1. Part 1 STRATEGIC MARKETING AND ITS ENVIRONMENT

2. 1: Customer-Driven Strategic Marketing
2: Planning, Implementing, and Evaluating Marketing Strategies
3:The Marketing Environment, Social Responsibility, and Ethics

3. Chapter 1 Customer-Driven Strategic Marketing
Professor Jason C. H. Chen, Ph.D.
School of Business Administration
Gonzaga University
Spokane, WA 99258

4. Question
What is marketing? How did you define the term before you read/ we discuss this chapter?

5. Objectives To be able to define marketing as focused on customers
To identify some important marketing terms, including target market, marketing mix, marketing exchanges, and marketing environment
To understand the relationship between marketing and value
To become aware of the marketing concept and market orientation
To understand the importance of building customer relationships
To recognize the role of marketing in our society

6. Defining Marketing
The process of creating, distributing, promoting, and pricing goods, services, and ideas to:
facilitating satisfying exchange relationships with customers
developing and maintaining favorable relationships with stakeholders in a dynamic environment

7. Marketing Strategies/Decisions
Select a
Target Market
Develop a
Marketing Mix
Target market: a defined group of consumers or organizations with whom a firm wants to create marketing exchanges.
-- segmentation, positioning etc.
A marketing mix is the overall marketing offer to appeal to the target market.
-- 4P’s
A marketing strategy is the selection of a target market and the creation of a marketing mix that will satisfy the needs of target market members. A marketing strategy articulates the best use of the company’s resources to accomplish its marketing objectives.
To Satisfy
Market Needs
A marketing strategy is the selection of a target market and the creation of a marketing mix that will satisfy the needs of target market members.
A marketing strategy articulates the best use of the company’s resources to accomplish its marketing objectives.

8. The Marketing Mix A Marketing Strategy C
Q: ask students how to sell (promote) a new product. Then try to direct the answers cover this 4P’s
Summary Overview (Exhibit 2-8)
Production and marketing work together to create utility: the power to satisfy human needs. There are five kinds of economic utility.
Key Issues
Form utility: provided when someone produces something tangible.
Task utility: provided when someone performs a task for someone else.
Time utility: having the product available when the customer wants it.
Place utility: having the product available where the customer wants it.
Discussion Question: Can you think of examples of businesses that excel in providing time and place utility?
Possession utility: obtaining a good or service and the right to use or consume it.

9. A Marketing Strategy – showing the 4 P’s of a
Marketing Mix
Product
Place C
Price
Promotion
Q: ask students how to sell (promote) a new product. Then try to direct the answers cover this 4P’s
Summary Overview (Exhibit 2-8)
Production and marketing work together to create utility: the power to satisfy human needs. There are five kinds of economic utility.
Key Issues
Form utility: provided when someone produces something tangible.
Task utility: provided when someone performs a task for someone else.
Time utility: having the product available when the customer wants it.
Place utility: having the product available where the customer wants it.
Discussion Question: Can you think of examples of businesses that excel in providing time and place utility?
Possession utility: obtaining a good or service and the right to use or consume it.

10. Marketing Mix Decisions
Product Decisions
Marketing
Mix
Integrated Marketing
Communications Decision
(Promotion)
Price Decisions
Distribution Decisions
(_______+ ______)
Place
Time

11. Figure 1.1 - Components of Strategic Marketing
4 P’s
(place+time)

12. Marketing Focuses on Customers
The purchasers of organizations’ products
The focal point of all marketing activities
Target Market
A specific group of customers on whom an organization focuses its marketing efforts

13. Marketing Mix Variables
Four marketing activities a firm can control to meet the needs of customers in its target market
Product
Distribution
Promotion
Price
Marketing mix variables are often viewed as controllable but have their limits

14. Product Variable A product can be: Involves creating/modifying:
A good
A service
An idea
Involves creating/modifying:
Brand names
Packaging
Product variable decisions are important because they are directly involved with creating products that address customers’ needs and wants

15. Distribution Variable
Marketing managers need to make products available in quantities desired to as many target market customers as possible
While minimizing these three costs:
Inventory
Transportation
Storage
Ensures availability of products:
At the right time
In convenient locations

16. Distribution Variable
Marketing managers may
Select/motivate intermediaries (wholesalers and retailers)
Establish/maintain inventory control procedures
Develop/manage transportation and storage systems
How has the Internet and electronic commerce influenced the distribution variable?
Marketing Information Systems

17. Promotion Variable
Relates to activities used to inform individuals or groups about the organization and its products
Can aim to increase public awareness of the organization and of new or existing products
Can educate customers about product features
Can urge people to take a stance on a political or social issue
Can help sustain interest in established products

18. Price Variable
Relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices
Price is
a critical component of the marketing mix as customers are concerned about value obtained in an exchange
used as a competitive tool
Intense price competition sometimes leads to price wars

19. Marketing Creates Value
Customer Benefits
Customer Costs – =
Value is a customer’s subjective assessment of benefits relative to costs in determining the worth of a product
Customer benefits include anything a buyer receives in an exchange
Customer costs include anything a buyer must give up to obtain the benefits the product provides including cost, time, effort and risk
The marketing mix can be used to enhance perceptions of value (p.8)
Perceived value  price (lowest) or distribution (greatest convenience or fastest delivery)

20. Costs Monetary costs Non-monetary costs
Time and efforts customers expend to find and purchase desired products
Risk-reduction strategy
an offer of a 100 percent satisfaction guarantee and becomes popular in today’s catalog/telephone/Internet shopping environment.

21. Figure 1.2 - Marketing Builds Relationships
Exchanges are the provision or transfer of goods, services, or ideas in return for something of value
Exchange
(and with other stakeholders)

22. Relationships with Customers
For an exchange to take place, four conditions must exist:
Two or more parties must participate, and each must possess something of value that the other party desires
The exchange should provide a benefit or satisfaction to both parties
Each party must have confidence in the promise of the “something of value” held by the other
To build trust, the parties to the exchange must meet expectations
Marketing activities should attempt to create and maintain satisfying exchange relationships.
p.10

23. Relationships with Stakeholders
Stakeholders are constituents who have a “stake,” or claim, in some aspect of a company’s products, operations, markets, industry, and outcomes
Stakeholders include:
Customers
Employees
Investors and shareholders
Suppliers
Governments, communities and more

24. Marketing Environment
The marketing environment is dynamic and includes the following forces:
Competitive
Economic
Political
Legal and regulatory
Technological
Socio-cultural
The marketing environment forces surround the customer and affect the marketing mix

25. Figure 1.1 - Components of Strategic Marketing#2 #1 #3
4 P’s
(place+time) #6 #4 #5

26. Marketing Environment
Effects of these forces on buyers/sellers can be dramatic and difficult to predict
The impact on value can be extensive as market changes can easily impact how stakeholders perceive certain products
Unlike marketing-mix variables, an organization has little to no control over marketing environment forces.
Marketing environment forces can fluctuate quickly and dramatically, which is one reason why marketing is so interesting and challenging.
Changes in the marketing environmen produce uncertainty for marketers and at times hurt marketing efforts.
p.11

27. Marketing Environment
The forces of the marketing environment affect a marketer’s ability to facilitate value-driven marketing exchanges in three ways:
They influence customers by affecting their lifestyle, standards of living, and preferences and needs for products
They help to determine whether and how a marketing manager can perform certain marketing activities
They may affect a marketing manager’s decisions and actions by influencing buyers’ reactions to the firm’s marketing mix.

28. Marketing Concept
According to the marketing concept, 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
The marketing concept is a management philosophy guiding an organization’s overall activities
A firm that adopts the marketing concept must satisfy not only its customers’ objectives but also its own objectives
Customers are the main focus

29. Evolution of the Marketing Concept
Production Orientation
Second half of the nineteenth century, the Industrial Revolution improved speed and efficiency
Large increases in availability of products and consumer response was strong

30. Evolution of the Marketing Concept
Sales Orientation
During the first half of the 20th century competition increased and focus shifted to selling products to buyers
Marketers were able to learn that many products did not meet consumers needs
Businesses viewed sales and selling as the main means of increasing profits

31. Evolution of the Marketing Concept
Market Orientation
Emerged in the mid-20th century
Market orientation requires an organization-wide commitment to researching and responding to customer needs and dissemination of the marketing intelligence across departments
New-product innovation by developing a strategic focus to explore and develop new products to serve target markets
Involves being responsive to ever-changing customer needs and wants

32. Implementing the Marketing Concept
Establish an information system to discover customers’ real needs (e.g., BI – data mining)
Use the information to create satisfying products
Company must coordinate all its activities to satisfy objectives
Listen and respond to consumers frustrations and appreciation is the key in implementing the marketing concept

33. BUSINESS VALUE & FOCUS –IS Perspective
IS/E-BUSINESS
Customer
centric
SCM
CRM
BPR
ERP
Demands
Products/
Services
Value
What they need/want?
How many they need/want?
When they need/want?
How to reach them?
Who are the customers?
Where are the customers?
Their purchasing habits
HOW TO REACH THEM?
IT/INTERNET/E-BUSINESS
SCM: Supply Chain Management
CRM: Customer Relationship Management
BPR: Business Process Reengineering
ERP: Enterprise Resources Planning
Business Models & Strategies

34. Customer Relationship Management (CRM)
???
Marketing Strategy
Information Technology
(what is a
strategic bridge?)

35. Customer Relationship Management (CRM)
Marketing Strategy
Information Technology
(CRM provides a strategic bridge between marketing strategy and IT aimed at long-term relationships)

36. Customer Relationship Management
Customer relationship management (CRM) means using information about customers to create marketing strategies that develop and sustain desirable customer relationships
Marketing relationships with customers are the lifeline of all businesses
Profits can be obtained through relationships in the following ways:
1) By acquiring new customers
2) By enhancing profitability of existing customers
3) By extending the duration of customer relationships
How?
We will learn BI – RapidMiner a dataming tool for exploring “Market Basket” and “Target Market” if time is allowed.

37. Customer Relationship Management (CRM)
Suite of applications, a database, and a set of inherent processes
Intended to support customer-centric organization
Integrates all primary activities of value chain
Manage all interactions with customer though four phases of customer life cycle:
Marketing - marketing sends messages to target market
Customer ___________ - customer prospects order and need to be supported
___________ Management - support and resale processes increase value to existing customers
Loss/churn - win-back processes categorize customers according to value and attempt to win back high-value customers
Acquisition
Relationship

38. Four Phases of Customer Life Cycle
Figure below depicts the four phases of the customer life cycle and shows how a CRM system integrates them into three major processes: solicitation, lead-tracking, and relationship management.
Manage all interactions with customer though four phases of customer life cycle: (Fig. 7-11)
Marketing—marketing sends messages to target market
Customer Acquisition—customer prospects order and need to be supported
Relationship Management—support and resale processes increase value to existing customers
Loss/churn—win-back processes categorize customers according to value and attempt to win back high-value customers
Fig 1-Extra: The Customer Life Cycle

39. CRM Applications
Customer Relationship Management (CRM) systems store data in a single database and link CRM processes to one another.
Fig (Extra): CRM Applications

40. Customer Relationships
Petouhoff (CRM, Anton)

41. Relationship Marketing
“Long-term and mutually beneficial arrangement in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges.”
Deepens the buyers trust
Building satisfying exchange relationships between buyers and sellers requires:
Gathering useful data at all customer contact points
Analyzing that data to better understand customers’ needs, desires, and habits

42. Importance of Marketing in a Global Economy Summary
Marketing costs (50% - 60%) consume a sizable portion of buyers’ dollars
Used in nonprofit organizations
Important to businesses and the economy
Fuels global economy
Marketing knowledge enhances consumer awareness
Connects people through technology
Computers and telecommunications helps marketers understand and satisfy more customers than ever before
The Internet provides information about products and allows customer interaction
As more consumers adopt smartphones, mobile marketing is also becoming a major trend

43. People, Process and Technology
Start with People
Petouhoff (CRM, Anton)

44. The Importance of Marketing in Our Global Economy
Socially responsible marketing – Promoting the welfare of customers and stakeholders
Green marketing – A strategic process involving stakeholder assessment to:
create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment (Safeway Whole Foods)
Market orientation combined with social responsibility improves overall business performance.
All organizations engage in some kind of marketing
The field offers interesting and challenging career opportunities throughout the world
25-33% of civilian workers in the U.S. perform marketing activities and marketing skills are valuable in every field

45. Video Case 1.1: Cruising to Success: The Tale of New Belgium Brewing
Summary
This case illustrates how New Belgium Brewing’s market orientation has helped the company grow from a small business to America’s third largest brewery. Since its founding, New Belgium has emphasized the importance of meeting the needs of its many stakeholder groups, and that philosophy continues to guide the company’s marketing activities. While students may be familiar with the company’s corporate social responsibility activities, it is important for them to realize that those activities are part of the company’s marketing strategy and thus its profitability.

46. 1. How has New Belgium implemented the marketing concept?
According to the marketing concept, an organization should try to provide products that satisfy customers’ needs through a coordinated set of activities that also allow the organization to achieve its goals. New Belgium considers its customers and other stakeholders at every level of its marketing activities, which has led to the company’s popularity and success. Students may cite examples related to each part of the marketing mix, so make sure they focus on how the marketing mix contributes to customer satisfaction and the marketing concept.
To ensure customer satisfaction, New Belgium focuses on creating quality products. The company engages in market research when creating its beers. It continually creates new products to keep customers engaged and excited about the brand. Even the company’s focus on sustainability reflects what is important to their customers. However, New Belgium’s corporate social responsibility activities are not just philanthropic—they are strategic. Because New Belgium beers provide more value, customers are willing to pay premium prices, which leads to higher profits for the company and its impressive 15 percent growth rate.

47. 2. What has Kim Jordan done to create success at New Belgium?
Kim Jordan created a unique marketing mix for New Belgium. Under her direction, the company crafted quality beers (product), placed them on shelves and in bars (distribution), created a unique indie brand (promotion), and increased their profit by providing more value and charging a higher price.
In addition, Jordan’s vision for New Belgium’s corporate culture creates value for all stakeholder groups, including employees, customers, the environment, and the community and fosters loyalty to the New Belgium brand

48. 3. How does New Belgium’s focus on sustainability as a core value contribute to its corporate culture and success?
Sustainability has been a major part of the company’s vision since its founding. For this reason, NBB strives to incorporate environmental responsibility directly into its business strategies. Sustainability is important to several of New Belgium’s stakeholder groups, which increases customer and employee loyalty.
Because of this, the company’s environmental philosophy creates a competitive advantage. Environmentally conscious consumers are more likely to do business with a company that incorporates green practices into its business activities. Sustainable practices also increase consumers’ perceptions of the value of New Belgium’s prices, which results in higher prices and better financial returns for the company.