1. An Overview of Strategic Marketing1
An Overview of Strategic Marketing

2. 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
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3. 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
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4. 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
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5. 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
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6. Components of Strategic Marketing
FIGURE 1.1
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7. 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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8. 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
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9. 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
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10. Class Exercise
A product can be a good, a service, or an idea. How would you classify the following products?
1. Overnight stay in a hotel
2. DVD player
3. This marketing course
4. Dry cleaning
5. Political party platform
6. Advice from a marriage counselor
7. Utilities, such as electricity
8. Meal at Red Lobster
9. Pair of jeans
10. A movie at a theater
11. Candy bar
12. Airplane flight
The objective of this class exercise is to help students understand the meaning of a “product” and differentiate between a good, a service, and an idea. Answers:
1. Overnight stay in a hotel service
2. DVD player good
3. This marketing course service
4. Dry cleaning service
5. Political party platform idea
6. Advice from a marriage counselor idea/service
7. Utilities, such as electricity service
8. Meal at Red Lobster good/service
9. Pair of jeans good
10. A movie at a theater service
11. Candy bar good
12. Airplane flight service
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11. Marketing Builds Satisfying Exchange Relationships
The provision or transfer of goods, services, or ideas in return for something of value
FIGURE 1.2
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12. 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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13. 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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14. 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
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15. 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.
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16. College Student Travel Market
Activity
Number
Students traveling for spring break
38%
Students traveling outside the U.S. for spring break
17%
Students traveling internationally in the past year
27%
Students having a passport
49%
Students having parents make their travel arrangements
36%
Number of students going to Panama City for spring break
540,000
Average amount spent per student in Panama City (while on spring break)
$315
Amount of money spent buying airline tickets & hotels online
$428 million
Top 4 spring break destinations
Panama City, FL
Daytona Beach, FL
South Padre Island, TX
Lake Havasu, AZ
Source: Christopher Reynolds, “Gimme a Break!” American Demographics, March 2004, p. 48.
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17. Class Exercise
1. Of all the organizations and companies in your area, which ones do not appear to be implementing the marketing concept?
• Are they trying to satisfy their customers’ needs or their own needs?
• Are their efforts coordinated?
• Are all employees working together to satisfy customers?
2. With what areas of marketing are these organizations or companies having difficulty? Why are they failing in these areas?
• Customer satisfaction/seller satisfaction
• Maintaining long-term, positive relationships
• Recognizing and responding to environmental forces
• Selecting and clearly defining target markets
• The marketing mix: product, distribution, promotion, price
3. Which of these organizations’ or companies’ “products” are primarily goods? Services? Ideas?
4. Would you characterize these organizations or companies as having a marketing orientation? Why or why not?
The objective of this class exercise is to help students understand how the marketing concept works and to be able to apply the marketing concept to the implementation of marketing strategy.
Question 1. To generate interest, you might ask, “Why are some local firms doing poorly or going out of business?” or “What bad experiences have you had with local companies?” The causes for business failure or bad experiences can then be traced back to weak need satisfaction and poor coordination (e.g., lack of marketing orientation). You may also want to cover the implementation of the marketing concept (acceptance by top management, need for information systems, and reorganization).
Question 2. Customer satisfaction/seller satisfaction: An exchange must be satisfying to both the buyer and the seller. Some firms offer products that few people want and thus do not satisfy customers. Other firms offer what people want, but not at a price that will allow the firms to stay in business. Cover the four conditions required for an exchange to take place when explaining this point.
Maintaining long-term, positive relationships: Students will likely have examples of car dealers or others who are more concerned with making the immediate sale than they are with building customer relationships. Mercedes dealerships and salespeople, on the other hand, make it a point to know their customers and maintain contact after the sale.
Recognizing and responding to environmental forces: Marketing occurs in a dynamic environment—including laws, regulations, political activities, societal pressures, changing economic and competitive conditions, and technological advances.
Selecting and clearly defining target markets: Organizations that try to be all things to all people typically end up not satisfying the needs of any customer group very well.
The marketing mix: product, distribution, promotion, price: Examples of prob­lems with the marketing mix might include poorly prepared food or small portion sizes at restau­rants; banks or campus offices that have inconvenient hours; overpricing PCs in undifferentiated segments; or new stores with low customer awareness levels.
Question 3. Most students can distinguish between goods and services. In addition to political and religious organizations, you as an instructor are marketing ideas to your students.
Question 4. Some firms are still operating as if they were in the production or sales orientations, when businesspeople emphasized technology, personal selling, or advertising rather than customers.
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18. Is the marketing concept short-term oriented?
Debate Issue
Is the marketing concept short-term oriented?
YES
·      Marketers learn the immediate wants of customers and develop products to satisfy those wants.
·      Studying the long-term needs of customers entails considerable time and expense.
·      Companies are producing products with minor modifications rather than assessing latent or unseen needs.
·      Marketers are merely responding to the marketplace rather than striving for revolutionary or innovative products. NO
·      No component of the marketing concept requires that it be used on a short-term basis.
·      If managers focus on short-term objectives and performance, it is not the fault of the marketing concept.
·      Japanese marketers have a reputation for having a long-term focus, yet they are very successful at embracing the marketing concept.
·      Being long-term oriented does not mean that a marketer cannot follow the marketing concept.
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19. 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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20. 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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21. 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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22. 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
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23. What is the role of marketing in selling these products?
How much does marketing and profit cost for some of your favorite products?
Percent Marketing Product Category and Profit
Soft 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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24. 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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25. 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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26. 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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27. 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.
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28. 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
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29. Marketing Is Used in Nonprofit Organizations: The World Wildlife Fund supports the protection of endangered species.
Reprinted with permission of World Wildlife Fund.
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30. 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
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31. Source: www.billboard.com/bb/charts/internet.jsp
Marketing Connects People Through Technology: Top Internet Album Sales, Week of November 20, 2004
Ranking
Artist/Album 1
Relient K/MMHMM 2
A Perfect Circle/eMOTIVe 3
Rod Stewart/Stardust...The Great American Songbook Vol. III 4
Ray Charles/Genius Loves Company 5
Pink Martini/Hang On Little Tomato 6
John Lennon/Acoustic 7
Ray Charles/Ray (Soundtrack) 8
Michael McDonald/Motown Two 9
John Mellencamp/Words & Music: John Mellencamp’s Greatest Hits 10
Usher/Confessions
Source:
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32. Starting Salaries for College Graduates
Degree
Average Starting Salary
% Change (vs. previous year)
Computer Science
$49,691
4.8%
Information Science/Systems
43,053
8.2
Mgmt. Information Systems
42,098
2.9
Accounting
41,110
1.4
Economics/Finance
40,906
2.1
Business Admin.
38,188
Marketing
35,321
2.0
Liberal Arts
30,152
3.4
Source: NACE (National Association of Colleges and Employers) Summer 2004 Salary Survey as reported on “Most Lucrative College Degrees,” CNN/Money, July 27, 2004,
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33. 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.
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34. 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.
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35. Marketing is best defined as
Chapter Quiz
Marketing is best defined as
developing a product and matching it with its market.
advertising and selling products.
creating marketing mixes to facilitate satisfying exchange relationships with customers.
transferring goods to stores to make them available.
a process of bringing buyers and sellers together. C A D
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36. Chapter Quiz (cont’d)
A marketing manager decides what combination of variables is needed to satisfy customers’ needs for a general type of product. What are the essential variables that the marketing manager combines?
Product variables, price variables, distribution variables, and promotion variables
Marketing environment variables
Product variables and promotion variables
Product variables, price variables, and customer variables
Product variables, price variables, customer variables, and promotion variables.
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37. Chapter Quiz (cont’d)
A Panasonic DVD player has average marketing costs and sells for $100. Approximately how many of the buyer’s dollars go to marketing costs?
$25
$35
$50
$75
$85
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38. The focal point of all marketing activities is
Chapter Quiz (cont’d)
The focal point of all marketing activities is
profits.
promotion and selling.
the marketing concept.
customers.
competitors.
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