1. An Overview of Strategic Marketing Part One Marketing and Its Environment Copyright © Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie Cook 1 1

2. Copyright © Houghton Mifflin Company. All rights reserved. 1–21–2 Chapter Learning 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 more aware of the marketing concept and marketing orientation 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

3. Copyright © Houghton Mifflin Company. All rights reserved. 1–31–3 Chapter Outline Defining Marketing Understanding the Marketing Concept Managing Customer Relationships Value-Driven Marketing Marketing Management The Importance of Marketing in Our Global Economy

4. Copyright © Houghton Mifflin Company. All rights reserved. 1–41–4 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

5. Copyright © Houghton Mifflin Company. All rights reserved. 1–51–5 Components of Strategic Marketing FIGURE 1.1

6. Copyright © Houghton Mifflin Company. All rights reserved. 1–61–6 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

7. Copyright © Houghton Mifflin Company. All rights reserved. 1–71–7 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

8. Copyright © Houghton Mifflin Company. All rights reserved. 1–81–8 Marketing Mix Variables Product Distribution Promotion Pricing 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

9. Copyright © Houghton Mifflin Company. All rights reserved. 1–91–9 Marketing Builds Satisfying Exchange Relationships Exchange –The provision or transfer of goods, services, or ideas in return for something of value FIGURE 1.2

10. Copyright © Houghton Mifflin Company. All rights reserved. 1–10 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.

11. Copyright © Houghton Mifflin Company. All rights reserved. 1–11 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

12. Copyright © Houghton Mifflin Company. All rights reserved. 1–12 Evolution of the Marketing Concept Product Orientation Sales Orientation Marketing Orientation 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

13. Copyright © Houghton Mifflin Company. All rights reserved. 1–13 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.

14. Copyright © Houghton Mifflin Company. All rights reserved. 1–14 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.

15. Copyright © Houghton Mifflin Company. All rights reserved. 1–15 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

16. Copyright © Houghton Mifflin Company. All rights reserved. 1–16 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

17. Copyright © Houghton Mifflin Company. All rights reserved. 1–17 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

18. Copyright © Houghton Mifflin Company. All rights reserved. 1–18 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

19. Copyright © Houghton Mifflin Company. All rights reserved. 1–19 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

20. Copyright © Houghton Mifflin Company. All rights reserved. 1–20 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.

21. Copyright © Houghton Mifflin Company. All rights reserved. 1–21 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

22. Copyright © Houghton Mifflin Company. All rights reserved. 1–22 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

23. Copyright © Houghton Mifflin Company. All rights reserved. 1–23 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. Understand the importance of building customer relationships. Have learned about the process of marketing management. Recognize the important role of marketing in our society.

24. Chapter 1 Supplemental Slides Copyright © Houghton Mifflin Company. All rights reserved. 1–24

25. Copyright © Houghton Mifflin Company. All rights reserved. 1–25 Key Terms and Concepts The following slides (a listing of terms and concepts) are intended for use at the instructor’s discretion. To rearrange the slide order or alter the content of the presentation –select “Slide Sorter” under View on the main menu. –left click on an individual slide to select it; hold and drag the slide to a new position in the slide show. –To delete an individual slide, click on the slide to select, and press the Delete key. –Select “Normal” under View on the main menu to return to normal view.

26. Copyright © Houghton Mifflin Company. All rights reserved. 1–26 Important Terms 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 Target Market –A specific group of customers on whom an organization focuses its marketing efforts

27. Copyright © Houghton Mifflin Company. All rights reserved. 1–27 Important Terms 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 –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

28. Copyright © Houghton Mifflin Company. All rights reserved. 1–28 Important Terms Pricing –Decisions and actions that establish pricing objectives and policies and set product prices Exchange –The provision or transfer of goods, services, or ideas in return for something of value 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

29. Copyright © Houghton Mifflin Company. All rights reserved. 1–29 Important Terms Relationship Marketing –Establishing long-term, mutually satisfying buyer-seller relationships allowing for cooperation and mutual dependency Customer Relationship Management (CRM) –Using information about customers to create marketing strategies that develop and sustain desirable customer relationships Value –A customer’s subjective assessment of benefits relative to the costs in determining the worth of a product

30. Copyright © Houghton Mifflin Company. All rights reserved. 1–30 Important Terms 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 Marketing Management –The process of planning, organizing, implementing, and controlling marketing activities to facilitate exchanges effectively and efficiently

31. Copyright © Houghton Mifflin Company. All rights reserved. 1–31 Important Terms 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

32. Copyright © Houghton Mifflin Company. All rights reserved. 1–32 Transparency Figure 1D Percentage of Sales Online by Retail Segment Source: Investor’s Business Daily, Wednesday, September 5, 2001, p. A6. Used with Permission.

33. Copyright © Houghton Mifflin Company. All rights reserved. 1–33 Transparency Figure 1I Starting Salaries for College Graduates Source: American Demographics, December 2000, p. 27. Adapted with permission.