Note: Complete the required readings before each lesson. The following information supplements the information presented in the textbook.
This lesson focuses on introducing you to the field of marketing.
At this early point in your first marketing course, you likely have some ideas about the important issues and decision areas that fall into the marketing domain. If you are like most students, you probably think marketing is mostly advertising and sales. This is a common belief, but these two elements make up only a small piece within the larger marketing puzzle.
In this lesson, you will be introduced to
You will examine the process of how organizations accomplish their goals: They pay attention to their target customers’ needs, offer products to meet those needs, and establish long-term relationships with customers while considering their larger effects on society.
After completing this lesson, you should be able to do the following things:
By the end of this lesson, make sure you have completed the readings and activities found in the course schedule.
The definition of marketing is complex and dynamic, impacted by numerous factors that change constantly.
The American Marketing Association, which represents marketing professionals, has attempted over the years to define what marketing is.
It is important to note that its definition has evolved over the years to reflect changes in society and technology.
As you might have noticed from these definitions, as well as the video, many decisions are involved in marketing. Some of the decisions include
Satisfaction is derived by comparing two things:
When there is a gap between their expectations and your performance, the direction of that gap indicates whether or not there is a problem. For example, if our performance fell short of expectations, the customer is likely to indicate dissatisfaction with their experience. If our performance met or exceeded expectations, the customer is satisfied.
You might recall companies that brag about their ability to continually exceed customer expectations. While this sounds nice, it really isn't possible long-term. If we exceed a customer's expectations, they will alter those expectations going forward, expecting more from us in the future.
This can be challenging for marketers, because everyone's expectations and perceptions will differ; they are very subjective, meaning that one customer might be delighted by a restaurant experience while another is dissatisfied with precisely the same experience. It is important for marketers to overcome this by doing the best they can to understand and manage customer expectations, keeping close tabs on their perception of performance.
Now think about how crucial this is to the entire hospitality industry—not just restaurants, but hotels and airlines, too. In this industry, customer satisfaction increases a firm’s financial performance and value by positively impacting profitability, return on assets, and return on equity (Sun & Kim, 2013).
Marketers who follow the market orientation philosophy tend to strongly agree that creating customer satisfaction is the only path to success. But why is customer satisfaction so important?
We know that if customers are satisfied, they will
Sharon Tercha
SHARON TERCHA: Hi, I'm Sharon Tercha, and I'm director of strategic communications for Penn State University at the Lehigh Valley campus. I started out a long time ago working for the American Red Cross, and it was an exceptional opportunity to move into a nonprofit world, where you could really get your hands on a lot of things. You could explore, marketing, public relations, events planning, development from so many different angles-- as a writer, as a designer, as a spokesperson, as a leader, and a project manager.
It really helped me narrow down what aspects of marketing and PR I wanted to really be involved in in the long term. And over the course of my career, I moved through higher ed, I led a strategic communications team in the national banking world, I worked for a global leadership organization, and now I've rounded back to my alma mater, Penn State. What I love most about my marketing positions over the years is the strategic and the creative process.
And many years ago, when I first started, that moment interviewing people, putting campaigns out, and seeing what worked, what didn't work, and learning from it so next time around we could do things differently. Today, with the onset of digital and the ability to follow the analytics really from minute to minute, it means tracking everything, optimizing on the fly, and reassessing your work constantly so that you can compete. So it really takes on a new life in terms of the types of days that you would have.
It's less interaction with people, a little bit more interaction with your numbers and the data. Marketing has changed more in the past 10 to 15 years than it has in the previous, say, 100. When you think about even the terms that we're using right now, you're optimizing SEO, SEM, web 30, all the types of things that you're doing now through social media, through the user experience, modeling attribution. It's a whole new language.
It's all new tools. It's new policies, procedures, and skill sets. So when I look back on what my job was like 30 years ago versus what it's like today and what the modern marketer needs to do, it's so vastly different. They're not even comparable. Really, everything is served up digitally.
There's eight second attention spans. Video is king in terms of gathering attention, and like I said, you're in a place where there are ad impressions 6,000 to 10,000 a day we as Americans see. So being able to cut through that clutter is an enormous accomplishment. It's enormous challenge, but it's very doable if you can pull the right teams together.
We now have in place that we can make that happen for you. I hate to go back to this example, but it's no longer, oh, I need a brochure. It's I need an entire digital campaign. Where should we put that? What should it look like?
What should the spend be, and how should it go? So it's vastly different for me at this point. COVID added all kinds of layers of things. So another piece of this is world events can quickly impact your days and bring on different things.
Crisis communications becomes a big piece of it. You may think that social media is all fun and games, but one bad comment, one controversial move, one misstep on social media, and it can turn into something that blows up nationally. So there are so many different aspects of my job that I'd love to say that any day is typical, but I have to say that the typical day is that it's rarely ever the same thing.
My art teacher at the time, Linda Ross, same thing, she actually called attention to some of my talents in the world of photography and design, which I didn't end up pursuing that direction, but I took enough of the classes so that I could have a good design eye. So when I am working with my design teams in the agencies, I know what I'm looking at. I know how to be a thought partner to them and to actually critique some of the work.
So I can give a lot of examples of how Penn State helped prepare me for the job, and also, I'm back in a digital analytics master's program right now, and it is just mind blowing how good the program is in terms of the industry experience and the professors that I'm learning from and how hard it is, but also how amazing it is, how much I'm learning at Penn State again. In terms of my challenges over the years, one of the biggest challenges you're going to face as a marketer is you're going to be enormously proud of your work, and a lot of it can be subjective, at least at first, and people are always going to have opinions about your work.
They are going to critique you ruthlessly and gratuitously, and you're going to be offended. And you have got to have thick skin but find a balance so that you don't shut down their input and you can glean good pieces of their feedback without taking it personally and getting offended. So one of the things that I really love about the field of marketing is there's so many different ways that you can become a professional in this field.
You don't have to be the creative person. You can be the statistician. You can become the person who goes into sociology and really studies people so you understand your target market and you're bringing that aspect of the skill set to the table.
You can be the project manager that keeps the flow going. You can be all kinds of different people within this field. The other thing is that you can grow with it. I loved public relations when I was younger. I wanted to be on camera. I loved the fact that I got to be on CNN when I was 24 years old. I was on talk shows for the Red Cross and those sorts of things.
So in that overarching marketing field as a communicator, I loved that. I don't want to do that so much anymore, which is funny because I'm being interviewed today. I want to be a little bit more behind the scenes. So I've been able to grow and evolve in that way. I've had the opportunity to work in the creative space and do really fun, funky, out there commercials and campaigns that made people pause along the way, and that was great for that phase in my life.
You can do anything in this field. You can be any type of person and find a place at the table of marketing.
Four competing philosophies tend to influence the way an organization orients itself within the marketing discipline. It could focus on
[ON-SCREEN TEXT: Four Marketing Philiosphies]
JENNIFER LOMBARDO: How does a company choose their sales and marketing philosophy? A company will select their philosophy by deciding on how to harness their internal strengths to reach their consumers. What part of their arsenal will they use?
Companies adopt one of four philosophies when deciding on how to create an organizational marketing process. The four philosophies are
The first philosophy we'll discuss is production orientation. An easy way to understand this term is to reference Henry Ford, the original manufacturer of American cars.
Production orientation is a philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. Ford created one type of car and stated that the consumer could have it in any color as long as it was black. Firms that use this philosophy believe that they are utilizing their firm's strength in the best way. They look internally and decide on how to proceed depending upon their own capabilities.
The one problem with this type of philosophy is that it does not take into consideration whether their product or service actually meets the needs of the consumer and the market. If a firm is a new inventor, as with Ford, they are able to be successful. If a car manufacturer kept this production orientation today and limited any type of option to the consumer, they would surely be out of business very quickly. Could you imagine if you could not change the rims of your car or add a DVD player?
A second philosophy a company can adapt is sales orientation. Sales orientation is when a company believes that they will sell more product or services if very aggressive sales methods are used to gain higher sales. The central theme of sales orientation is about making items and making money.
Sales-oriented companies rely heavily on promotion and a highly trained aggressive sales force. An example would be a door-to-door salesmen or a mall kiosk. Again, the problem with this type of philosophy is that it does not focus on what the customer and market requires. It's too caught up in pushing their product or service with a polished sales technique.
Marketing orientation is the third philosophy and the first one that takes into account the importance of the customer needs.
JENNIFER LOMBARDO: Marketing orientation is the third philosophy and the first one that takes into account the importance of the customer's needs. Marketing orientation is the philosophy that a firm exists to satisfy consumers' wants and needs and also provides shareholder and corporate benefit. Marketing orientation also incorporates the belief of long-term customer relationship building, the process of a combined business effort to satisfy customers, and really researching customer needs and wants.
Businesses that are known for following this philosophy are Apple, Disney, and Coca-Cola. They keep their eye on their consumer at all times.
JENNIFER LOMBARDO: The last philosophy is called societal marketing orientation. This concept takes the idea of providing customer value to the next level. Companies that endorse this idea follow the marketing orientation. Plus, they also believe that their product or service protects or enhances society's interests.
A current example is the explosive growth of green products that companies market. They promote that these products are helpful to consumers, good for company profits, and also better for the environment.
A growing trend is the use of charity marketing. The Buy Pink! to support breast cancer marketing campaign has become so prevalent that some experts say it has created a negative backlash and complacency regarding social marketing.
It has made consumers wary of how much of their donations reach the targeted charity. It has also made them wary of constant requests to purchase products associated with a social movement or--
Currently, most organizations have a marketing orientation, making it the dominant philosophy. This philosophy assumes that organizations can achieve their goals—their profit objectives—when they direct all their efforts toward satisfying customer needs.
It is a simple, but very powerful, idea. Organizations have to focus on the customers they are serving, not on the products they are producing. However, there are some companies that still utilize a product-centered or product-oriented philosophy. Apple is a good example because they focus on developing new products and using their brand to sell them, as opposed to focusing on what consumers already want.
For a company to achieve customer satisfaction, it must follow a logical process.
The marketplace is filled with many different customers with many different needs and values. As such, it is unrealistic to think that every product can successfully meet every individual's needs. It is crucial for companies to
Within this process, the marketing mix can be thought of as a set of tactical tools available to marketers. The marketing mix is also known as the four Ps of marketing; please click on each quadrant in Illustration 1.1 to learn more or read the text alterative below.
Some argue that there are actually five Ps in marketing, adding "people." For this class, we will focus on the traditional four Ps with the understanding that people, of course, are a necessary part of the mix!
It's marketing management's job to blend the four Ps together in a way that elicits a customer response. Most marketing decisions depend on careful integration of the marketing mix.
[MUSIC PLAYING]
SPEAKER: A new look at the four Ps of marketing.
Nothing explains a complicated business algorithm like a cute mnemonic device. Hence, the four Ps of marketing. This is one of the first things they drill into your head in business school-- actually, in any type of formal marketing instruction. It's everywhere. Everyone knows it, and you need to know it, too. So here it is. Let's go.
Four Ps-- Product, Place, Price, Promotion. Got that? Let's say it again. Say it out loud. It helps. Product, price, place, promotion. One more time, with feeling. Product, place, price, promotion. Never forget these four words.
Each of the four Ps represents one of the really, really important elements of marketing that you need to consider when developing your campaigns. Alone, none of them will do you much good. The four Ps need to work together. They're like the four wheels of a car or the four legs of a table. If you've got trouble with, or heaven forbid are missing one entirely, you'll have trouble getting anywhere. So it's easy, right? Find a good product, slap a good price on it, sell it somewhere people go, and throw together some promotion.
Yes? No. Because first you have to figure out how to define these things as good. It's all about fit. Each of the four Ps has to be geared towards your specific target market and work with each of the other four Ps to do so.
The first P is product. This is what you're selling-- be it a pot scrubber, e-book, or car detailing service. But it's not just the item or service itself that's included in the product P. It's also the different varieties of your product, the quality of it, how it's designed, packaged, and branded. Anything that adds value to your product, any reason a customer might want to purchase it, is part of the product. Obviously, it's pretty important.
The next P is price. You may be tempted to believe that the price of your product or service is merely the amount you charge customers when they purchase it. Dispel that notion immediately. The price includes the retail price, any discounts or special offers, bonuses, payment plans, and credit terms-- in short, anything even remotely related to money. It makes sense when you think about it. A discount lowers the price of an item. A bonus offer also lowers the price. Credit terms and payment plans make it easier for your customers to pay the price. All of these must be considered.
The third P is promotion. This is what most people think of when they think of marketing. Promotion includes advertising, personal selling, sales promotion, and public relations. Sponsoring your nephew's little league game? That's promotion. Making a sales call? That's promotion. Handing out brochures? That's promotion. Answering client emails? Still promotion.
The final P is place. Place is also known as distribution. How do your clients find your product and get what they've paid for once they've paid for it? Is it delivered to their door? Is it right there in a retail location? Do they download it? Place also includes the logistics of each of these things. If your product is sold in retail stores, how did it get there? How many of them are there? How soon do you need to get more there? Everything that you need to consider about how to get your product to your customer or to a place where your customer can find it is part of place.
Now remember, it's not enough to choose a good product, price, place, and promotion, because we have to know how to define good. Let's use an example to illustrate. Let's say that your seven-year-old wants to set up a lemonade stand to make some extra money. What will she have to figure out? She'll need to decide where to place her stand, how to make the lemonade, what she should charge for it, and how to let people know what she's doing. If she came up to you and asked you how to do all of this, you'd have to tell her that it depends.
Where she sets up her stand depends on who she wants to sell the lemonade to-- grownups or kids. Should the stand be in the park or at the end of her driveway? Same with the recipe. How much sugar should she add? More for kids than for grownups, probably. If she makes grown up lemonade, she might be able to charge more for it because adults have more money to spend. On the other hand, if she sets up her stand in the park and sells sweet lemonade to kids, more of them will see it, and she won't have to tell people about it.
You have to know who your target market is before you make any of the four P decisions, or you'll be in the same mess as a seven-year-old-- not knowing which course of action is best for any of the Ps. If the seven-year-old knew from the get go that she wanted to sell lemonade to other kids, she would have been able to decide right away that she should have a sweet lemonade-- product-- that she should sell in the park-- place, promotion-- for $0.10 a cup-- price.
If she wanted to sell to grownups, she would have her stand at the end of her driveway, where lots of adults walk to and from work-- place. The lemonade would be tart-- product. Her mom would probably tell some of her neighbors about it-- promotion. And she could charge $0.25 a cup-- price.
At the end of the day, it comes down to figuring out your target market and what works for them. Your offering will be perfect for some people, and those are the ones you need to reach.
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In practice, you may hear the term supply chain management used instead of place and integrated marketing communications (IMC) used instead of promotion.
Competitive advantage occurs when the target market perceives one firm's marketing mix as more valuable than a competitor’s. This perceived value may be the result of
Whatever the source, the crucial test of an advantage is whether it allows the firm to provide value and satisfy customers better than its competitors do (while still making a profit).
Positioning is also important for establishing a competitive advantage. You position your product advantageously when you present it in a way that lets you occupy a clear and distinctive place in customers’ minds, especially in comparison with competing products. (For example, in comparing BMW and Ford, many consumers associate the former with luxury.) An effective positioning strategy begins with differentiation.
Perreault, Cannon, and McCarthy introduce us to the idea of differentiation as follows (2008, p. 50):
A marketing mix must meet the needs of target customers, but a firm isn't likely to get a competitive advantage if it just meets needs in the same way as some other firm. So, in evaluating possible strategies, the marketing manager should think about whether there is a way to differentiate the marketing mix.
Differentiation means offering a marketing mix that is distinct from and (perceived as) better than what is available from a competitor. Differentiation often requires that the firm fine-tune all of the elements of its marketing mix to the specific needs of a distinctive target market....Sometimes, the difference is based mainly on one important element of the marketing mix.
Differentiation, for example, could occur via an improved product (like a built-in safety feature) or faster delivery (like Amazon Prime’s free two-day delivery).
Sometimes, defining your competitive advantage can be difficult. Marketers do not want their products perceived as commodities, but sometimes, in the eyes of consumers, there is no difference between their product and their competitor's. In these situations, price may become the only differentiator for the consumer.
Customer relationship management (CRM) could be defined as a process of
This is particularly important in industries that face a lot of competition, where individual companies rely on repeat purchases.
Murtaza Jaffer
MURTAZA JAFFER: Hello, everyone. My name is Murtaza Jaffer. I am a proud Penn Stater and graduated at Penn State Lehigh Valley in 2002. I'm originally from Tanzania, East Africa, and moved here in the mid-'90s, in 1996, and started coming to the United States. My main goal of my parents was getting their kids educated in America. So this was our American Dream.
So since then, I've been here. I chose Penn State Lehigh Valley because it was close to where my family lived, here in the Lehigh Valley. We lived in Whitehall first, and now we live in Allentown. So it was very close to home.
During my time here at Penn State Lehigh Valley, I always had the interest of operating a small business, along with my family as well. They had the interest of having a business here. And I decided to major in business administration with a concentration in marketing. So that really helped me kind of cultivate me to start my own business.
My brother, who's my partner in business, has an accounting background, while myself, with a marketing background. And we thought that mixing these two ideologies of having an accounting background and marketing would be beneficial to the small business that we wanted to launch.
When I graduated from Penn State Lehigh Valley, my brother graduated from Lehigh University, we both went into the corporate world to gain some experience. My brother worked for a local company in the finance department, a company that produced semiconductor chips in the area. And I started working for a mid-sized manufacturing company in New York.
Within the third month of the dream job, I get a phone call from my brother saying that he misses me. So I come over that one weekend, home. And over a Sunday breakfast, I turn The Morning Call newspaper, and I see this copy center/print shop going for sale.
So we look at each other. And we say, hey, do you want to go check this business out? And we said, OK, let's go. So I took off that Monday. We took a look at the business. And when we went into the business, it was a completely rundown business.
However, the couple that wanted to sell this business, we fell in love with them. They were just the kindest people we've met. And they said, look, we know that our business is not up to par, and we don't have the latest technology. But we're looking for a good faith acquisition here. And so we did.
We quit our corporate jobs. And we started operating this print shop with no background experience, with no experience in the printing industry. We just started. And today, we have been a successful print shop here in the Lehigh Valley, where we're producing all sorts of marketing materials. We print signage, promotional products, and apparel.
And I attest this success to some of the foundation and the education that I've gained at Penn State Lehigh Valley. Most importantly, the relationships that were made here at Penn State Lehigh Valley is what attest my success to, especially my professors.
I realized that I enjoyed connecting with people. And ever since I moved into the United States, I've always felt welcomed by the community here. As a matter of fact, when I started high school here, coming into America, I felt like a celebrity, watching all those movies and sitcoms. I told my friends back home, hey, I'm going to America. And I was so proud about it.
And I remember the first class when I went into high school here in the Lehigh Valley. I had a completely different picture of what a high school is going to look like. But the first person that I heard a voice from from the side as I sat down in my chair was somebody speaking Arabic to me. And that just blew my mind that somebody in America would speak Arabic to me.
That individual is still my friend today. And I didn't realize that the Lehigh Valley community has a large population of Syrian Christians and Lebanese Christians. So I was very fortunate to be welcomed like that and made a lot of friendships like that.
Because of this and just being connected with the community, getting involved in different activities, especially at Penn State Lehigh Valley-- where I was with student government, I joined the tennis team, and took much pride in the classes that I was involved with-- that really pushed me to look at the marketing degree. And that was the main reason why. It's just those community interactions, the activities that I got involved with, and knowing the fact that one day, I want to be in an entrepreneurial role. That is what pushed me to go into a marketing role, specifically.
When I started working at our print shop, I started working on the machines. And knowing that I had a marketing background, my brother, who was my partner, having an accounting background-- being a small business, you kind of dabble into many different things. You do many different things, especially when you're starting off.
But as our business grew and I surrounded with very talented and very caring people, the team that I created allowed me to get out there in the community. As a matter of fact, my own manager kind of fired me from my job and said that, hey, Murtaza, you need to be out in the community promoting our company and bringing in marketing initiatives and partnering with vendors that will help us from a marketing standpoint.
So I took her advice very seriously and started promoting our company. And my daily activity is basically that-- marketing our company, being in a business development role, working with our vendors and seeking their advice on how we can promote our small business. Also, getting involved with the community is a huge part of what I do.
I volunteer at many non-profit organizations. I'm a member of the Greater Lehigh Valley Chamber of Commerce. I sit on their executive board. And I sit on many different chambers within the Greater Lehigh Valley Chamber of Commerce on their board of directors, which allows me to connect with the community and also build relationships within the community.
The biggest challenge, especially from a small business perspective, is that I want to do a little bit of everything, especially when it comes to marketing my business. I want to be on TV, I want to be on radio-- every medium that you look at. It's very exciting to be part of every medium.
However, for a small business, it can be challenging, especially from a cost perspective, that you can't do everything. However, what you can do is you can gauge yourself and maybe start off at an entry level. So for example, from a digital marketing standpoint, our company-- ebcprinting.com-- is an e-commerce setup.
So from a digital marketing standpoint, we partnered with a really good advertising agency to help us promote our company. But we're also looking into other mediums, such as TV. We have a great TV anchor here in the Lehigh Valley called WFMZ. We have a great billboard company called Adams Outdoor here in the Lehigh Valley that, at some point, we want to partner with these companies so that we can promote our small business.
So after many years of being an alumni at Penn State Lehigh Valley, serving on the advisory board here at the campus, and just being a full-time supporter for the campus, the campus awarded me with an Alumni Award in 2019. And my own Professor, Dr. Denise Ogden, presented me with that award.
It's truly one of the proudest moments in my life. And I thank Denise Ogden, I thank the campus, for this award. And I will continue to support and promote all the initiatives that Penn State Lehigh Valley is trying to do for the betterment--
Sometimes, the most effective approach to achieving company objectives and satisfying consumers will hurt the larger sphere in which the company operates. In other words, what might be good for some consumers is not always good for society (Perreault, Cannon, & McCarthy, 2011, p. 22). For example, disposable packaging might be convenient for consumers, but it causes pollution and wastes natural resources. Marketers have an obligation to balance social responsibility with efforts to satisfy consumers, reducing the negative societal effects that production and consumption of their products can have (Kerin & Hartley, 2020).
Similarly, what might be good for the company (like increased profits via cheap labor) is neither ethically nor morally sound. Today, customers expect value to be delivered in socially and environmentally responsible ways. Therefore, business practices need to be conducted fairly and honestly, upholding consistently high and universally followed ethical standards.
Social responsibility, then, sometimes requires difficult trade-offs that could cut into a firm's profits. Marketers need to balance consumer, company, and social interests.
This lesson introduced marketing as concept—the philosophy that motivates modern marketing thinking. Acceptance and implementation of the marketing concept creates customer value. In the pursuit of satisfying customer needs, marketing managers often determine who will perform the marketing functions required to get a product to the market.
Naturally, some of you may have started this class believing that marketing is primarily used to promote new products. While this may sometimes be the case, other functions of marketing are equally important:
The concepts you’ve learned in this lesson—like target markets, customer satisfaction, and the four Ps—give you a basic framework for organizing and thinking about the broad issues in marketing. They represent the basic tools that marketing managers use to analyze marketing situations and solve problems.
Proceed with the lesson's activities.
American Marketing Association. (2013). Definitions of marketing. https://www.ama.org/AboutAMA/Pages/Definition-of-Marketing.aspx
Kerin, R. A., & Hartley, S. W. (2020). Marketing: The core (8th ed.). McGraw-Hill Education.
Kyung-A, Dae-Young (2013). Does customer satisfaction increase firm performance? An application of American Customer Satisfaction Index (ACSI), International Journal of Hospitality Management, 35, 68-77.
Lamb, C. W., Hair, J. F., & McDaniel, C. (2013). MKTG 7 (7th ed.). South-Western, Cengage Learning.
Lusch, R. (2007). Marketing’s evolving identity: Defining our future. Journal of Public Policy & Marketing, 26(2). https://archive.ama.org/archive/AboutAMA/Pages/AMA%20Publications/AMA%20Jour nals/Journal%20of%20Public%20Policy%20Marketing/TOCS/summary%20fall%2007/ MarketingsEvolvingjppmfall07.aspx
Perreault, Jr., W. D., Cannon, J. P., & McCarthy, E. J. (2008). Basic marketing: A marketing strategy planning approach (17th ed.). McGraw-Hill/Irwin.
Perreault, Jr., W. D., Cannon, J. P., & McCarthy, E. J. (2011). Basic marketing: A marketing strategy planning approach (18th ed.). McGraw-Hill/Irwin.
Story, L. (2007, January 15). Anywhere the eye can see, it’s likely to see an ad. The New York Times. http://www.nytimes.com/2007/01/15/business/media/15everywhere.html?pagewanted=all &_r=2