Chapter 1 An Overview of Strategic Marketing Marketing the process of creating distributing promoting and pricing goods services and ideas to facilitate satisfying exchange relationships with customers and to develop and maintain favorable relationships with stakeholders in a dynamic environment o To make the process of selling and advertising unnecessary o Companies are based on Products are the foundation of marketing products Customers the focal point of all marketing activities Target Market a specific group of customers Marketing Mix o Product o Pricing o Place Distribution o Promotion o MWRC Manufacturer Wholesaler Retailer Consumer The marketing mix should match the needs of customers in the target market It is important to understand consumer age income ethnicity gender and education level Product Variable Product a good service or idea o Good physical entity ie Sunglasses computers etc o Service the application of human and mechanical efforts to people or objects to provide intangible benefits to customers ie air travel banking medical care etc o Ideas concepts philosophies and images ie Marriage counselor churches schools etc Distribution Variable Promotion Variable Price Variable Products must be available at the right time and in convenient locations Promotion relates to activities used to inform individuals or groups about the organization and its products Price establishing pricing objectives and policies and determining product prices o Used as a competitive tool o High prices can establish a premium image o Low prices establish best deals 1 1C Marketing Creates Value Value a customer s subjective assessment of benefits relative to costs in determining the worth of a product Customer Value Customer Benefits Customer Costs Customer Costs include anything a buyer must give up to obtain the benefits the product provides Customer Value can be subjective based on expectations and or prior experience The Marketing Mix can be used to enhance perceptions of value 1 1D Marketing Builds Relationships with Customers and Other Stakeholders Exchanges the provision or transfer of goods services or ideas in return for something of value An exchange occurs when 1 Two or more individuals must participate and each must possess something of value that the other party desires 2 The exchange should create satisfaction to both parties upon completion 3 Each party must have confidence in the promise of the something of value held by the other 4 Each party must meet the other s expectations Marketing activities should attempt to create and maintain satisfying exchange relationships Stakeholders those constituents who have a stake or claim in some aspect of a company o Having a good relationship with stakeholders is crucial to long term growth of an organization and its products 1 1E Marketing Occurs in a Dynamic Environment Marketing Environment includes competitive economic political legal and regulatory technological and sociocultural forces surrounds the customer and affects the marketing mix o Difficult to predict o Environmental forces affect a marketer s ability to facilitate value driven marketing exchanges in three general ways 1 They influence customers by affecting their lifestyles standards of living and preferences needs for products ie Obesity in America has increased demand for healthier food options 2 They help to determine whether and how a marketing manager can perform certain marketing actives 3 They may affect a marketing manager s decisions and actions by influencing buyers reactions to the firm s marketing mix o Marketers should always plan for changes in the marketing environment despite it being largely unpredictable 1 2 Understanding The Marketing Concept Marketing Concept an organization should try to provide products that satisfy customer s needs through a coordinated set of actives that also allows the organization to achieve its goals o Customer satisfaction is a major component of the marketing concept o An organization must focus on customer analysis competitor analysis and integration of the firm s resources to provide customer value and satisfaction o ALWAYS adapt alter and develop products to keep pace with customers changing preferences 1 2A Evolution of the Marketing Concept Production Orientation Sales Orientation Market Orientation preferences 1 2B Implementing the Marketing Concept o Industrial revolution Mass production assembly lines emphasis on efficiency o Emphasis on gross sales and promotion to increase profit o Emphasis on determining what customers want first then selling a product instead of making a product first then trying to promote and sell it to a customer o Having this orientation involves understanding and adapting to changing consumer Management must first establish and information system to discover customers real needs and then use the information to create satisfying products o Requires time and money but is absolutely necessary to by market oriented Management must coordinate all of its internal activities to adapt to external environment Requires communication and agreement amongst all levels of management 1 3 Customer Relationship Management Customer Relationship Management CRM focuses on using information about customers to create marketing strategies that develop and sustain desirable customer relationships Profits are acquired through o Acquiring new customers o Enhancing profitability of existing customers o Extending the duration of customer relationships 1 3A Relationship Marketing Relationship Marketing long term mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges Makes use of databases and technologies to identify strategies and methods that will maximize the lifetime value of e Each desirable customer to the company 1 3B Customer Lifetime Value A customer s value over a lifetime represents an intangible asset to a marketer that can be augmented by addressing the customers varying needs and preferences at different stages in his or her relationship with the firm Customer Lifetime Value CLV an individual s tendency to engage in purchase and his or her strong word of mouth communication about the company s products o CLV is a key measurement of a customer s lifetime economic value 1 4A Marketing Costs Consume a Sizable Portion of Buyers Dollars About one half of a buyer s dollar goes toward marketing costs 1 4B Marketing is Used
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