An Overview of Strategic Marketing 1 An Overview of Strategic Marketing

To be able to define marketing as focused on customers 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 become aware of the marketing concept and marketing orientation Copyright © Houghton Mifflin Company. All rights reserved.

To understand the importance of building customer relationships Objectives (cont’d) To understand the importance of building customer relationships To learn about the process of marketing management To recognize the role of marketing in our society Copyright © Houghton Mifflin Company. All rights reserved.

Understanding the Marketing Concept Managing Customer Relationships Chapter Outline Defining Marketing Understanding the Marketing Concept Managing Customer Relationships Value-Driven Marketing Marketing Management The Importance of Marketing in Our Global Economy Copyright © Houghton Mifflin Company. All rights reserved.

Defining Marketing Marketing Customers 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 Copyright © Houghton Mifflin Company. All rights reserved.

Components of Strategic Marketing FIGURE 1.1 Copyright © Houghton Mifflin Company. All rights reserved.

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 Copyright © Houghton Mifflin Company. All rights reserved.

Marketing Deals with Products, Distribution, Promotion, and Price The Marketing Mix Four marketing activities—product, distribution, promotion, and pricing—that a firm can control to meet the needs of customers within its target market Product Distribution Promotion Pricing Target Market Copyright © Houghton Mifflin Company. All rights reserved.

Marketing Mix Variables Product Goods, services, or ideas that satisfy customer needs Distribution 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 Copyright © Houghton Mifflin Company. All rights reserved.

Marketing Builds Satisfying Exchange Relationships The provision or transfer of goods, services, or ideas in return for something of value FIGURE 1.2 Copyright © Houghton Mifflin Company. All rights reserved.

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. Copyright © Houghton Mifflin Company. All rights reserved.

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 Copyright © Houghton Mifflin Company. All rights reserved.

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 Copyright © Houghton Mifflin Company. All rights reserved.

Implementing the Marketing Concept Becoming marketing oriented requires Establishing an information system to discover customers’ needs and using the information to create satisfying products. Coordinating all marketing activities by restructuring the organization. Obtaining the support of all managerial and staff levels in the organization. Copyright © Houghton Mifflin Company. All rights reserved.

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. Copyright © Houghton Mifflin Company. All rights reserved.

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 Copyright © Houghton Mifflin Company. All rights reserved.

Value-Driven Marketing 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 Copyright © Houghton Mifflin Company. All rights reserved.

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 Copyright © Houghton Mifflin Company. All rights reserved.

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 Copyright © Houghton Mifflin Company. All rights reserved.

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 Copyright © Houghton Mifflin Company. All rights reserved.

Effective Marketing Control Process Provides for quick detection of differences in planned and 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. Copyright © Houghton Mifflin Company. All rights reserved.

The Importance of Marketing in Our Global Economy Marketing costs consume a sizable portion of buyers’ dollars Marketing is used in nonprofit organizations Marketing is important to business and the economy Marketing fuels our global economy Copyright © Houghton Mifflin Company. All rights reserved.

The Importance of Marketing in Our Global Economy (cont’d) Marketing knowledge enhances consumer awareness Marketing connects people through technology Socially responsible marketing can promote the welfare of customers and society Marketing offers many exciting career prospects Copyright © Houghton Mifflin Company. All rights reserved.

After reviewing this chapter you should: Be able to define marketing as focused on customers. Know the meaning of important marketing terms, including target market, marketing mix, marketing exchanges, and marketing environment. Be more aware of the marketing concept and marketing orientation. Copyright © Houghton Mifflin Company. All rights reserved.

After reviewing this chapter you should: Understand the importance of building customer relationships. Have learned about the process of marketing management. Recognize the important role of marketing in our society. Copyright © Houghton Mifflin Company. All rights reserved.