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Chapter 1:
An Overview of Strategic Marketing
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•
•
•
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Defining Marketing
Understanding the Marketing Concept
Managing Customer Relationships
Value-Driven Marketing
Marketing Management
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Defining Marketing
• Marketing
– The process of creating, distributing,
promoting, and pricing goods, services,
and ideas to facilitate satisfying exchange
relationships with customers in a dynamic
environment
• Customers
– The purchasers of organizations’ products;
the focal point of all marketing activities
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Components of Strategic Marketing
FIGURE 1.1
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Marketing Focuses on Customers
• Target Market
– A specific group of customers on whom an
organization focuses its marketing efforts
•
•
•
•
Large or small customer groups
Single or multiple product markets
Single or multiple products
Local to global markets
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Marketing Deals with Products, Distribution,
Promotion, and Price
• The Marketing Mix
– Four marketing activities - product,
distribution (placement), promotion, and
pricing - that a firm can control to meet the
needs of customers within its target market
Product
Distribution
Promotion
Target
Market
Pricing
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Marketing Mix Variables
Product
Distribution
Goods, services, or ideas that satisfy
customer needs
The ready, convenient, and timely
availability of products
Promotion
Activities that inform customers about
the organization and its products
Pricing
Decisions and actions that establish
pricing objectives and policies and set
product prices
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Marketing Builds Satisfying Exchange
Relationships
• Exchange
– The provision or transfer of goods,
services, or ideas in return for something
of value
FIGURE 1.2
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Marketing Builds Satisfying Exchange
Relationships (cont’d)
• Exchange Conditions
– Two or more participants have something of value
that the other party desires.
– Exchange provides mutual benefit/satisfaction.
– Each party has confidence in the exchange value
of the other party’s offering.
– Each party must meet the expectations of the
exchange to become trusted by the other parties.
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Marketing Occurs in a Dynamic Environment
• Marketing Concept
– A philosophy that an organization should
try to satisfy customers’ needs through a
coordinated set of activities that also
allows the organization to achieve its goals
– Customer satisfaction
• Analysis of customers’ current and long-term
needs
• Analysis of competitors’ capabilities
• Integration of firm’s resources
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Evolution of the Marketing Concept
Product
Orientation
Late 19th century: efficient production of goods
allowed firms to meet strong customer demand.
Sales
Orientation
Mid-1920s–early 1950s: weakened demand
required that products would have to be “sold.”
(personal selling, advertising, and distribution
was the focus)
Marketing
Orientation
Early 1950s–2000s: adopting a customer focus
means a commitment to researching and
responding to customer needs.
FIGURE 1.3
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Managing Customer Relationships
• Relationship Marketing
– Establishing long-term, mutually satisfying
buyer-seller relationships allowing for
cooperation and mutual dependency
• Increased value of customer (loyalty) over time
results in increased profitability.
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Managing Customer Relationships (cont’d)
• Customer Relationship Management
(CRM)
– Using information about customers to
create marketing strategies that develop
and sustain desirable customer
relationships
• Identifying buying-behavior
patterns of customers
• Using behavioral
information to focus on
the most profitable
customers
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By offering its coffee in
grocery stores,
Starbucks practices
relationship
marketing—it acquires
new customers and
enhances the
profitability of existing
customers.
Reprinted with permission of Starbucks.
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Value-Driven Marketing
• Value
– A customer’s subjective assessment of benefits
relative to the costs in determining the worth of a
product
• Customer value = customer benefits – customer costs
– Customer benefits
• Anything desired by the customer that is received in an
exchange
– Customer costs
• Anything a customer gives up in an exchange for
benefits
– Monetary price of the benefit
– Search costs (time and effort) to locate the product
– Risks associated with the exchange
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How much does marketing and profit cost
for some of your favorite products?
Product Category
Soft drinks
Breakfast cereals
Potato chips and snacks
Beer
Canned fruits and vegetables
Percent
Marketing
and Profit
70%
70%
55%
50%
50%
What is the role of marketing in selling these
products?
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Marketing Management
• Marketing Management
– The process of planning, organizing,
implementing, and controlling marketing activities
to facilitate exchanges effectively and efficiently
– Effectiveness
• The degree to which an exchange
helps an organization achieve its
objectives
– Efficiency
• The process of minimizing the
resources an organization must
spend to achieve a specific level
of desired exchanges
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Marketing Management (cont’d)
• Planning
– Assessing opportunities and resources
– Determining marketing objectives
– Developing a marketing strategy and plans for
implementation and control
• How, when and by whom are marketing activities
performed?
• Organizing
– Developing the internal structure of the marketing
unit
• Functions, products, regions, customer types
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Marketing Management (cont’d)
• Implementation
– Coordinating marketing activities
– Motivating marketing personnel
– Developing effective internal communications
within the unit
• Control
– Establishing performance standards
– Comparing actual performance to established
standards
– Reducing the difference between desired and
actual performance
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Effective Marketing Control Process
• Provides for quick detection
of differences in planned
vs. actual performance
• Accurately monitors
activities and is flexible
enough to accommodate changes
• Incurs low process costs relative to the
costs of a “no-control” situation
• Is understandable by both managers
and subordinates.
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