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CH 17] Business 101 17-3

manufactured into consumable goods. Processing applies to food items, canning,
packaging, boxing, sorting, sizing, etcetera, and manufacturing where those elements
are changed to make automobiles, airplanes, refrigerators, furniture, television sets,
and are sized and packaged for the consumer. These goods from secondary production
are moved along into Tertiary Production which is where the ultimate exchange occurs
to the ultimate consumer. There are also many facilitators to this process which
include finance, communications (advertising), transportation, and energy with its
numerous forms and uses.
For any business to succeed it must serve the needs of the consumer, this is true for
profit and nonprofit organizations alike. For any business to be successful, it needs
only to find a need and fill it. Following the process of finding the need assures
success, but it does not guarantee profitability. Market planning helps with
profitability. For any business to remain in the marketplace, it must be profitable. If
there is no profit, entrepreneurs will turn to other profitable activities. And the
business needs to deal with repeat customers to assure their success.
John Cash Penney would tell his store managers: "Either you or your replacement
will greet the customer within the first 60 seconds." Sam Walton, founder of WalMart
stores, was trained in a J.C. Penney store and instituted customer greeting as an on-
going service in Wal-Mart stores. Daton-Hudson, the parent company of Target stores,
seeing the effectiveness of store greetings, instituted the greeting policy to be
competitive with Wal-Mart.
When people hear the term “marketing”, many immediately think of advertising on
billboards, the radio and television, and periodicals. Some think of the selling
processes as marketing, describing it as the process of selling you something that you
really did not want or refer to the advocacy that takes place to promote ideas as with
public service advertising (see Figure 17.1). Of course, these are important parts, but
are not the whole of marketing.
This chapter presents an overview of basic marketing concepts: that marketing
adds value in the exchange process, utility in marketing, the marketing function, and
how firms utilize the environmental factors that influence market planning and
strategies such as consumer behavior and market research.

Marketing adds value — the Exchange Process
Marketing begins when the exchange becomes important to society. Exchange
becomes important when people recognize that they cannot produce or supply
everything that they need, and in that realization, they also recognize that they can
produce some goods or services more efficiently and profitably than other goods that 17
they may need. In efficient production, they can over produce and then begin to trade
(exchange). Exchange is the process by which two or more parties give something of
value to one another to satisfy a determined need. For example, a consumer writes a

EXCHANGE PROCESS
Business offers to
sell products or
services
Good service and
customer satisfaction

Gives money, credit, labor,
time, trade

Consum ers have needs
and will give som ething
in exchange

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