1. Part 1 Marketing Strategy and Environment
Hult • Pride • Ferrell
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2. 1: Strategic Marketing Management
2: Developing and Implementing Marketing Strategies
3: The Global Marketing Environment
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3. 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 understand the relationship between marketing and value
To become aware of the marketing concept and market orientation
To understand the importance of building customer relationships
To recognize the role of marketing in our society
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

4. Defining Marketing
The process of creating, distributing, promoting, and pricing goods, services, and ideas
facilitating satisfying exchange relationships with customers
developing and maintaining favorable relationships with stakeholders in a dynamic environment
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5. Components of Strategic Marketing
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6. Marketing Focuses on 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
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7. Discussion Point Netflix Alienates Its Target Market
Netflix revolutionized the video streaming and DVD rental business
Netflix shocked customers when it announced price increases
Over 82,000 angry comments were soon posted on the company’s blog
Who is Netflix’s target market?
Have you ever provided feedback on a product through social media resources?
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8. Marketing Mix Variables
Four marketing activities a firm can control to meet the needs of customers in its target market
Product
Distribution
Promotion
Price
Marketing mix variables are often viewed as controllable but have their limits
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9. Product Variable A product can be:
A good
A service
An idea
Product variable also involves creating/modifying brand names and packaging
Product variable decisions are important because they are directly involved with creating products that address customers’ needs and wants
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10. Distribution Variable
Marketing managers need to make products available in quantities desired to as many target market customers as possible
While minimizing these three costs:
Inventory
Transportation
Storage
To satisfy customers, products must be available at the right time and in convenient locations
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11. Distribution Variable
Marketing managers may
Select/motivate intermediaries (wholesalers and retailers)
Establish/maintain inventory control procedures
Develop/manage transportation and storage systems
How has the Internet and electronic commerce influenced the distribution variable?
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12. Promotion Variable
Relates to activities used to inform individuals or groups about the organization and its products
Can aim to increase public awareness of the organization and of new or existing products
Can educate customers about product features or urge people to take a stance on a political or social issue
Can help sustain interest in established products
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13. Price Variable
Relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices
Price is a critical component of the marketing mix as customers are concerned about value obtained in an exchange
Price is often used as a competitive tool
Intense price competition sometimes leads to price wars
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14. Discussion Point
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

15. Discussion Point
Discuss the variables of the marketing mix (product, price, promotion, and distribution) as they might relate to each of the following:
A trucking company
A men’s clothing store
A skating rink
A campus bookstore
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16. Marketing Creates Value
Value is a customer’s subjective assessment of benefits relative to costs in determining the worth of a product
Customer benefits include anything a buyer receives in an exchange
Customer costs include anything a buyer must give up to obtain the benefits the product provides including cost, time, effort and risk
The marketing mix can be used to enhance perceptions of value
Value
Customer Benefits –
Customer Costs =
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17. Discussion Point
Value is a subjective assessment of benefits relative to costs
Marketing has the ability to increase consumers’ perceptions of a product’s quality and social approval
Does marketing increase the value of products?
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18. Marketing Builds Relationships
Exchanges are the provision or transfer of goods, services, or ideas in return for something of value
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19. Relationships with Customers
For an exchange to take place:
Two or more parties must participate, and each must possess something of value that the other party desires
The exchange should provide a benefit or satisfaction to both parties
Each party must have confidence in the promise of the “something of value” held by the other
To build trust, the parties to the exchange must meet expectations
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20. Relationships with Stakeholders
Stakeholders are constituents who have a “stake,” or claim, in some aspect of a company’s products, operations, markets, industry, and outcomes
Stakeholders include:
Customers
Employees
Investors and shareholders
Suppliers
Governments, communities and more
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21. Marketing Environment
The marketing environment is dynamic and includes the following forces:
Competitive
Economic
Political
Legal and regulatory
Technological
Socio-cultural
The marketing environment forces surround the customer and affect the marketing mix
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22. Marketing Environment
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23. Marketing Environment
The forces of the marketing environment affect a marketer’s ability to facilitate value-driven marketing exchanges in three ways:
They influence customers by affecting their lifestyle, standards of living, and preferences and needs for products
They help to determine whether and how a marketing manager can perform certain marketing activities
They may affect a marketing manager’s decisions and actions by influencing buyers’ reactions to the firm’s marketing mix.
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24. Marketing Environment
Effects of these forces on buyers/sellers can be dramatic and difficult to predict
The impact on value can be extensive as market changes can easily impact how stakeholders perceive certain products
Unlike marketing-mix variables, an organization has little to no control over marketing environment forces
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25. Marketing Concept
According to the marketing concept, an organization should try to provide products that satisfy customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals
The marketing concept is a management philosophy guiding an organization’s overall activities
A firm that adopts the marketing concept must satisfy not only its customers’ objectives but also its own objectives
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26. Discussion Point
Howard Schultz, founder and CEO of Starbucks demonstrates the company’s grasp on the marketing concept
Schultz explains that Starbucks is not a coffee business that serves people, but rather a “people business serving coffee.”
Starbucks leadership sees the company as being “in the business of humanity,” emphasizing the fact that Starbucks is not only concerned about customers but society as well
How does Starbucks utilize the marketing concept?
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27. Evolution of the Marketing Concept
Production Orientation
Second half of the nineteenth century, the Industrial Revolution improved speed and efficiency
Large increases in availability of products and consumer response was strong
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28. Evolution of the Marketing Concept
Sales Orientation
During the first half of the 20th century competition increased and focus shifted to selling products to buyers
Marketers were able to learn that many products did not meet consumers needs
Businesses viewed sales and selling as the main means of increasing profits
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29. Evolution of the Marketing Concept
Market Orientation
Emerged in the mid-20th century
Market orientation requires an organization-wide commitment to researching and responding to customer needs
New-product innovation by developing a strategic focus to explore and develop new products to serve target markets
Involves being responsive to ever-changing customer needs and wants
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30. Implementing the Marketing Concept
Establish an information system to discover customers’ real needs
Use the information to create satisfying products
A company must coordinate all activities to satisfy customers’ objectives as well as its own objectives
Listening and responding to consumers frustrations and appreciation is the key in implementing the marketing concept
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31. Discussion Point
Rubbermaid uses a social commerce platform that impacts product development and education as to how to use the product
Rubbermaid noted that many consumers did not understand how to use its “Produce Saver” food storage container properly
After adding use and care instructions to its website, the average star rating increased significantly
Since implementing an information system is usually expensive, does its benefits outweigh its costs?
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32. Customer Relationship Management
Customer relationship management (CRM) means using information about customers to create marketing strategies that develop and sustain desirable customer relationships
Marketing relationships with customers are the lifeline of all businesses
Profits can be obtained through relationships in the following ways:
By acquiring new customers
By enhancing profitability of existing customers
By extending the duration of customer relationships
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33. Relationship Marketing
Establishing long-term, mutually satisfying, buyer/seller relationships
Focused on value enhancement through creation of more satisfying exchanges
Continually deepens the buyers trust
Which increases the company’s understanding of the customer’s needs
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34. Customer Lifetime Value
Customer Lifetime Value (CLV) is the worth of individual customers and estimates their lifetime value to the company
Requires identifying patterns of buying behavior and using that to focus on the most promising and profitable customers
Companies must establish communication to build customer trust and loyalty
May include an individual’s strong word-of- mouth communication about the company’s products
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35. Customer Lifetime Value
Identifying individual customers allows marketers to shift focus from targeting groups to increasing their share of an individual customer’s purchases
Emphasis changes from share of market to share of customer
CLV can be calculated by taking the sum of the customer’s present value contributions to profit margin over a specific time frame.
Helps marketers determine how best to allocate resources to marketing strategies to sustain a customer over a lifetime
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36. Discussion Point
Walmart alienated its core market by offering trendier items and removing items such as fishing tackle that were popular with its target market
This resulted in customers switching to lower price rivals
Realizing its marketing mistake Walmart reintroduced many of the basic products
What else could Walmart do to regain the customer’s trust in its everyday low prices (EDLP)?
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37. The Importance of Marketing in Our Global Economy
Marketing costs consume a sizable portion of buyers’ dollars
About one-half of a buyer’s dollar goes toward marketing costs
Marketing helps produce profits essential to the survival of individual businesses
Those profits supply jobs
Marketing helps create a successful economy and contributes to the well-being of society
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38. The Importance of Marketing in Our Global Economy
Marketing is used in nonprofit organizations
Government agencies at all levels engage in marketing activities to fulfill their mission and goals
Private nonprofit organizations employ marketing activities to create, price, distribute and promote programs that benefit particular segments of society
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39. The Importance of Marketing in Our Global Economy
Marketing fuels our global economy
Marketing across national borders is commonplace due to:
Advances in technology
Falling political and economic barriers
Universal desire for a higher standard of living
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40. The Importance of Marketing in Our Global Economy
Marketing knowledge enhances consumer awareness
Today, the customer has more power from information available through websites, social media, and required disclosure than at any other time in history
Understanding marketing can help you be a better consumer and increase your ability to maximize value from purchases
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41. Discussion Point Entrepreneurship in Marketing: Electronic Payments
Electronic Payments, a payment processing business founded by Michael Nardy went from a humble beginning to serving 25,000 organizations
Nardy, a self-taught computer programmer who majored in English and history, recognized a need for efficient payment processing
The company puts a great amount of emphasis on managing customer relationships and securing a greater share of a customer’s business
How is Nardy using the marketing mix to satisfy stakeholder needs?
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42. The Importance of Marketing in Our Global Economy
Marketing Connects People through Technology
Computers and telecommunications helps marketers understand and satisfy more customers than ever before
The Internet provides information about products and allows customer interaction
As more consumers adopt smartphones, mobile marketing is also becoming a major trend
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43. The Importance of Marketing in Our Global Economy
Socially responsible marketing – Promoting the welfare of customers and stakeholders
Green marketing – A strategic process involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment
Market orientation combined with social responsibility improves overall business performance
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44. The Importance of Marketing in Our Global Economy
All organizations engage in some kind of marketing
The field offers interesting and challenging career opportunities throughout the world
25-33% of civilian workers in the U.S. perform marketing activities
Marketing skills are valuable in every field
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45. Discussion Point Legal Sea Foods Uses Edgy Ads to Hook Consumers:
“Save the salmon…so that our children can witness the beauty of this noble fish. Or just save it so that we can sauté it with our fabulous lemon chive butter sauce”
One of three ads released by seafood restaurant chain Legal Sea Foods to raise awareness of the plight of seafood
The ads have stirred up controversy
Is this socially responsible marketing?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.