Part 5

Marketing:
Developing
Relationships

2015 McGraw-Hill Education.

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CHAPTER 11

Customer-Driven Marketing

CHAPTER 12

Dimensions of Marketing Strategy

CHAPTER 13

Digital Marketing and Social Networking

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Learning Objectives
LO 11-1 Define marketing and describe the exchange process.
LO 11-2 Specify the functions of marketing.
LO 11-3 Explain the marketing concept and its implications for
developing marketing strategies.
LO 11-4 Examine the development of a marketing strategy,
including market segmentation and marketing mix.
LO 11-5 Investigate how marketers conduct marketing research
and study buying behavior.
LO 11-6 Summarize the environmental forces that influence
marketing decisions.

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The Nature of Marketing

Create value by allowing individuals and organizations to

obtain what they need and want
Other functional areas of the business (operations, finance,
and all areas of management) must be coordinated with
marketing decisions

Marketing is not:
Manipulating consumers to get them to buy products they do
not want
Just selling and advertising

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The Exchange Relationship

Each participant must be willing to give up his or her

respective something of value to receive the something
held by the other
The tangible product itself may not be as important as the
image or the benefits associated with the product
This intangible something of value may be:
Capability gained from using a product
The image evoked by it
The brand name

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The Exchange Process:

Giving Up One Thing in Return for Another

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Functions of Marketing

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Creating Value with Marketing

Customer
Value

Customer
Benefits

Customer
Costs

Benefits Anything a buyer receives in an exchange

Costs Anything a buyer must give up to obtain the
products benefits
Monetary costs and time and effort expended to procure
the product

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The Marketing Concept

A business must find out what consumers desire and

then develop the good, service, or idea that fulfills their
needs or wants
The business must then get the product to the
customer
The business must continually alter, adapt, and
develop products to keep pace with changing
consumer needs and wants

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Trader Joes, which sells

many different lines of
organic and natural food
products, is often
thought to have better
deals than some of its
competitors

The grocery chain

attempts to meet
consumer demands for
high-quality food at
reasonable prices

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Evolution of the Marketing Concept

Our society and economic system have changed over
time, and marketing has become more important as
markets have become more competitive
Production orientation

19th century
Manufacturing efficiency

Sales orientation

Early 20th century

Supply exceeds demand; a need to sell products
grew

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Evolution of the Marketing Concept

Today some people still inaccurately equate marketing
with a sales orientation

An approach requiring organizations to gather

information about customer needs, share that
information throughout the firm, and use that information
to help build long-term relationships with customers

Began in the 1950s and continues today

New technologies are helping firms to improve
communication and learn what customers want

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Developing a Marketing Strategy

Has two major components:

Selecting a target market

Developing an appropriate marketing mix to
satisfy that target market

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Business to Business (B2B) Markets

Depending on the type of business you work for, other businesses
can be your customer

Businesses buy products to resell, use in the production of other

products, or for use in operations

While the marketing concepts are the same for both businesses and
consumers, there are complexities to the business market that need
to be considered

Customer populations in the business market are smaller than in the

consumer market, products tend to be highly technical as does the
buyer, and how the product affects the rest of the businesses
marketing channel are all important characteristics of the business
market

Businesses also tend to buy in larger quantities than consumers

and long-term relationships are seen as necessary

SOURCE: William M. Pride and O.C. Ferrell. Foundations of Marketing. Fifth ed. South-Western Cengage Learning: Mason, OH. 2013. Page
178.

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Selecting a Target Market

Sellers of salt, sugar, and many agricultural products use a total-market

approach because everyone is a potential consumer of these products

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Selecting a Target Market

Women are the largest market segment, with 51% of

the U.S. population
Marketers are focusing on the growing Hispanic
population

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Market Segmentation Approaches

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Market Segmentation Approaches

Niche segments are usually very small compared to the

total market for the product
Many airlines cater to first-class flyers, who comprise
only 10% of international air travelers
To meet the needs of these elite customers, airlines
include special perks along with spacious seats

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Market Segmentation Approaches

For a firm to successfully use a concentration or
multisegment approach to market segmentation:
1.

Consumers needs for the product must be

heterogeneous

2.

The segments must be identifiable and divisible

3.

The total market must be divided in a way that allows

estimated sales potential, cost, and profits of the
segments to be compared

4.

At least one segment must have enough profit potential

to justify developing and maintaining a special marketing
strategy

5.

The firm must be able to reach the chosen market

segment with a particular market strategy

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Bases for Segmenting Markets

Companies segment markets on the basis of

several variables:

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Developing a Marketing Mix

The buyer or the target market is the central focus of

all marketing activities

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The Marketing Mix:

Product, Price, Distribution, and Promotion

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Product
A product whether a

Good A physical entity you can touch (a car,

computer, or adopted kitten)

Service The application of human and mechanical

efforts to people or objects to provide intangible
benefits to customers (Air travel, dry cleaning, or
haircuts)

Idea Can be a concept, philosophy, image, or

issue (attorney advise or political parties)

Is a complex mix of tangible and intangible attributes

that provide satisfaction and benefits

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Price

The buyer usually exchanges purchasing power

income, credit, wealthfor the satisfaction of utility
associated with a product
Key element of the marketing mix because it relates
directly to the generation of revenue and profits
Can be changed quickly to stimulate demand or
respond to competitors actions

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Distribution
Making products available to customers in the
quantities desired
Sometimes referred to as place because it helps to
remember the marketing mix as the 4 Ps
Product, price, place, and promotion
Intermediariesusually wholesalers and retailers
perform many of the activities required to move products
efficiently from producers to consumers or industrial
buyers
Involves transporting, warehousing, materials
handling, and inventory control

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Promotion

Includes advertising, personal selling, publicity, and

sales promotion
Digital advertising on websites and social media sites
are growing

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Expeditionary Marketing
Expeditionary marketing is a strategy that both small and
large companies use to find untapped markets

In the case of a startup, The goal is to find emerging markets

where there is little competition, design a product for that
market, and establish themselves as a leader
For more established businesses, both large and small, the
goal of expeditionary marketing is to find new areas for growth
in markets that are small but growing

Internal and external research is done to find markets that

are complementary to the skills of the company and the needs
of the market, as is extensive planning for new products or
services
SOURCE: Marketing-Schools.org. Expeditionary Marketing. www.marketing-schools.org.
http://www.marketing-schools.org/types-of-marketing/expeditionary-marketing.html. (accessed September 25, 2013).

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Marketing Research and Information Systems

Guides marketing decisions

May include data on age, income, ethnicity,
educational level, etc. of the target market and how
frequently they purchase the product

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Marketing Research and Information Systems

Marketing information system A framework for
accessing information about customers from sources
both inside and outside the organization
Inside the organization
Continuous flow of information on prices, sales, and
expenses

Outside the organization

Data are available through public and private reports,
census statistics, digital media sources, etc.

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Marketing Research and Information Systems

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Online Marketing Research

New information technologies are changing how
businesses learn about consumers and market
their products

Digital media and online social networks

Opportunity to reach new markets via the Internet
Online surveys are becoming an important part of
marketing research

Virtual testing Interactive multimedia research

that combines sight, sound, and animation to
improve testing of products and their features

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Buying Behavior

Marketers analyze buying behavior because a

firms marketing strategy should be guided by an
understanding of buyers

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Psychological Variables of Buying Behavior

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Social Variables of Buying Behavior

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Peoples cultures
have a big impact on
what they buy

Goya Foods sells

more than three
dozen types of beans
to U.S. supermarkets
because people with
different cultural roots
demand different
types of beans

Which products are delivered to which stores depends on

the heritage of those living in each area

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Understanding Buying Behavior

Trying to understand consumers is the best way to
satisfy them
Tools and techniques for analyzing consumers are not
exact
To combat declining gum sales, companies have begun
to turn gum into a fashion statement

Kraft is engaging young artists to create designs for its

gum packaging

Rockstar Iced Mint Energy is touting its energy-boosting

caffeine and taurine content

These overhauls are an attempt to reconnect with the

teen market, which is the largest purchaser of gum
products

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The Marketing Environment

External forces directly or indirectly influence the
development of marketing strategies:

Political, legal, and regulatory forces

Social forces
Competitive and economic forces
Technological forces

Marketing requires creativity and consumer focus

because environmental forces can change quickly
and dramatically

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The Marketing Mix and the Marketing

Environment

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Importance of Marketing to
Business and Society
Marketing is a necessary function to reaching
consumers, establishing relationships, and driving sales
Marketing is essential in communicating the value of
products and services
Nonprofits, government institutions, and even people
must market themselves to spread awareness and
achieve desired outcomes
All organizations must reach their target markets,
communicate their offerings, and establish high-quality
services

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Discussion

? What is the

marketing
concept? Why is it
so important?

? List the variables

in the marketing
mix. How is each
used in a
marketing
strategy?