Chapter 1: An Overview of Marketing
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
1
What is Marketing?
What is Marketing?
• A Philosophy
A Set of Activities
• An Attitude
•
Products
• A Perspective
•
Distribution
• A Management
•
Promotion
•
Pricing
Orientation
AMA: Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering,
and exchanging offerings that have value for
customers, clients, partners, and society at large.
Exchange
At Least Two Parties
People giving
up something
to receive
something
they would
rather have.
Something of Value
Conditions for
Exchange
Communication and Delivery
Freedom to Accept or Reject
Desire to Deal with Other Party
What is Marketing?
Customer value
and beneficial
relationships
Creating
Value
Exchange
A
B
The Four Marketing Management Philosophies
Orientation
Focus
Production
What can we make or do best?
Sales
How can we sell more aggressively?
Marketing
What do customers want and need?
Societal
What do customers want and need, and
how can we benefit society?
Achieving a Marketing Orientation

Obtain information about customers, competitors, and markets

Examine the information from a total business perspective

Determine how to deliver superior
customer value

Implement actions to provide value
to customers
Customer Value Requirements
 Offer products that perform
 Earn trust
 Avoid unrealistic pricing
 Give the buyer facts
 Offer organization-wide commitment in
service and after-sales support
 Co-Creation
Sales vs. Marketing Orientations
Primary
Profit
Goal?
Tools to
Achieve
Maximum
sales
volume
Primarily
promotion
Organization’s
Focus
Firm’s
Business
For
Whom?
Inward
Selling
goods and
services
Everybody
Outward
Satisfying
wants and
needs
Specific groups Customer
satisfaction
of people
Sales
Orientation:
Market
Orientation:
Coordinated
use of all
marketing
activities
Why Study Marketing?
Why Study Marketing?

Plays an important role in society

Vital to business survival, profits
and growth

Offers career opportunities

Affects your life every day
Chapter 2: Strategic Planning for Competitive
Advantage
Copyright 2012 by Cengage Learning Inc. All Rights Reserved
12
The Nature of Strategic Planning
Understand the importance
of strategic marketing
and know a basic outline
for a marketing plan.
Strategic Planning
The managerial process of creating and
maintaining a fit between the
organization’s objectives and resources
and evolving market opportunities.
The goal is long-term profitability
and growth.
Why Write a Marketing Plan?
LOI
• Provides a basis for comparison of
actual and expected performance
• Provides clearly stated activities to
work toward common goals
• Serves as a reference for the success of
future activities
•Provides an examination of the marketing
environment
•Allows entry into the marketplace with
awareness
Marketing Plan Elements
Defining the Business Mission
•
Answers the question,
“What business are we in?”
•
Focuses on the market(s)
rather than the good or service
•
Strategic Business Units (SBUs) may
also have a mission statement
Southwest Airlines Mission Statement
Source: http://www.southwestairlines.com/about_swa/mission
Strategic Business Units (SBUs)
Characteristics:
An SBU HAS…
•
•
•
•
A distinct mission and specific target market
Control over its resources
Its own competitors
Plans independent of other SBUs
SWOT Analysis
S
W
O
T
Things the company does well.
Internal
Things the company does not do well.
Conditions in the external environment that
favor strengths.
External
Conditions in the external environment that
do not relate to existing strengths or favor
areas©South-Western
of currentCollege
weakness.
Publishing
Scanning the Marketing
Environment
The process of continually acquiring/interpreting info on the
events occurring outside the organization to identify and
interpret potential trends.
Scanning the Marketing
Environment
Marketing Objectives
Realistic
Measurable
Time specific
Compared to a
benchmark
“Our objective is to
increase sales of Purina
brand cat food by 15
percent over 2009 sales of
$300 million.”
Criteria for Good Marketing Objectives
Realistic, measurable, and time-specific objectives
consistent with the firm’s objectives:
1. Communicate marketing management philosophy
2. Provide management direction
3. Motivate employees
4. Force executives to think clearly
5. Allow for better evaluation of results
Competitive Advantage
The set of unique features of a company and its products that are
perceived by the target market as significant and superior to the
competition.
Cost
Types of Competitive
Advantage
Product/Service
Differentiation
Niche Strategies
Cost Competitive Advantage
Being the low-cost competitor in an industry
while maintaining satisfactory profit margins.

Obtain inexpensive raw materials

Create efficient plant operations

Design products for ease of manufacture

Control overhead costs

Avoid marginal customers
Sources of Cost Reduction
Experience Curves
Product Design
Efficient Labor
Reengineering
No-frills Goods and
Services
Production Innovations
Government Subsidies
New Service
Delivery Methods
Product/Service Differentiation
• The provision of something that is unique and
valuable to buyers beyond simply offering a
lower price than the competition’s.
– Brand names
– Strong dealer network
– Product reliability
– Image
– Service
Niche Competitive Advantage
• Used by small companies with
limited resources
• May be used in a limited geographic market
• Product line may be focused on a
specific product category
Sources of Sustainable
Competitive Advantage
Patents
Copyrights
Locations
Equipment
Technology
Skills and Assets
of an
Customer Service
Organization
Promotion
Sources of Competitive Advantage
Sources of
Competitive Advantage
Cost
$
Product/Service
Differentiation
A vs. B vs. C
Niche
Strategies
STRATEGY
Ansoff’s Strategic Opportunity Matrix
Present Product
New Product
Present
Market
Market
Penetration
Product
Development
New
Market
Market
Development
Diversification
Strategic Alternatives
Market
Penetration
Market
Development
Increase market share among
existing customers
Attract new customers to
existing products
Product Development
Create new products for
present markets
Diversification
Introduce new products
into new markets
Setting Strategic Direction
1. Where are we now?
2. Where do we want to go?
Setting Strategic Direction –
Where are we now?
•
•
•
•
•
•
Customers
Competencies
Competitors
Business sectors
SWOT analysis
Environmental scanning
Setting Strategic Direction –
Where are we now?
•
•
•
Competencies – an organization’s special
capabilities, including skills, technologies, and
resources that distinguish it from other
organizations
Competitive advantage – a unique strength relative
to competitors, often based on quality, time, cost,
or innovation
Benchmarking – discovering how others do
something better than your own firm, so you can
imitate or leapfrog competition. Studying
operations in completely different businesses.
Setting Strategic Direction –
Where do we want to go?
•
1.
Growth strategies
Portfolio analysis
–
2.
Market growth rate versus
market share
Market-Product analysis
–
Analyze current and new
products and markets
Critical Factors for Success
•
•
•
•
Customer relationships (value)
Innovation (new and unique value)
Quality
Efficiency
Strategic Marketing Process
The activities of selecting and describing one or more target markets
and developing and maintaining a market mix that will produce
mutually satisfying exchanges with target markets.
Target Market Strategy
• Segment the market based on
groups with similar characteristics
• Analyze the market based on attractiveness
of market segments
• Select one or more target markets
Target Market Strategy
Appeal to the entire market
with one marketing mix
Concentrate on one
marketing segment
Appeal to multiple markets
with multiple marketing mixes
Focusing Marketing Strategy with Segmentation
and Positioning
Segmentation
•Defining markets
•Dimensions to use
•Identifying segments
•Identifying segments to target
•Segmentation approaches
Positioning
•Understanding customer’s view
•Positioning techniques
•Evaluating segment preferences
•Differentiating the marketing mix
•Relationship between
positioning & targeting
Market Segmentation
• Involves aggregating prospective buyers into
groups that
– Have common needs, and
– Will respond similarly to a marketing action
Product Segmentation
• Using different marketing mix activities
(features and advertising) to demonstrate
perceive differences against competing
products/brands
• A firm selling two or more products with
different features targeted to different market
segments.
– Good – Better – Best
– Cost – Value – Premium
5 Steps to Segmenting Markets
• Form prospective buyers into segments
• Form products to be sold into groups
• Develop a market product grid and estimate
size of market
• Select target markets
• Design marketing activities to each target
market
Criteria for Forming Segments
•
•
•
•
Potential for increased profit/ROI
Similarity of needs
Difference of needs
Feasibility of marketing action to reach the
targeted segment
• Simplicity of cost of assigning potential
buyers to a segment
Ways to Segment Consumer Markets
• Customer Characteristics
–
–
–
–
Geographic
Demographic
Socioeconomic
Psychographic
• Buying Situations
–
–
–
–
–
Outlet type
Benefits sought
Usage
Awareness and intentions
Behavior
Ways to Segment Consumer Markets
Market Segmentation Defines Possible
Target Markets
Broad product-market (or generic market) name
goes here (The bicycle-riders product-market)
Submarket 1
(Exercisers)
Submarket 2
(Off-road
adventurers)
Submarket 3
(Transportation riders)
Submarket 4
(Socializers)
Submarket 5
(Environmentalists)
Behavioral dimensions for segmenting
consumer markets
•
•
•
•
•
•
•
•
•
•
Benefits sought
Thoughts
Rate of use
Type of problem solving
Rate of use
Information required
Brand familiarity
Purchase relationship
Kind of shopping
Needs
Segmenting business markets
•
•
•
•
•
•
Kind of relationship
Purchasing methods
Type of customer
Segmentation
Type of buying situation
How customers will use the product
Marketing Mix – 4P’s
Marketing Mix: The “Four Ps”
 The starting point of the
“4 Ps”
 Includes
 Physical unit
 Package
 Warranty
 Service
 Brand
 Image
 Value
Product
 Products can be…
 Tangible goods
 Ideas
 Services
Marketing Mix: The “Four Ps”
 Product availability where
and when customers want
them
 All activities from raw
materials to finished
products
 Ensure products arrive in
usable condition at
designated places when
needed
Place
Marketing Mix: The “Four Ps”
 Role is to bring about
exchanges with target
markets by:




Informing
Educating
Persuading
Reminding
Promotion
Includes integration of:
Personal selling
Advertising
Sales promotion
Public relations
Marketing Mix: The “Four Ps”
 Price is what a buyer must
give up to obtain a product.
 The most flexible of the
“4 Ps”-- quickest to change
 Competitive weapon
 Price x Units Sold = Total Revenue
Price
Strategic Marketing Process
Following Up the Marketing Plan
• Implementation
• Evaluation
• Control
• Marketing audit is…
•
•
•
•
Comprehensive
Systematic
Independent
Periodic
Effective Strategic Planning
• Effective Strategic Planning requires…
• Continual attention – ongoing rather than
annual
• Creativity – challenging assumptions
• Management Commitment – support and
participation from the top
Chapter 3: Ethics and Social Responsibility
Civil Society
Six Modes of Social Control
Ethics
Self Regulation
Laws
The Media
Formal and Informal Groups
Active Civil Society
Ethical Behavior
Ethics
The moral principles or values
that generally govern the
conduct of an individual.
People usually base their individual choice of ethical theory on their
life experiences
•Deontology
•Utilitarianism
•Casuist
•Moral Relativists
•Virtue Ethics
63
Ethical Decision Making
Influential Factors
Extent of Problems
Probability of Harm
Top Management
Actions
Time Until
Consequences
Potential Consequences
Number Affected
Social Consensus
Code of Ethics
Code of Ethics- A guideline to help
marketing managers and other
employees make better decisions.
Creating Ethical Guidelines
• Helps identify acceptable business practices
• Helps control behavior internally
• Avoids confusion in decision making
• Facilitates discussion about right and
wrong
Ethical Guidelines and Training
Exhibit 3.3
Arguments for Social Responsibility
Corporate Social Responsibility
Stakeholders
Employees
Local Community
Management
Suppliers
Customers
Owners
Sustainability
The idea that socially
responsible companies will
outperform their peers by
focusing on the world’s social
problems and reviewing
them as opportunities to build
profits and help the
world at the same time.
70
Cause-Related Marketing
The cooperative efforts of a “for-profit” firm and a “non-profit”
organization for mutual benefit.
“Five Questions to Ask Before Participating in a Cause-Related
Marketing Program”
•Is this company committed?
•How is the program structured?
•Who does the program benefit?
•How will the organization that benefits use my money?
•Is the program meaningful to me?