L. Bruhn MKTG 3050 Copyright © Houghton Mifflin Company. All rights reserved. 1 | 1 Chapter 1: An Overview of Strategic Marketing Defining Marketing Understanding

L. Bruhn MKTG 3050 Copyright © Houghton Mifflin Company. All rights reserved.

1 | 1

Chapter 1:An Overview of Strategic Marketing

• 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

ProductProduct

DistributionDistribution

PromotionPromotion

PricingPricing

TargetTargetMarketMarket


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Marketing Mix Variables

ProductProduct

DistributionDistribution

PromotionPromotion

PricingPricing

Goods, services, or ideas that satisfy customer needs

The ready, convenient, and timely availability of products

Activities that inform customers about the organization and its products

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

ProductProductOrientationOrientation

SalesSalesOrientationOrientation

MarketingMarketingOrientationOrientation

Late 19th century: efficient production of goods allowed firms to meet strong customer demand.

Mid-1920s–early 1950s: weakened demand required that products would have to be “sold.” (personal selling, advertising, and distribution was the focus)

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?

Percent Marketing

Product Category and ProfitSoft drinks 70%Breakfast cereals 70%Potato chips and snacks 55%Beer 50%Canned fruits and vegetables 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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L. Bruhn MKTG 3050 Copyright © Houghton Mifflin Company. All rights reserved. 1 | 1 Chapter 1: An Overview of Strategic Marketing Defining Marketing Understanding