CHAPTER 1

WHAT IS MARKETING?
Marketing is a process by which companies create value for customers
and build strong customer relationships in order to capture value from customers in return.
The twofold goal of marketing is to:
● attract new customers by promising superior value
● grow current customers by delivering satisfaction

Understanding the Marketplace and Customer Needs

Needs are states of felt deprivation.
○ Human needs include basic physical needs for food, clothing, warmth, and
safety
Wants are the form human needs take as they are shaped by culture and individual
personality.
○ Wants are the form human needs take as they are shaped by one’s society
and are described in terms of objects that will satisfy those needs.
Demands are human wants that are backed by buying power.
○ When backed by buying power, wants become demands.

Market offerings are some combination of products, services, information, or experiences

offered to a market to satisfy a need or want.
include other entities, such as persons, places, organizations, information, and ideas
Marketing myopia is focusing only on existing wants and losing sight of underlying
consumer needs.
Market offerings include other entities, such as persons, places, organizations,
information, and ideas

A market is set of actual and potential buyers.

Consumers market when they:
● Search for products
● interact with companies to obtain information
● make purchases
Designing a Customer Value-Driven Marketing Strategy
Marketing management is the art and science of choosing target markets and building
profitable relationships with them.
● What customers will we serve (target market)?
● How can we best serve these customers (value proposition)?

A brand’s value proposition is the set of benefits or values it promises to deliver to

customers to satisfy their needs.

five alternative concept marketing strategies

● Production concept: Consumers will favor products that are available and highly
affordable.
● Product concept: Consumers favor products that offer the most quality,
performance, and features.
● Selling concept: Consumers will not buy enough of the firm’s products unless the
firm undertakes a large-scale selling and promotion effort.
● Marketing concept: Know the needs and wants of the target markets and deliver the
desired satisfactions better than competitors
● societal marketing concept: marketing strategy should deliver value to customers
in a way that maintains or improves both the consumer’s and society’s well-being.

The marketing mix is comprised of a set of tools known as the four Ps:
● Product: the firm must first create a need-satisfying market offering
● Price: It must then decide how much it will charge for the offering
● Promotion: it must engage target consumers, communicate about the offering, and
persuade consumers of the offer’s merits
● Place: how it will make the offering available to target consumers
Integrated marketing program—a comprehensive plan that communicates and delivers
the intended value
Managing Customer Relationships and Capturing Customer Value
Customer relationship management—the overall process of building and maintaining
profitable customer relationships by delivering superior customer value and satisfaction.

customer-perceived value—the customer’s evaluation of the difference between all the

benefits and all the costs of a market offering relative to those of competing offers.

Customer satisfaction depends on the product’s perceived performance relative to a

buyer’s expectations. If the product’s performance falls short of expectations, the customer is
dissatisfied. If performance matches expectations, the customer is satisfied. If performance
exceeds expectations, the customer is highly satisfied or delighted.

Customer-Engagement Marketing fosters direct and continuous customer involvement in

shaping brand conversations, experiences, and community.

Consumer-Generated Marketing Brand exchanges are created by consumers themselves.

Consumers are playing an increasing role in shaping brand experiences.

Partner relationship management involves working closely with partners in other company
departments and outside the company to jointly bring greater value to customers.

Customer lifetime value is the value of the entire stream of purchases that the customer
would make over a lifetime of patronage.

Share of customer is the portion of the customer’s purchasing that a company gets in its
product categories.

Customer equity is the total combined customer lifetime values of all of the company’s
customers

The Changing Marketing Landscape

Digital and social media marketing involves using digital marketing tools such as
websites, social media, mobile ads and apps, online videos, e-mail, and blogs that engage
consumers anywhere, at any time, via their digital devices.
CHAPTER 2
Company-Wide Strategic Planning
Strategic planning is the process of developing and maintaining a strategic fit between the
organization’s goals and capabilities, and its changing marketing opportunities.
● Strategic planning sets the stage for the rest of the planning in the firm. Companies
usually prepare annual plans, long-range plans, and strategic plans.
● The annual and long-range plans deal with the company’s current businesses and
how to keep them going.
● In contrast, the strategic plan involves adapting the firm to take advantage of
opportunities in its constantly changing environment.

The mission statement is the organization’s purpose; what it wants to accomplish in the
larger environment.
● What is our business?
● Who is the customer?
● What do consumers value?
● What should our business be?
A mission statement should:
● Not be myopic in product terms
● Be meaningful and specific
● Be motivating
● Emphasize the company’s strengths
● Contain specific workable guidelines
● Not be stated as making sales or profits

Designing The Business Portfolio

The business portfolio is the collection of businesses and products that make up the
company.
Portfolio analysis is a major activity in strategic planning whereby management evaluates
the products and businesses that make up the company.

Strategic business units (SBU) can be a:

● Company division
● Product line within a division
● Single product or brand
Analyzing The Current Business Portfolio

The growth-share matrix defines four types of SBUs.

● Stars are high-growth, high-share businesses or products requiring heavy
investment to finance rapid growth. They will eventually turn into cash cows.
● Cash cows are low-growth, high-share businesses or products that are established
and successful SBUs requiring less investment to maintain market share.
● Question marks are low-share business units in high-growth markets requiring a lot
of cash to hold their share.
● Dogs are low-growth, low-share businesses and products that may generate enough
cash to maintain themselves but do not promise to be large sources of cash.

Problems with Matrix Approaches

● Difficulty in defining SBUs and measuring market share and growth
● Time-consuming
● Expensive
● Focus on current businesses, not future planning.

product/market expansion grid

● Market penetration involves making more sales to current customers without
changing its original product such as by adding new stores in current market areas to
make it easier for customers to visit.
● Market development involves identifying and developing new markets for its current
products. For instance, managers could review new demographic markets. Perhaps
new groups—such as seniors—could be encouraged. Managers could consider new
geographic markets in U.S. markets and in non-U.S. markets, especially Asia.
● Product development involves offering modified or new products to current markets
such as by moving into new product categories.
 ● Diversification involves starting up or buying businesses beyond its current products
and markets. For example, the company could acquire a company that operates in
different market segments with a different product mix.

Downsizing is when a company must prune, harvest, or divest businesses that are
unprofitable or that no longer fit the strategy.

Planning Marketing: Partnering to Build Customer Relationships

Value chain is a series of departments that carry out value-creating activities to design,
produce, market, deliver, and support a firm’s products.

Value delivery network is made up of the company, suppliers, distributors, and ultimately
customers who partner with each other to improve performance of the entire system.

Marketing Strategy and the Marketing Mix

Marketing strategy is the marketing logic by which the company hopes to create customer
value and achieve profitable customer relationships.

Market segmentation is the division of a market into distinct groups of buyers who have
different needs, characteristics, or behaviors and who might require separate products or
marketing mixes.

Market segment is a group of consumers who respond in a similar way to a given set of
marketing efforts.

Market targeting is the process of evaluating each market segment’s

attractiveness and selecting one or more segments to enter.

Market positioning is the arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target consumers.

Differentiation begins the positioning process.

Marketing mix is the set of controllable, tactical marketing tools—product, price, place, and
promotion—that the firm blends to produce the response it wants in the target market.
Managing the Marketing Effort
Marketing Implementation
● Turning marketing strategies and plans into marketing actions to accomplish strategic
marketing objectives
● Addresses who, where, when, and how

Measuring and Managing Return on Marketing Investment

Return on Marketing Investment (Marketing ROI)
● Net return from a marketing investment divided by the costs of the marketing
investment
● Measurement of the profits generated by investments in marketing activities
CHAPTER 3
A Company’s Marketing Environment
The marketing environment includes the actors and forces outside marketing that affect
marketing management’s ability to build and maintain successful relationships with target
customers.

Microenvironment consists of the actors close to the company that affects its ability to
serve its customers—the company, suppliers, marketing intermediaries, customer markets,
competitors, and publics.
-The Company: In designing marketing plans, marketing management takes other company
groups into account.
● Top management
● Finance
● R&D
● Purchasing
● Operations
● Accounting
-Suppliers
● Provides the resources to produce goods and services
● Treat as partners to provide customer value
● Suppliers form an important link in the company’s overall customer value delivery
network. Supplier problems can seriously affect marketing.
-Marketing intermediaries are firms that help the company to promote, sell, and distribute
its goods to final buyers
● Resellers are distribution channel firms that help the company find customers or
make sales to them. Large and growing reseller organizations, such as Walmart and
Costco, frequently have enough power to dictate terms or even shut smaller
manufacturers out of large markets.
● Physical distribution firms help the company stock and move goods from their
points of origin to their destinations.
● Marketing services agencies are the marketing research firms, advertising
agencies, media firms, and marketing consulting firms that help the company target
and promote its products to the right markets.
● Financial intermediaries include banks, credit companies, insurance companies,
and other businesses that help finance transactions or insure against the risks
associated with the buying and selling of goods.
-Competitors
Firms must gain strategic advantage by positioning their offerings strongly against
competitors’ offerings in the minds of consumers.
-Publics
Any group that has an actual or potential interest in or impact on an organization’s ability to
achieve its objectives:
● Financial publics. This group influences the company’s ability to obtain funds.
● Media publics. This group carries news, features, and editorial opinion.
● Government publics. Management must take government developments into
account.
● Citizen-action publics. A company’s marketing decisions may be questioned by
consumer organizations, environmental groups, minority groups, and others.
● Local publics. This group includes neighborhood residents and community
organizations.
● General public. A company needs to be concerned about the general public’s
attitude toward its products and activities.
● Internal publics. This group includes workers, managers, volunteers, and the board
of directors.
-Customers
● Consumer markets consist of individuals.
● Business markets buy goods and services for further processing or use in their
production processes.
● Reseller markets buy goods and services to resell at a profit.
● Government markets consist of government agencies that buy goods and services to
produce public services or transfer the goods and services to others who need them.
● International markets consist of various buyers in other countries, including
consumers, producers, resellers, and governments.

Macroenvironment consists of the larger societal forces that affect the

microenvironment—demographic, economic, natural, technological, political, and cultural
forces.
-Demographic Environment
● Demography is the study of human populations—size, density, location, age,
gender, race, occupation, and other statistics.
● Demographic environment involves people, and people make up markets.
● Demographic trends include changing age and family structures, geographic
population shifts, educational characteristics, and population diversity.
 ● Generational marketing is important in segmenting people by lifestyle or life stage
instead of age.
-Economic Environment
Changes in Consumer Spending
● Value marketing involves offering financially cautious buyers greater value—the
right combination of quality and service at a fair price.
● Income Distribution Over the past several decades, the rich have grown richer, the
middle class has shrunk, and the poor have remained poor.
-The Natural Environment
The natural environment is the physical environment and the natural resources that are
needed as inputs by marketers or that are affected by marketing activities.
Trends in the Natural Environment
● Growing shortages of raw materials
● Increased pollution
● Increased government intervention
● Developing strategies that support environmental sustainability
Environmental sustainability involves developing strategies and practices that create a
world economy that the planet can support indefinitely.
-Technological Environment
● Most dramatic force in changing the marketplace
● New products, opportunities
● Concern for the safety of new products
-Political and Social Environment
Legislation regulating business is intended to protect
● companies from each other
● consumers from unfair business practices
● the interests of society against unrestrained business behavior
-Cultural Environment
The cultural environment consists of institutions and other forces that affect a society’s basic
values, perceptions, and behaviors.
● Core beliefs and values are persistent and are passed on from parents to children
and are reinforced by schools, churches, businesses, and government.
● Secondary beliefs and values are more open to change and include people’s views
of themselves, others, organizations, society, nature, and the universe.
Responding to the Marketing Environment