1. Part One Marketing Strategy and Customer Relationships 1 An Overview of Strategic Marketing

2. Copyright © Houghton Mifflin Company. All rights reserved.1 | 2 Objectives 1.To be able to define marketing as focused on customers 2.To identify some important marketing terms, including target market, marketing mix, marketing exchanges, and marketing environment 3.To become aware of the marketing concept and marketing orientation

3. Copyright © Houghton Mifflin Company. All rights reserved.1 | 3 Objectives (cont’d) 4.To understand the importance of building customer relationships 5.To learn about the process of marketing management 6.To recognize the role of marketing in our society

4. Copyright © Houghton Mifflin Company. All rights reserved.1 | 4 Chapter Outline Defining Marketing Understanding the Marketing Concept Managing Customer Relationships Value-Driven Marketing Marketing Management The Importance of Marketing in Our Global Economy

5. Copyright © Houghton Mifflin Company. All rights reserved.1 | 5 Marketing Importance of marketing –Financial success depends on marketing ability –Finance, operations, accounting, design, etc. will not really matter if there is not sufficient demand for products and services

6. Copyright © Houghton Mifflin Company. All rights reserved.1 | 6 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 –Meeting needs profitably –Should result in a customer who is ready to buy

7. Copyright © Houghton Mifflin Company. All rights reserved.1 | 7 Defining Marketing Customer needs –Ebay –IKEA –Google

8. Copyright © Houghton Mifflin Company. All rights reserved.1 | 8 Defining Marketing Marketing decisions –What features to design into a product –What prices to offer customers –Where to sell products –How much to spend on advertising –Wording on packaging –Design of packaging

9. Copyright © Houghton Mifflin Company. All rights reserved.1 | 9 Defining Marketing A person can obtain a product in one of four ways: –Self produce –Steal –Beg –purchase

10. Copyright © Houghton Mifflin Company. All rights reserved.1 | 10 Defining Marketing Customers –The purchasers of organizations’ products; the focal point of all marketing activities

11. Copyright © Houghton Mifflin Company. All rights reserved.1 | 11 Components of Strategic Marketing FIGURE 1.1

12. Copyright © Houghton Mifflin Company. All rights reserved.1 | 12 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

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

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

15. Copyright © Houghton Mifflin Company. All rights reserved.1 | 15 Marketing Builds Satisfying Exchange Relationships Exchange –The provision or transfer of goods, services, or ideas in return for something of value FIGURE 1.2

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

17. Copyright © Houghton Mifflin Company. All rights reserved.1 | 17 Marketing Builds Satisfying Exchange Relationships (cont’d) Exchange forms –Business firm wants purchases –Political candidate wants votes –Church wants active members –Social-action group wants passionate adoption of some cause

18. Copyright © Houghton Mifflin Company. All rights reserved.1 | 18 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 –Against the “selling concept”, which focuses on the needs of the seller

19. Copyright © Houghton Mifflin Company. All rights reserved.1 | 19 Marketing Occurs in a Dynamic Environment Marketing Concept –Customer satisfaction Analysis of customers’ current and long-term needs Analysis of competitors’ capabilities Integration of firm’s resources

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

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

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

23. Copyright © Houghton Mifflin Company. All rights reserved.1 | 23 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

24. Copyright © Houghton Mifflin Company. All rights reserved.1 | 24 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

25. Copyright © Houghton Mifflin Company. All rights reserved.1 | 25 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

26. Copyright © Houghton Mifflin Company. All rights reserved.1 | 26 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

27. Copyright © Houghton Mifflin Company. All rights reserved.1 | 27 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

28. Copyright © Houghton Mifflin Company. All rights reserved.1 | 28 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.

29. Copyright © Houghton Mifflin Company. All rights reserved.1 | 29 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

30. Copyright © Houghton Mifflin Company. All rights reserved.1 | 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

31. Copyright © Houghton Mifflin Company. All rights reserved.1 | 31 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.

32. Copyright © Houghton Mifflin Company. All rights reserved.1 | 32 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.