Kotler - Mm15e - Inppt - 01 (11 Files Merged)

Chapter
1
Defining
Marketing
for the
New Realities
Copyright © 2016 Pearson Education Ltd. 1-1

Learning Objectives
1. Why is marketing important?
2. What is the scope of marketing?
3. What are some core marketing concepts?
4. What forces are defining the new marketing
realities?
5. What new capabilities have these forces given
consumers and companies?
6. What does a holistic marketing philosophy include?
7. What tasks are necessary for successful marketing
management?

The Value of Marketing
• Financial success often depends on marketing
ability
• Successful marketing builds demand for
products and services, which, in turn, creates
jobs
• Marketing builds strong brands and a loyal
customer base, intangible assets that contribute
heavily to the value of a firm

The Scope of Marketing
• Marketing is about identifying and meeting
human and social needs
• AMA’s formal definition: Marketing is the activity,

set of institutions, and processes for creating,
communicating, delivering, and exchanging
offerings that have value for customers, clients,
partners, and society at large

Marketing Management
• The art and science of choosing target
markets and getting, keeping, and growing
customers through creating, delivering,
and communicating superior customer
value
COPYRIGHT © 2016 PEARSON

Copyright ©EDUCATION,
2016 Pearson
INC.
Education Ltd. 1-5 1-5
What is Marketed?
• Goods
• Services
• Events
• Experiences
• Persons

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What is Marketed?
• Places
• Properties
• Organizations
• Information
• Ideas

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Who Markets?
• A marketer is someone who seeks a

response—attention, a purchase, a vote, a
donation—from another party, called the
prospect

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8 Demand States
• Negative
• Nonexistent
• Latent
• Declining
• Irregular
• Unwholesome
• Full
• Overfull
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Fig. 1.1
Structure Of Flows In A Modern
Exchange Economy
COPYRIGHT © 2016 Copyright

PEARSON ©EDUCATION,
2016 PearsonINC.
Fig. 1.2
A Simple Marketing System

Key Customer Markets
• Consumer markets
• Business markets
• Global markets
• Nonprofit & governmental markets

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Core Marketing Concepts
• Needs: the basic human requirements
such as for air, food, water, clothing, and
shelter
• Wants: specific objects that might satisfy

the need
• Demands: wants for specific products

backed by an ability to pay
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Types of Needs
STATED
REAL
UNSTATED
DELIGHT
SECRET

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• Target markets
• Positioning
• Segmentation

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• Value proposition: a set of benefits that
satisfy those needs
• Offerings: a combination of products,

services, information, and experiences
• Brands: an offering from a known source

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• Marketing channels
COMMUNICATION
DISTRIBUTION
SERVICE

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• Paid media: TV, magazine and display
ads, paid search, and sponsorships
• Owned media: a company or brand

brochure, web site, blog, Facebook page,
or twitter account
• Earned media: word of mouth, buzz, or

viral marketing
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• Impressions: occur when consumers
view a communication
• Engagement: the extent of a customer’s

attention and active involvement with a
communication

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• Value: a combination of quality, service,
and price (qsp: the customer value triad)
• Satisfaction: a person’s judgment of a

product’s perceived performance in
relationship to expectations

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• Supply chain: a channel stretching from raw materials
to components to finished products carried to final
buyers (Fig 1.3: The Supply Chain for Coffee)

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• Competition: all the actual and potential
rival offerings and substitutes a buyer
might consider

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• Marketing
environment
– Task environment
– Broad environment

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The New Marketing Realities
• Technology
• Globalization
• Social
responsibility

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A dramatically changed
marketplace
• New consumer capabilities
– Can use the internet as a powerful information

and purchasing aid
– Can search, communicate, and purchase on

the move
– Can tap into social media to share opinions

and express loyalty
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marketplace
• New consumer
capabilities
– Can actively interact

with companies
– Can reject marketing

they find inappropriate

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marketplace
• New company capabilities
– Can use the internet as a powerful information and
sales channel, including for individually differentiated
goods
– Can collect fuller and richer information about

markets, customers, prospects, and competitors
– Can reach customers quickly and efficiently via social

media and mobile marketing, sending targeted ads,
coupons, and information
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marketplace
• New company capabilities
– Can improve purchasing, recruiting, training, and

internal and external communications
– Can improve cost efficiency

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marketplace
• Changing channels
– Retail
transformation
– Disintermediation

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marketplace
• Heightened competition
– Private brands
– Mega-brands
– Deregulation
– Privatization

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Marketing in practice
• Marketing balance
• Marketing accountability
• Marketing in the organization

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Company Orientation toward
the Marketplace
PRODUCTION
PRODUCT
SELLING
MARKETING

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Fig. 1.4
Holistic Marketing Dimensions

Relationship marketing
CUSTOMERS
EMPLOYEES
MARKETING PARTNERS
FINANCIAL
COMMUNITY

Integrated marketing
• Devise marketing activities and programs that
create, communicate, and deliver value such that
“the whole is greater than the sum of its parts.”

Internal marketing
• The task of hiring, training, and motivating
able employees who want to serve
customers well

Performance marketing
FINANCIAL ENVIRONMENTAL
ACCOUNTABILITY IMPACT
SOCIAL IMPACT

Fig. 1.5
Marketing Mix Components (4 Ps)

MODERN MARKETING
MANAGEMENT
PEOPLE
PROCESSES
PROGRAMS
PERFORMANCE

MARKETING
MANAGEMENT TASKS
• Developing market strategies and plans
• Capturing marketing insights
• Connecting with customers
• Building strong brands

MARKETING
MANAGEMENT TASKS
• Creating value
• Delivering value
• Communicating value
• Creating successful long-term growth

Chapter
2
Developing
Marketing
Strategies and
Plans

Learning Objectives
1. How does marketing affect customer value?
2. How is strategic planning carried out at the
corporate and divisional levels?
3. How is strategic planning carried out at the
business unit level?
4. What does a marketing plan include?

Marketing and customer Value
• The value delivery process
• The value chain
• Core competencies
• The central role of strategic planning

The value delivery process
CHOOSING THE VALUE
PROVIDING THE VALUE
COMMUNICATING THE VALUE

The Value chain
• A tool for identifying ways to create more
customer value
– Every firm is a synthesis of activities

performed to design, produce, market, deliver,
and support its product

Core business processes
• Market-sensing process
• New-offering realization process
• Customer acquisition process
• Customer relationship management
process
• Fulfillment management process

Core competencies
• A source of competitive advantage and
makes a significant contribution to
perceived customer benefits
• Applications in a wide variety of markets
• Difficult for competitors to imitate

Maximizing Core competencies
• (Re)define the business concept
• (Re)shaping the business scope
• (Re)positioning the company’s brand

identity

Central role of strategic
planning
• Managing the businesses as an
investment portfolio
• Assessing the market’s growth rate and

the company’s position in that market
• Establishing a strategy

Marketing plan
• The central instrument for directing and
coordinating the marketing effort
– Strategic
– Tactical

Figure 2.1
Strategic Planning, Implementation,
and Control Processes

Corporate and division strategic
planning
• Defining the corporate mission
• Establishing strategic business units
• Assigning resources to each strategic

business unit
• Assessing growth opportunities

Defining the
corporate mission
• What is our business?
• Who is the customer?
• What is of value to the customer?
• What will our business be?
• What should our business be?

Product Orientation vs.
Market Orientation
Company Product Market
Missouri-Pacific We run a railroad We are a people-
Railroad and-goods mover
Xerox We make copying We improve office

equipment productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We market

entertainment

Good Mission statements
• Focus on a limited number of goals
• Stress the company’s major policies and
values
• Define the major competitive spheres
within which the company will operate
• Take a long-term view
• Are as short, memorable, and meaningful
as possible
Establishing Strategic Business
Units
• A single business or collection of related
businesses
• Has its own set of competitors
• Has a leader responsible for strategic

planning and profitability

Assigning Resources
to Each SBU
• Management must decide how to allocate
corporate resources to each SBU
– Portfolio-planning models
– Shareholder/market value analysis

Assessing growth opportunities

Assessing growth opportunities
• Intensive Growth
• Integrative Growth
• Diversification Growth
• Downsizing and Divesting Older Businesses

Intensive growth
• Corporate
management
should first review
opportunities for
improving existing
businesses

Figure 2.3
ESPN Growth Opportunities

INTEGRATIVE GROWTH
• A business can increase sales and profits
through backward, forward, or horizontal
integration within its industry

Diversification growth
• Diversification growth makes sense when
good opportunities exist outside the
present businesses
– The industry is highly attractive and the

company has the right mix of business
strengths to succeed

Downsizing and Divesting Older
Businesses
• Companies must carefully prune, harvest,
or divest tired old businesses to release
needed resources for other uses and
reduce costs

Organization and Organizational
Culture
• A company’s organization consists of its
structures, policies, and corporate culture, all of
which can become dysfunctional in a rapidly
changing business environment

Organization and Organizational
Culture
• Corporate culture: “The shared
experiences, stories, beliefs, and norms
that characterize an organization”

Marketing Innovation
• Innovation in marketing is critical
• Employees can challenge company

orthodoxy and stimulate new ideas
• Firms develop strategy by choosing their

view of the future
– Scenario analysis
Figure 2.4
The Business Unit
Strategic-planning Process

SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats

External environment
• Marketing opportunity: an area of buyer need
and interest that a company has a high
probability of profitably satisfying.
• Environmental threat: challenge posed by an

unfavorable trend or development that, in the
absence of defensive marketing action, would
lead to lower sales or profit

Market Opportunity Analysis
(MOA)
• Can we articulate the benefits convincingly
to a defined target market(s)?
• Can we locate the target market(s) and
reach them with cost-effective media and
trade channels?
• Does our company possess or have access
to the critical capabilities and resources we
need to deliver the customer benefits?

Market Opportunity Analysis
(MOA)
• Can we deliver the benefits better than
any actual or potential competitors?
• Will the financial rate of return meet or

exceed our required threshold for
investment?

Figure 2.5
Opportunity And Threat Matrices

Internal environment
• Strengths
• Weaknesses

Goal formulation (MBO)
• Unit’s objectives must be arranged

hierarchically
• Objectives should be quantitative
• Goals should be realistic
• Objectives must be consistent

Strategic formulation:
Porter’s Generic Strategies
OVERALL COST LEADERSHIP
DIFFERENTIATION
FOCUS

Strategic formulation:
Strategic alliances
• Categories of marketing alliances
– Product or service alliance
– Promotional alliance
– Logistics alliances
– Pricing collaborations

Program Formulation and
Implementation
• McKinsey’s Elements of Success
Skills Strategy
Staff Structure
Style Systems
Shared values

Feedback and control
• Peter Drucker: it is more important to “do
the right thing”—to be effective—than “to
do things right”—to be efficient
– The most successful companies, however,

excel at both

Marketing Plan Contents
 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Marketing tactics
 Financial projections
 Implementation controls

Evaluating a Marketing Plan
 Is the plan simple/succinct?

 Is the plan complete?
 Is the plan specific?
 Is the plan realistic?

Other marketing plan contents
• Marketing research
• Specifications for internal and external

relationships
• Action plans and schedules

Chapter
3
Collecting
Information and
Forecasting
Demand

Learning Objectives
1. What are the components of a modern
marketing information system?
2. What are useful internal records for a marketing
information system?
3. What makes up a marketing intelligence
system?
4. What are some influential macroenvironment
developments?
5. How can companies accurately measure and
forecast demand
Components of a
Modern Marketing
Information System (MIS)
 Internal company records

 Marketing intelligence activities
 Marketing research

Internal records
• Internal reports of orders
• Sales
• Prices
• Costs
• Inventory levels
• Receivables
• Payables

Marketing intelligence
• Marketing intelligence system: a set of procedures
and sources that managers use to obtain everyday
information about developments in the marketing
environment

Improving
marketing intelligence
 Motivate sales force to report new developments

 Motivate intermediaries to pass along intelligence
 Hire external experts to collect intelligence
 Network internally and externally
 Set up a customer advisory panel
 Take advantage of government-related data
 Purchase information from outside research vendors
 Collect marketing intelligence on Internet

Marketing Intelligence on the
internet
• Independent customer goods and service
review forums
• Distributor or sales agent feedback sites
• Combo sites offering customer reviews
and expert opinions
• Customer complaint sites
• Public blogs

Communicating & Acting on Marketing
intelligence
• The competitive intelligence function
works best when it is closely coordinated
with the decision-making process
– Given the speed of the Internet, it is important

to act quickly on information gleaned online

Analyzing the
Macroenvironment
• Needs and Trends
– Fad
– Trend
– Megatrend

Identifying the
Major Forces
• Six major forces in the broad environment
Demographic Natural
Economic Technological
Socio-cultural Political-legal

The Demographic Environment
• Worldwide population growth
• Population age mix
• Ethnic and other markets
• Educational groups
• Household patterns

The Economic Environment
CONSUMER PSYCHOLOGY
INCOME DISTRIBUTION
INCOME, SAVINGS, DEBT, CREDIT

Income distribution
• Subsistence • Very low incomes
economies • Mostly low incomes
• Raw-material- • Very low, very high
exporting incomes
economies • Low, medium, high
• Industrializing incomes
economies • Mostly medium
• Industrial incomes
economies

The Sociocultural Environment
Views of Views of
ourselves society
Views of Views of
others nature
Views of Views of the

organizations universe

The Sociocultural Environment
• Core cultural values

– Values are passed from parents to children
and reinforced by social institutions
• Subcultures
– Groups with shared values, beliefs,
preferences, and behaviors emerging from
their special life experiences or circumstances

The natural environment
• Corporate environmentalism
– Opportunities await those who can reconcile
prosperity with environmental protection

The Technological Environment
Accelerating pace of change
Unlimited opportunities
for innovation
Varying R&D budgets
Increased regulation of
technological change

The Political-Legal Environment
LAWS
GOVERNMENT AGENCIES
PRESSURE GROUPS

Forecasting and Demand
Measurement
• Market demand measures
– Potential market
– Available market
– Target market
– Penetrated market

Figure 3.1
Ninety Types of Demand
Measurement

Demand measurement
vocabulary
• Market demand (Figure 3.2)

Market demand vocabulary
• Market share
• Market-penetration
index
• Share-penetration
index

Demand measurement
vocabulary
Market forecast
Market potential
Company demand
Company sales forecast
Company sales potential

Estimating Current Demand
• Total market potential
– Chain-ratio method

• Area market potential
– Market-buildup method
– Multiple-factor index method

brand development index (BDI)
Table 3.5

• Industry sales and market share

Estimating future demand
• Survey of buyers’ intentions
– Forecasting and purchase probability scale
• Composite of sales force opinions
• Expert opinion
• Past-sales analysis
• Market-test method

Chapter
4
Conducting
Marketing
Research

Learning Objectives
1. What is the scope of marketing research?
2. What steps are involved in conducting good
marketing research?
3. What are the best metrics for measuring
marketing productivity?

The Scope of
marketing research
• American Marketing Association
– Marketing research is the function that links
the consumer, customer, and public to the
marketer through information—information
used to identify and define marketing
opportunities and problems; generate, refine,
and evaluate marketing actions; monitor
marketing performance; and improve
understanding of marketing as a process.

The Scope of
marketing research
• Importance of marketing insights
– Generating insights (how and why we observe
certain effects in the marketplace)

The Scope of
marketing research
• Who Does Marketing Research?
 Marketing departments in big firms

 Everyone at small firms
 Syndicated-service research firms
 Custom marketing research firms
 Specialty-line marketing research firms

Research conducted
at small companies
Engage
students/pro
fessors
Tap
employee Use Internet
creativity
Tap partner Check out

expertise rivals

The Scope of
marketing research
• Overcoming
Barriers to the Use
of Marketing
Research
– Many companies
still fail to use it
sufficiently or
correctly

Figure 4.1
The Marketing Research Process

Step 1
• Define the problem
• Define the decision alternatives
• Define the research objectives

Step 2: Develop the Research
Plan
• Data sources
– Secondary data vs. primary data

Plan
• Research approaches
 Observational research
 Focus group research
 Survey research
 Behavioral research

Plan
• Research instruments
Questionnaires
Qualitative measures
Technological devices

Questionnaire

Questionnaire

Qualitative measures
ZMET Word
approach association
Projective
Laddering techniques
Brand
Visualization
personification

Plan
• Technological devices
– Galvanometer
– Tachistoscope
– Eye-tracking
– Facial detection
– Skin sensors
– Brain wave scanners
– Audiometer
– GPS
Plan
• Sampling plan
– Sampling unit: Whom should we survey?
– Sample size: How many people should we

survey?
– Sampling procedure: How should we choose

the respondents?

Plan
• Contact methods
 Mail
 Telephone
 Personal
 Online

Online Research
• Advantages • Disadvantages
– Inexpensive – Small
– Expansive – Skewed
– Fast – Excessive turnover
– Honest – Technological
– Thoughtful problems
– Versatile – Technological
inconsistencies

Step 3 to Step 6
Step 3: Collect the Information
Step 4: Analyze the Information
Step 5: Present the Findings
Step 6: Make the Decision

Table 4.2
Good Marketing Research

Measuring Marketing
Productivity
• Marketing metrics
• Marketing-mix
modeling
• Marketing
dashboards

Marketing metrics
• Measures that help marketers quantify,
compare, and interpret performance

MARKETING-MIX MODELING
• Analyzes data from a variety of sources, such as
retailer scanner data, company shipment data,
pricing, media, and promotion spending data, to
understand more precisely the effects of specific
marketing activities

Marketing Dashboards
• “A concise set of interconnected
performance drivers to be viewed in
common throughout the organization.”
 Customer-performance scorecard
Stakeholder-performance scorecard

Table 4.4

Figure 4.3
Example Of A Marketing Dashboard

Chapter
5
Creating Long-
Term Loyalty
Relationships

Learning Objectives
1. What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
2. What is the lifetime value of customers, and
how can marketers maximize it?
3. How can companies attract and retain the right
customers and cultivate strong customer
relationships and communities?
4. How do customers’ new capabilities affect the
way companies conduct their marketing?

Building Customer Value,
Satisfaction, and Loyalty
• Figure 5.1

• Customer-perceived value (CPV)
– The difference between the prospective

customer’s evaluation of all the benefits and
costs of an offering and the perceived
alternatives
– Total customer benefit vs. total customer cost

Figure 5.2
Determinants of CPV

CUSTOMER VALUE
ANALYSIS
1. Identify the major attributes and benefits that customers
value
2. Assess the quantitative importance of the different
attributes and benefits
3. Assess the company’s and competitors’ performances
on the different customer values against their rated
importance
4. Examine how customers in a specific segment rate the
company’s performance against a specific major
competitor on an individual attribute or benefit basis
5. Monitor customer values over time

• Customer-perceived
value (CPV)
– Choice processes
– Delivering high
customer value
– Loyalty
• Total customer satisfaction
– A person’s feelings of pleasure or
disappointment that result from comparing a
product or service’s perceived performance
(or outcome) to expectations

• Monitoring satisfaction: many companies
are systematically measuring how well
they treat customers, identifying the
factors shaping satisfaction, and changing
operations and marketing as a result
– Periodic surveys, customer loss rate, mystery
shoppers, J. D. Power’s satisfaction ratings

• Product and service quality
– Quality is the totality of features and
characteristics of a product or service that
bear on its ability to satisfy stated or implied
needs
– Conformance quality vs. performance quality
– Impact of quality

Maximizing Customer Lifetime
Value
• Customer profitabillity analysis
– Activity-based costing (ABC)

Figure 5.3
Customer-Product Profitability Analysis

Value
• Customer lifetime value (CLV)
– The net present value of the stream of future
profits expected over the customer’s lifetime
purchases

Value

Value

Attracting and Retaining
Customers
• Reducing defection/customer churn
 Define and measure retention rate

 Distinguish/identify customer attrition causes
 Compare lost CLV to reducing defection rate

Customers
• Retention dynamics/marketing funnel

Customers
• Managing the customer base
Reduce
customer
defection
Focus on Increase
high-profit customer
customers longevity
Terminate Share of wallet

low-profit &
customers cross/upselling

Building loyalty
Interact closely with customers
Develop loyalty programs
Create institutional ties

Brand communities
• A specialized community of consumers
and employees whose identification and
activities focus around the brand

Table 5.5
Value Creation Practices
• Social networking • Community
– Welcoming, engagement
empathizing, – Staking, milestoning,
governing badging,
• Impression documenting
management • Brand use
– Evangelizing, – Grooming,
justifying customizing,
commoditizing
Cultivating Customer
Relationships
• Customer relationship management
(CRM)
– The process of carefully managing detailed
information about individual customers and all
customer “touch points” to maximize loyalty
– Customer value management (CVM)

CRM
• Personalizing/permissi
on marketing
• Customer
empowerment
• Customer reviews/
recommendations
• Customer complaints

Chapter
6
Analyzing
Consumer
Markets

Learning Objectives
1. How do consumer characteristics influence
buying behavior?
2. What major psychological processes influence
consumer responses to the marketing program?
3. How do consumers make purchasing
decisions?
4. In what ways do consumers stray from a
deliberative, rational decision process?

What Influences Consumer
Behavior?
• Consumer behavior
– The study of how individuals, groups, and
organizations select, buy, use, and dispose of
goods, services, ideas, or experiences to
satisfy their needs and wants
– Influenced by cultural, social, and personal
factors

Behavior?
• Cultural factors
– Culture
– Subcultures
– Social classes

Behavior?
• Social factors
Reference groups
Cliques
Family
Roles and status

Reference Groups
• Membership groups
– Primary vs. secondary
• Aspirational groups
• Dissociative groups
• Opinion leader

Family
• Family of orientation vs. family of
procreation

Behavior?
• Personal factors
– Age/stage in life cycle
– Occupation and
economic
circumstances
– Personality and self-
concept
– Lifestyle and values

Key Psychological Processes
Motivation
Memory Perception
Emotions Learning

Figure 6.1
Model Of Consumer Behavior

• Motivation
– A need becomes a motive when it is aroused
to a sufficient level of intensity to drive us to
act

Motivation
Maslow’s Herzberg’s
Freud’s Hierarchy Two-Factor
Theory of Needs Theory
Behavior Behavior Behavior is

is guided by is driven by guided by
subconscious lowest, dissatisfiers
motivations unmet need and
satisfiers

Figure 6.2
Maslow’s Hierarchy Of Needs

• Perception
– The process by
which we select,
organize, and
interpret information
inputs to create a
meaningful picture
of the world

perception
Selective attention
Selective distortion
Selective retention
Subliminal perception

• Learning
– Induces changes in our behavior arising from
experience
– Drive and cues
– Generalization and discrimination

• Emotions
– Many different
kinds of emotions
can be linked to
brands

• Memory
– Short-term vs. long-term memory
– Associative network memory model
– Brand associations
– Memory encoding
– Memory retrieval

The Buying
Decision Process
• The consumer typically
passes through five stages
– Problem recognition
– Information search
– Evaluation of alternatives
– Purchase decision
– Postpurchase behavior

The Buying
Decision Process
• Problem recognition
– The buyer recognizes a problem/need
triggered by internal/external stimuli

The Buying
Decision Process
• Information search
 Personal sources
 Commercial sources
 Public sources
 Experiential sources

Figure 6.5
Sets Involved In Decision Making

The Buying
Decision Process
• Evaluation of alternatives
– Expectancy-value model

The Buying
Decision Process
• Purchase decision
– Compensatory vs. noncompensatory models
Conjunctive heuristic
Lexicographic heuristic
Elimination-by-aspects heuristic
Intervening factors

Types of perceived risk
Functional
Physical risk
risk
Financial
Time risk risk
Psychological
Social risk
risk

The Buying
Decision Process
• Postpurchase
behavior
– Postpurchase
satisfaction
– Postpurchase actions
– Postpurchase uses
and disposal
Figure 6.7
Customer Product Use/Disposal

Moderating Effects on Consumer
Decision Making
• Low-involvement Consumer Decision
Making
• Variety-Seeking Buying Behavior

Behavioral Economics
• Decision Heuristics
– Availability heuristic
– Representativeness heuristic
– Anchoring and adjustment heuristic
• Framing
– Mental accounting

Chapter
7
Analyzing
Business Markets

Learning Objectives
1. What is organizational buying?
2. What buying situations do business buyers face?
3. Who participates in the business-to-business buying
process?
4. How do business buyers make their decisions?
5. In what ways can business-to-business companies
develop effective marketing programs?
6. How can companies build strong loyalty relationships
with business customers?
7. How do institutional buyers and government agencies
do their buying?
What is
Organizational Buying?
• Business market
– Consists of all the organizations that acquire
goods and services used in the production of
other products or services that are sold,
rented, or supplied to others

Business markets
• Fewer, larger buyers • Multiple sales calls
• Close supplier– • Derived demand
customer relationships • Inelastic demand
• Professional • Fluctuating demand
purchasing
• Geographically
• Multiple buying concentrated buyers
influences
• Direct purchasing

Buying situations
Straight Rebuy
Modified Rebuy
New Task

The buying center
 Initiators
 Users
 Influencers
 Deciders
 Approvers
 Buyers
 Gatekeepers

Targeting within the Business
Center
• Who are the major
decision participants?
• What decisions do they
influence, and how
deeply?
• What evaluation
criteria do they use?

The Purchasing/
Procurement Process
• Business buyers seek the highest benefit
package (economic, technical, service,
and social) in relationship to a market
offering’s costs

Stages in the Buying Process

• Problem recognition
– Someone in the company recognizes a
problem or need that can be met by acquiring
a good or service
• General need description and product
specification
– Next, the buyer determines the needed item’s
general characteristics, required quantity, and
technical specifications
• Supplier search
Catalog Vertical
sites markets
Buying “Pure Play”

alliances auction
Private Spot & barter

exchanges markets

E-procurement
• Vertical hubs
• Functional hubs
• Direct extranet
links to major
suppliers
• Buying alliances
• Company buying
sites
• Proposal solicitation
– The buyer next invites qualified suppliers to
submit written proposals
• Supplier selection
– Before selecting a supplier, the buying center
will specify and rank desired supplier
attributes

A supplier-evaluation model

Supplier selection
• Overcoming price
pressures
– Solution selling
– Risk and gain sharing
• Number of suppliers

• Order-routine specification
– After selecting suppliers, the buyer negotiates
the final order, listing the technical
specifications, the quantity needed, the
expected time of delivery, return policies,
warranties, etc.
• Performance review
– The buyer periodically reviews the
performance of the chosen supplier(s)

Developing Effective b2b
Marketing Programs
• Communication and
branding activities
• Systems buying and
selling
– Total problem solution
from one seller
(turnkey solution)
• Role of services
Buyer–supplier relationships
• Basic buying and • Customer supply

selling • Cooperative systems
• Bare bones • Collaborative
• Contractual transaction • Mutually adaptive
• Customer is king

MANAGING B2B
CUSTOMER RELATIONSHIPS
• Risks and Opportunism in Business
Relationships

Institutional and Government
Markets
• Institutional market
– Schools, hospitals, nursing homes, prisons,
etc. that must provide goods and services to
people in their care
• Government organizations
– Are a major buyer of goods and services in
most countries

Chapter
9
Identifying
Market Segments
and Targets

Learning Objectives
1. In what ways can a company divide the
consumer market into segments?
2. How should business markets be segmented?
3. How should a company choose the most
attractive target markets?
4. What are the requirements for effective
segmentation?
5. What are the different levels of market
segmentation?

Bases for Segmenting
Consumer Markets
• Market segment
– A group of customers who share a similar set
of needs and wants
Geographic Demographic
segmentation segmentation
Psychographic Behavioral
segmentation segmentation

Geographic Segmentation
• Geographical units
– Nations, states, regions, counties, cities, or
neighborhoods
• Nielsen Claritas’ PRIZM
– Education and affluence
– Family life cycle
– Urbanization
– Race and ethnicity
– Mobility
Geographic Segmentation

Demographic Segmentation
Age & life-

Life stage
cycle stage
Race & Gender

culture
Generation Income

• Age and life-cycle stage
– Our wants and abilities change with age
• Life stage
– A person’s major concern (e.g., divorce)

• Gender
– Men and women have
different attitudes and
behave differently
• Income
– Income segmentation is
a long-standing practice

• Generation
Millennials (Gen Y) Gen X
Baby Boomers Silent Generation

• Race and culture
Hispanic Americans Asian Americans
African Americans LGBT

Psychographic Segmentation
• Buyers are divided into groups on the
basis of psychological/personality traits,
lifestyle, or values

Figure 9.1: VALS
Segmentation System

BEHAVIORAL
SEGMENTATION
• Marketers divide buyers into groups on the
basis of their knowledge of, attitude
toward, use of, or response to a product

BEHAVIORAL
SEGMENTATION
• Needs and benefits
• Decision roles
– Initiator
– Influencer
– Decider
– Buyer
– User

USER AND USAGE-RELATED
VARIABLES
Occasions User status
Attitude Usage rate
Buyer-
Loyalty
readiness
status
stage

Figure 9.2
Marketing Funnel

Figure 9.3
Behavioral Segmentation
Breakdown

How Should Business Markets
Be Segmented?
 Demographic
 Operating variables
 Purchasing approaches
 Purchasing approaches
 Situational factors
 Personal characteristics

Market targeting

Effective
Segmentation Criteria
 Measurable
 Substantial
 Accessible
 Differentiable
 Actionable

Porter’s five forces
Threat of Rivalry
Threat of Threat of
New Entrants Substitutes
Threat of Buyer Threat of Supplier

Bargaining Power Bargaining Power

Evaluating & Selecting the
Market Segments
• Figure 9.4: Possible Levels of
Segmentation

One-to-one marketing
Identify your prospects and customers
Differentiate customers in terms of their needs

and value to your company
Interact to improve your knowledge about

customers’ needs and to build relationships
Customize products, services,

and messages to each customer

Legal and Ethical Issues
• Marketers must avoid
consumer backlash
– Labeling consumers
– Vulnerable groups
– Disadvantaged groups
– Potentially harmful
products

Chapter
10
Crafting the
Brand Positioning

Learning Objectives
1. How can a firm develop and establish an effective
positioning in the market?
2. How do marketers identify and analyze
competition?
3. How are brands successfully differentiated?
4. How do firms communicate their positioning?
5. What are some alternative approaches to
positioning?
6. What are the differences in positioning and
branding for a small business?
Developing a Brand Positioning
• Positioning
– The act of designing a
company’s offering and
image to occupy a
distinctive place in the
minds of the target
market
– Value proposition

Value proposition

Competitive Frame
of Reference
• Competitive frame of reference
– Defines which other brands a brand competes
with and which should thus be the focus of
competitive analysis
– Identifying and analyzing competitors

Competitive Frame
of Reference

Points-of-Difference
and Points-of-Parity
• Points-of-difference
(PODs)
– Attributes/benefits that
consumers strongly
associate with a brand,
positively evaluate,
and believe they could
not find to the same
extent with a
competitive brand
• POD criteria
Desirable
Deliverable
Differentiating

• Points-of-parity (POPs)
– Attribute/benefit associations that are not
necessarily unique to the brand but may in
fact be shared with other brands

• POP forms
Category
Correlational
Competitive

Pop vs. pod
• Multiple Frames of
Reference
• Straddle Positioning

• Choosing specific
POPs and PODs
– Competitive
advantage
– Means of
differentiation
– Perceptual map
– Emotional
branding
• Brand mantras
Communicate
Simplify
Inspire

Establishing a Brand Positioning
• Communicating category membership
Announcing category benefits
Comparing to exemplars
Relying on product descriptor

Brand-positioning
bull’s-eye

Communicating
POPs and PODs
• Negatively correlated attributes/benefits
 Low price vs. high quality

 Taste vs. low calories
 Powerful vs. safe
 Ubiquitous vs. exclusive
 Varied vs. simple

MONITORING COMPETITION
• Variables in assessing
potential competitors
– Share of market
– Share of mind
– Share of heart

ALTERNATIVE APPROACHES
TO POSITIONING
• Brand narratives and
storytelling
– Setting
– Cast
– Narrative arc
– Language
• Cultural branding

Positioning/Branding
for A Small Business
• Find compelling product • Create buzz and a loyal
performance advantage brand community
• Focus on building one or • Employ a well-integrated
two strong brands based set of brand elements
on one or two key • Leverage as many
associations secondary associations as
• Encourage product trial in possible
any way possible • Creatively conduct low-cost
• Develop cohesive digital marketing research
strategy to make the brand
“bigger and better”
Chapter
11
Creating
Brand Equity

Learning Objectives
1. What is a brand, and how does branding work?
2. What is brand equity?
3. How is brand equity built?
4. How is brand equity measured?
5. How is brand equity managed?
6. What is brand architecture?
7. What is customer equity?

How Does
Branding Work?
• American Marketing Association
– A brand is “a name, term, sign, symbol, or
design, or a combination of them, intended to
identify the goods or services of one seller or
group of sellers and to differentiate them from
those of competitors”

The role of brands
• Brands’ role for consumers
 Set and fulfill expectations

 Reduce risk
 Simplify decision making
 Take on personal meaning
 Become part of identity

The role of brands
• Brands’ role for firms
 Simplify product handling

 Organize inventory & accounting
 Offer legal protection
 Create brand loyalty
 Secure competitive advantage

The Scope of Branding
• Branding
– The process of
endowing products
and services with
the power of a
brand

Defining Brand Equity
• Brand equity
– Added value endowed to products with
consumers

• Customer-based brand equity
– The differential effect brand knowledge has
on consumer response to the marketing of
that brand
 Differences in consumer response

 Brand knowledge
 Perceptions, preferences, and behavior

• Brand promise
– The marketer’s vision of what the brand must
be and do for consumers

Brand Equity Models
BrandAsset® Valuator
Brandz
Brand Resonance Model

Brand Equity Models
• BrandAsset®
Valuator
– Energized
differentiation
– Relevance
– Esteem
– Knowledge

Figure 11.2
The Universe of Brand Performance

Brand Equity Models
• Brandz
– Meaningful, different, & salient associations
– Power, premium, & potential outcomes

Brand Equity Models
• Brand Resonance Pyramid

Building Brand Equity
• Brand equity drivers
Brand element or identity choices
Product & accompanying marketing
Other associations

Building Brand Equity
• Brand element choice criteria
Memorable Meaningful
Protectable Likable
Adaptable Transferable

Designing Holistic Marketing
Activities
• Brand contact
– Any information-bearing experience (positive
or negative) a customer or prospect has with
the brand, its product category, or its market

Leveraging
Secondary Associations

INTERNAL BRANDING
• Activities and processes that help
inform/inspire employees about brands
Choose the right Link internal & external

moment marketing
Bring the brand alive for

Keep it simple
employees

Measuring Brand Equity
• Brand value chain

• Brand audit
• Brand-tracking studies
• Brand valuation


Figure 11.7
Interbrand Brand Valuation Method

Managing Brand Equity
• Brand reinforcement
– Requires the brand
always be moving
forward
• Brand revitalization
– Almost any kind
starts with the
product

Devising a
Branding Strategy
Can develop new brand elements for
new product
Can apply some of existing brand

elements
Can use a combination of new &

existing brand elements

Devising a
Branding Strategy
• Brand extension • Category extension
• Sub-brand • Brand line
• Parent brand • Brand mix
• Master/family brand • Branded variants
• Line extension • Licensed product

Branding Decisions
• Alternative branding strategies
Individual or separate
family brand names
Corporate umbrella or company

brand name
Sub-brand name

Branding Decisions
• House of brands
• A branded house
– Flagship product

Brand Portfolios
• The set of all brands and brand lines a
particular firm offers for sale in a particular
category or market segment
Flankers Cash cows
Low-end entry level High-end prestige

Brand Extensions
• Introducing a host of new products under a
firm’s strongest brand names
 Improved odds of new-product success

 Positive feedback effects
 Risk of brand dilution
 May harm parent brand
 Firm forgoes creating new brand

Brand Extensions

CUSTOMER EQUITY
• The sum of lifetime
values of all customers
• Is affected by customer
acquisition, retention,
and cross-selling

Chapter
12
Addressing
Competition and
Driving Growth

Learning Objectives
1. Why is it important for companies to grow the core of
their business?
2. How can market leaders expand the total market and
defend market share?
3. How should market challengers attack market
leaders?
4. How can market followers or nichers compete
effectively?
5. What marketing strategies are appropriate at each
stage of the product life cycle?
6. How should marketers adjust their strategies and
tactics during slow economic growth?
Growth strategies
• Building your market • International expansion
share • Acquisitions, mergers,
• Developing committed and alliances
customers and • Building an outstanding
stakeholders reputation for social
• Building a powerful brand responsibility
• Innovating new products, • Partnering with
services, and government and NGOs
experiences

Growing the Core
Make the core of the brand as

distinctive as possible
Drive distribution through both

existing and new channels
Offer the core product in new formats

or versions

Competitive Strategies
for Market Leaders
• Expanding total market
demand
• Protecting market share
• Increasing market share

Expanding total market demand
• New customers
• More usage

Protecting market share
• Proactive
marketing
– Responsive
anticipation
– Creative
anticipation

Protecting market share
• Defensive marketing

Increasing market share
• The cost of buying higher market share
through acquisition may far exceed its
revenue value
Possibility of provoking
Economic cost
antitrust action
Pursuing wrong Increased market share

marketing activities effect on quality

Figure 12.3
Optimal Market Share

MARKET-CHALLENGER
STRATEGIES
• Defining the strategic objective and
opponent(s)
A market challenger can attack:

 The market leader
 Underfunded firms its own size
 Small local and regional firms
 The status quo

MARKET-CHALLENGER
STRATEGIES
• Choosing a general attack strategy

Market-Follower Strategies
Cloner
Imitator
Adapter

MARKET-NICHER
STRATEGIES
• To be a leader in a
small market
– Firms with low shares
of the total market
can become highly
profitable through
smart niching

Niche Specialist Roles
Vertical-
End-user
level
specialist
specialist
Customer-
Channel size
specialist specialist
Job-shop Geographic
specialist specialist

PRODUCT LIFE-CYCLE
MARKETING STRATEGIES
• A company’s
positioning and
differentiation
strategy must change
as its product,
market, and
competitors change
over the PLC

Figure 12.6
Common Product Life-Cycle
Patterns

Figure 12.7
Style, Fashion, And Fad Life Cycles

Marketing Strategies: Introduction
Stage
• Pioneering advantages
– Recall of brand name
– Establishes product class attributes
– Captures more uses in middle of market
• Pioneering drawbacks
– Imitators can surpass innovators
– Once leadership is lost, it’s rarely regained

Figure 12.8
Long-Range Product Market
Expansion Strategy

Marketing Strategies: Growth
Stage
• To sustain rapid market share growth now:
– Improve product quality and add new features
– Add new models and flanker products
– Enter new market segments
– Increase distribution coverage and enter new
distribution channels
– Shift from awareness and trial communications to
preference and loyalty communications
– Lower prices to attract the next layer of price-sensitive
buyers

Marketing Strategies: Maturity
Stage
Market modification
Product modification
Marketing program
modification

Market Modification

Marketing Strategies: Decline
Stage
• Eliminating Weak
Products
• Harvesting and
Divesting

Marketing in a Slow-Growth
Economy
 Explore upside of increasing investment
 Get closer to customers
 Review budget allocations
 Put forth compelling value proposition
 Fine-tune brand and product offerings


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Chapter

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• AMA’s formal definition: Marketing is the activity,

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• A marketer is someone who seeks a

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• Wants: specific objects that might satisfy

• Demands: wants for specific products

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• Offerings: a combination of products,

• Brands: an offering from a known source

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• Owned media: a company or brand

• Earned media: word of mouth, buzz, or

• Engagement: the extent of a customer’s

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• Satisfaction: a person’s judgment of a

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– Can use the internet as a powerful information

– Can search, communicate, and purchase on

– Can tap into social media to share opinions

– Can actively interact

– Can reject marketing

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– Can collect fuller and richer information about

– Can reach customers quickly and efficiently via social

– Can improve purchasing, recruiting, training, and

– Can improve cost efficiency

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• Marketing in the organization

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• Capturing marketing insights

• Connecting with customers

• Building strong brands

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• Creating successful long-term growth

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