Core Marketing Concepts
To understand the marketing function, we need to understand the following core set of concepts.
Needs, Wants, and Demands
Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humans
also have strong needs for recreation, education, and entertainment. These needs become wantswhen they are directed to specific objects that might satisfy the need. A U.S. consumer needs food
but may want a Philly cheesesteak and an iced tea. A person in Afghanistan needs food but may
want rice, lamb, and carrots. Wants are shaped by our society.
Demands are wants for specific products backed by an ability to pay. Many people want a
Mercedes; only a few are able to buy one. Companies must measure not only how many people
want their product, but also how many are willing and able to buy it.
These distinctions shed light on the frequent criticism that “marketers create needs” or “marketers
get people to buy things they don’t want.” Marketers do not create needs: Needs preexist
marketers. Marketers, along with other societal factors, influence wants. They might promote the
idea that a Mercedes would satisfy a person’s need for social status. They do not, however, create the
need for social status.
Some customers have needs of which they are not fully conscious or that they cannot articulate.
What does it mean when the customer asks for a “powerful” lawn mower or a “peaceful” hotel? The
marketer must probe further. We can distinguish five types of needs:
1. Stated needs (The customer wants an inexpensive car.)
2. Real needs (The customer wants a car whose operating cost, not initial price, is low.)
3. Unstated needs (The customer expects good service from the dealer.)
4. Delight needs (The customer would like the dealer to include an onboard GPS navigation
system.)
5. Secret needs (The customer wants friends to see him or her as a savvy consumer.)
Responding only to the stated need may shortchange the customer.18 Consumers did not know
much about cellular phones when they were first introduced, and Nokia and Ericsson fought to
shape consumer perceptions of them. To gain an edge, companies must help customers learn what
they want.
Target Markets, Positioning, and Segmentation
Not everyone likes the same cereal, restaurant, college, or movie. Therefore, marketers start by dividing
the market into segments. They identify and profile distinct groups of buyers who might
prefer or require varying product and service mixes by examining demographic, psychographic,
and behavioral differences among buyers.
After identifying market segments, the marketer decides which present the greatest opportunities—
which are its target markets. For each, the firm develops a market offering that it positions in the minds
of the target buyers as delivering some central benefit(s). Volvo develops its cars for buyers to whom
safety is a major concern, positioning its vehicles as the safest a customer can buy.
Offerings and Brands
Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy
those needs. The intangible value proposition is made physical by an offering, which can be a
combination of products, services, information, and experiences.
A brand is an offering from a known source. A brand name such as McDonald’s carries many
associations in people’s minds that make up its image: hamburgers, cleanliness, convenience, courteous
service, and golden arches. All companies strive to build a brand image with as many strong,
favorable, and unique brand associations as possible.
Value and Satisfaction
The buyer chooses the offerings he or she perceives to deliver the most value, the sum of the
tangible and intangible benefits and costs to her. Value, a central marketing concept, is primarily a
combination of quality, service, and price (qsp), called the customer value triad. Value perceptions
increase with quality and service but decrease with price.
We can think of marketing as the identification, creation, communication, delivery, and
monitoring of customer value. Satisfaction reflects a person’s judgment of a product’s perceived
performance in relationship to expectations. If the performance falls short of expectations, the customer
is disappointed. If it matches expectations, the customer is satisfied. If it exceeds them, the
customer is delighted.
DEFINING MARKETING