Download chap1

Chapter 1
An Overview of
Strategic Marketing
Objectives
• Define marketing as focused on customers
• Identify important marketing terms
• Become aware of the marketing concept and
marketing orientation
• Understand importance of building customer
relationships
• Learn the process of marketing management
• Recognize role of marketing in society
Copyright © Houghton Mifflin Company. All rights reserved.
1|3
Defining Marketing
the process of creating, distributing,
promoting, and pricing goods, services,
and ideas to facilitate satisfying exchange
relationships with customers and to
develop and maintain favorable
relationships with stakeholders in a
dynamic environment
Copyright © Houghton Mifflin Company. All rights reserved.
1|4
Marketing focuses on customers
• Customers, who are buyers of organization’s
products, are the focal point of all marketing
activities.
• The essence of marketing is to develop satisfying
exchanges from which both customers and
marketers benefit.
• Organizations generally focus their marketing efforts
on a specific group of customers, or target market.
• Organizations must define their products not as what
they produce but as what they do to satisfy
customers.
Copyright © Houghton Mifflin Company. All rights reserved.
1|5
Target Market
• A specific group of customers on whom an
organization focuses its marketing efforts.
Copyright © Houghton Mifflin Company. All rights reserved.
1|6
Components of
Strategic Marketing
Copyright © Houghton Mifflin Company. All rights reserved.
1|7
Marketing deals with “Marketing Mix”
• Marketing is more than simply advertising or selling a
product;
it involves developing and managing a product, making
the product available in the right place and at a price
acceptable to buyers, and communicating information
to help customers determine if the product will satisfy
their needs.
• These activities — product, distribution, promotion,
and pricing — are known as the marketing mix
because marketers decide what type of each element
to use and in what amounts. (each will be briefed in the
followings slides)
Copyright © Houghton Mifflin Company. All rights reserved.
1|8
Product Variable
• The product variable deals with researching
customers’ needs and wants and designing a product
that satisfies them.
• A product can be a good, a service, or an idea:
– Good—a physical entity you can touch
– Service—the application of human and mechanical efforts
to people or objects to provide intangible benefits to
customers
– Idea—concept, philosophy, image, or issue
• The product variable also involves creating or modifying
brand names and packaging and may include decisions
regarding warranty and repair services.
Copyright © Houghton Mifflin Company. All rights reserved.
1|9
Distribution Variable
 Makes products available in the right
quantities to the target market, and
 Yet, keeps the following costs under
control:
 Inventory
 Transportation
 Storage
 It also involves Selecting/Motivating
intermediaries
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 10
Promotion Variable
 It relates to activities used to inform
individuals or groups about an organization
and its products.
 It can also increase public awareness of an
organization and of new or existing products.
 Promotional activities can also educate
customers about product features
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 11
Price Variable
• Decisions and actions associated with
establishing pricing objectives and policies and
determining product prices.
• Price is a critical component of the marketing
mix because customers are concerned about
the value obtained in an exchange.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 12
The Marketing Mix – the control issue
• The marketing mix variables are often
viewed as controllable because they can
be modified. But,
• Economic conditions, competitive
structure, or government regulations may
limit how much marketing managers can
alter them (uncontrollable).
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 13
Marketing Builds Relationships with Customers
and Other Stakeholders
• Individuals and organizations engage in
marketing to facilitate exchanges. (see next slide
for illustration)
• Exchange is “the provision or transfer of goods,
services, or ideas in return for something of
value”.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 14
Exchange Between
Buyer and Seller
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 15
Conditions of Exchange
1) Two or more must participate and possess
something of value other party desires
2) Exchange should provide benefit/ satisfaction
to both parties
3) Parties have confidence in the promise of
“something of value” held by the other
4) Parties must meet expectations
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 16
Stakeholders
• Marketers are also concerned with building
relationships with relevant stakeholders,
• Stakeholders: those who have a “stake,” or
claim, in some aspect of a company’s products,
operations, markets, industry, and outcomes”.
• Stakeholders may include customers, employees,
investors and shareholders, suppliers,
governments, communities, and many others.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 17
Marketing Occurs in a Dynamic Environment
• The marketing environment includes
competitive, economic, legal and regulatory,
technological, and socio-cultural forces.
• It affects marketer’s ability to facilitate
exchanges
• Marketing environment forces can fluctuate
quickly and dramatically.
• Changes in the marketing environment produce
uncertainty for marketers and at times hurt
marketing efforts, but they also create
opportunities.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 18
Marketing Occurs in a Dynamic
Environment
• The forces of the marketing environment affect a marketer’s
ability to facilitate exchanges in three general ways:
• 1- they influence customers by affecting their lifestyles,
standards of living, and preferences and needs of products.
• 2-marketing environment forces determine whether and how
a marketing manager can perform certain marketing
activities.
• 3- environmental forces may affect a marketing manager’s
decisions and actions by influencing buyers' reactions to the
firm’s marketing mix.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 19
Marketing Concept
• The marketing concept is “a philosophy that an
organization should try to provide products that satisfy
customers’ needs through a coordinated set of activities
that also allows the organization to achieve its goals.
• It is also a management philosophy that guides an
organization’s overall activities.
• Customer satisfaction is the major focus of the
marketing concept.
• To implement this concept, an org. focuses on customer
analysis, competitor analysis, and integration of the firm’s
resources to provide customer value and satisfaction, as
well as long-term profits.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 20
Evolution of the
Marketing Concept
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 21
The Production Orientation (1850-1900)

During the second half of the nineteenth
century, the Industrial Revolution was at its
peak in the United States. The attention was
fully focused on production

As a result of new technology and new ways
of using labor, products poured into the
market, where consumer demand for the
new manufactured goods was strong.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 22
The Sales Orientation (1900-1950)
•
Between 1900 and 1950, businesspeople
viewed sales as the major means of
increasing profits. [sell what you can make]
•
During this era, businesspeople believed
that the major marketing activities were
personal selling, advertising, and
distribution.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 23
Marketing Orientation 1950-now
By the early 1950s, some businesspeople
recognized that they must first determine what
customers want and then produce it, rather than
make products and try to persuade customers
that what they need is what was produced.
[make what you can sell]
• Marketing orientation is “an organization-wide
commitment to researching and responding to
customer needs”
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 24
Implementing the Marketing Concept
marketing orientation requires an “organization-wide
generation of market intelligence pertaining to current
and future customer needs, dissemination of the
intelligence across departments, and organizationwide responsiveness to it.” This means that:
– Management must first establish an information
system to discover customers’ real needs and
then use the information to create satisfying
products.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 25
Relationship Marketing
• It refers to “establishing long-term, mutually satisfying buyerseller relationships”.
• Relationship marketing continually deepens the buyer’s trust in
the company, and as the customer’s confidence grows, this in
turn increases the firm’s understanding of the customer’s needs.
• Eventually this interaction becomes a solid relationship that
allows for cooperation and mutual dependency.
• Relationship marketing can be developed through:
 Acquire new customers
 Enhance profitability of existing customers
 Extend duration of customer relationship
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 26
Customer
Relationship Management (CRM)
Using information about customers to create
marketing strategies that develop and
sustain desirable customer relationships.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 27
Value-Driven Marketing
• To manage customer relationships, organizations must
develop marketing mixes that create value for customers.
• Value is “a customer’s subjective assessment of benefits
relative to costs in determining the worth of a product”
(customer value = customer benefits – customer costs).
• Customer benefits include anything a buyer receives in an
exchange. While,
• Customer costs include anything a buyer must give up to
obtain the benefits provided by the product. Costs include
the monetary price of the product as well as non-monetary
costs such as time and effort.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 28
Value-Driven Marketing
(continued)
• The process people use to determine the value
of a product is not highly scientific (subjective).
• In developing marketing activities, it is important
to recognize that customers receive benefits
based on their expectations and previous
experiences.
• The marketing mix can be used to enhance
perceptions of value.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 29
Marketing Management
Marketing management is “the process of
planning, organizing, implementing, and
controlling marketing activities to facilitate
exchanges effectively and efficiently.
• “Effectiveness” is the degree to which an exchange
helps achieve an organization’s objectives. While,
• “Efficiency” refers to minimizing the resources an
organization must spend to achieve a specific level of
desired exchanges (objectives).
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 30
Marketing Management
• The Proper implementation of marketing plans depends on
proper coordination of marketing activities. Look at McDonald’s
example on page16.
• An effective control process has four requirements:
First, it should ensure a rate of information flow.
Second, it must accurately monitor various activities and be
flexibly.
Third, the cost of the control process must be low relative to
the cost that would arise without control.
Fourth, all employees should be able to understand the
process.
Marketing manager should have an effective communication
system that connects him with others.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 31
The Importance of Marketing in Global Economy
1. Marketing Costs Consume a Sizable
Portion of Buyers’ money
 About one-half of a buyer’s money goes to pay
the costs of marketing.
 Because marketing expenses consume such a
significant portion of our money, we should know
how this money is used.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 32
The Importance of Marketing in Global Economy
(continued)
2. Marketing Is Used in Nonprofit Organizations
– Marketing is also important for nonprofit organizations.
For example, government agencies use marketing
activities to fulfill their goals.
– In the private sector, nonprofit organizations also
employ marketing activities to create, distribute,
promote, and even price programs that benefit
particular segments of society.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 33
The Importance of Marketing in Global Economy
(continued)
3. Marketing Is Important to Business
and the Economy
– Businesses must sell products to survive and
grow, and marketing activities help sell their
products.
– Marketing activities help individual business
make healthy profits, and this is important for
the health and ultimate survival of the global
economy.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 34
The Importance of Marketing in Global Economy
(continued)
4. Marketing Fuels Our Global Economy
– Profits from marketing products contribute
to the development of new products and
technologies.
– Advances in technology lead to a higher
standard of living, and this stimulates
global economic growth.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 35
The Importance of Marketing in Global Economy
(continued)
5. Marketing Knowledge Enhances
Consumer Awareness
– Studying marketing allows us to assess a
product’s value more effectively.
– Understanding marketing enables us to
understand measures (i.e. laws and regulations)
that could stop unfair, damaging, or unethical
marketing practices.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 36
The Importance of Marketing in Global Economy
(continued)
6. Marketing Connects People Through
Technology
– New communication technology helps
marketers understand and satisfy more
customers than ever before. (E-marketing,
E-shopping)
– The Internet has become a vital tool for
marketing to consumers and businesses.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 37
The Importance of Marketing in Global Economy
(continued)
7. Socially Responsible Marketing Can
Promote the Welfare of Customers and
Society
– The success of economic system depends on
marketers who promote trust and treat customers
with respect.
– By being socially responsible, a firm can protect
the interests of the general public and the natural
environment.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 38
The Importance of Marketing in Global Economy
(continued)
8. Marketing Offers Many Exciting Career
Prospects
– For example, 25 to 33 percent of all civilian
workers in the United States perform
marketing activities.
– Whether a person earns a living through
marketing activities or otherwise, marketing
knowledge and skills are valuable assets.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 39