1. Part 1: A Passion for the Business
Advertising’s Role
in Marketing
Part 1: A Passion for the Business
Chapter 2

2. Questions We’ll Answer
CHAPTER KEY POINTS
Questions We’ll Answer
What is marketing and what are its key concepts?
What are the different types of markets, and how do they relate to the marketing process?
Who are the key players in marketing?
How are agencies organized, and how do they work with their clients?

3. WHAT IS MARKETING?
Defining Marketing
Traditionally, marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted.
“An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”—American Marketing Association

4. Key Concepts in Marketing
WHAT IS MARKETING?
Key Concepts in Marketing
The Marketing Concept
Exchange
Differentiation & Competitive Advantage
Added Value
Branding
Marketing should focus first on identifying the needs and wants of the consumer, rather than building products the consumer may not want.
Two steps of the marketing concept:
Determine customer needs and wants through research.
Develop, manufacture, market, and service goods that fill those needs and wants—solve customers’ problems.

5. Key Concepts in Marketing
WHAT IS MARKETING?
Key Concepts in Marketing
The Marketing Concept
Exchange
Differentiation & Competitive Advantage
Added Value
Branding
Exchange is the act of trading a product or service for something of value (money)
Two types of exchange: economic and communication

6. Key Concepts in Marketing
WHAT IS MARKETING?
Key Concepts in Marketing
The Marketing Concept
Exchange
Differentiation & Competitive Advantage
Added Value
Branding
A brand’s competitive advantage is where it’s different from its competitors and superior in some way.
In marketing, this concept is called differentiation.
Price
Design
Performance
distribution
Brand image
Reliability

7. Key Concepts in Marketing
WHAT IS MARKETING?
Key Concepts in Marketing
The Marketing Concept
Exchange
Differentiation & Competitive Advantage
Added Value
Branding
Added value is a marketing or advertising activity that makes the product more valuable, useful or appealing to consumers.
Other ways to add value:
More convenient to buy
Lower price
More useful features
Higher quality
Status symbol
More knowledgeable employees

8. Key Concepts in Marketing
WHAT IS MARKETING?
Key Concepts in Marketing
The Marketing Concept
Exchange
Differentiation & Competitive Advantage
Added Value
Branding
Branding is the way marketers create a special meaning for a product.
Brand image is based on communication and on the consumer’s personal experiences with the product.
Brand equity refers to the financial value based on the reputation and meaning the brand name has acquired over time.

9. Types of Markets Consumer Markets Business-to-Business Markets
WHAT IS MARKETING?
Types of Markets
Consumer Markets
Those who buy products or services for personal use.
Business-to-Business Markets
Companies that buy products or services to use in their own business or to make products.
Institutional Markets
Nonprofits such as hospitals, governments, schools that provide goods and services for the benefit of society.
Channel Markets
Resellers and intermediaries who buy finished or semi-finished products and resell them for a profit.

10. The Marketing Plan WHAT IS MARKETING? Steps in the Marketing Process
Research the consumer marketplace and competitive marketplace and develop a situation analysis or SWOT analysis.
Set objectives for the marketing effort.
Assess consumer needs and wants, segment the market into groups, target specific markets.
Differentiate and position the product relative to the competition.
Develop the marketing mix strategy.
Evaluate the effectiveness of the strategy.

11. Marketing Research Marketing Research
WHAT IS MARKETING?
Marketing Research
Marketing Research
Research markets, product categories, consumers, and the competitive situation.
Planners need to know as much as they can about the marketplace so they can make informed, insightful strategic decisions.
SWOT (Strengths, Weaknesses, Opportunities, Threats) helps managers turn data into insights.

12. Marketing Research WHAT IS MARKETING? Key Strategic Decisions
Objectives—increase sales, share of market, or broader distribution
Segmenting and targeting
Target market
Segmenting
Target audience
Differentiating and positioning.
The point of differentiation positions the product within the competitive environment, relative to consumer needs.
Positioning is how consumers view the brand relative to others in the category.

13. The Marketing Mix Product Distribution Pricing Marketing Communication
WHAT IS MARKETING?
The Marketing Mix
Product
Distribution
Pricing
Marketing Communication
Includes product design and development, product operation and performance, branding, and physical packaging.
Product design, performance, and quality are key to a product’s success.

14. The Marketing Mix Product Distribution Pricing Marketing Communication
WHAT IS MARKETING?
The Marketing Mix
Product
Distribution
Pricing
Marketing Communication
The channels used to move a product from manufacturer to buyer.
Types of distribution:
Direct marketing to consumer
Channel marketing through resellers and retailers
Strategic distribution decisions:
Market coverage strategy
Push strategies
Pull strategies

15. The Marketing Mix Product Distribution Pricing Marketing Communication
WHAT IS MARKETING?
The Marketing Mix
Product
Distribution
Pricing
Marketing Communication
Price is based on:
Cost of making and marketing the product and seller’s expected profit level.
Also, based on what the market will bear, competition, economic well-being of customer, value of product, and the consumer’s ability to gauge the value.
Pricing strategies:
Customary pricing—movies
Psychological pricing for affluent customers

16. The Marketing Mix Product Distribution Pricing Marketing Communication
WHAT IS MARKETING?
The Marketing Mix
Product
Distribution
Pricing
Marketing Communication
Includes personal selling, advertising, public relations, sales promotion, direct marketing, events and sponsorships, point of sale, packaging.
Personal sales uses face-to-face contact with customers to create immediate sales.
Marketing communication is about “Big Ideas.”

17. THE KEY PLAYERS
Marketer
The advertiser or client that is the company or organization who produces and sells the brand.
The marketing function is usually handled by a marketing department headed by a VP or director of marketing.
Some companies have a product or brand manager who handles marketing and makes all strategic decisions about design, manufacture, and the marketing mix.

18. THE KEY PLAYERS
Suppliers and Vendors
They provide or produce the materials and ingredients that are sold to manufacturers to make products.
In theory, every member of the supply chain adds value.
In practice, every member of the supply chain is a partner in creating the product and marketing the brand.

19. Distributors and Retailers
THE KEY PLAYERS
Distributors and Retailers
The distribution chain or channel of distribution refers to all the companies who help move a product from manufacturer to buyer.
The trade refers to upstream players (suppliers and vendors in the supply chain) and downstream players (companies in distribution chain)

20. THE KEY PLAYERS
Marketing Partners
Suppliers, distributors, and marketing communication agencies are partners in supporting the brand and maintaining good customer relationships.
Affiliate marketing is a partnership in which one company drives customers to another company and may get a commission for doing so.

21. The Agency-Client Relationship
HOW AGENCIES WORK WITH THEIR CLIENTS
The Agency-Client Relationship
Agencies and agency networks (holding companies)
Companies have internal advertising departments who act as a liaison between the marketing department and advertising agency(ies).
Advertisers may have one agency of record (AOR) or several agencies.
Agencies offer clients:
Specialized services
Objective advice
Experienced staffing
Management of all advertising activities and personnel

22. HOW AGENCIES WORK WITH THEIR CLIENTS
Types of Agencies
Full-service Agencies
Account management, creative services, media planning, account planning, accounting, traffic, production, and human resources
Specialized by:
Function (copy, art, media)
Audience (minority, youth)
Industry (healthcare, computers, agriculture)
Market (minority groups)
Creative Boutiques
Small agencies focused on the creative product
Media-buying Services
Focused on purchasing media for clients

23. How Agency Jobs Are Organized
HOW AGENCIES WORK WITH THEIR CLIENTS
How Agency Jobs Are Organized
Account Management
Serves as a liaison between the client and agency
Three levels: management supervisor, account supervisor, account executive
Account Planning and Research
Acts as the voice of the consumer
Creative Development and Production
People who create and people who inspire
Creative directors, copywriters, art directors, producers
Media Planning and Buying
Recommend most efficient means of delivering the message
Internal Agency Services
Traffic, print production, financial services, human resources

24. HOW AGENCIES WORK WITH THEIR CLIENTS
How Agencies Are Paid
Commissions
A percentage of the media cost
Fees
Hourly fee or rate plus expenses and travel
Retainers
Amount billed per month based on projected amount of work and hourly rate charged
Performance-based
Based on percentage of sales or marketing budget
Profit-based
Greater risk if campaign doesn’t have desired impact
Value Billing
Based on value of creative strategy or ideas

25. CURRENT DEVELOPMENTS IN MARKETING
Accountability
Senior managers want marketing managers to prove that their marketing is effective based on:
Sales increases
Percentage share of the market the brand holds
Return on Investment (ROI)
Agencies are creating departments to help marketers evaluate the efficiency and effectiveness of their marketing communication budgets.

26. Integrated (Holistic) Marketing
CURRENT DEVELOPMENTS IN MARKETING
Integrated (Holistic) Marketing
Focused on better coordinating all marketing efforts to maximize customer satisfaction.
All areas of the marketing mix work together to present the brand in a coherent and consistent way.
The goal is to manage all the messages delivered by all aspects of the marketing mix to present a consistent brand strategy.

27. Emerging Marketing Strategies
CURRENT DEVELOPMENTS IN MARKETING
Emerging Marketing Strategies
Relationship Marketing
Permission Marketing
Experience Marketing
Guerilla Marketing
Digital Marketing
Viral Marketing
Mobile Marketing
Social Network Marketing

28. CURRENT DEVELOPMENTS IN MARKETING
Global Marketing
Most countries have local, regional, and international brands requiring international advertising to promote the same brand in several countries.
Companies may have several international regional offices and/or a world corporate headquarters.
Agencies must adapt with new tools including one language, one budget, and one strategic plan.
The choice of an agency for international advertising depends on whether the brand message will be standardized or localized.

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Copyright © 2009 Pearson Education, Inc.  
Publishing as Prentice Hall