process 4 Measuring marketing’s contribution to
Understanding the marketplace and organisational performance 24
customer needs 5 Marketing in Action 1.1
Customer needs, wants and demands 5 Are marketers really that ‘lousy at selling
Market offerings: Goods, services and marketing’? 25
experiences6 The growth of not-for-profit marketing 26
Customer value and satisfaction 7 Rapid globalisation 26
Exchanges, transactions and relationships 8 Sustainable marketing: The call for more
Markets8 environmental and social responsibility 28
Designing a customer-driven marketing So, what is marketing? Pulling it all
strategy 9 together 28
Selecting customers to serve 9 Student Learning Centre
Choosing a value proposition 10 • Reviewing the learning objectives 31
Marketing management orientations 11 • Discussion questions 32
Preparing an integrated marketing plan • Critical thinking exercises 32
and program 13 • Mini cases 33
Engaging customers and managing 1.1 Digital technologies in marketing 33
customer relationships 15 1.2 Customer-driven marketing
Customer relationship management 15 strategy33
1.3 Marketing analytics at work 34
Engaging customers 16
1.4 Ethical reflection 34
Consumer-generated marketing 17
• References 34
Partner relationship management 18

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vi Contents

Chapter 2 Session 2
Understanding the
Sustainable marketing: Social marketplace and buyer
responsibility, ethics and legal behaviour 67
compliance 36 Chapter 3
Learning Objectives 36 The marketplace and customers:
Concept map 37 Analysing the environment 68
Sustainable marketing 38 Learning Objectives 68
Social criticisms of marketing 39 Concept map 69
Marketing’s impact on individual The marketing environment 70
customers39 The company’s microenvironment 70
Marketing’s impact on society as a whole 42 The company 70
Marketing’s impact on other Suppliers71
businesses44 Marketing intermediaries 71
Consumer actions to promote Competitors72
sustainable marketing 45 Publics72
Consumerism45
Customers73
Environmentalism46
The company’s macroenvironment 74
Public actions to regulate marketing 49
Demographic environment 74
Business actions towards sustainable Economic environment 81
marketing 49
Natural environment 82
Sustainable marketing principles 49
Technological environment 84
Marketing in Action 2.1
Marketing in Action 3.1
Peoples Coffee: Making a difference,
The quite real virtual experience 85
one cup at a time 52
Political and social environment 86
The role of ethics in marketing 53
Cultural environment 88
Marketing ethics 53
Responding to the marketing environment 91
The sustainable company 56
Managing the marketing effort 92
Legal compliance in marketing 56
Marketing analysis 92
Putting a compliance program in place 56
Marketing planning 93
Legal education 57
Marketing implementation 93
Coverage of a legal compliance program 58
Marketing department organisation 95
Student Learning Centre
Marketing control 96
• Reviewing the learning objectives 63
• Discussion questions 63 Student Learning Centre
• Critical thinking exercises 64 • Reviewing the learning objectives 97
• Mini cases 64 • Discussion questions 97
2.1 Consumerism 64 • Critical thinking exercises 98
2.2 Role of ethics in marketing 64 • Mini cases 98
2.3 Marketing analytics at work 65 3.1 Microeconomic environment 98
2.4 Ethical reflection 65 3.2 Technological environment 99
• References 66 3.3 Marketing analytics at work 99
3.4 Ethical reflection 100
• References 100

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Contents vii

Chapter 4 Session 3
Marketing analytics 139
Buyer behaviour: Understanding Chapter 5
consumer and business buyers 102 Marketing analytics: Gaining
Learning Objectives 102 customer insights 140
Concept map 103 Learning Objectives 140
Consumer markets and consumer buyer Concept map 141
behaviour 104 Marketing information and customer
Model of consumer behaviour 104 insights 142
Characteristics affecting consumer Marketing information and today’s ‘big data’142
behaviour 105 Marketing analytics 143
Marketing in Action 4.1 Managing marketing information 143
Consumer behaviour: A whole life story 111
Marketing in Action 5.1
The buyer decision process 117 Netflix streams success with big data
Stages in the buyer decision process 117 and marketing analytics 144
The buyer decision process for Assessing marketing information needs 146
new products 120 Developing marketing information 147
Stages in the adoption process 120 Internal data 147
Individual differences in Competitive marketing intelligence 148
innovativeness121
Marketing research 149
Influence of product characteristics
Defining the problem and research
on rate of adoption 121
objectives150
Business markets and business Developing the research plan 150
buyer behaviour 122
Primary data collection 153
Business markets 123
Implementing the research plan 162
Business buyer behaviour 125
Interpreting and reporting the findings 162
The business buying process 128
Customer database use in direct and
E-procurement: Buying on the internet 131
digital marketing 163
Business-to-business digital and social Customer database defined 163
media marketing 132
Database use in direct and digital
Student Learning Centre marketing164
• Reviewing the learning objectives 133
Analysing and using marketing information 167
• Discussion questions 133
Customer relationship management 167
• Critical thinking exercises 134
Distributing and using marketing
• Mini cases 135
information168
4.1 Consumer behaviour 135
4.2 Business buyer behaviour 135 Student Learning Centre
4.3 Marketing analytics at work 135 • Reviewing the learning objectives 170
4.4 Ethical reflection 136 • Discussion questions 171
• References 136 • Critical thinking exercises 171
• Mini cases 171
5.1 Gathering data 171
5.2 Customer insights 172

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viii Contents

5.3 Marketing analytics at work 172 What is a product? 206

5.4 Ethical reflection 173 Products, services and experiences 206
• References 173 Levels of products and services 207
Product and service classifications 208
Product and service decisions 211
Session 4
Products and services 175
Individual product and service decisions 211
Chapter 6
Marketing in Action 7.1
Customer-driven marketing
Headspace and the unsought product 212
strategy: Creating value for
Product line decisions 217
target customers 176
Product mix decisions 218
Learning Objectives 176
Concept map 177 Services marketing 219
Customer-driven marketing strategy 178 Nature and characteristics of a service 219
Market segmentation 179 Marketing strategies for service firms 220
Segmenting consumer markets 179 The service–profit chain 221
Marketing in Action 6.1 Managing service differentiation 222
ALDI: Offering a ‘same-for-less’ value Student Learning Centre
proposition 182 • Reviewing the learning objectives 224
Market targeting 186 • Discussion questions 224
Evaluating market segments 186 • Critical thinking exercises 225
Selecting target market segments 187 • Mini cases 225
Socially responsible target marketing 190 7.1 Industrial products 225
7.2 Packaging 225
Differentiation and positioning 192
7.3 Ethical reflection 226
Positioning maps 192

• References 226
Choosing a differentiation and
positioning strategy 192
Chapter 8
Communicating and delivering the New products: Developing
chosen position 198 and managing innovation 228
Student Learning Centre Learning Objectives 228
• Reviewing the learning objectives 199 Concept map 229
• Discussion questions 199 New-product development strategy 230
• Critical thinking exercises 200 The new-product development process 230
• Mini cases 200 Idea generation 230
6.1 Target marketing 200 Idea screening 232
6.2 Differentiation 201
Concept development and testing 233
6.3 Marketing analytics at work 202
Marketing strategy development 234
6.4 Ethical reflection 202
Business analysis 235
• References 203
Product development 235
Test marketing 236
Chapter 7
Products, services and brands: Commercialisation236
Offering customer value 204 Managing new-product development 237
Learning Objectives 204 Customer-centred new-product
Concept map 205 development237

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Contents ix

Team-based new-product development 238 Psychological pricing 264

Systematic new-product development 238 Promotional pricing 265
Product life-cycle strategies 239 Marketing in Action 9.1
Marketing in Action 8.1 Pricing cues are customer clues 266
Mattel: Managing the fun and games 240 Geographical pricing 268
Introduction stage 242 Dynamic and online pricing 269
Growth stage 243 International pricing 270
Maturity stage 243 Student Learning Centre
Decline stage 244 • Reviewing the learning objectives 272
Student Learning Centre • Discussion questions 272
• Reviewing the learning objectives 246 • Critical thinking exercises 273
• Discussion questions 246 • Mini cases 273
• Critical thinking exercises 247 9.1 Online price tracking 273
• Mini cases 247 9.2 Rebates under the microscope 273
8.1 Innovation 247 9.3 Marketing analytics at work 274
8.2 New-product development 247 9.4 Ethical reflection 274
8.3 Marketing analytics at work 248 • References 275
8.4 Ethical reflection 248
• References 248 Chapter 10
Placement: Customer value
fulfilment 276
Session 5
Price and placement 251 Learning Objectives 276
Concept map 277
Chapter 9
Pricing: Capturing customer value 252 Supply chains and the value delivery
Learning Objectives 252 network 278
Concept map 253 Supply chain goals 281
What is a price? 254 Major supply chain functions 283
Major pricing strategies 254 The nature of marketing channels
Customer value-based pricing 255 and value creation 286
Cost-based pricing 257 How marketing channels add value 287
Competition-based pricing 259 Number of channel levels 288
Channels in the service sector 290
New-product pricing strategies 260
Market-skimming pricing 260 Channel behaviour and organisation 290
Market-penetration pricing 260 Channel behaviour 290
Channel organisation 291
Product-mix pricing strategies 261
Product-line pricing 261 Marketing in Action 10.1
Optional-product pricing 262 Multichannel services marketing 296
Captive-product pricing 262 Channel design and management decisions 297
Analysing consumer needs 298
By-product pricing 263
Setting channel objectives 298
Product-bundle pricing 263
Identifying major channel alternatives 298
Price-adjustment strategies 263
Evaluating the major alternatives 299
Discount and allowance pricing 263
Channel management decisions 299
Segmented pricing 264

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x Contents

Retailing 300 Student Learning Centre

Retailing: Connecting brands with • Reviewing the learning objectives 339
consumers300 • Discussion questions 339
Types of retailers 300 • Critical thinking exercises 340
Wholesaling 307 • Mini cases 341
Types of wholesalers 307 11.1 Integrated marketing
communication341
Wholesaler marketing decisions 309
11.2 Public relations 341
Wholesaling trends and developments 311
11.3 Marketing analytics at work 342
Student Learning Centre 11.4 Ethical reflection 342
• Reviewing the learning objectives 312 • References 342
• Discussion questions 313
• Critical thinking exercises 313 Chapter 12
• Mini cases 314 Salespeople and sales promotion:
10.1 Corporate VMN 314 Creating value in relationships 344
10.2 Multichannel distribution networks 315 Learning Objectives 344
10.3 Marketing analytics at work 315 Concept map 345
10.4 Ethical reflection 316
Personal selling 346
• References 317
The nature of personal selling 346
The role of the salesforce 347
Session 6
Integrated marketing Managing the salesforce 348
communication 319 Designing salesforce strategy
and structure 348
Chapter 11
Communicating customer value: Recruiting and selecting salespeople 352
Advertising and public relations 320 Training salespeople 353
Learning Objectives 320 Compensating salespeople 354
Concept map 321 Supervising and motivating
The promotion mix 322 salespeople354
Integrated marketing communications 322 Marketing in Action 12.1
The new marketing communications Social selling: Who needs salespeople? 357
model322 Evaluating salespeople and salesforce
The need for integrated marketing performance358
communications324 Sales promotion 359
Marketing in Action 11.1 Rapid growth of sales promotion 359
It’s content marketing, not advertising 325 Sales promotion objectives 360
Shaping the overall promotion mix 326 Major sales promotion tools 360
The nature of each promotion tool 327 Developing the sales promotion
Promotion mix strategies 328 program363
Advertising 329 Student Learning Centre
Setting advertising objectives 330 • Reviewing the learning objectives 365
Setting the advertising budget 332 • Discussion questions 365
Other advertising considerations 333 • Critical thinking exercises 366
Public relations 335 • Mini cases 366
The role and impact of public relations 336 12.1 Supervising salespeople 366
12.2 Sales promotion 367
The main public relations tools 337

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Contents xi

12.3 Marketing analytics at work 367 Session 7

Managers, management
12.4 Ethical reflection 368 and managerial
• References 369 sustainable
Chapter 13 responsibilities393
Direct and digital marketing: Chapter 14
Interactivity and fulfilment 370 Managers and management 394
Learning Objectives 370 Learning objectives 394
Concept map 371 Concept map 395
The direct and digital marketing model 372 Who are managers, and where do
Direct and digital marketing 372 they work? 396
Benefits of direct and digital marketing What four characteristics do all
to buyers and sellers 374 organisations share? 396

Direct marketing 375 How are managers different from

Direct print and reproduction 375 non-managerial employees? 397

Direct-response television and radio 375 What titles do managers have? 397

Telemarketing375 What is management? 399

Kiosks and electronic dispensing 376 What do managers do? 400

What are the four management functions? 400
Digital marketing 377
What are management roles? 401
Interacting in digital marketing 377
What characteristics do managers need? 402
Search-engine optimised websites 377
Is the manager’s job universal? 403
Marketing in Action 13.1
Search engine marketing: Three reasons Why study management? 406
why search engines exist 379 What factors are reshaping and redefining
Search engine marketing 381 management?406
Online advertising 382 Why are customers important to the
manager’s job? 407
Email383
Why is innovation important to the
Social media marketing 384
manager’s job? 407
Other forms of online interaction 385
Why are ethics and social responsibility
Interactivity 386 important to the manager’s job? 408
Customer-to-customer interaction 386
Why are social media tools important to
Customer-to-company interaction 387 the manager’s job? 408
Student Learning Centre Why is sustainability important to the
• Reviewing the learning objectives 388 manager’s job? 408
• Discussion questions 388
Student Learning Centre
• Critical thinking exercises 388
• Reviewing the learning objectives 411
• Mini cases 389
• Discussion questions 411
13.1 Location-based marketing 389
• Management Skill Builder | Becoming
13.2 Direct and digital marketing 389
politically adept 411
13.3 Marketing analytics at work 390
• Mini cases 413
13.4 Ethical reflection 390
14.1 Google: Building a better boss 413
• References 391
14.2 Managing to create a better world 414
• References 414

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xii Contents

History Module Should organisations be socially

A brief history of management’s responsible?443
roots416 How can managers identify the ethical
Learning objectives 416 thing to do? 444
Early management (3000 BCE–1776) 417 Ethical perspectives 445
Behavioural approach (late 1700s–1950s) 418 What factors influence ethical
Classical approaches (1911–1947) 419 and unethical behaviour? 446
Quantitative approach (1940s–1950s) 420 How can managers encourage
Contemporary approaches (1960s–present) 421 ethical behaviour? 447
Choosing between management Codes of ethics 447
approaches422 Ethical leadership 448
• References 423 Ethics training 448
Formal protective mechanisms 449
Chapter 15
References451
The managerial environment 424
Learning objectives 424
Concept map 425 Session 8
Managing the
What is the external environment of an business453
organisation?426
Chapter 16
What is the general environment of an
Foundations of planning 454
organisation?426
Learning objectives 454
What is the specific environment of an
Concept map 455
organisation?429
What is planning, and why do managers
How does the external environment affect need to plan? 456
managers?432 Why should managers formally plan? 456
What is organisational culture, and why is it What are some criticisms of formal
important?434 planning, and how should managers
How does organisational culture affect respond?457
managers?435 Does formal planning improve
Student Learning Centre organisational performance? 458
• Reviewing the learning objectives 437 What do managers need to know about
• Discussion questions 437 strategic management? 459
• Management Skill Builder | Understanding What is strategic management? 459
Culture438
Why is strategic management important? 459
• Mini cases 439
What are the steps in the strategic
15.1 Tragedy in fashion 439
management process? 459
15.2 Getting a boost 439
• References 440 What contemporary planning issues do
managers face? 463
Ethics and Social How can managers plan effectively in
Responsibility Module dynamic environments? 463
Managing socially responsible and How can managers use environmental
ethical behaviour 442 scanning?463
Learning objectives 442 How can managers use benchmarking? 464
How do organisations define their social
Student Learning Centre
responsibilities?443
• Reviewing the learning objectives 465

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Contents xiii

• Discussion questions 465 Session 9

Managing the organisation
• Management Skill Builder | Being and individual489
a good goal setter 466
Chapter 18
• Mini cases 467
Organisational structure and design 490
16.1 Less is more 467
Learning objectives 490
16.2 Spy games 467
Concept map 491
• References 468
What are the six key elements in
Chapter 17 organisational design? 492
Foundations of decision making 470 What is work specialisation? 492
Learning objectives 470 What is departmentalisation? 493
Concept map 471 What are authority and responsibility? 495
How do managers make decisions? 472 What is span of control? 499
What defines a decision problem? 472
A question of ethics 500
What is relevant in the decision-making How do centralisation and decentralisation
process?472 differ?500
How does the decision maker weight What is formalisation? 501
the criteria and analyse alternatives? 473
How is a mechanistic organisation different
What determines the best choice? 475
from an organic organisation? 501
What happens in decision implementation? 475
What are some common organisational
What is the last step in the decision designs?503
process?475 What traditional organisational designs
What common errors are committed in the can managers use? 503
decision-making process? 475 What contemporary organisational designs
How do groups make decisions? 477 can managers use? 505
What are the advantages and disadvantages What are today’s organisational design
of group decision making? 477 challenges?508
When are groups most effective? 479 How do you keep employees connected? 508
How can you improve group How do you delegate effectively? 508
decision making? 479 How do global differences affect
What contemporary decision-making organisational structure? 510
issues do managers face? 480 How do you build a learning organisation? 511
How does national culture affect managers’ How can managers design efficient and
decision making? 480 effective flexible work arrangements? 512
Why are creativity and design thinking
Student Learning Centre
important in decision making? 481
• Reviewing the learning objectives 514
Student Learning Centre • Discussion questions 514
• Reviewing the learning objectives 484 • Management Skill Builder | Increasing
• Discussion questions 484 your power 515
• Management Skill Builder | Being a creative • Mini cases 516
decision maker 485 18.1 Structural renewal at the Australian
• Mini cases 486 Red Cross 516
17.1 Going greener 486 18.2 Shortening the corporate ladder 517
17.2 Dramatic decisions 486 • References 518
• References 487

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xiv Contents

Chapter 19 What contemporary OB issues do

Foundations of individual behaviour 520 managers face? 540
Learning objectives 520 How do generational differences affect the
Concept map 521 workplace?540
What are the focus and goals of How do ability, disability and mental health
organisational behaviour? 522 affect the workplace? 541
What is the focus of OB? 522 How do managers deal with bullying in the
What are the goals of organisational workplace?543
behaviour?522 Student Learning Centre
What role do attitudes play in job • Reviewing the learning objectives 545
performance?523 • Discussion questions 546
What are the three components of an • Management Skill Builder | Understanding
attitude?523 employee emotions 546
What attitudes might employees hold? 524 • Mini cases 547
Do individuals’ attitudes and behaviours 19.1 Troubling texts 547
need to be consistent? 525 19.2 A fighting chance at a fair go 548
• References 548
What is cognitive dissonance theory? 525
How can an understanding of attitudes
help managers be more effective? 526 Session 10 Managing people553
What do managers need to know about
Chapter 20
personality?527
Managing human resources 554
How can we best describe personality? 527
Learning objectives 554
Can personality traits predict practical Concept map 555
work-related behaviours? 530
What is the human resource management
How do we match personalities and process, and what influences it? 556
jobs?531 What is the legal environment of HRM? 557
Do personality attributes differ across
How do managers identify and select
cultures?532
competent employees? 559
How can an understanding of personality What is employment planning? 559
help managers be more effective? 533
How do managers reduce their workforce? 561
What is perception, and what factors How do organisations recruit employees? 561
influence it? 533
How do managers select job applicants? 562
What influences perception? 534
How are employees provided with needed
How do managers judge employees? 534
skills and knowledge? 566
How can an understanding of perception help
How are new employees introduced to the
managers be more effective? 537
organisation?567
How do learning theories explain What is employee training? 567
behaviour?538
How do organisations provide a safe
What is operant conditioning? 538
working environment? 570
What is social learning theory? 539
What contemporary HRM issues do
How can managers shape behaviour? 539
managers face? 571
How can an understanding of learning help How can managers manage downsizing? 571
managers be more effective? 540
How can workforce diversity be managed? 572
What is sexual harassment? 573

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Contents xv

What is career development? 574 Session 11 Leading and managing

Student Learning Centre groups603
• Reviewing the learning objectives 576 Chapter 22
• Discussion questions 576 Leadership and trust 604
• Management Skill Builder | Providing Learning objectives 604
good feedback 577 Concept map 605
• Mini cases 578 Who are leaders, and what is leadership? 606
20.1 Managing diversity at PwC 578
What do early leadership theories tell us
20.2 Producing CHAMPS at KFC 578
about leadership? 606
• References 579
What traits do leaders have? 606
Chapter 21 What behaviours do leaders exhibit? 606
Motivating and rewarding What do the contingency theories of
employees582 leadership tell us? 610
Learning objectives 582 What was the first comprehensive contingency
Concept map 583 model?610
What is motivation? 584 How do followers’ willingness and ability
What do the early theories of influence leaders? 612
motivation say? 584 How participative should a leader be? 613
What is Maslow’s hierarchy of needs theory? 584 How do leaders help followers? 614
What is McClelland’s three-needs theory? 585 What is leadership like today? 616
What are McGregor’s Theory X and What do the four contemporary views of
Theory Y? 586 leadership tell us? 616
What is Herzberg’s two-factor theory? 586 What issues do today’s leaders face? 620
How do the contemporary theories explain Student Learning Centre
motivation?588 • Reviewing the learning objectives 623
What is goal-setting theory? 588 • Discussion questions 623
How does job design influence motivation? 590 • Management Skill Builder | Being a
What is equity theory? 592 good leader 624
How does expectancy theory explain • Mini cases 625
motivation?593 22.1 Gearing up and reaching out 625
How can we integrate contemporary 22.2 Top-down leadership 625
motivation theories? 594 • References 626
Student Learning Centre Chapter 23
• Reviewing the learning objectives 596 Understanding groups and managing
• Discussion questions 596 work teams 630
• Management Skill Builder | Being a Learning objectives 630
good motivator 596 Concept map 631
• Mini cases 598 What is a group, and what stages of
21.1 Battling bugs and vanquishing development do groups go through? 632
viruses598 What is a group? 632
21.2 One for the money . . . 598
What are the stages of group development? 632
• References 599
What are the main concepts of group
behaviour?634
What are roles? 634

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xvi Contents

How do norms and conformity affect group What should managers control? 664
behaviour?634 When does control take place? 664
What is status, and why is it important? 635 In what areas might managers need
Does group size affect group behaviour? 636 controls?666
Are cohesive groups more effective? 636 What contemporary control issues do
How are groups turned into effective managers confront? 668
teams?637 Using feedback to control employee
Are work groups and work teams the performance669
same thing? 638 Do controls need to be adjusted for cultural
What are the different types of work teams? 639 differences?669
What makes a team effective? 639 What challenges do managers face in
How can a manager shape team controlling the workplace? 670
behaviour?644 Controlling workplace conflict 671
What current issues do managers face in Student Learning Centre
managing teams? 645 • Reviewing the learning objectives 675
What’s involved with managing global • Discussion questions 675
teams?645 • Management Skill Builder | Discipleining
When are teams not the answer? 647 difficult employees 676
• Mini cases 677
Student Learning Centre
24.1 In the can 677
• Reviewing the learning objectives 648
24.2 Driving better decisions 678
• Discussion questions 648
• References 678
• Management Skill Builder | Understanding
how teams work 649 Chapter 25
• Mini cases 650 Managing change and innovation 680
23.1 Working together anywhere, Learning objectives 680
anytime650 Concept map 681
23.2 Intel inside . . . and far away 650 How can managers encourage innovation
• References 651 in an organisation? 682
How are creativity and innovation related? 682
How can organisations stimulate creativity? 682
Session 12 Control and change
What’s involved in turning creativity into
management655
innovation?683
Chapter 24 How can a manager foster innovation? 683
Foundations of control 656
How does design thinking influence
Learning objectives 656
innovation?686
Concept map 657
What is change, and how do managers
What is control, and why is it important? 658
deal with it? 687
What is control? 658
Why do organisations need to change? 688
Why is control important? 658
Who initiates organisational change? 689
What takes place as managers control? 659
How does organisational change happen? 689
What is ‘measuring’? 659
Reasons why change fails 693
How do managers compare actual
What are some techniques for overcoming
performance to planned goals? 662
barriers to organisational change? 694
What managerial action can be taken? 664

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Contents xvii

What reaction do employees have to What human resource management (HRM)

organisational change? 695 issues do entrepreneurs face? 712
What is stress? 695 What issues do entrepreneurs face in
What are the symptoms of stress? 695 leading an entrepreneurial venture? 712
What causes stress? 696 How can entrepreneurs motivate
How can stress be reduced? 697 employees?712
Student Learning Centre How can entrepreneurs be leaders? 713
• Reviewing the learning objectives 699 What controlling issues do entrepreneurs
• Discussion questions 699 face?714
• Management Skill Builder | Stress How is growth managed? 714
management700 How are downturns managed? 714
• Mini cases 701 What’s involved with exiting the venture? 714
25.1 Turning Coles around 701 Why is it important to think about
25.2 Saving mates 702 managing personal challenges as an
• References 702 entrepreneur?715
Entrepreneurship Module • References 717
Managing entrepreneurial ventures 706 Appendix 1
Learning objectives 706 Case studies 719
Who engages in entrepreneurship? 707
Who’s starting entrepreneurial ventures? 707 Appendix 2
What do entrepreneurs do? 708 The marketing plan: An introduction 732
What planning do entrepreneurs Appendix 3
need to do? 708 Marketing analytics spotlights 740
What’s in a full business plan? 709
Appendix 4
What issues are involved in organising an
Careers in marketing 764
entrepreneurial venture? 710
What are the legal forms of organisation for Glossary770
entrepreneurial ventures? 710 Index790
What type of organisational structure should
entrepreneurial ventures use? 711

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SESSION Introduction

1
to marketing
and sustainable
marketing
• Marketing: Creating and capturing customer
value
• Sustainable marketing: Social responsibility,
ethics and legal compliance

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Chapter

1 Marketing: Creating and capturing

customer value
You are beginning a journey into the science and practice of marketing – a journey that is both exciting
and vital in the preparation for the career that awaits you. In this chapter, we start with the question,
‘What is marketing?’. Simply put, marketing is managing profitable customer relationships. The aim
of marketing is to create value for customers and to capture value from customers in return. We start
with a definition of marketing before proceeding to discuss the five steps in the marketing process –
from understanding customer needs, to designing customer-driven marketing strategies and integrated
marketing programs, to building customer relationships and capturing value for the firm, as shown in
Figure 1.1. Finally, we discuss the major trends and forces affecting marketing in this age of customer
relationships. Understanding these basic concepts, and forming your own ideas about what they really
mean to you, will give you a solid foundation for all that follows.
As you start this chapter, we suggest you pay close attention to the visual representation on the next
page, which is designed to give you a ‘helicopter’ view of the main concepts covered. You will find such a
visual representation, or concept map, at the start of each chapter.

Learning Objective 1 Define marketing, and outline the steps in the marketing process.
What is marketing? pp. 4–5
Learning Learning Objective 2 Explain the importance of understanding the marketplace and
Objectives customers, and identify the five core marketplace concepts.
Understanding the marketplace and customer needs pp. 5–9
Learning Objective 3 Identify the key elements of a customer-driven marketing strategy, and
discuss the marketing management orientations that guide marketing
strategy.
Designing a customer-driven marketing strategy pp. 9–13
Preparing an integrated marketing plan and program pp. 13–15
Learning Objective 4 Discuss customer relationship management, and identify strategies for
creating value for customers and capturing value from customers in
return.
Engaging customers and managing customer relationships pp. 15–18
Capturing value from customers pp. 18–21
Learning Objective 5 Describe the major trends and forces that are changing the marketing
landscape in this age of relationships.
The changing marketing landscape pp. 21–28
So, what is marketing? Pulling it all together pp. 28–30

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Chapter 1 Marketing: Creating and capturing customer value 3

CREATE VALUE FOR CREATE VALUE

CUSTOMERS AND BUILD FROM CUSTOMERS
CUSTOMER RELATIONSHIPS IN RETURN

Understand Design a Construct an Build Capture value

the customer- integrated profitable from customers
LO 1 marketplace driven marketing relationships to create profits
Define marketing, and outline the
and customer marketing program and create and customer
steps in the marketing process.
needs and strategy that delivers customer equity
wants superior value delight

Societal
Production Product Selling Marketing
LO 2 marketing
concept concept concept concept
Explain the importance of concept
understanding the marketplace
and customers, and identify the
five core marketplace concepts. MARKETING MANAGEMENT ORIENTATIONS
(a lens through which managers understand the marketplace and customers)

Process
Phy
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Identify the key elements of a e
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and discuss the marketing processes for cre Pl ogis
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strategies for creating value for (a collection of sellers) (a collection of buyers)
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Describe the major trends and forces Ra M ar
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landscape in this age of

relationships. tio
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trib Growth fit
perf ution to ro
or m a n
ce not-for-p g
in
market

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4 Session 1 Introduction to marketing and sustainable marketing

What is marketing?
Marketing, more than any other business function, deals with customers. Although we will soon explore
more-detailed definitions of marketing, perhaps the simplest definition is this one: Marketing is engaging
customers and managing profitable customer relationships. The twofold goal of marketing is to attract new
customers by promising superior value, and to keep and grow current customers by delivering satisfaction.
Marketing comes to you in traditional forms, such as the products you see on supermarket shelves and
in the windows of shopping-centre boutiques, as well as in the advertising you see and hear in newspapers
and magazines, and on television and radio. However, in recent years, marketers have adopted a host of
new marketing approaches, using everything from imaginative websites and social networks to smartphone
apps. These new approaches do more than just blast out messages to the masses. They reach you directly
and personally. Today’s marketers want to become a part of your life and enrich your experiences with their
brands – to help you engage with their brands.
When we examine successful marketing organisations, we see that many factors contribute to making a
business or other organisational type successful. These factors include great strategy, dedicated employees,
good information systems and excellent implementation, among others. However, today’s successful
organisations have one thing in common – they have a strong market orientation, which means they
are focused on their customers, their competitors and their profits (or surpluses in the case of those not
operating for profit), and they have a commitment to sharing this marketing information with all parts of
the organisation.1 These organisations share an absolute dedication to understanding and satisfying the
needs of customers in well-defined target markets. They motivate everyone in the organisation to produce
superior value for their customers, leading to high levels of customer satisfaction.
At home, at school, where you work and where you play, you see marketing in almost everything you
do. Yet, there is much more to marketing than meets the consumer’s casual eye. Behind it all is a massive
network of people, technologies and activities competing for your attention and purchases.
This book will give you a complete introduction to the basic concepts and practices of today’s marketing.
In this chapter, we begin by defining marketing and the marketing process.

Marketing defined
What is marketing? Many people think of marketing as only selling and advertising. We are bombarded
every day with television commercials, catalogues, spiels from salespeople and online pitches. However,
selling and advertising are but the tip of the marketing iceberg.
Today, marketing must be understood not in the old sense of making a sale – ‘telling and selling’ – but
in the new sense of satisfying customer needs. If the marketer engages consumers effectively, understands
their needs, develops products that provide superior customer value, and prices, distributes and promotes
them well, these products will sell easily. In fact, according to management guru Peter Drucker, ‘The aim
of marketing is to make selling unnecessary.’2
Selling and advertising are only a part of a larger marketing mix – a set of marketing tools that work
together to engage customers, satisfy customer needs and build customer relationships.
Broadly defined, marketing is a social and managerial process by which individuals and organisations
obtain what they need and want through creating and exchanging value with others. In a narrower business
marketing context, marketing involves building profitable, value-laden exchange relationships with customers. Hence,
The process by which
marketing organisations we define marketing as the process by which marketing organisations engage customers, build strong
engage customers, customer relationships and create customer value in order to capture value from customers in return.3
build strong customer
relationships and create The marketing process
customer value in order
Figure 1.1 presents a simple five-step model of the marketing process. In the first four steps, marketing
to capture value from
customers in return. organisations uncover knowledge about consumers, create customer value and build strong customer

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Chapter 1 Marketing: Creating and capturing customer value 5

CREATE VALUE FOR CAPTURE VALUE

CUSTOMERS AND BUILD FROM CUSTOMERS
CUSTOMER RELATIONSHIPS IN RETURN

Understand Design a Construct an Build Capture value

the customer- integrated profitable from customers
marketplace driven marketing relationships to create profits
and customer marketing program and create and customer
needs, wants strategy that delivers customer equity
and demands superior value delight

Figure 1.1 A simple model of the marketing process

relationships. In the final step, companies reap the rewards of creating superior customer value. By creating
value for consumers, companies, in turn, capture value from consumers in the form of sales, profits and
long-term customer equity.
In this chapter, we begin to examine the steps in this model of the marketing process. We review
each step but focus more on the customer relationship management steps – understanding customers,
building customer relationships and capturing value from customers.

Understanding the marketplace and

customer needs
As a first step, marketers need to understand customer needs, wants and demands, and the marketplace
within which they operate. We now examine five core customer and marketplace concepts: (1) customer
needs, wants and demands; (2) market offerings – goods, services and experiences; (3) customer value and satisfaction;
(4) exchanges and relationships; and (5) markets.
Figure 1.2 shows how these core marketing concepts are linked, with each concept building on the
one before. Market offerings are the various product forms we examine in detail in Chapters 7 and 8.
We discuss value, satisfaction and quality throughout the book. We begin our discussion of customer needs,
wants and demands in this chapter, and examine them further in Chapters 4 and 5. The nature of exchange,
transactions, relationships and markets is examined in this chapter and throughout the book.

Customer needs, wants and demands

The most basic concept underlying marketing is that of human needs. Human needs are states of felt needs
deprivation. Humans have many complex needs. These include basic physical needs for food, clothing, States of felt
deprivation.
warmth and safety; social needs for belonging and affection; and individual needs for knowledge and
self-expression. While marketers may stimulate these needs, they do not create them for they are a basic
part of human makeup.
Wants are the form taken by human needs as they are shaped by culture and individual personality. wants
A hungry person in Australia, Singapore or Hong Kong might want a rice or noodle dish for a quick lunch, The form human needs
take, as shaped by
accompanied by green tea. A hungry person in the South Pacific might want mangoes, suckling pig and
culture and individual
beans. Wants are described in terms of objects that will satisfy needs. As a society evolves, the wants of its personality.
members expand. As people are exposed to more objects that arouse their interest and desire, producers try
to provide more want-satisfying goods and services.

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6 Session 1 Introduction to marketing and sustainable marketing

Needs, wants
Market offerings
and demands

CORE MARKETING CONCEPTS

Value,
Markets
satisfaction
and quality

Exchange,
transactions and
relationships

Figure 1.2 Five core customer and marketplace concepts

People have almost unlimited wants but limited resources. Thus, they want to choose products that
provide the most value and satisfaction for their money. When backed by buying power, wants become
demands demands. A simple way to look at needs, wants and demands is that a person needs water to survive (thirst).
Human wants that are The person may want a carbonated beverage to satisfy his or her thirst. If the person has the resources, he or
backed by buying power.
she may demand a particular brand of carbonated beverage, such as Coca-Cola, Pepsi or another local brand.
Outstanding marketers, whether profit-oriented companies, citizen-focused government or not-for-
profit organisations, go to great lengths to learn about and understand their customers’ needs, wants and
demands. They conduct qualitative research, such as small focus groups and customer clinics, to ascertain if
there are unmet needs, wants and demands. They conduct quantitative research on a larger scale to ascertain
the magnitude of the unmet needs, wants and demands. They seek customer insights when they examine
their databases for patterns hidden in purchase data, customer complaints, inquiries, warranty claims
and service performance data. They train salespeople and other frontline personnel to be on the lookout
for unfulfilled customer needs. They observe customers using their own and competing products, and
interview them in depth about their likes and dislikes. They conduct consumer research, analyse mountains
of customer data and observe customers as they shop and interact, offline and online. Understanding
customer needs, wants and demands in detail provides important input for designing marketing strategies.
market offering People at all levels of the company – including top management – stay close to customers.4
Some combination
of goods, services, Market offerings: Goods, services and experiences
information or
Consumers’ needs and wants are fulfilled through market offerings – some combination of goods,
experiences offered to a
market to satisfy a need services, information or experiences offered to a market to satisfy a need or a want. Usually, the word product
or want. suggests a physical object such as a car, an iPad or a bar of soap. However, the concept of product is not

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Chapter 1 Marketing: Creating and capturing customer value 7

limited to physical objects; anything capable of satisfying a need

can be called a product. The importance of products that are
physical objects lies not so much in owning them as in the
benefits they provide. We buy food not to look at, but because it
satisfies our hunger. We buy a microwave not to admire its utility,
but because it defrosts or cooks our food.
Marketers often use the expressions goods and services/
experiences to distinguish between products that have physical
form and those that do not – that is, those that are intangible.
However, in Chapter 9 we show that there is a continuum
involved and not a clear-cut dichotomy. Consumers also obtain
benefits through experiences, people, places, organisations,
activities and ideas, and so we call these products, too.
Consumers decide which entertainers to watch at the movies
and on television, which places to visit on holiday, which
organisations to support through contributions and which
ideas to adopt. Thus, the term product covers physical goods,
services, experiences and a variety of other offerings that satisfy
consumers’ needs and wants. If at times the term seems not to
fit, we could substitute words such as satisfier, resource or offer.
In the broadest sense, market offerings also include other
entities, such as persons, places, organisations, information and ideas.
Many sellers make the mistake of paying more attention to
the attributes of the products they offer than to the benefits
produced by these products. They see themselves as selling a Product offerings: Social causes are products . . . Often
product, rather than providing a solution to a need. demarketing is involved.
A manufacturer of drill bits may think that the customer wants a Department of Health

6 mm drill bit, but what the customer really wants is a 6 mm hole.

These sellers suffer from marketing myopia.5 They are so
taken with their products that they focus only on existing wants and lose sight of underlying customer marketing myopia
needs. They forget that a product is only a tool to solve a consumer’s problem and they will have trouble if The mistake of paying
more attention to the
a new product comes along that serves the need better or less expensively. The customer with the same need
specific products a
will, all things being equal, want the new product. company offers than
Smart marketers look beyond the attributes of the products and services they sell. By orchestrating to the benefits and
several services and products, they create brand experiences for consumers. For example, you do not just experiences produced
by these products.
watch a V8 Supercar or MotoGP motorcycle race; you immerse yourself in the exhilarating, high-octane
experience that the many on-board mini-cameras now provide.

Customer value and satisfaction

Consumers usually face a broad array of products and services that might satisfy a given need. How do they
choose among these many market offerings? Customers form expectations about the value and satisfaction
that various market offerings will deliver, and buy accordingly. Satisfied customers buy again and tell others
about their good experiences. Dissatisfied customers often switch to competitors and disparage the original
product to others.
Marketers must be careful to set the right level of expectations. If they set expectations too low, they
may satisfy those who buy but may fail to attract enough buyers. If they set expectations too high, buyers
will be disappointed. Customer value and customer satisfaction are key building blocks for developing and
managing customer relationships. We revisit these core concepts later in the chapter.

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8 Session 1 Introduction to marketing and sustainable marketing

Exchanges, transactions and relationships

exchange Marketing occurs when people decide to satisfy needs and wants through exchange relationships. Exchange
The act of obtaining is the act of obtaining a desired object from someone by offering something in return. In the broadest sense,
a desired object from
the marketer tries to bring about a response to some market offering. The response may be more than
someone by offering
something in return. simply buying or trading products and services. A political candidate, for instance, wants votes; a golf club
wants members; an orchestra wants an audience; an online community of practice, such as BimmerPost
(BMW owners), wants subscribers who help each other; and a social action group, such as Amnesty Australia,
wants idea acceptance.
transaction Whereas exchange is the core concept of marketing, a transaction is marketing’s unit of
A trade between two measurement. A transaction consists of a trade of values between two parties. In a transaction, we must be
parties that involves at
able to say that one party gives X to another party and gets Y in return. For example, if you pay $1650 for
least two things of value,
agreed-upon conditions, a television set to Harvey Norman in Sydney or Singapore, you are engaged in a classic monetary
and a time and place of transaction.
agreement. Marketing consists of actions taken to build and maintain desirable exchange relationships with target
audiences involving a product, service, idea or other object. Beyond simply attracting new customers and
creating transactions, the company wants to retain customers and grow their business. Marketers want to
build strong relationships by consistently delivering superior customer value. We expand on the important
concept of managing customer relationships later in this chapter.

Markets
market The concepts of exchange and relationships lead to the concept of a market. A market is the set of actual
The set of all actual and and potential buyers of a product. These buyers share a particular need or want that can be satisfied through
potential buyers of a
exchange relationships.
product or service.
Marketing means managing markets to bring about profitable customer relationships. However,
creating these relationships takes work. Sellers must search for buyers, identify their needs, design good
market offerings, set prices for those offerings, promote them, and store and deliver them. Activities such
as consumer research, product development, communication, distribution, pricing and service are core
marketing activities.
Although we normally think of marketing as being carried out by sellers, buyers also carry out
marketing. Consumers market when they search for products, interact with companies, obtain
information and make their purchases. In fact, today’s digital technologies, from websites and online
social networks to tablets and smartphones, have empowered consumers and made marketing a truly
interactive affair. Thus, in addition to customer relationship management, today’s marketers must also
deal effectively with customer-managed relationships. Marketers are no longer asking only, ‘How can we
reach our customers?’ but also, ‘How can our customers reach us?’ and even, ‘How can our customers
reach each other?’.
Figure 1.3 shows the main elements in a marketing system. Marketing involves serving a market of final
consumers in the face of competitors. The company and competitors research the market and interact with
consumers to understand their needs. They then create and send their market offerings and messages to
consumers, either directly or through marketing intermediaries. All of the parties in the system are affected
by major environmental forces (demographic, economic, physical, technological, political/legal and
social/cultural).
Each party in the system adds value for the next level. In the figure, the arrows represent relationships
that must be developed and managed. Thus, a company’s success at building profitable relationships
depends not only on its own actions but also on how well the entire system serves the needs of final
consumers. Coles Supermarkets cannot fulfil its promise of everyday low prices unless its suppliers provide

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Chapter 1 Marketing: Creating and capturing customer value 9

Company
(marketer)
Marketing
Suppliers Consumers
intermediaries
Competitors

Major environmental forces

Figure 1.3 Elements of a modern marketing system

merchandise at low costs. And Toyota cannot deliver a high-quality car-ownership experience unless its
dealers provide outstanding sales and service.

Designing a customer-driven
marketing strategy
Once marketing management fully understands consumers and the marketplace, it can design a customer-
driven marketing strategy. We define marketing management as the art and science of choosing marketing
target markets and building profitable relationships with them. The marketing manager’s aim is to attract, management
The art and science of
engage, keep and grow target customers by creating, delivering and communicating superior customer
choosing target markets
value. and building profitable
To design a winning marketing strategy, the marketing manager must answer two important questions: relationships with them.
(1) What customers will we serve? (Who is our target market?) and (2) How can we serve these customers best? (What
is our value proposition?). We introduce these aspects of marketing strategy here, and discuss them further in
later chapters.

Selecting customers to serve

Marketing management first decides who the organisation will serve. This is done by examining the various
segments into which the market naturally falls, based on the appropriate factors that can be used to analyse
a market. We discuss this aspect in depth in Chapter 6. Marketers know they cannot serve all customers in
every way with a single market offering. They know it is necessary to select customers they can serve well
and profitably. This may not involve continuously seeking increasing market demand; at times, it may be
necessary to seek fewer customers and reduce demand.
Most people think of marketing management as finding enough customers for the company’s current
output, but this is too limited a view. The organisation has a desired level of demand for its products.
At any point in time there may be no demand, adequate demand, irregular demand or too much demand,
and marketing management must find ways to deal with these different demand states. (See Table 1.1 for
a demand management ready-reckoner.) Marketing management is concerned not only with finding and
increasing demand but also with changing or even reducing it. For example, Uluru (Ayers Rock) might
have too many tourists wanting to climb it, and Daintree National Park in North Queensland can become

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10 Session 1 Introduction to marketing and sustainable marketing

Table 1.1 Demand management ready-reckoner

1 Negative demand

A market is in a state of negative demand if a major part of the market dislikes the product and may even pay a price to avoid it.
Examples include vaccinations, dental work and gall-bladder operations.

2 No demand

Target consumers may be unaware of or uninterested in the product. The marketing task is to find ways to connect the benefits of
the product with the person’s natural needs and interests.

3 Latent demand

Many consumers may share a strong need that cannot be satisfied by any existing product. Examples include safer communities and
more fuel-efficient cars. The marketing task is to measure the size of the potential market and develop effective products and services
that would satisfy the demand.

4 Declining demand

Every organisation, sooner or later, faces declining demand for one or more of its products. The marketing task is to reverse the
declining demand through creative remarketing of the product.

5 Irregular demand

Many organisations face demand that varies on a seasonal, daily or even hourly basis, causing problems of idle or overworked
capacity. Examples include public transport, museums and hospital operating theatres. Supermarkets may be less frequented early
in the week and understocked after heavy weekend trading. The marketing task is to find ways to alter the same pattern of demand
through flexible pricing (e.g. early-bird specials), promotion and other incentives.

6 Full demand

Organisations face full demand when they are satisfied with their volume of business. The marketing task is to maintain the current
level of demand in the face of changing consumer preferences and increasing competition.

7 Overfull demand

Some organisations face a demand level that is higher than they can, or want to, handle. Examples include a national park that is
carrying more tourists than the facilities can handle. The marketing task, called demarketing, requires finding ways to reduce the
demand temporarily or permanently. Demarketing aims not to destroy demand but only to reduce its level, temporarily or permanently.

8 Unwholesome demand

Unwholesome products will attract organised efforts to discourage their consumption. The marketing task is to get people who like
something to give it up, using such tools as fear messages, price hikes and reduced availability.

Sources: For a fuller discussion, see Philip Kotler, ‘The major tasks of marketing management’, Journal of Marketing, October 1973, pp. 42–9; and
Phyllis Berman & Katherine Bruce, ‘Make-up gets a make-over’, BRW, 7 May 1999, pp. 56–7.

overcrowded in the tourist season. Power companies sometimes have trouble meeting demand during peak
usage periods.
demarketing In these and other cases of excess demand, the needed marketing task, called demarketing, is to reduce
Marketing in which the demand temporarily or permanently. The aim of demarketing is not to completely destroy demand, but only
task is to temporarily
to reduce or shift it to another time or even to another product. Thus, marketing management seeks to affect
or permanently reduce
demand. the level, timing and nature of demand in a way that helps the organisation achieve its objectives.
A marketing organisation’s demand comes from two groups: new customers and repeat customers.
Beyond designing strategies to attract new customers and create transactions with them, marketing
organisations go all out to retain current customers and build lasting relationships. Simply put, marketing
management is customer management and demand management.

Choosing a value proposition

The marketing organisation must also decide how it will serve targeted customers – how it will differentiate
and position itself in the marketplace. A marketing organisation’s value proposition is the set of benefits or
values it promises to deliver to consumers to satisfy their needs.

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Chapter 1 Marketing: Creating and capturing customer value 11

Such value propositions differentiate one brand from another. They answer the customer’s question,
‘Why should I buy your brand rather than a competitor’s?’. Marketing organisations must design strong
value propositions that give them the greatest advantage in their target markets. For example, Telstra’s value
positioning in 2016 was ‘It’s how we connect’. The company’s value propositioning is more easily identified
in its WiFi advertising, which used tennis and humour to make it stand out and finished with the statement
‘Telstra Air is how’ – how to stay in touch using thousands of WiFi hotspots.

Marketing management orientations

We have seen that marketing managers carry out tasks to achieve desired behaviour in defined target
markets and to build profitable relationships with target customers. Questions arise in this regard.
For example, what philosophy should guide these marketing efforts? What weight should be given to
the interests of the organisation, the customers and the society? Very often, these interests conflict with
each other.
There are five alternative concepts under which organisations may conduct their marketing
activities: (1) production, (2) product, (3) selling, (4) marketing and (5) societal marketing. We discuss each of
these below.

The production concept

The production concept holds that consumers will favour products that are available and highly production
affordable. Therefore, management should focus on improving production and distribution efficiency. This concept
The idea that consumers
concept is one of the oldest philosophies that guide sellers.
will favour products
The production concept is still a useful philosophy in some situations. For example, both personal- that are available and
computer maker Lenovo and home-appliance maker Haier dominate the highly competitive, price-sensitive highly affordable, and
Chinese market through low labour costs, high production efficiency and mass distribution. However, that the organisation
should therefore focus
although useful in some situations, the production concept can lead to marketing myopia. Companies
on improving production
adopting this orientation run a major risk of focusing too narrowly on their own operations and losing sight and distribution
of the real objective – satisfying customer needs and building customer relationships. efficiency.

The product concept

Another major concept guiding sellers, the product concept, holds that consumers will favour product concept
products that offer the most quality, performance and innovative features. Thus, an organisation should The idea that
consumers will favour
devote energy to making continuous product improvements. Some manufacturers believe that if they
products that offer
can build a better mousetrap the world will beat a path to their door.6 But they are often rudely the most quality,
shocked. Buyers may well be looking for a better solution to a mouse problem, but not necessarily for performance and
a better mousetrap. The solution might be an electronic deterrent, an exterminating service or even a features, and that the
organisation should
house cat, or something that works better than a mousetrap. Furthermore, a better mousetrap will not therefore devote its
sell unless the manufacturer designs, packages and prices it attractively, places it in convenient energy to making
distribution channels, brings it to the attention of people who need it and convinces buyers that it is a continuous product
improvements.
better product.
The product concept can also lead to marketing myopia. For instance, railways management once
thought that users wanted trains, rather than transportation, and overlooked the growing challenge from
airlines, buses, trucks and cars. FTA-TV (free-to-air television) station management who target narrow
segments overlook the fact that, in general, younger people watch less television in favour of interaction selling concept
with each other via mobile devices, instant messaging and email, interactive games and social networking The idea that consumers
on the web, and even watch sporting events on YouTube after the fact. will not buy enough
of the firm’s products
unless the firm
The selling concept undertakes a large-scale
Many companies follow the selling concept, which holds that consumers will not buy enough of the selling and promotion
firm’s products unless the firm undertakes a large-scale selling and promotion effort. The selling concept is effort.

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12 Session 1 Introduction to marketing and sustainable marketing

typically practised with unsought goods – those that buyers do

not normally think of buying, such as insurance. These industries
must be effective at tracking down prospects and selling them on
product benefits.
Such aggressive selling, however, carries high risks. It focuses
on creating sales transactions rather than on building long-
term, profitable customer relationships. The aim often is to sell
what the company makes, rather than making what the market
wants. It assumes that customers who are coaxed into buying the
product will like it. Or, if they do not like it, they will possibly
forget their disappointment and buy it again later. These are
usually poor assumptions.

The marketing concept

The marketing concept: KFC colourfully proclaims how it delivers The marketing concept holds that achieving organisational
satisfaction – ‘It’s finger lickin’ good’. goals depends on determining the needs and wants of target
Bloomberg via Getty Images
markets and delivering the desired satisfaction more effectively
and efficiently than competitors do. The marketing concept
marketing has often been stated in colourful ways: ‘Finger lickin’ good’ (KFC), ‘Beanzmeanz Heinz’ (Heinz), ‘You
concept are 24 hours of sun!’ (Fronius solar energy) and ‘Where do you want to go today?’ (Microsoft).
The marketing
The selling concept and the marketing concept are sometimes confused. Figure 1.4 compares the
management philosophy
which holds that two concepts. The selling concept takes an inside-out perspective. It starts with the factory, focuses on
achieving organisational the company’s existing products, and calls for heavy selling and promotion to obtain profitable sales.
goals depends on It focuses primarily on customer conquest – getting short-term sales with little concern about who
knowing the needs and
buys or why.
wants of target markets
and delivering the desired In contrast, the marketing concept takes an outside-in perspective. As Herb Kelleher, Southwest Airlines’
satisfactions better than colourful co-founder, puts it, ‘We don’t have a marketing department; we have a customer department.’
competitors do. The marketing concept starts with a well-defined market, focuses on customer needs and integrates all the

Starting point Focus Means Ends

THE SELLING Existing Selling and Profits through

Factory
CONCEPT products promoting sales volume

THE MARKETING Customer Integrated Profits through

Market customer
CONCEPT needs marketing
satisfaction

Figure 1.4 The selling and marketing concepts contrasted

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Chapter 1 Marketing: Creating and capturing customer value 13

marketing activities that affect customers. In turn, it yields profits by creating lasting relationships with the
right customers based on customer value and satisfaction.
Implementing the marketing concept often means more than simply responding to customers’
stated desires and obvious needs. Customer-driven companies research current customers deeply to learn
about their desires, gather new product and service ideas, and test proposed product improvements.
Such customer-driven marketing usually works well when a clear need exists and when customers know
what they want.
In many cases, however, customers do not know what they want or even what is possible. As Henry Ford
once remarked, ‘If I’d asked people what they wanted, they would have said faster horses.’7 For example,
even 20 years ago, how many consumers would have thought to ask for now-commonplace products such
as tablet computers, smartphones, digital cameras, 24-hour online buying and satellite navigation systems
(GPS) in their cars? Such situations call for customer-driven marketing – understanding customer needs even
better than customers themselves do and creating products and services that meet existing and latent needs,
now and in the future. As an executive at 3M puts it, ‘Our goal is to lead customers where they want to go
before they know where they want to go.’

The societal marketing concept

The societal marketing concept questions whether the pure marketing concept overlooks possible societal
conflicts between consumer short-run wants and consumer long-run welfare. Is a firm that satisfies the marketing
immediate needs and wants of target markets always doing what is best for consumers in the long run? concept
The idea that a
The societal marketing concept holds that marketing strategy should deliver value to customers in a company’s marketing
way that maintains or improves both the consumer’s and society’s wellbeing. It calls for sustainable decisions should consider
marketing – socially and environmentally responsible marketing that meets the present needs of consumers’ wants, the
company’s requirements,
consumers and businesses while also preserving or enhancing the ability of future generations to meet
consumers’ long-run
their needs. interests and society’s
Even more broadly, many leading business and marketing thinkers are now preaching the concept of long-run interests.
shared value, which recognises that societal needs, not just economic needs, define markets.8
The concept of shared value focuses on creating economic value in a way that also creates value for
society. A growing number of companies known for their hard-nosed approaches to business – such as
GE, Dow, Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever and Walmart – are rethinking the
interactions between society and corporate performance. They are concerned not just with short-term
economic gains but with the wellbeing of their customers, the depletion of natural resources vital to their
businesses, the viability of key suppliers and the economic wellbeing of the communities in which they
operate.
One prominent marketer calls this Marketing 3.0. ‘Marketing 3.0 organisations are values-driven,’ he
says. ‘I’m not talking about being value-driven. I’m talking about “values” plural, where values amount to
caring about the state of the world.’ Another marketer calls it purpose-driven marketing. ‘The future of profit
is purpose,’ he says.9

Preparing an integrated marketing

plan and program
The company’s marketing strategy outlines which customers the company will serve and how the company
will create value for these customers. Next, the marketer develops an integrated marketing program that
will actually deliver the intended value to target customers. The marketing program builds customer
relationships by transforming the marketing strategy into action. It consists of the firm’s marketing mix –
that is, the set of marketing tools the firm uses to implement its marketing strategy.

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14 Session 1 Introduction to marketing and sustainable marketing

While the ultimate aim may be to modify people’s behaviour – to drive more carefully, drink less alcohol,
use less energy or water, think favourably of a political party, give more to a charitable organisation or buy
a particular brand – marketing managers have a defined set of tools they can use. The set of tools most
marketers employ, in varying combinations, has developed most recently from the knowledge gained in
business-to-business marketing (formerly industrial marketing) and in marketing services. We refer to these
tools (see Figure 1.5) as the extended marketing mix. Each of the main marketing mix tools (product, price,
placement logistics and promotion) is discussed in more detail in the chapters forming Sessions 2 and 3. It
should be noted at the outset that the three remaining marketing mix tools (people, process and physical
evidence) are discussed throughout the book for reasons which should become clear as the story unfolds.
To deliver on its value proposition, the marketing organisation must first create a need-satisfying
market offering (product). It must decide how much it will charge for the offer (price) and where it will
make the offer available to target customers (placement). It must communicate with target customers
about the offer and persuade them of its merits (promotion). It must decide how relationships will be
developed and maintained and who will do this (people). It must decide on how customer satisfaction
will be delivered and recorded (technologies) – whether a service/experiential product or after-sales
service (process). And, lastly, it must manage customer expectations and relative service quality,
thereby ensuring that customers have realistic expectations which the marketing organisation can
meet (physical evidence). The marketing organisation must blend all these marketing mix tools into
a comprehensive, integrated marketing program that communicates and delivers the intended value
to chosen customers. We explore marketing programs and the marketing mix in much more detail in
later chapters.

PRODUCT: GOODS, SERVICES PRICE PEOPLE

and EXPERIENCES List price ‘People interacting with
Variety Packaging Discounts people’ is how many service
Quality Sizes Allowances experiences might be
Design Add-ons Settlement and described. Relationships
Features Warranties credit terms are important in marketing.
Brand name Returns

TARGET CUSTOMERS
INTENDED POSITIONING

PLACEMENT LOGISTICS PROMOTION PROCESS PHYSICAL EVIDENCE

Demand chain Advertising In the case of Services are mostly
management Personal selling ‘high-contact’ services, intangible. The
Logistics management Direct marketing customers are often meaning of other tools
Channel management Online marketing involved in the process and techniques used
of creating and enjoying in measures of
experiences. Increasingly, satisfaction is
so is technology. important.

Figure 1.5 The extended marketing mix

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Chapter 1 Marketing: Creating and capturing customer value 15

LINKING THE CONCEPTS

Stop here for a moment and stretch your mind. What have you ● What does marketing mean to you? How does it affect your
learned so far about marketing? Set aside the more formal daily life?
definitions we have examined and try to develop your own ● What brand of athletic shoes did you last purchase? Describe
understanding of marketing. your relationship with Nike, adidas, New Balance, Asics,
● In your own words, what is marketing? Write down your Reebok, Puma, Converse or whatever brand of shoes you
definition. Does your definition include such key concepts as purchased.
customer value, engagement and relationships?

Engaging customers and managing

customer relationships
The first three steps in the marketing process – understanding the marketplace and customer needs,
designing a customer-driven marketing strategy and constructing marketing programs – all lead to the
fourth and most important step: building profitable customer relationships. We first discuss the basics of
customer relationship management. Then we examine how companies go about engaging customers on a
deeper level in this age of digital and social marketing.

Customer relationship management

Customer relationship management is perhaps the most important concept of modern marketing. In its
broadest sense, customer relationship management is the overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of
acquiring, keeping and growing customers. Hence, more specifically, customer relationship customer
management (CRM) is the process of managing detailed information about individual customers and relationship
carefully managing customer touch points in order to maximise customer loyalty. management
(CRM)
Managing detailed
Relationship building blocks: Customer value and satisfaction information about
The key to building lasting customer relationships is to create superior customer value and satisfaction. individual customers
Satisfied customers are more likely to be loyal customers and to give the marketing organisation a larger and carefully managing
share of their business. customer touch points
in order to maximise
customer loyalty.
Customer value
Attracting and retaining customers can be a difficult task. Customers often face a bewildering array of
products and services from which to choose. A customer buys from the firm that offers the highest customer- customer-
perceived value – the customer’s evaluation of the difference between all the benefits and all the costs of perceived value
The customer’s
a market offering relative to those of competing offers. Importantly, customers often do not judge product
evaluation of the
values and costs accurately or objectively. They act on perceived value. For example, is a Tesla Model 3 really difference between all
the most economical choice when buying a motor vehicle? In reality, it might take years to save enough in the benefits and all the
reduced fuel costs to offset the car’s higher purchase price. However, Tesla Model 3 buyers perceive that they costs of a marketing
offer relative to those of
are getting real value. It is all a matter of personal value perceptions. For many consumers, the answer to our competing offers.
question is ‘no’, but – for the target segment of style-conscious, affluent buyers – the answer is ‘yes’.
customer
Customer satisfaction satisfaction
Customer satisfaction depends on the product’s perceived performance relative to a buyer’s The extent to which
a product’s perceived
expectations. If the product’s performance falls short of expectations, the customer is dissatisfied.
performance matches
If performance matches expectations, the customer is satisfied. If performance exceeds expectations, the or exceeds a buyer’s
customer is highly satisfied or delighted. Outstanding marketing companies go out of their way to keep expectations.

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16 Session 1 Introduction to marketing and sustainable marketing

important customers satisfied. Most studies show that higher levels of customer satisfaction lead to greater
customer loyalty, which in turn results in better company performance. Smart companies aim to delight
customers by promising only what they can deliver, then delivering more than they promise. Delighted
customers not only make repeat purchases; they also become willing marketing partners and ‘customer
evangelists’ who spread the word about their good experiences to others.10
For companies interested in delighting customers, exceptional value and service become part of the
overall company culture. For example, year after year, Ritz-Carlton ranks at or near the top of the hospitality
industry in terms of customer satisfaction. The company’s passion for satisfying customers is summed up
in its credo, which promises that its luxury hotels will deliver a truly memorable experience – one that
‘enlivens the senses, instils well-being, and fulfils even the unexpressed wishes and needs of our guests’.11
Although a customer-centred firm seeks to deliver high customer satisfaction relative to competitors,
it does not attempt to maximise customer satisfaction. A company can always increase customer satisfaction
by lowering its price or increasing its services. But this may result in lower profits. Thus, the purpose of
marketing is to generate customer value profitably. This requires a very delicate balance: the marketer must
continue to generate more customer value and satisfaction but not ‘give away the house’.

Customer relationship levels and tools

Marketing organisations can build customer relationships at many levels, depending on the nature of the target
market. At one extreme, a company with many low-margin customers may seek to develop basic relationships with
them. For example, Lever-Rexona does not phone or call on all of its Sunsilk consumers to get to know them
personally. Instead, the company creates relationships through brand-building advertising, websites and social
media presence. At the other extreme, in markets with few customers and high margins, sellers want to create
full partnerships with key customers. For example, Lever-Rexona teams work closely with Coles, Woolworths
and other large retailers. In between these two extremes, other levels of customer relationships are appropriate.
Beyond offering consistently high value and satisfaction, marketers can use specific marketing tools to
develop stronger bonds with consumers. For example, many companies offer frequency marketing programs
that reward customers who buy frequently or in large amounts. Airlines offer frequent-flyer programs,
hotels give room upgrades to their frequent guests, and supermarkets – for example, Woolworths – give
patronage discounts to their customers via such tools as their Woolworths Rewards card which enables
customers to get money off their weekly shopping bills.
Other companies sponsor club marketing programs that offer members special benefits and create
member communities. For example, Harley-Davidson sponsors the Harley Owners Group (HOG), which
gives Harley riders a way to share their common passion of ‘making the Harley-Davidson dream a way
of life’. HOG membership benefits include a quarterly HOG magazine, the H.O.G. Touring Handbook, a
roadside assistance program, a specially designed insurance program, theft reward service, a travel centre
and a ‘Fly & Ride’ program enabling members to rent Harleys while on holiday. The worldwide club now
numbers more than 1500 local chapters and more than a million members.12

Engaging customers
Profound changes continue to occur in the ways in which companies are relating to their customers.
Yesterday’s marketing organisations focused on mass marketing to all customers at arm’s length. Today’s
companies build deeper, more direct and lasting relationships with more carefully selected customers.
We now examine some of the important trends in the way companies are relating to their customers.

Customer engagement and today’s digital and social media

The digital age has spawned a dazzling set of new customer relationship-building tools, from websites,
online ads and videos, mobile ads and apps, and blogs to online communities and the major social media,
such as Twitter, Facebook, YouTube, Instagram and Pinterest.

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Chapter 1 Marketing: Creating and capturing customer value 17

Yesterday’s companies focused mostly on mass marketing to broad segments of customers at arm’s
length. By contrast, today’s companies are using online, mobile and social media to refine their targeting
and to engage customers more deeply and interactively. The old marketing involved marketing brands to
consumers. The new marketing is customer-engagement marketing – fostering direct and continuous customer
involvement in shaping brand conversations, brand experiences and brand community. Customer-
engagement marketing goes beyond just selling a brand to consumers. Its goal is to make the brand a
meaningful part of consumers’ conversations and lives.
The burgeoning internet and social media have given a huge boost to customer-engagement
marketing. Today’s consumers are better informed, more connected and more empowered than ever before.
Newly empowered consumers have more information about brands and they have a wealth of digital
platforms for airing and sharing their brand views with others. Thus, marketers are now embracing not only
customer relationship management but also customer-managed relationships, in which customers connect
with companies and with each other to help forge their own brand experiences.
Greater consumer empowerment means that companies can no longer rely on marketing by intrusion.
Instead, they must practise marketing by attraction – creating market offerings and messages that engage
consumers rather than interrupt them. Hence, most marketers now combine their mass-media marketing
efforts with a rich mix of online, mobile and social media marketing that promotes brand–consumer
engagement and conversation.
Many companies post their latest ads and videos on social media sites, hoping they will go viral. They
maintain an extensive presence on Twitter, YouTube, Facebook, Google+, Pinterest, Instagram, Vine and other
social media to create brand buzz. They launch their own blogs, mobile apps, online microsites and consumer-
generated review systems, all with the aim of engaging customers on a more personal, interactive level.
Take Twitter, for example. Organisations ranging from computer giant, Dell, and news media to
politicians and government departments have created Twitter pages and promotions. They use ‘tweets’
to start conversations with and between Twitter’s more than 317 million monthly active users, to address
customer service issues, to research customer reactions and to drive traffic to relevant articles, web and
mobile marketing sites, contests, videos and other brand activities.13
Similarly, almost every marketing organisation has something going on Facebook these days. Starbucks
has more than 38 million Facebook ‘fans’; Coca-Cola has more than 94 million.14 And every major marketer
has a YouTube channel where the brand and its fans post current ads and other entertaining or informative
videos. Instagram, LinkedIn, Pinterest, Snapchat, Vine – all have exploded onto the marketing scene, giving
brands more ways to engage and interact with customers. Skilled use of social media can get consumers
involved with and talking about a brand.
The key to engagement marketing is to find ways to enter consumers’ conversations with engaging
and relevant brand messages. Simply posting a humorous video, creating a social media page or hosting a
blog is not enough. Successful engagement marketing means making relevant and genuine contributions
to consumers’ lives and interactions.
consumer-
Consumer-generated marketing generated
Whether invited by marketers or not, consumer-generated marketing has become a significant marketing
marketing force. Through a profusion of consumer-generated videos, blogs and websites, consumers are Brand exchanges
playing an increasing role in shaping their own brand experiences and those of other consumers. Beyond created by consumers
themselves – both
creating brand conversations, on their own or by invitation, customers are having an increasing say in invited and uninvited
everything from product design, usage and packaging, to pricing and distribution and reviewing product – by which consumers
quality and satisfaction.15 Some companies ask consumers for new product and service ideas, while others are playing an increasing
role in shaping their
invite customers to play an active role in shaping ads.
own brand experiences
Despite the many successes, however, harnessing consumer-generated content can be a time-consuming and those of other
and costly process, and companies may find it difficult to glean even a little gold from all the garbage. consumers.

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18 Session 1 Introduction to marketing and sustainable marketing

Moreover, because consumers have so much control over social media content, inviting their input can
sometimes backfire. For example, McDonald’s famously launched a Twitter campaign using the hashtag
#McDStories, hoping it would inspire heart-warming stories about Happy Meals. Instead, the effort was
hijacked by Twitter users, who turned the hashtag into a ‘bashtag’ by posting less-than-appetising messages
about their bad experiences with the fast-food chain. McDonald’s pulled the campaign within only two
hours, but the hashtag was still churning weeks, even months, later.16
As consumers become more connected and empowered, and as the boom in digital and social media
technologies continues, consumer brand engagement – whether invited by marketers or not – will be
an increasingly important marketing force. Through a profusion of consumer-generated videos, shared
reviews, blogs, mobile apps and websites, consumers are playing a growing role in shaping their own and other
consumers’ brand experiences. Engaged consumers are now having a say in everything from product design,
usage and packaging to brand messaging, pricing and distribution. Brands must embrace this new consumer
empowerment and master the new digital and social media relationship tools – or risk being left behind.

Partner relationship management

When it comes to creating customer value and building strong customer relationships, today’s marketers know
partner they cannot go it alone. They must work closely with a variety of marketing partners. In addition to being good
relationship at customer relationship management, marketers must also be good at partner relationship management
management – working closely with others inside and outside the company to jointly bring more value to customers.
Working closely with
partners in other
company departments
Partners inside the organisation
and outside the Traditionally, marketers have been charged with understanding customers and representing customer
company to jointly needs to different company departments. The old thinking was that marketing is done only by marketing,
bring greater value to sales and customer-support people. However, in today’s more connected world, every functional area can
customers.
interact with customers, especially electronically. The new thinking is that – no matter what your job is in a
company – you must understand marketing and be customer-focused. Rather than letting each department
go its own way, firms must link all departments in the cause of creating customer value.

Partners outside the organisation

Marketers must also partner with suppliers, channel partners and others outside the company. Marketing
channels consist of distributors, retailers and others who connect the company to its buyers. The supply
chain describes a longer channel, stretching from raw materials to components to final products that
are carried to final buyers. Through supply chain management, companies today are strengthening their
connections with partners all along the supply chain. They know that their fortunes rest on more than just
how well they perform. Success at delivering customer value rests on how well their entire supply chain
performs against competitors’ supply chains.

Capturing value from customers

The first four steps in the marketing process outlined in Figure 1.1 involve building customer relationships
by creating and delivering superior customer value. The final step involves capturing value in return, in the
form of current and future sales, market share and profits. By building superior customer value, the firm
creates highly satisfied customers who remain loyal and buy more. This, in turn, means greater long-run
returns for the marketing organisation. Here, we discuss the outcomes of creating customer value: customer
loyalty and retention, share of market, share of customer and customer equity.

Creating customer loyalty and retention

Good customer relationship management creates customer satisfaction. In turn, satisfied customers remain
loyal and talk favourably to others about the company and its products. Studies show big differences in the

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Chapter 1 Marketing: Creating and capturing customer value 19

loyalty of customers who are less satisfied, somewhat satisfied

and completely satisfied. Even a slight drop from complete
satisfaction can create an enormous drop in loyalty. Thus, the
aim of customer relationship management is to create not
only customer satisfaction but also customer delight.
Keeping customers loyal makes good economic sense.
Loyal customers spend more and stay around longer. Research
also shows that it is five times cheaper to keep an old customer
than to acquire a new one. Conversely, customer defections
can be costly. Losing a customer means losing more than a
single sale. It means losing the entire stream of purchases that
the customer would make over a lifetime of patronage. Here
is a classic illustration of customer lifetime value:

Stew Leonard, who operates a highly profitable four-store

supermarket in Connecticut and New York, once said that
Customer lifetime value: To keep customers coming back, the US
he sees $50,000 flying out of his store every time he sees supermarket chain Stew Leonard’s has created the ‘Disneyland of
a sulking customer. Why? Because his average customer dairy stores’. Rule #1 – The customer is always right. Rule #2 – If the
spends about $100 a week, shops 50 weeks a year, and customer is ever wrong, reread Rule #1.
Courtesy of Stew Leonard’s
remains in the area for about 10 years. If this customer
has an unhappy experience and switches to another
supermarket, Stew Leonard’s has lost $50,000 in lifetime revenue. The loss can be much greater if customer lifetime
the disappointed customer shares the bad experience with other customers and causes them to defect. value
The amount by which
revenues from a
To keep customers coming back, Stew Leonard’s has created what has been called the ‘Disneyland customer over time
of Dairy Stores’, complete with costumed characters, scheduled entertainment, a petting zoo, and exceed the company’s
animatronics throughout the store. From its humble beginnings as a small dairy store in 1969, Stew costs of attracting,
Leonard’s has grown at an amazing pace. It’s built 30 additions onto the original store, which now selling and servicing that
customer. The value
serves more than 300,000 customers each week. This legion of loyal shoppers is largely a result of the of the entire stream
store’s passionate approach to customer service. ‘Rule #1: The customer is always right. Rule #2: If the of purchases that the
customer is ever wrong, reread rule #1.’17 customer would make
over a lifetime of
Stew Leonard is not alone in assessing customer lifetime value. Lexus, for example, estimates that a patronage.
single satisfied and loyal customer is worth more than $600 000 in lifetime sales, and the estimated lifetime
value of a Starbucks customer is more than $14 000.18 In fact, a company can lose money on a specific
transaction but still benefit greatly from a long-term relationship. This means that companies must aim
high in building customer relationships. Customer delight creates an emotional relationship with a brand,
not just a rational preference. And that relationship keeps customers coming back.

Growing share of customer

Beyond simply retaining good customers to capture customer lifetime value, good customer relationship
management can help marketers increase their share of customer – the share they get of the customer’s share of customer
purchasing in their product categories. Thus, banks want to increase ‘share of wallet’. Supermarkets and The portion of the
customer’s purchasing
restaurants want to get more ‘share of stomach’. Car companies want to increase ‘share of garage’, and
that a company gets in
airlines want greater ‘share of travel’. its product categories.
To increase share of customer, firms can offer greater variety to current customers. Or they can train
employees to cross-sell and up-sell in order to market more products and services to existing customers.
For example, Amazon.com is highly skilled at leveraging relationships with its 244 million customers to
increase its share of each customer’s purchases. Originally an online bookseller, Amazon.com now also

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20 Session 1 Introduction to marketing and sustainable marketing

offers customers music, videos, gifts, toys, consumer electronics, office products, home improvement
items, lawn and garden products, apparel and accessories, jewellery and an online auction. Based on its
system, which relies on each customer’s purchase history, the company recommends related products that
might be of interest. In this way, Amazon.com captures a greater share of each customer’s spending budget.
In the United States, Amazon has what it terms its Prime two-day shipping program, which has also helped
boost its share of customers’ wallets. For an annual fee of $99, Prime members receive delivery of all their
purchases within two days, whether it is a single paperback book or a 60-inch high-definition television.
According to one analyst, the ingenious Amazon Prime program ‘converts casual shoppers, who gorge on
the gratification of having purchases reliably appear two days after the order, into Amazon addicts’. As a
result, Amazon’s 40 million Prime customers now account for more than half of its US sales. On average,
a Prime customer spends 2.4 times more than a non-Prime customer does.19

Building customer equity

We can now see the importance of not just acquiring customers, but also keeping and growing them.
One marketing consultant puts it this way: ‘The only value your company will ever create is the value that
comes from customers – the ones you have now and the ones you will have in the future. Without customers,
you do not have a business.’20 Customer relationship management takes a long-term view. Companies want
not only to create profitable customers, but to ‘own’ them for life, earn a greater share of their purchases
and capture their customer lifetime value.

What is customer equity?

customer equity The ultimate aim of customer relationship management is to produce high customer equity.21 Customer
The total combined equity is the total combined customer lifetime values of all of the company’s current and potential customers.
customer lifetime values
As such, it is a measure of the future value of the company’s customer base. Clearly, the more loyal the company’s
of all of the company’s
customers. profitable customers, the higher the company’s customer equity. Customer equity may be a better measure of
a company’s performance than current sales or market share. Customer equity is one reason why upmarket car
brands, such as BMW, have focused on younger customers (average age about 40), and why communities of
practice, such as Bimmerpost.com and BabyBMW.net, are so important to the company’s long-term sales and
profitability. There, those younger users communicate with one another across the full range of BMWs and
also with companies across the world that supply original equipment accessories and more.

Building the right relationship with the right

customers
Companies should manage customer equity carefully. They should view customers as assets that need to
be managed and maximised. But not all customers, not even all loyal customers, are good investments.
Surprisingly, some loyal customers can be unprofitable, and some disloyal customers can be profitable.
Which customers should the company acquire and retain?
The company can classify customers according to their potential profitability and manage its relationships
with them accordingly. Customers can be classified into one of four relationship groups, according to their
profitability and projected loyalty.22 Each group requires a different relationship management strategy.
Strangers show low potential profitability and little projected loyalty. There is little fit between their needs
and the company’s offerings. The relationship management strategy for these customers is simple: do not
invest anything in them; make money on every transaction.
Butterflies are potentially profitable but not loyal. There is a good fit between their needs and the
company’s offerings. However, like real butterflies, we can enjoy them for only a short while and then they
are gone. An example is stock market investors who trade shares often and in large amounts but who enjoy
hunting out the best deals without building a regular relationship with any single brokerage company.
Efforts to convert butterflies into loyal customers are rarely successful. Instead, the company should enjoy

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Chapter 1 Marketing: Creating and capturing customer value 21

the butterflies for the moment. It should create satisfying and profitable transactions with them, capturing
as much of their business as possible in the short time during which they buy from the company. Then the
company should move on and cease investing in them until the next time around.
True friends are both profitable and loyal. There is a strong fit between their needs and the company’s
offerings. The company wants to make continuous relationship investments to delight these customers and
nurture, retain and grow them. It wants to turn true friends into true believers, who come back regularly and
tell others about their good experiences with the company.
Barnacles are highly loyal but not very profitable. There is a limited fit between their needs and the
company’s offerings. An example is smaller bank customers who bank regularly but do not generate enough
returns to cover the costs of maintaining their accounts. Like barnacles on the hull of a ship, they create
drag. Barnacles are perhaps the most problematic customers. The company might be able to improve their
profitability by selling them more, raising their fees or reducing service to them. However, if they cannot
be made profitable, they should be ‘fired’.
The point here is an important one: different types of customers require different engagement and
relationship management strategies. The goal is to build the right relationships with the right customers.

LINKING THE CONCEPTS

We have covered a lot of ground. Again, pause for a moment and customer relationship management strategy does it use? Do
develop your own thoughts about marketing. you think this relationship management strategy differs from
● In your own words, what is marketing and what does it seek other companies you buy from?
to accomplish? ● Are you a ‘true friend’ of any company? What strategy does
● Select a company that you last purchased from. How well does this company use to manage its relationship with you?
that company manage its relationships with customers? What

The changing marketing landscape

Marketing operates within a dynamic global environment. Every decade calls on marketing managers
to think in a fresh way about their marketing objectives and practices. Rapid changes can quickly make
yesterday’s winning strategies out of date. As management thought leader Peter Drucker once observed, a
marketing organisation’s winning formula for the last decade will probably be its undoing in the next decade.
Marketing does not take place in a vacuum. Now that we have discussed the five steps in the marketing
process, let us examine how the ever-changing marketplace affects both consumers and the marketers who
serve them. We look more deeply into these and other marketing environment factors in Chapter 3.
In this section, we examine the major trends and forces that are changing the marketing landscape and
challenging marketing strategy. We look at six major developments: (1) the digital age; (2) the challenging
economic environment; (3) measuring marketing’s contribution to organisational performance; (4) the growth of not-
for-profit marketing; (5) rapid globalisation; and (6) the call for more corporate social responsibility.

The digital age: Online, mobile and social media

marketing
The information revolution has reached a critical point where a new information-based infrastructure is
internet
unfolding as we witness the convergence of telecommunications, media and technology (TMT) in the form A vast public web of
of computer systems, information services and consumer/professional electronics. The new digital computer networks
infrastructure is creating major shifts in markets and competition. As a result, traditional company and that connects users of
all types all around the
industry structures are being transformed into alliance networks. This IT explosion is accelerating the rate
world to each other and
of change and the emergence of new global competitors as various markets become attractive due to the to an amazingly large
lower costs offered to many industries by technology such as the internet. information repository.

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22 Session 1 Introduction to marketing and sustainable marketing

The explosive growth in digital technology has fundamentally changed the way we live – how we
communicate, share information, access entertainment and shop. More than 3 billion people – 42 per cent
of the world’s population – are now online; over 80 per cent of Australians own smartphones. These numbers
will only grow as digital technology rockets into the future.23
Most consumers are totally smitten with all things digital. For example, many smartphone users keep
their mobile phone next to them when they sleep – they say it is the first thing they touch when they get
up in the morning and the last thing they touch at night. In just the past few years, people averaged more
time per day with digital media than they did viewing traditional television, with many using their mobile
device while they watch television.24
The consumer love affair with digital and mobile technology makes it fertile ground for marketers
trying to engage customers. So it is no surprise that the internet and rapid advances in digital and social
digital and social media have taken the marketing world by storm. Digital and social media marketing involves using
media marketing digital marketing tools, such as websites, social media, mobile ads and apps, online video, email, blogs and
The use of digital
other digital platforms, to engage consumers anywhere, anytime via their computers, smartphones, tablets,
marketing tools, such
as websites, social internet-ready TVs and other digital devices. These days, it seems that every company is reaching out to
media, mobile ads and customers with multiple websites, newsy tweets and Facebook pages, viral ads and videos posted on
apps, online video, YouTube, rich-media emails and mobile apps that solve consumer problems and help them shop.
email, blogs and other
At the most basic level, marketers set up company and brand websites that provide information and
digital platforms, to
engage consumers promote the company’s products. Many companies also set up branded community sites, where customers
anywhere, anytime can congregate and exchange brand-related interests and information. For example, the Pettalk site, <www.
via their computers, pettalk.com.au>, is a place where pet lovers can communicate via discussion boards dedicated to various
smartphones, tablets,
internet-ready TVs and types of pets. Patient, <patient.info/forums/>, offers moderated forums where people from all over the world
other digital devices. can register and share their medical experiences, and the research they have found for various ailments and
remedies. And Sony’s GreatnessAwaits.com site serves as a social hub for PlayStation PS4 game enthusiasts.
It is a place where fans can follow social media posts about PS4, watch the latest PS4 videos, discover which
PS4 games are trending on social networks, share content and interact with other fans – all in real-time.
To date, GreatnessAwaits.com has earned more than 4.5 million page views, curated more than 3.3 million
pieces of social content and featured 75 000 fans.25
Beyond brand websites, most companies are also integrating social and mobile media into their
marketing mixes.

Social media marketing

It is difficult to find a brand website, or even a traditional media ad, that does not feature links to the brand’s
Facebook, Twitter, Google+, LinkedIn, YouTube, Instagram, Pinterest or other social media sites. Social
media provide exciting opportunities to extend customer engagement and get people talking about a brand.
More than 90 per cent of all US companies now use social media as part of their marketing mixes, and
71 per cent believe that social marketing is core to their business.26
Some social media are huge – Facebook has more than 1.2 billion active monthly members. Twitter
has more than 317 million monthly active users; Pinterest draws in 53 million users; and Instagram racks
up an estimated 300 million active monthly visitors. Reddit, the online social news community, has nearly
174 million unique visitors each month from 185 countries. But more-focused social media sites are also
thriving, such as XDA-Developers, an online global community of many millions of smartphone users
who exchange advice, discuss entertainment and share software development via phone at the community’s
online, Facebook, Swappa, Twitter, YouTube, Google+ and mobile sites such as Tapatalk.
Online social media provide a digital home where people can connect and share important information
and moments in their lives. As a result, they offer an ideal platform for real-time marketing, by which
marketers can engage consumers in the moment by linking brands to important trending topics, real-world
events, causes, personal occasions or other important happenings in consumers’ lives.

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Chapter 1 Marketing: Creating and capturing customer value 23

Using social media might involve something as simple as a contest or promotion to garner Facebook
likes, tweets or YouTube postings. But more often these days, large organisations of all kinds use a wide
range of carefully integrated social media. For example, space agency NASA uses a broad mix of social
media to educate the next generation of space explorers on its mission to ‘boldly go where no man has
gone before’. In all, NASA has more than 480 social media accounts, spanning various topics and digital
platforms. The agency has more than 10 million Facebook fans, 9 million Twitter followers, 2.5 million
Instagram followers and 30 000 YouTube subscribers. One of NASA’s largest-ever social media campaigns
supported the recent test launch of the Orion spacecraft, which will eventually carry humans to deep-space
destinations, such as Mars or an asteroid.27

Mobile marketing
Mobile marketing is perhaps the fastest-growing digital marketing platform. Four out of five smartphone
users use their phones to access their bank account for online transfers and payments, browse product
information through apps or the mobile web, make in-store price comparisons, read online product reviews,
find and redeem coupons, and a lot more.28 Smartphones are ever-present, always on, finely targeted and
highly personal, and for one-third of Australians, their only means of telephone communication.29
This makes smartphones ideal for engaging customers anytime, anywhere as they move through the buying
process. For example, Starbucks customers can use their mobile devices for everything from finding the
nearest Starbucks and learning about new products to placing and paying for orders.
We investigate the exciting use of digital technologies in marketing in the chapters ahead, particularly
in Chapter 13.

The challenging world economy

From 2008 to 2009, the United States experienced a stunning economic meltdown, mainly due to questionable
bank-lending practices. This Global Financial Crisis (GFC) was unlike anything experienced since the Great
Depression of the 1930s. As a result, most world economies experienced major economic upheavals, requiring
implementation of government stimulus packages. Stock markets plunged and trillions of dollars of market value
simply evaporated. The financial crisis left shell-shocked US consumers short of both money and confidence
as they faced losses in income, a severe credit crunch, declining home values and rising unemployment.
The stimulus packages introduced by the leading economies had a beneficial effect, particularly in
Australia and New Zealand. These countries were less affected by the GFC due, in part, to mineral exports
and to tighter regulation of the financial services sector. However, a subsequent downturn in trade with
China in 2015–16 caused concerns in both countries.
The faltering and uncertain economy caused many consumers to rethink their spending priorities and
to cut back on their buying. More than just a temporary change, the economic downturn has affected
consumer attitudes and spending behaviour and will continue to do so for many years to come – and in many
countries. In Australia and New Zealand, consumer confidence fell due to the collective impact on their
economies of a number of challenges occurring internationally: first, the US crisis, then the sovereign debt
issues of a number of southern European countries, followed by mass migration out of war-torn sectors of
the Middle East into these countries and further into Europe, coupled with a downturn in China’s exports.
In today’s post-recession era, consumer incomes and spending are again on the rise. However, even as
the economy has strengthened in the United States, rather than reverting to their old free-spending ways,
Americans are now showing an enthusiasm for frugality not seen in decades. Sensible consumption has
made a comeback, and it appears to be here to stay. The new consumer spending values emphasise simpler
living and more value for the dollar. Despite their rebounding means, consumers continue to buy less, clip
more coupons, swipe their credit cards less and put more in the bank.
Companies in all industries – from discounters to luxury brands – have tightened their budgets
and aligned their marketing strategies with the new economic realities. More than ever, marketers are

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24 Session 1 Introduction to marketing and sustainable marketing

emphasising the value in their value propositions. They are focusing on value-for-the-money, practicality
and durability in their product offerings and marketing pitches.
In adjusting to the new economy, companies might be tempted to cut marketing budgets deeply
and to slash prices in an effort to coax jittery customers into opening their wallets. Although cutting
costs and offering selected discounts can be important marketing tactics in a slowing economy, smart
marketers understand that making cuts in the wrong places can damage long-term brand images and
customer relationships. The challenge is to balance the brand’s value proposition with the current times
while also enhancing its long-term equity. Thus, rather than slashing prices in uncertain economic
times, many marketers hold the line on prices and instead explain why their brands are worth it.

Measuring marketing’s contribution to

organisational performance
Businesses exist to create wealth for their owners, while not-for-profit organisations seek to survive in
order to continue satisfying those who depend on them. While some researchers initially took the view
that profits are an element of market orientation, we join others in
taking the view that profit is the objective of business and surpluses
the objective of not-for-profit organisations.30
As performance measurement has increasingly become the
domain of marketing management, one key question facing each
type of organisation is which objective (independently reported
from such sources as company reports) and subjective (self-
reported by managers) performance measures to use in assessing
performance. In one review of 150 prior studies covering the
period 1991–95, it was found that the three most widely used
measures were sales (and growth) (22 per cent of all measures),
market share (17 per cent) and profit contribution (11 per cent).31
Such financial measures as sales revenue and profits dominated
(67 per cent). Another study extended this by examining a further
46 empirical performance studies published between 1992 and
Marketing a social cause: Open Family Australia provides
outreach support and services to homeless and at-risk young 2003 (nearly all of them published between 1996 and 2003). They
people. found that while the majority of measures were still financially
Open Family Australia oriented (54 per cent of indicators used), non-financial measures
were increasingly being favoured.32
The seminal US studies by researchers Narver and Slater and
by Kohli and Jaworski employed subjective performance measures whereby managers self-reported their
market orientation and the organisation’s performance.33 A later UK study by Harris is one of very few that
employed both subjective and objective measures in assessing organisational performance.34 A meta-analysis
by Ellis took these and many other similar studies and reporting methods into account and concluded that,
on balance, there is a positive relationship between an organisation holding a market orientation whereby
it focuses on both customer needs and competitor activities, and the organisation’s performance using a
variety of financial and marketing measures or metrics.35 Marketing in Action 1.1 begins our examination
of marketing metrics in this book.
It should be evident from this commentary on measuring marketing’s performance that, to date, most
studies have used the performance indicated by management, rather than turning to more objective sources
such as company reports. There are conflicting findings on the connection between holding a market
orientation and organisational performance from studies in different parts of the world. Further studies are
needed to provide an unequivocal answer as to which measures to use and what value-adding contribution
marketing makes to both profit-oriented and not-for-profit organisations.

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Chapter 1 Marketing: Creating and capturing customer value 25

Marketing
in Action Are marketers really that ‘lousy at selling marketing’?
1.1
A former Australian marketing commentator, Neil Shoebridge, often commented For Tim Ambler, Roger Best and the many firms they have influenced, the
on the issue of why marketing management seem to find it difficult to sell the most important aspect is ‘pan-company marketing’. These firms have adopted
benefits of marketing to the financial management of organisations – particularly a market-oriented approach, which ensures that, from top to bottom, thanks
to top management. He went so far as to indicate that, ‘Marketers might be good to effective internal marketing, their employees see the only reason for the
at selling their companies’ products, but they have done a lousy job of selling organisation’s existence as satisfying customers. How? They are market-oriented
marketing.’ Why this might be so, and how the matter is being addressed, is the because they repeatedly add value at every point of contact – what Jan Carlzon
subject of this Marketing in Action box. of Scandinavian Airways referred to as ‘moments of truth’ – and at every purchase
and post-purchase situation. This market-oriented approach is also vital for
not-for-profit organisations, such as the Red Cross and the Australian Cancer

Why the difficulty in measuring Council, and indeed for all levels of government, political and administrative.

marketing effectiveness? Not adopting this approach may result in moments of misery for customers and a
falling-away in repeat business.
One difficulty is that, quite apart from the fact that even marketing academics The aspect of marketing referred to throughout this book, even when
and practitioners use the same words (e.g. brand equity, product innovation), examining a marketing metric that seems applicable at the budgetary level,
individually they ascribe different meanings to the words. This makes it difficult is the pan-company marketing perspective. Why? The simple answer is that,
to talk with certainty to others within their organisations. Another problem is while businesses might depend on shareholder satisfaction to have the funds
that, while those who continually ‘count the beans’ within these organisations to continue and expand the scope of their operations, all facets of the business
recognise the costs of marketing, they do not yet include such aspects as – including shareholder wealth – depend on customers and their repeated
‘brand equity’ on the assets side of the published financial statements of satisfaction. This means that all employees should see it as their duty to know
the organisation. To do so would, at the outset, require agreement on what how they contribute to customer satisfaction.
forms such an asset. To be fair, many sophisticated organisations do utilise a
‘dashboard’ approach to decision making and predicting the future of their Which marketing metrics?
business, and marketing performance measures, or metrics (metrics is here taken
to indicate a measuring system), such as ‘brand share’, ‘brand equity’ and ‘share The key to developing a metrics system is to identify a group of indicators (Ambler
of voice’, are indeed monitored and used along with other financial and non- recommends ‘a dozen or so’) that aid in managing the business and enable
financial measures. accurate cashflow predictions into the future. As with marketing research, we
Another important issue is that, when referring to marketing, we need can ask every question imaginable, but the answers to relatively few questions
to be clear about which aspect of marketing is being referred to. Shoebridge will indicate whether the customer will come back and spend more money on
is clearly suggesting that marketing managers are looking to measure a our product offering. Sometimes the answer to one question indicates they will
return on marketing expenditure at the ‘budgetary level’, and he cites the never come back. A non-financial marketing metric, such as ‘share of voice’
Australian Marketing Institute’s (AMI) ‘metrics tool kit’, which was developed (which includes social media word of mouth), is important to long-term ‘brand
with the assistance of a grant from the Australian Research Council. Often, attitude’, and both – in time – impact on financial measures such as profitability
this can simply mean trying to measure the return on integrated marketing and cashflow. The critical feature is to establish the leads and lags between the
communication (IMC), or perhaps on a single element such as advertising, indicators. As we see in Appendix 3’s Spotlight 7, the link is more solid and the
if that is the only communication tool used. There is a ‘functional’ aspect to effect more immediate for the direct and digital marketer – which knows its
marketing that sees practitioners in different types of organisations using customers by name – than for the FMCG marketer which stands removed from
different metrics and having different responsibilities. For example, marketing individual customers by a supply chain that includes wholesalers and retailers
management of a service firm such as Qantas uses different metrics and is (see Appendix 3’s Spotlight 4). All such market-oriented companies depend on
responsible for different facets of the business than those in a service firm such innovation for their life’s blood and continually need to develop new products
as the ANZ Banking Group. And both service firms differ in their metrics and that truly add value for customers (see Appendix 3’s Spotlight 6).
responsibilities from those involved in the manufacturing and marketing of We begin by referring to a ranking of performance measures (or analytic
fast-moving consumer goods (FMCG), such as Lever-Rexona. measures) in Spotlight 1 in Appendix 3.

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26 Session 1 Introduction to marketing and sustainable marketing

The journey has begun Sources: Quotation from Paul W Farris, Neil T Bendle, Phillip E Pfeifer & David J Reibstein,
Marketing Metrics: 50+ Metrics Every Executive Should Master, Wharton School Publishing,
2006; Shoebridge quotation from Neil Shoebridge, ‘Marketers’ measure’, BRW, 1–7
We address this matter by presenting a marketing analytics spotlight – a mini December 2005, p. 63. The term pan-company marketing is from Tim Ambler, Marketing and
the Bottom Line, 2nd edn, Financial Times Prentice Hall: London, 2003. See also T Ambler &
case study – in Appendix 3 to introduce you to the many measures that are
F Kokkinaki, ‘Measures of marketing success’, Journal of Marketing Management, 13(7), 1997,
employed in assessing the performance that results from effective marketing. pp. 665–79; T Ambler, F Kokkinaki & S Puntoni, ‘Assessing marketing performance: Reasons
The marketing analytics spotlights should therefore be seen as the start of a journey for metrics selection’, Journal of Marketing Management, 20, 2004, pp. 475–98; T Ambler,
F Kokkinaki, S Puntoni & D Riley, ‘Assessing market performance: The current state of metrics’,
that will continue throughout your marketing studies and into your business life. Centre of Marketing, London Business School, Working Paper, 2001, pp. 1–68; Roger J Best,
As Farris and colleagues succinctly put it, ‘Being able to “crunch the numbers” is Market-Based Management, 4th edn, Pearson Prentice Hall: Upper Saddle River, NJ, 2005;
Competitive Fitness of Global Firms report, available at <www.corvaltec.com/index.html>,
vital to success in marketing. Knowing which numbers to crunch, however, is a accessed 9 January 2007; J-C Larréché, The Test of Business Capabilities? Highlights from
skill that develops over time.’ And so we ask you to work through the examples Measuring the Competitiveness of Global Firms 2002, Financial Times Prentice Hall: London,
2002, available at <www.corvaltec.com>, accessed 30 August 2003.
provided at the end of each chapter and begin your journey into the effective
use of marketing metrics. In particular, you will find mini case studies entitled Questions
‘Marketing analytics at work’, which are designed to allow you to work through
❶ What does the term marketing analytics refer to?
the various marketing performance measures faced by marketing management.
❷ List and describe the three aspects of marketing at the budgetary level that
A word of caution: Research studies conducted at different points in time,
can influence the measures used. (Hint: One is the functional aspect of
and in various locations, are not always able to support the findings of earlier
marketing.)
studies. It is therefore wise to read as widely as possible and to remain open-
❸ What is the sole reason for the company’s existence put forward in this
minded when confronted with conflicting evidence. Marketing has adopted the
Marketing in Action box? Do you agree?
scientific approach, and researchers continually seek to support or refute the
❹ Which (if any) one marketing performance measure do you believe is the
findings of earlier studies in the knowledge that ‘iron laws’ are unlikely to be
most important?
developed, even with continuous empirical investigation.

The growth of not-for-profit marketing

Over the years, marketing has been most widely applied in the business sector. In more recent times,
not-for-profit however, not-for-profit marketing has also become a major component in the strategies of many
marketing philanthropic organisations, universities, hospitals, museums, symphony orchestras, zoos and even churches.
Marketing as practised
Similarly, many private schools and, increasingly, universities, facing fluctuating domestic and
by a variety of
organisations whose international enrolments, rising costs and global competitors, are using marketing to compete for students
aim is to make surpluses and funds, both at home and abroad. They are redefining target markets, improving their communication
so as to continue their and promotion, and responding more effectively to student needs and wants. Many performing arts groups
operations, but that do
face huge operating deficits that they must cover by more aggressive donor marketing, particularly from
not seek to make profits
for shareholders. the corporate sector. Finally, many long-standing not-for-profit organisations – the YMCA, the Salvation
Army, the Red Cross and the Scouts – have lost members and are now modernising their missions and
‘products’ to attract more members and donations.36
Even government agencies have shown an increased interest in marketing. For example, the armed
services in many countries have marketing plans to attract recruits. And various government agencies are
now designing social marketing campaigns to reward and encourage energy conservation and concern for
the environment, to stimulate good corporate behaviour or to discourage smoking, excessive drinking and
drug use.
The continued growth of not-for-profit and public-sector marketing presents exciting challenges for
marketing managers.

Rapid globalisation
The world economy has undergone radical change during the past three decades. Geographical and cultural
distances have shrunk with the advent of jet airliners, telephone links (such as Japan’s DoCoMo iMode
interactive mobile phones), digital satellite-television broadcasting (such as Britain’s BSkyB and Japan’s

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Another random document with
no related content on Scribd:
to act for him. Throughout, Osterman saw to it that he personally did
not appear.
Of course Greasadick, when he discovered what the plot was,
roared and charged like a bull. Indeed before he was eventually
defeated he became very threatening and dangerous, attempting
once even to kill Drewberry. Yet he was finally vanquished and his
holdings swept away. With no money to make a new start and
seeing others prosper where he had failed for want of a little capital,
he fell into a heavy gloom and finally died there in Larston in the bar
that had been erected after the K. B. & B. spur had been completed.
Through all of this Mr. Osterman appears to have been utterly
indifferent to the fate of the man he was undermining. He cared so
little what became of him afterwards that he actually admitted, or
remarked to Whitley, who remained one of his slaves to the end, that
one could scarcely hope to build a large fortune without indulging in
a few such tricks.
3. Lastly, there was the matter of the C. C. and Q. L. Railroad, the
major portion of the stock of which he and Frank O. Parm, of the
Parm-Baggott chain of stores, had managed to get hold of by the
simple process of buying a few shares and then bringing
stockholders’ suits under one and another name in order to
embarrass President Doremus and his directors, and frighten
investors so they would let go of the stock. And this stock, of course,
was picked up by Osterman and Parm, until at last these two
became the real power behind the road and caused it to be thrown
into the hands of a receiver and then sold to themselves. That was
two years before ever Michael Doremus, the first president of the
road, resigned. When he did he issued a statement saying that he
was being hounded by malign financial influences and that the road
was as sound as ever it had been, which was true. Only it could not
fight all of these suits and the persistent rumors of mismanagement
that were afoot. As a matter of fact, Mr. Doremus died only a year
after resigning, declaring at that time that a just God ruled and that
time would justify himself. But Mr. Osterman and Mr. Parm secured
the road, and finally incorporated it with the P. B. & C. as is well
known.
III

Some data taken from the biographic study of the late J. H.

Osterman, multimillionaire and oil king, prepared for Lingley’s
Magazine and by it published in its issue for October, 1917.
In order to understand the late J. H. Osterman and his great
success and his peculiar faults one would first have to have known
and appreciated the hard and colorless life that had surrounded him
as a boy. His father, in so far as I have been able to ascertain, was a
crude, hard, narrow man who had been made harder and, if
anything, cruder by the many things which he had been compelled to
endure. He was not a kind or soft-spoken man to his children. He
died when John Osterman, the central figure of this picture, was
eleven. Osterman’s mother, so it is said, was a thin and narrow and
conventional woman, as much harried and put upon by her husband
as ever he was by life. Also there was one sister, unattractive and
rough-featured, an honest and narrow girl who, like her mother,
worked hard up to nineteen, when her mother died. After that, both
parents being dead, she and her brother attempted to manage the
farm, and did so fairly successfully for two years when the sister
decided to marry; and Osterman consenting, she took over the farm.
This falling in with his mood and plans, he ceased farming for good
and betook himself to the Texas oil fields, where he appears to have
mastered some of the details of oil prospecting and refining.
But before that, what miseries had he not endured! He was wont
to recount how, when grasshoppers and drought took all of their
crops for two years after his father’s death, he and his mother and
sister were reduced to want and he had actually been sent to beg a
little cornmeal and salt from the local store on the promise to pay,
possibly a year later. Taxes mounted up. There was no money to buy
seed or to plant or replace stock, which had had to be sold. The
family was without shoes or clothes. Osterman himself appeared to
be of the fixed opinion that the citizens and dealers of Reamer, from
near which point in Kansas he hailed, were a hard and grasping
crew. He was fond of telling how swift they were to point out that
there was no help for either himself or his mother or sister as farmers
and to deny them aid and encouragement on that score. He once
said that all he ever heard in the local branch of his mother’s church,
of which he was never a confessing communicant, was “an eye for
an eye, a tooth for a tooth”; also “with whatsoever measure ye mete
it shall be measured to you again.” Obviously such maxims taken
very much to heart by a boy of his acquisitive and determined nature
might bring about some of the shrewd financial tricks later accredited
to him. Yet he appears to have been a man of some consideration
and sympathy where boys were concerned, for it was said that he
made it a rule in all his adventures to select the poorest if most
determined youths of his organization for promotion and to have
developed all of his chief lieutenants from the ranks of farm or
orphan boy beginners whom he encouraged to work for him. How
true this is the writer is not able to state. However, of the forty or
more eminent men who have been connected with him in his
enterprises, all but four were farm or orphan boys who had entered
his enterprises as clerks or menials at the very bottom, and some
seven of the total were from his native State, Kansas.

The private cogitations of the late John H. Osterman in his

mansion at 1046 Fifth Avenue, New York, and elsewhere during the
last five years of his life.

Oh, but those days when he had been working and scheming to
get up in the world and was thinking that money was the great thing
—the only thing! Those impossible wooden towns in the Northwest
and elsewhere in which he had lived and worked, and those worse
hotels and boarding-houses—always hunting, hunting for money or
the key to it. The greasy, stinking craft in which he had made his way
up weedy and muddy rivers in Honduras and elsewhere—looking for
what? Snakes, mosquitoes, alligators, tarantulas, horned toads and
lizards. In Honduras he had slept under chiqua trees on mats of
chiqua leaves, with only a fire to keep away snakes and other things.
And of a morning he had chased away noisy monkeys and
parroquets from nearby branches with rotten fruit so as to sleep a
little longer. Alone, he had tramped through fever swamps, pursued
by Pequi Indians, who wanted only the contents of his wretched
pack. And he had stared at huge coyal palms, a hundred feet high,
with the great feathery leaves fifteen feet long and their golden
flowers three feet high. Ah, well, that was over now. He had shot the
quetzal with its yellow tail feathers three feet long and had traded
them for food. Once he had all but died of fever in a halfbreed’s hut
back of Cayo. And the halfbreed had then stolen his gun and razor
and other goods and left him to make his way onward as best he
might. That was life for you, just like that. People were like that.
And it was during that time that he had come to realize that by no
honest way at his age was he likely to come to anything financially.
Roaming about the drowsy, sun-baked realm, he had encountered
Messner, an American and a fugitive, he guessed, and it was
Messner who had outlined to him the very scheme by which he had
been able, later, to amass his first quick fortune in New York. It was
Messner who had told him of Torbey and how he had come up to
London from Central Africa to offer shares in a bogus rubber
enterprise based on immense forests which he was supposed to
have found in the wilds of Africa yet which did not exist. And it was
the immense though inaccessible rubber forests in Honduras that
had inspired him to try the same thing in New York. Why not? A new
sucker was born every minute, and he had all to gain and nothing to
lose. Messner said that Torbey had advertised for a widow with some
money to push his enterprise, whereupon he had proceeded to tell
the London speculative public of his treasure and to sell two pound
shares for as low as ten shillings in order to show tremendous rises
in value—to issue two million pounds’ worth of absolutely worthless
stock.
By these methods and by having the stock listed on the London
curb he was able to induce certain curb or “dog” brokers to go short
of this stock without having any of it in their possession. Finally they
began to sell so freely and to pay so little attention to the amount that
was being sold that it was easy for Torbey to employ agents to buy
from all of them freely on margin. And then, as the law of the curb
and the state permitted, he had demanded (through them, of course)
the actual delivery of the shares, the full curb value of the stock
being offered. Of course the brokers had none, although they had
sold thousands; nor had any one else except Torbey, who had seen
to it that all outstanding stock had been recalled to his safe. That
meant that they must come to Torbey to buy or face a jail sentence,
and accordingly they had flocked to his office, only to be properly
mulcted for the total face value of the shares when they came.
Well, he had done that same thing in New York. Following the
example of the good Torbey, he had picked up a few unimportant
options in Honduras, far from any railroad, and had come to New
York to launch Calamita. Just as Torbey had done, he had looked for
a rich widow, a piano manufacturer’s wife in this case, and had
persuaded her that there were millions in it. From her he had gone
on to Wall Street and the curb and had done almost exactly as
Torbey had done.... Only that fellow De Malquit had killed himself,
and that was not so pleasant. He hadn’t anticipated that anything like
that would happen! That unfortunate wife of his. And those two
children made orphans. That was the darkest spot. He hadn’t known,
of course, that De Malquit himself was helping orphans—or—And
from there he had gone on to the forests of Washington and Oregon,
where he had bought immense tracts on which even yet he was
realizing, more and more. And from there it had been an easy step to
oil in southern California and Mexico—Ah, Greasadick, another sad
case!—And from there to mines and government concessions in
Peru and Ecuador, and the still greater ones in Argentina and Chile.
Money came fast to those who had it. At last, having accumulated a
fortune of at least nine millions, he had been able to interest Nadia,
and through her the clever and well-to-do fashionable set who had
backed his projects with their free capital. And by now his fortune
had swollen to almost forty millions.
But what of it? Could he say he was really content? What was he
getting out of it? Life was so deceptive; it used and then tossed one
aside. At first it had seemed wonderful to be able to go, do, act, buy
and sell as he chose, without considering anything save whether the
thing he was doing was agreeable and profitable. He had thought
that pleasure would never pall, but it had. There was this thing about
age, that it stole over one so unrelentingly, fattening one up or
thinning one down, hardening the arteries and weakening the
muscles and blood, until it was all but useless to go on. And what
was the import of his success, anyhow, especially to one who had no
children and no friends worthy of the name? There was no such
thing as true friendship in nature. It was each man for himself,
everywhere, and the devil take the hindmost. It was life that used
and tossed one aside, however great or powerful one might be.
There was no staying life or the drift of time.
Of course there had been the pleasure of building two great
houses for Nadia and living in them when he was not living in other
parts of the world. But all that had come too late; he had been too
old to enjoy them when they did come. She had been a great catch
no doubt, but much too attractive to be really interested in him at his
age. His wealth had been the point with her—any one could see that;
he knew it at the time and would not now try to deceive himself as to
that. At the time he had married her she had had social position
whereas he had none. And after she married him all her social
influence, to be sure, had been used to advance his cause. Still, that
scheme of hers to get him to leave his great fortune to those two
worthless sons of hers. Never! They were not worthy of it. Those
dancing, loafing wasters! He would see to it that his fortune was put
to some better use than that. He would leave it to orphans rather
than to them, for after all orphans in his employ had proved more
valuable to him than even they had, hadn’t they?—That curious
fellow, De Malquit!—So long ago. Besides wasn’t it Nadia’s two sons
who had influenced their mother to interest herself in D’Eyraud, the
architect who had built their two houses and had started Nadia off on
that gallery idea. And not a picture in it that would interest a sensible
person. And wasn’t it because of her that he had never troubled to
answer the letters of his sister Elvira asking him to educate her two
boys for her. He had fancied at the time that taking her two children
into his life would in some way affect his social relations with Nadia
and her set. And now Elvira was dead and he did not know where
the children were. He could charge that to her if he wanted to,
couldn’t he?
Well, life was like that. When he had built his two great houses he
had thought they would prove an immense satisfaction to him, as
they had for a time; but he would not be here much longer now to
enjoy them. He wasn’t nearly as active as he had been, and the sight
of the large companies of people that came to pose and say silly
things to each other was very wearying. They were always civil to
him, of course, but little more. They wanted the influence of his
name. And as long as he permitted it, his homes would be haunted
by those who wished to sell him things—stocks, bonds, enterprises,
tapestries, estates, horses. And those two boys of hers, along with
Nadia herself where her so-called art objects were concerned, so
busy encouraging them! Well, he was done with all that now. He
would not be bothered. Even youth and beauty of a venal character
had appeared on the scene and had attempted to set traps for him.
But his day was over. All these fripperies and pleasures were for
people younger than he. It required youth and energy to see beauty
and romance in such things, and he hadn’t a trace of either left. His
day was over and he might as well die, really, for all the good he
was, apart from his money, to any one.

The reminiscences of Byington Briggs, Esq., of Skeff,

Briggs & Waterhouse, private legal advisers to the late J.
H. Osterman, as developed in a private conversation at
the Metropolitan Club in New York in December, 19—.
“You knew old Osterman, didn’t you? I was his confidential adviser
for the last eight years of his life, and a shrewder old hawk never
sailed the air. He was a curious combination of speculator, financier
and dreamer, with a high percentage of sharper thrown in for good
measure. You’d never imagine that he was charitably inclined, now
would you? It never occurred to me until about a year and a half
before his death. I have never been able to explain it except that as
a boy he had had a very hard time and in his old age resented
seeing his two stepsons, Kester and Rand Benda, getting ready to
make free use of his fortune once he was gone. And then I think he
had come to believe that his wife was merely using him to feather
her own nest. I wouldn’t want it mentioned to a soul as coming from
me, but three months before he died he had me draw up a will
leaving his entire estate of something like forty millions, not to her, as
the earlier will filed by her showed, but to the J. H. Osterman
Foundation, a corporation whose sole purpose was to administer his
fortune for the benefit of something like three hundred thousand
orphans incarcerated in institutions in America. And but for the
accident of his sudden death out there at Shell Cove two years ago,
he would have left it that way.
“According to the terms of the will that I drew up, Mrs. Osterman
and her two sons were to receive only the interest on certain bonds
that were to be placed in trust for them for their lifetime only; after
that the money was to revert to the fund. That would have netted
them between forty and fifty thousand a year among them—nothing
more. In the will I drew up he left $500,000 outright to that Gratiot
Home for Orphans up here at 68th Street, and he intended his big
country place at Shell Cove as the central unit in a chain of modern
local asylums for orphans that was to have belted America. The
income from the property managed by the foundation was to have
been devoted to this work exclusively, and the Gratiot institution was
to have been the New York branch of the system. His wife has
leased the Shell Cove place to the Gerbermanns this year, I see, and
a wonderful place it is too, solid marble throughout, a lake a mile
long, a big sunken garden, a wonderful glassed-in conservatory, and
as fine a view of the sea as you’ll find anywhere. Yet she never knew
until the very last hour of his life—the very last, for I was there—that
he planned to cut her off with only forty or fifty thousand a year. If we
weren’t all such close friends I wouldn’t think of mentioning it even
now, although I understand that Klippert, who was his agent in the
orphan project, has been telling the story. It was this way:
“You see, I was his lawyer, and had been ever since the K. B. & B.
control fight in 1906, and the old man liked me—I don’t know why
unless it was because I drew up the right sort of ‘waterproof
contracts,’ as he always called them. Anyway, I knew six or seven
years before he died that he wasn’t getting along so well with Mrs.
Osterman. She is still an attractive woman, with plenty of brain
power and taste, but I think he had concluded that she was using
him and that he wasn’t as happy as he thought he would be. For one
thing, as I gathered from one person and another, she was much too
devoted to those two boys by her first husband, and in the next place
I think he felt that she was letting that architect D’Eyraud lead her
about too much and spend too much of his money. You know it was
common rumor at the time that D’Eyraud and his friend Beseroe,
another man the old captain disliked, were behind her in all her
selections of pictures for the gallery she was bringing together up
there in the Fifth Avenue place. Osterman, of course, knowing
absolutely nothing about art, was completely out of it. He wouldn’t
have known a fine painting from a good lithograph, and I don’t think
he cared very much either. And yet it was a painting that was one of
the causes of some feeling between them, as I will show you. At that
time he looked mighty lonely and forlorn to me, as though he didn’t
have a friend in the world outside of those business associates and
employés of his. He stayed principally in that big town house, and
Mrs. Benda—I mean Mrs. Osterman—and her sons and their friends
found a good many excuses for staying out at Shell Cove. There
were always big doings out there. Still, she was clever enough to be
around him sometimes so as to make it appear, to him at least, that
she wasn’t neglecting him. As for him, he just pottered around up
there in that great house, showing his agents and employés, and the
fellows who buzzed about him to sell him things, the pictures she
was collecting—or, rather, D’Eyraud—and letting it appear that he
was having something to do with it. For he was a vain old soldier,
even if he did have one of the best business minds of his time. You’d
think largeness of vision in some things might break a man of that,
but it never does, apparently.
“Whenever I think of him I think of that big house, those heavily
carved and gilded rooms, the enormous eighty-thousand dollar
organ built into the reception-room, and those tall stained-glass
windows that gave the place the air of a church. Beseroe once told
me that if left to follow her own taste Mrs. Osterman would never
have built that type of house, but that Osterman wanted something
grand and had got his idea of grandeur from churches. So there was
nothing to do but build him a house with tall Gothic windows and a
pipe-organ, and trust to other features to make it homelike and
livable. But before they were through with it Mrs. Osterman and
D’Eyraud had decided that the best that could be done with it would
be to build something that later could be turned into an art gallery
and either sold or left as a memorial. But I think both D’Eyraud and
Mrs. Osterman were kidding the old man a little when they had that
self-playing attachment built in. It looked to me as though they
thought he was going to be alone a good part of the time and might
as well have something to amuse himself with. And he did amuse
himself with it, too. I recall going up there one day and finding him
alone, in so far as the family was concerned, but entirely surrounded
by twenty-five or more of those hard, slick and yet nervous (where
social form was concerned) western and southern business agents
and managers of his, present there to hold a conference. A luncheon
was about to be served in the grand dining-room adjoining the
reception-room, and there were all these fellows sitting about that big
room like a lot of blackbirds, and Osterman upon a raised dais at one
end of the room solemnly rendering The Bluebells of Scotland, one
of his favorites, from the self-player attachment! And when he
finished they all applauded!
“Well, what I wanted to tell you is this: One day while I was there,
some dealer dropped in with a small picture which for some reason
took his fancy. According to Beseroe, it wasn’t such a bad thing,
painted by a Swedish realist by the name of Dargson. It showed a
rather worn-out woman of about forty-three who had committed
suicide and was lying on a bed, one hand stretched out over the
edge and a glass or bottle from which she had taken the poison lying
on the floor beside her. Two young children and a man were
standing near, commiserating themselves on their loss, I presume. It
seemed to have a tremendous impression on Osterman for some
reason or other. I could never understand why—it was not so much
art as a comment on human suffering. Nevertheless, Osterman
wanted it, but I think he wanted Nadia to buy it for her collection and
so justify his opinion of it. But Nadia, according to Beseroe, was
interested only in certain pictures as illustrations of the different
schools and periods of art in different countries. And when the dealer
approached her with the thing, at Osterman’s suggestion, it was
immediately rejected by her. At once Osterman bought it for himself,
and to show that he was not very much concerned about her opinion
he hung it in his bedroom. Thereafter he began to be quarrelsome in
regard to the worthwhileness of the gallery idea as a whole and to
object to so much money being squandered in that direction. But to
this day no one seems to know just why he liked that particular
picture so much.
“What I personally know is that it was just about this time that
Osterman began to be interested in that fellow Klippert and his plan
for improving the condition of the orphan. He finally turned him over
to me with the request that I go into the idea thoroughly, not only in
regard to the work done by the Gratiot Home but by orphan asylums
in general in America. He told us that he wanted it all kept very quiet
until he was ready to act, that if anything was said he would refuse to
have anything further to do with it. That was a part of his plan to
outwit Mrs. Osterman, of course. He told us that he wanted some
scheme in connection with orphans that would be new and
progressive, better than anything now being done, something that
would do away with great barracks and crowd regulations and cheap
ugly uniforms and would introduce a system of education and home
life in cottages. I had no idea then that he was planning the immense
thing that was really in his mind, and neither did Klippert. He thought
he might be intending to furnish enough money to revive the Gratiot
Home as an experiment, and he urged me to use my influence to
this end if I had any. As it turned out, he wanted to establish an
interstate affair, as wide as the nation, of which the place at Shell
Cove was to be the centre or head—a kind of Eastern watering-
place or resort for orphans from all over America. It was a colossal
idea and would have taken all of his money and more.
“But since he wanted it I went into the idea thoroughly with this
fellow Klippert. He was very clever, that man, honest and thorough
and business-like and disinterested, in so far as I could see. I liked
him, and so did Osterman, only Osterman wanted him to keep out of
sight of his wife until he was ready to act. Klippert made a regular
business of his problem and went all over the United States studying
institutions of the kind. Finally he came back with figures on about
fifty or sixty and a plan which was the same as that outlined to me by
Osterman and which I incorporated in his will, and there it ended for
the time being. He didn’t want to sign it right away for some reason,
and there it lay in my safe until—well, let me tell you how it was.
One Saturday morning—it was a beautiful day and I was thinking
of going out to the club to play golf—I received a long distance call
from Osterman asking me to get hold of Klippert and another fellow
by the name of Moss and bring them out to Shell Cove, along with
the will for him to sign. He had made up his mind, he said, and I
have often wondered if he had a premonition of what was going to
happen.
“I remember so well how excited Klippert was when I got him on
the wire. He was just like a boy, that fellow, in his enthusiasm for the
scheme, and apparently not interested in anything except the welfare
of those orphans. We started for Shell Cove, and what do you think?
Just as we got there—I remember it all as though it had happened
yesterday. It was a bright, hot Saturday afternoon. There were some
big doings on the grounds, white-and-green and white-and-red
striped marque tents, and chairs and swings and tables everywhere.
Some of the smartest people were there, sitting or walking or
dancing on the balcony. And there was Osterman walking up and
down the south verandah near the main motor entrance, waiting for
us, I suppose. As we drove up he recognized us, for he waved his
hand, and then just as we were getting out and he was walking
towards us, I saw him reel and go down. It was just as though some
one had struck him with something. I realized that it must be
paralysis or a stroke of apoplexy and I chilled all over at the thought
of what it might mean. Klippert went up the steps four at a time, and
as we all ran down the verandah they carried him in and I
telephoned for a doctor. Klippert was very still and white. All we
could do was to stand around and wait and look at each other, for
Mrs. Osterman and her sons were there and were taking charge.
Finally word came out that Mr. Osterman was a little better and
wanted to see us, so up we went. He had been carried into an airy,
sunny room overlooking the sea and was lying in a big white
canopied bed looking as pale and weak as he would if he had been
ill for a month. He could scarcely speak and lay there and looked at
us for a time, his mouth open and a kind of tremor passing over his
lips from time to time. Then he seemed to gather a little strength and
whispered: ‘I want—I want—’ and then he stopped and rested,
unable to go on. The doctor arrived and gave him a little whisky, and
then he began again, trying so hard to speak and not quite making it.
At last he whispered: ‘I want—I want—that—that—paper.’ And then:
‘Klippert—and you—’ He stopped again, then added: ‘Get all these
others out of here—all but you three and the doctor.’
“The doctor urged Mrs. Osterman and her sons to leave, but I
could see that she didn’t like it. Even after she went out she kept
returning on one excuse and another, and she was there when he
died. When she was out of the room the first time I produced the will
and he nodded his approval. We called for a writing board, and they
brought one—a Ouija board, by the way. We lifted him up, but he
was too weak and fell back. When we finally got him up and spread
the will before him he tried to grasp the pen but he couldn’t close his
fingers. He shook his head and half whispered: The——the——boys
—th—the—boys.’ Klippert was all excited, but Osterman could do
nothing. Then his wife came into the room and asked: ‘What is it that
you are trying to make poor Johnnie sign? Don’t you think you had
better let it rest until he is stronger?’ She tried to pick up the paper
but I was too quick for her and lifted it to one side as though I hadn’t
noticed that she had reached for it. I could see that she was aware
that something was being done that neither we nor Osterman
wanted her to know about, and her eyes fairly snapped. Osterman
must have realized that things were becoming a little shaky for he
kept looking at first one and then another of us with a most unhappy
look. He motioned for the pen and will. Klippert put down the board
and I the paper, and he leaned forward and tried to grasp the pen.
When he found he couldn’t he actually groaned: ‘The—the—I—I—I
want to—to—do something—for—for—the—the—the—’ Then he fell
back, and the next moment was dead.
“But I wish you could have seen Klippert. It wasn’t anything he
said or did, but just something that passed over his face, the shadow
of a great cause or idea dying, let us say. Something seemed to go
out from or die in him, just as old Osterman had died. He turned and
went out without a word. I would have gone too, only Mrs. Osterman
intercepted me.
“You might think that at such a moment she would have been too
wrought up to think of anything but her husband’s death, but she
wasn’t. Far from it. Instead, as her husband was lying there, and
right before the doctor, she came over to me and demanded to see
the paper. I was folding it up to put into my pocket when she flicked it
out of my hands. ‘I am sure you can have no objection to my seeing
this,’ she said icily, and when I protested she added: ‘I am sure that I
have a right to see my own husband’s will.’ I had only been
attempting to spare her feelings, but when I saw what her attitude
was I let it go at that and let her read it.
“I wish you could have seen her face! Her eyes narrowed and she
bent over the paper as though she were about to eat it. When she
fully comprehended what it was all about she fairly gasped and
shook—with rage, I think—though fear as to what might have
happened except for her husband’s weakness may have been a part
of it. She looked at him, at his dead body, the only glance he got
from her that day, I’m sure, then at me, and left the room. Since
there was nothing more to do, I went too.
“And that’s the reason Mrs. Osterman has never been friends with
me since, though she was genial enough before. But it was a close
shave for her, all the same, and don’t you think it wasn’t. Just an
ounce or two more of strength in that old codger’s system, and think
what would have been done with those millions. She wouldn’t have
got even a million of it all told. And those little ragamuffins would
have had it all. How’s that for a stroke of chance?”
XIII
THE SHADOW

W HAT had given him his first hint that all might not be as well at
home as he imagined was the incident of the automobile. Up to
that time he had not had a troubled thought about her, not one. But
after—Well, it was a year and a half now and although suspicion still
lingered it was becoming weaker. But it had not been obliterated
even though he could not help being fond of Beryl, especially since
they had Tickles to look after between them. But anyhow, in spite of
all his dark thoughts and subtle efforts to put two and two together,
he had not been able to make anything of it. Perhaps he was being
unjust to her to go on brooding about it.... But how was it possible
that so many suspicious-looking things could happen in a given time,
and one never be able to get the straight of them?
The main thing that had hampered him was his work. He was
connected with the Tri-State Paper Company, at the City Order desk,
and as a faithful employé he was not supposed to leave during
working hours without permission, and it was not always easy to get
permission. It was easy to count the times he had been off—once to
go to the dentist, and two or three times to go home when Beryl was
ill. Yet it just happened that on that particular afternoon his superior,
Mr. Baggott, had suggested that he, in the place of Naigly who
always attended to such matters but was away at the time, should
run out to the Detts-Scanlon store and ask Mr. Pierce just what was
wrong with that last order that had been shipped. There was a mix-
up somewhere, and it had been impossible to get the thing straight
over the telephone.
Well, just as he was returning to the office, seated in one of those
comfortable cross seats of the Davenant Avenue line and looking at
the jumble of traffic out near Blakely Avenue, and just as the car was
nearing the entrance to Briscoe Park he saw a tan-and-chocolate-
colored automobile driven by a biggish man in a light tan overcoat
and cap swing into view, cross in front of the car, and enter the park.
It was all over in a flash. But just as the car swung near him who
should he see sitting beside the man but Beryl, or certainly a woman
who was enough like her to be her twin sister. He would have sworn
it was Beryl. And what was more, and worse, she was smiling up at
this man as though they were on the best of terms and had known
each other a long time! Of course he had only had a glimpse, and
might have been mistaken. Beryl had told him that morning that she
was going to spend the afternoon with her mother. She often did
that, sometimes leaving Tickles there while she did her mother’s
marketing. Or, she and her mother, or she and her sister Alice, if she
chanced to be there, would take the baby for a walk in the park. Of
course he might have been mistaken.
But that hat with the bunch of bright green grapes on the side....
And that green-and-white striped coat.... And that peculiar way in
which she always held her head when she was talking. Was it really
Beryl? If it wasn’t, why should he have had such a keen conviction
that it was?
Up to that time there never had been anything of a doubtful
character between them—that is, nothing except that business of the
Raskoffsky picture, which didn’t amount to much in itself. Anybody
might become interested in a great violinist and write him for his
photo, though even that couldn’t be proved against Beryl. It was
inscribed to Alice. But even if she had written him, that wasn’t a
patch compared to this last, her driving about in a car with a strange
man. Certainly that would justify him in any steps that he chose to
take, even to getting a divorce.
But what had he been able to prove so far? Nothing. He had tried
to find her that afternoon, first at their own house, then at her
mother’s, and then at Winton & Marko’s real estate office, where
Alice sometimes helped out, but he couldn’t find a trace of her. Still,
did that prove anything once and for all? She might have been to the
concert as she said, she and Alice. It must be dull to stay in the
house all day long, anyhow, and he couldn’t blame her for doing the
few things she did within their means. Often he tried to get in touch
with her of a morning or afternoon, and there was no answer, seeing
that she was over to her mother’s or out to market, as she said. And
up to the afternoon of the automobile it had never occurred to him
that there was anything queer about it. When he called up Beryl’s
mother she had said that Beryl and Alice had gone to a concert and
it wasn’t believable that Mrs. Dana would lie to him about anything.
Maybe the two of them were doing something they shouldn’t, or
maybe Alice was helping Beryl to do something she shouldn’t,
without their mother knowing anything about it. Alice was like that,
sly. It was quite certain that if there had been any correspondence
between Beryl and that man Raskoffsky, that time he had found the
picture inscribed to Alice, it had been Alice who had been the go-
between. Alice had probably allowed her name and address to be
used for Beryl’s pleasure—that is, if there was anything to it at all. It
wasn’t likely that Beryl would have attempted anything like that
without Alice’s help.
But just the same he had never been able to prove that they had
been in league, at that time or any other. If there was anything in it
they were too clever to let him catch them. The day he thought he
had seen her in the car he had first tried to get her by telephone and
then had gone to the office, since it was on his way, to get
permission to go home for a few minutes. But what had he gained by
it? By the time he got there, Beryl and her mother were already
there, having just walked over from Mrs. Dana’s home, according to
Beryl. And Beryl was not wearing the hat and coat he had seen in
the car, and that was what he wanted to find out. But between the
time he had called up her mother and the time he had managed to
get home she had had time enough to return and change her clothes
and go over to her mother’s if there was any reason why she should.
That was what had troubled him and caused him to doubt ever since.
She would have known by then that he had been trying to get her on
the telephone and would have had any answer ready for him. And
that may have been exactly what happened, assuming that she had
been in the car and gotten home ahead of him, and presuming her
mother had lied for her, which she would not do—not Mrs. Dana. For
when he had walked in, a little flushed and excited, Beryl had
exclaimed: “Whatever is the matter, Gil?” And then: “What a crazy
thing, to come hurrying home just to ask me about this! Of course I
haven’t been in any car. How ridiculous! Ask Mother. You wouldn’t
expect her to fib for me, would you?” And then to clinch the matter
she had added: “Alice and I left Tickles with her and went to the
concert after going into the park for a while. When we returned, Alice
stopped home so Mother could walk over here with me. What are
you so excited about.” And for the life of him, he had not been able
to say anything except that he had seen a woman going into Briscoe
Park in a tan-and-chocolate car, seated beside a big man who
looked like—well, he couldn’t say exactly whom he did look like. But
the woman beside him certainly looked like Beryl. And she had had
on a hat with green grapes on one side and a white-and-green
striped sports coat, just like the one she had. Taking all that into
consideration, what would any one think? But she had laughed it off,
and what was he to say? He certainly couldn’t accuse Mrs. Dana of
not knowing what she was talking about, or Beryl of lying, unless he
was sure of what he was saying. She was too strong-minded and too
strong-willed for that. She had only married him after a long period of
begging on his part; and she wasn’t any too anxious to live with him
now unless they could get along comfortably together.
Yet taken along with that Raskoffsky business of only a few
months before, and the incident of the Hotel Deming of only the day
before (but of which he had thought nothing until he had seen her in
the car), and the incident of the letters in the ashes, which followed
on the morning after he had dashed home that day, and then that
business of the closed car in Bergley Place, just three nights
afterwards—well, by George! when one put such things together—
It was very hard to put these things in the order of their effect on
him, though it was easy to put them in their actual order as to time.
The Hotel Deming incident had occurred only the day before the
automobile affair and taken alone, meant nothing, just a chance
encounter with her on the part of Naigly, who had chosen to speak of
it. But joined afterwards with the business of the partly burned letters
and after seeing her in that car or thinking he had—Well—After that,
naturally his mind had gone back to that Hotel Deming business, and
to the car, too. Naigly, who had been interested in Beryl before her
marriage (she had been Baggott’s stenographer), came into the
office about four—the day before he had seen Beryl, or thought he
had, in the car, and had said to him casually: “I saw your wife just
now, Stoddard.” “That so? Where?” “She was coming out of the
Deming ladies’ entrance as I passed just now.” Well, taken by itself,
there was nothing much in that, was there? There was an arcade of
shops which made the main entrance to the Deming, and it was easy
to go through that and come out of one of the other entrances. He
knew Beryl had done it before, so why should he have worried about
it then? Only, for some reason, when he came home that evening
Beryl didn’t mention that she had been downtown that day until he
asked her. “What were you doing about four to-day?” “Downtown,
shopping. Why? Did you see me? I went for Mother.” “Me? No. Who
do you know in the Deming?” “No one”—this without a trace of self-
consciousness, which was one of the things that made him doubt
whether there had been anything wrong. “Oh, yes; I remember now. I
walked through to look at the hats in Anna McCarty’s window, and
came out the ladies’ entrance. Why?” “Oh, nothing. Naigly said he
saw you, that’s all. You’re getting to be a regular gadabout these
days.” “Oh, what nonsense! Why shouldn’t I go through the Deming
Arcade? I would have stopped in to see you, only I know you don’t
like me to come bothering around there.”
And so he had dismissed it from his mind—until the incident of the
car.
And then the matter of the letters ... and Raskoffsky ...
Beryl was crazy about music, although she couldn’t play except a
little by ear. Her mother had been too poor to give her anything more
than a common school education, which was about all that he had
had. But she was crazy about the violin and anybody who could play
it, and when any of the great violinists came to town she always
managed to afford to go. Raskoffsky was a big blond Russian who
played wonderfully, so she said. She and Alice had gone to hear
him, and for weeks afterward they had raved about him. They had
even talked of writing to him, just to see if he would answer, but he
had frowned on such a proceeding because he didn’t want Beryl
writing to any man. What good would it do her? A man like that
wouldn’t bother about answering her letter, especially if all the
women were as crazy about him as the papers said. Yet later he had
found Raskoffsky’s picture in Beryl’s room, only it was inscribed to
Alice.... Still, Beryl might have put Alice up to it, might even have
sent her own picture under Alice’s name, just to see if he would
answer. They had talked of sending a picture. Besides, if Alice had
written and secured this picture, why wasn’t it in her rather than
Beryl’s possession. He had asked about that. Yet the one flaw in that
was that Alice wasn’t really good-looking enough to send her picture
and she knew it. Yet Beryl had sworn that she hadn’t written. And
Alice had insisted that it was she and not Beryl who had written. But
there was no way of proving that she hadn’t or that Beryl had.
Yet why all the secrecy? Neither of them had said anything more
about writing Raskoffsky after that first time. And it was only because
he had come across Raskoffsky’s picture in one of Beryl’s books that
he had come to know anything about it at all. “To my fair little
western admirer who likes my ‘Dance Macabre’ so much. The next
time I play in your city you must come and see me.” But Alice wasn’t
fair or good-looking. Beryl was. And it was Beryl and not Alice, who
had first raved over that dance; Alice didn’t care so much for music.
And wasn’t it Beryl, and not Alice, who had proposed writing him. Yet
it was Alice who had received the answer. How was that? Very likely
it was Beryl who had persuaded Alice to write for her, sending her
own instead of Alice’s picture, and getting Alice to receive
Raskoffsky’s picture for her when it came. Something in their manner
the day he had found the picture indicated as much. Alice had been
so quick to say: “Oh yes. I wrote him.” But Beryl had looked a little
queer when she caught him looking at her, had even flushed slightly,
although she had kept her indifferent manner. At that time the
incident of the car hadn’t occurred. But afterwards,—after he had
imagined he had seen Beryl in the car—it had occurred to him that
maybe it was Raskoffsky with whom she was with that day. He was
playing in Columbus, so the papers said, and he might have been
passing through the city. He was a large man too, as he now
recalled, by George! If only he could find a way to prove that!

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Full Ebook of Marketing and Management Defined Explained and Applied 1St Edition Malliga Marimuthu Online PDF All Chapter

Uploaded by

Full Ebook of Marketing and Management Defined Explained and Applied 1St Edition Malliga Marimuthu Online PDF All Chapter

Uploaded by

Marketing and Management : Defined,

Explained and Applied 1st Edition

Primary Mathematics 3A Hoerst

Applied Artificial Intelligence in Business: Concepts

How Management Works: The Concepts Visually Explained

Handbook of Research on Applied AI for International

Marketing Management Fifteenth edition Philip Kotler

Marketing Management (16th edition) Philip Kotler

Marketing Management 5th Edition Dawn Iacobucci

Successful Product Management: Tool Box for

To get in touch, email [email protected].

Compiled by Malliga Marimuthu

9780655702412_C.indd 1 3/4/20 8:30 AM

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Project Management Team Leader: Jill Gillies

ISBN: 978 0 6557 0241 2

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Session 1 Introduction to marketing and sustainable marketing 1

Session 2 Understanding the marketplace and buyer behaviour 67

Session 3 Marketing analytics 139

Session 4 Products and services 175

Session 5 Price and placement 251

Session 6 Integrated marketing communication 319

Session 7 Managers, management and managerial sustainable

Session 8 Managing the business 453

9780655702412_FM.indd 3 3/3/20 5:31 PM

Session 9 Managing the organisation and individual 489

Session 10 Managing people 553

Session 11 Leading and managing groups 603

Session 12 Control and change management 655

Appendix 1 Case studies 719

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5.3 Marketing analytics at work  172 What is a product?  206

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Team-based new-product development 238 Psychological pricing 264

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Retailing 300 Student Learning Centre

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12.3 Marketing analytics at work 367 Session 7 

Direct marketing  375 How are managers different from

Telemarketing375 What is management? 399

Kiosks and electronic dispensing 376 What do managers do? 400

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History Module Should organisations be socially

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• Discussion questions 465 Session 9 

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Chapter 19 What contemporary OB issues do

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What is career development? 574 Session 11 Leading and managing

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What reaction do employees have to What human resource management (HRM)

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9780655702412_CH01.indd 1 3/3/20 10:41 AM

1 Marketing: Creating and capturing

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CREATE VALUE FOR CREATE VALUE

Understand Design a Construct an Build Capture value

guide marketing strategy. g

management, and identify Industry Market

that are changing the marketing

landscape in this age of

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CREATE VALUE FOR CAPTURE VALUE

Understand Design a Construct an Build Capture value

Figure 1.1 A simple model of the marketing process

Understanding the marketplace and

Customer needs, wants and demands

9780655702412_CH01.indd 5 3/3/20 10:41 AM

CORE MARKETING CONCEPTS

Session 1 Introduction to marketing and sustainable marketing 1

Session 2 Understanding the marketplace and buyer behaviour 67

Session 3 Marketing analytics 139

Session 4 Products and services 175

Session 5 Price and placement 251

Session 6 Integrated marketing communication 319

Session 7 Managers, management and managerial sustainable

Session 8 Managing the business 453

Session 9 Managing the organisation and individual 489

Session 10 Managing people 553

Session 11 Leading and managing groups 603

Session 12 Control and change management 655

Appendix 1 Case studies 719

5.3 Marketing analytics at work 172 What is a product? 206

Team-based new-product development 238 Psychological pricing 264

Retailing 300 Student Learning Centre

12.3 Marketing analytics at work 367 Session 7

Direct marketing 375 How are managers different from

Telemarketing375 What is management? 399

Kiosks and electronic dispensing 376 What do managers do? 400

History Module Should organisations be socially

• Discussion questions 465 Session 9

What is career development? 574 Session 11 Leading and managing