Part One

Marketing
and Its
Environment

1
An Overview of
Strategic Marketing

Copyright © Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie Cook
 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

Copyright © Houghton Mifflin Company. All rights reserved. 1–2

 Chapter Outline
• Defining Marketing
• Understanding the Marketing Concept
• Managing Customer Relationships
• Value-Driven Marketing
• Marketing Management
• The Importance of Marketing in Our Global
Economy

Copyright © Houghton Mifflin Company. All rights reserved. 1–3

 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

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

 Components
of Strategic
Marketing

FIGURE 1.1
Copyright © Houghton Mifflin Company. All rights reserved. 1–5
 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

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

 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 Target
Promotion Market
Pricing

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

 Marketing Mix Variables

Goods, services, or ideas that satisfy

Product customer needs

The ready, convenient, and timely

Distribution availability of products

Activities that inform customers about

Promotion the organization and its products

Decisions and actions that establish

Pricing pricing objectives and policies and set
product prices

Copyright © Houghton Mifflin Company. All rights reserved. 1–8

 Marketing Builds Satisfying Exchange
Relationships
• Exchange
– The provision or transfer of goods, services, or ideas in
return for something of value

FIGURE 1.2
Copyright © Houghton Mifflin Company. All rights reserved. 1–9
 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.

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

 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

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

 Evolution of the Marketing Concept
Product Late 19th century: efficient production of goods
Orientation allowed firms to meet strong customer demand.

Mid-1920s–early 1950s: weakened demand

Sales required that products would have to be “sold.”
Orientation (personal selling, advertising, and distribution
was the focus)

Early 1950s–2000s: adopting a customer focus

Marketing
means a commitment to researching and
Orientation responding to customer needs.

FIGURE 1.3
Copyright © Houghton Mifflin Company. All rights reserved. 1–12
 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.

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

 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.

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

 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

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

 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

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

 Marketing Management
• 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

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

 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

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

 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

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

 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.

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

 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

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

 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

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

 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.

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

 Chapter 1
Supplemental Slides

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

 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.

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

 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

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

 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

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

 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

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

 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

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

 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

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

 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

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

 Transparency Figure 1D
Percentage of Sales Online by Retail Segment

Source: Investor’s Business Daily, Wednesday, September 5, 2001, p. A6. Used with
Permission.
Copyright © Houghton Mifflin Company. All rights reserved. 1–32
 Transparency Figure 1I

Starting Salaries for College Graduates

Source: American Demographics, December 2000, p. 27. Adapted with permission.

Copyright © Houghton Mifflin Company. All rights reserved. 1–33