Chapter One:

Overview of Strategic Marketing

1.1. What Is Marketing?
What is marketing? It’s a broad, challenging and often misunderstood function. Yet marketing is
much more than brochures and websites and numbers; it’s an investment that generates revenue,
profit and opportunity for growth.
 Marketing is the process of developing and communicating value to your prospects and
customers.
 Good marketing is essential for every company. It can make a company with a mediocre
(ordinary) product successful, but poor marketing can send a good company out of business.
The question of what marketing is and what it entails has been the focus of a considerable amount of
work over the past 40 years. From this, numerous definitions have emerged, with differing emphases
on the process of marketing, the functional activities that constitute marketing, and the orientation (or
philosophy) of marketing. The Chartered Institute of Marketing, for example, defines it as: “. . . The
management process for identifying, anticipating and satisfying customer requirements profitably.”
Marketing is the social process by which individuals and groups obtain what they need and want
through creating and exchanging product and value with each other. (Philip K.)
A slightly longer but conceptually similar definition of marketing was proposed by the American
Marketing Association (AMA) in 1985:
 “Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational objectives.”
It could be said that the AMA definition is more of a list than a definition and is therefore clumsy and
inconvenient to use; that it cannot ever be comprehensive; and that it fails to provide a demarcation
as to what necessarily is or is not ‘marketing’.
They go on to suggest that the AMA definition presents marketing as a functional process conducted
by the organization’s marketing department, whereas the general thrust of the more recent literature
on marketing theory is that marketing is increasingly being conceptualized as an organizational
philosophy or ‘an approach to doing business’. This strategic as opposed to a functional approach
to marketing is captured both by McDonald (1989, p. 8):
 “Marketing is a management process whereby the resources of the whole organization are
utilized to satisfy the needs of selected customer groups in order to achieve the objectives of both
parties. Marketing, then, is first and foremost an attitude of mind rather than a series of
functional activities.
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 “Marketing is so basic that it cannot be considered a separate function on a par with others
such as manufacturing or personnel. It is first a central dimension of the entire business. It is
the whole business seen from the point of view of its final result, that is, from the customers’
point of view.” Drucker (1973),
 Now the concept is attached to competitive position in a changing world. Thus, the marketing
concept is that managerial orientation which recognizes that success primarily depends upon
identifying changing customer wants and developing products and services which match these
better than those of competitors. If an enterprise is managed a little better than customers expect,
and if this is done in a slightly better way than competitors can manage, then the enterprise should
be successful.
The essential requirements of marketing can be seen to be:

The identification of consumers’ needs (covering what goods and services are bought, how they
are bought, by whom they are bought, and why they are bought)
The definition of target market segments (by which customers are grouped according to
common characteristics – whether demographic, psychological, geographic, etc.)
The creation of a differential advantage within target segments by which a distinct competitive
position relative to other companies can be established, and from which profit flows.
But is your organization really market-driven?
When Peter Drucker first outlined the marketing concept 50 years ago, he equated marketing with
customer orientation, arguing that for a firm to be market-driven meant always putting the customer
first and innovating continuously to improve the delivered value. Subsequently, it has been
recognized that Drucker’s perspective lacked strategic content in that it gives emphasis to the
organizational culture, but fails to provide guidance on which customers to serve and how to serve
them. Equally, his initial views failed to take explicit account of competitors and the discipline of
profit in the analysis of product and market opportunity. It is because of this that customer orientation
has been replaced with the broader concept of market orientation.
Given this, we can see marketing operating at three levels:
1. Marketing as a culture, characterized by a set of values and beliefs that highlights the
importance of the customer’s interests
2. Marketing as a strategy, concerned with the choice of products, markets and competitive
stance
3. Marketing as the set of tactics (essentially the seven Ps of the expanded marketing mix) that
provides the basis for the implementation of the business and competitive strategy.

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1.2. Why we study marketing?
The Importance of Marketing
The first decade of the 21st century challenged firms to prosper financially and even survive in the face
of an unforgiving economic environment. Marketing is playing a key role in addressing those challenges.
Finance, operations, accounting, and other business functions won’t really matter without sufficient
demand for products and services so the firm can make a profit. In other words, there must be a top line
for there to be a bottom line. Thus financial success often depends on marketing ability.
Good marketing is no accident, but a result of careful planning and execution using state-of-the-art
tools and techniques. It becomes both an art and a science as marketers strive to find creative new
solutions to often-complex challenges amid profound changes in the 21st century marketing environment.
1.3. Company’s Orientation towards the Market Place:
The marketing Concept
Marketing management is the conscious effort to achieve desired exchange out comes with target
markets. But what philosophy should guide a company’s marketing efforts? Marketing activities should
be carried out under a well thought –out philosophy of efficiency, effectiveness, & social responsibility
marketing organizations have the following alternatives philosophies to conduct their marketing
activities. They are the production, the product, the selling, the marketing, the customers, and the societal
marketing concepts.
The production concepts
The production concepts are one of the oldest concepts in business. The production concept holds that
consumers will prefer products that are widely available and inexpensive. Managers of production
oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution
they assume that the consumers are primarily interested in product a availability and low prices. These
orientations make sense in developing countries, where consumers are more interested in obtaining the
product than its features. It is also used when a company wants to expand the market such concept is also
useful if demand for a product is greater than supply.
The product concept
Other businesses are guided by the product concept. The product concept holds that the consumers will
favor those products that offer the most quality the performance, and innovative features managers in
these organizations focus on making superior products and improving them over time they assume that
buyers admire well made products and can evaluate quality and performance.
Product oriented companies often trust their engineers can design exceptional products. They get little or
no customer input, and very often they will not even examine competitors’ products. This results the

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product concept to marketing myopia, where producers make mistake of paying more attention to the
specific products they offer than to the benefits produced by these products to customers.
The selling concept
The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of
company’s products. The organizations, therefore, must undertake an aggressive selling and promotion
effort. The concept assumes that the consumers typically show buying inertia or resistance and must be
coaxed into buying. It also assumes that the company has a whole battery of effective selling and
promotion tools to stimulate more buying. The selling concept is practiced more aggressively with
unsought goods, goods that buyers normally do not think of buying such as insurance, encyclopedias and
funeral plots.
The Marketing concept፡
The Marketing concept is a business philosophy that challenges the three concepts we just discussed
Instead of a product centered, “make and sell “philosophy, we shift to customer centered, “sense and
respond” philosophy. The job is not to find the right customers for your product, but the right products
for your customers. The marketing concept holds that the key to achieving its organizational goals
consists of the company being more effective than competitors in creating, delivering, and
communicating superior customer value to its chosen target markets. Harvard’s Theodore Levitt drew a
perceptive contrast between the selling and marketing concepts: Selling focuses on the needs of the
seller; marketing on the needs of the buyer. The marketing concept rests on four pillars:
a. Target market: Companies do best when they choose their target market carefully and prepare
tailored marketing programs.
b. Customer Needs: A company can define its target market but fail to correctly understand the
customers’ needs understanding customer needs and wants is not always simple. A distinction needs to
be drawn between responsive marketing, anticipating marketing and creative marketing.
 a responsive marketer finds a stated need & fills it
 an anticipative marketer looks a head into what needs customers may have in the future.
 a creative marketer discovers and produces solution customers did not ask for but to which they
enthusiastically respond.
c. Integrated marketing: when the company’s department’s entire look together to serve the customers
interests, the result is integrated marketing. Integrated marketing takes places on two levels:
• All the marketing functions must be coordinated from the customers’ point of view
• Marketing department must be supported by the other departments, they must also think customers

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d. Profitability: The ultimate purpose of the marketing concept is to help the organizations achieve their
objectives. In case of private firms, the major objective is long run profitability, in the case of
nonprofit and public organizations; it is surviving and attracting funds to perform usual work.  
Several scholars found that companies embracing the marketing concept at that time achieved superior
performance.
The Customer concept:
Many companies today are moving beyond the marketing concept to the customers concept where as
companies practicing the market concept work at the level of customer segments a growing number of
companies today are now shaping offers services, and messages to individual customers. They hope to
achieve profitable growth through capturing a larger share of customer expenditures by building high
customer loyalty and focusing on customer lifetime value.
The Societal Marketing Concept:
The marketing concept side steps the potential conflicts among customer wants, interests, and long run
societal welfare for example the fast food hamburger industry offers tasty but unhealthy food. The
concept calls upon marketers to build social & ethical considerations into their marketing practices.
The Holistic Marketing Concept
Without question, the trends and forces that have defined the first decade of the 21st century are leading
business firms to a new set of beliefs and practices. “Marketing Memo: Marketing Right and Wrong”
suggests where companies go wrong—and how they can get it right—in their marketing.
The holistic marketing concept is based on the development, design, and implementation of marketing
programs, processes, and activities that recognize their breadth and interdependencies. Holistic marketing
acknowledges that everything matters in marketing—and that a broad, integrated perspective is often
necessary. Holistic marketing thus recognizes and reconciles the scope and complexities of marketing
activities.
Four broad components characterizing holistic marketing: relationship marketing, integrated
marketing, internal marketing, and performance marketing. Successful companies keep their
marketing changing with the changes in their marketplace—and market space.
Relationship Marketing – a key goal of marketing is to develop deep, enduring relationships with
people and organizations that directly or indirectly affect the success of the firm’s marketing
activities. Relationship marketing aims to build mutually satisfying long-term relationships with key
constituents in order to earn and retain their business. Four key constituents for relationship
marketing are customers, employees, marketing partners (channels, suppliers, distributors, dealers,
agencies), and members of the financial community (shareholders, investors, analysts).

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Integrated Marketing – occurs when the marketer devises marketing activities and assembles
marketing programs to create, communicate, and deliver value for consumers such that “the whole is
greater than the sum of its parts.” Two key themes are that (1) many different marketing activities can
create, communicate, and deliver value and (2) marketers should design and implement any one
marketing activity with all other activities in mind.
Internal Marketing – an element of marketing, is the task of hiring, training, and motivating able
employees who want to serve customers well. It ensures that everyone in the organization embraces
appropriate marketing principles, especially senior management.
Performance Marketing – requires understanding the financial and nonfinancial returns to business
and society from marketing activities and programs. Smart marketers go beyond sales revenue to
examine the marketing scorecard and interpret what is happening to market share, customer loss rate,
customer satisfaction, product quality, and other measures. They also consider the legal, ethical,
social and environmental effects of marketing activities and programs. 
1.4. Marketing management
Thus we see marketing management as the art and science of choosing target markets and getting,
keeping, and growing customers through creating, delivering, and communicating superior customer
value.
 Marketing management: Is a process of planning, organizing, directing & controlling the activities of
product planning, pricing, promotion & distribution of products to create exchange that satisfy
individuals, & organizational needs.
 Marketing Management: Is an art and science of choosing target markets and building profitable
relationships with them, then it involves getting, keeping and growing customers through creating,
delivering and communications superior customer value.
 Marketing Management: A business discipline focused on the practical application of marketing
techniques and the management of a firms marketing resources and activities, and often responsible
for influencing the timing and composition of customers demand in a manner that will achieve the
company’s objectives.
Understanding Marketing Management
Marketing’s broader importance extends to society as a whole. Marketing has helped introduce and gain
acceptance of new products that have eased or enriched people’s lives. It can inspire enhancements in
existing products as marketers innovate to improve their position in the marketplace. Successful
marketing builds demand for products and services, which, in turn, creates jobs. By contributing to the
bottom line, successful marketing also allows firms to more fully engage in socially responsible
activities.
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CEOs recognize the role of marketing in building strong brands and a loyal customer base, intangible
assets that contribute heavily to the value of a firm. Consumer goods makers, health care insurers,
nonprofit organizations, and industrial product manufacturers all trumpet their latest marketing
achievements. Many now have a chief marketing officer (CMO) to put marketing on a more equal
footing with other C-level executives such as the chief financial officer (CFO) or chief information
officer (CIO).
Making the right marketing decisions isn’t always easy. One survey of more than a thousand senior
marketing and sales executives revealed that although 83 percent felt that marketing and sales capabilities
were a top priority for their organization’s success, in rating their actual marketing effectiveness, only 6
percent felt that they were doing an “extremely good” job. Marketers must decide what features to design
into a new product or service, what prices to set, where to sell products or offer services, and how much
to spend on advertising, sales, the Internet, or mobile marketing. They must make those decisions in an
Internet-fueled environment where consumers, competition, technology, and economic forces change
rapidly, and the consequences of the marketer’s words and actions can quickly multiply.
Good marketers are always seeking new ways to satisfy customers and beat competition.
Strategic Marketing and Marketing Management
Strategic marketing focuses on choosing the right products for the right growth markets at the right time.
It may be argued that these decisions are no different from those emphasized in marketing management.
However, the two disciplines approach these decisions from different angles. For example, in marketing
management, market segments are defined by grouping customers according to marketing mix variables.
In the strategic marketing approach, market segments are formed to identify the group(s) that can provide
the company with a sustainable economic advantage over the competition. To clarify the matter,
Henderson labels the latter grouping a strategic sector. Henderson notes: A strategic sector is one in
which you can obtain a competitive advantage and exploit it…Strategic sectors are the key to strategy
because each sector’s frame of reference is competition. The largest competitor in an industry can be
unprofitable in that the individual strategic sectors are dominated by smaller competitors.
A further difference between strategic marketing and marketing management is that in marketing
management the resources and objectives of the firm, however defined, are viewed as uncontrollable
variables in developing a marketing mix. In strategic marketing, objectives are systematically defined at
different levels after a thorough examination of necessary inputs. Resources are allocated to maximize
overall corporate performance, and the resulting strategies are formulated with a more inclusive view. As
Abell and Hammond have stated:
A strategic market plan is not the same…as a marketing plan; it is a plan of all aspects of an
organization’s strategy in the market place. A marketing plan, in contrast, deals primarily with the
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delineation of target segments and the product, communication, channel, and pricing policies for reaching
and servicing those segments—the so-called marketing mix.
Marketing management deals with developing a marketing mix to serve designated markets. The
development of a marketing mix should be preceded by a definition of the market. Traditionally,
however, market has been loosely defined.
In an environment of expansion, even marginal operations could be profitable; therefore, there was no
reason to be precise, especially when considering that the task of defining a market is at best difficult.
Besides, corporate culture emphasized short-term orientation, which by implication stressed a winning
marketing mix rather than an accurate definition of the market.
To illustrate how problematic it can be to define a market, consider the laundry product Wisk. The
market for Wisk can be defined in many different ways: the laundry detergent market, the liquid laundry
detergent market, or the prewash- treatment detergent market. In each market, the product would have a
different market share and would be challenged by a different set of competitors.
Which definition of the market is most viable for long-term healthy performance is a question that
strategic marketing addresses. A market can be viewed in many different ways, and a product can be used
in many different ways. Each time the product-market pairing is varied, the relative competitive strength
is varied, too. Many businesspeople do not recognize that a key element in strategy is choosing the
competitor whom you wish to challenge, as well as choosing the marketing segment and product
characteristics with which you will compete.
Exhibit 1-2 summarizes the differences between strategic marketing and marketing management.
Strategic marketing differs from marketing management in many respects: orientation, philosophy,
approach, relationship with the environment and other parts of the organization, and the management
style required. For example, strategic marketing requires a manager to forgo short-term performance in
the interest of long-term results. Strategic marketing deals with the business to be in; marketing
management stresses running a delineated business.
In its strategic role, marketing focuses on a business’s intentions in a market and the means and timing of
realizing those intentions. The strategic role of marketing is quite different from marketing management,
which deals with developing, implementing, and directing programs to achieve designated intentions. To
clearly differentiate between marketing management and marketing in its new role, a new term—
strategic marketing—has been coined to represent the latter. This part discusses different aspects of
strategic marketing and examines how it differs from marketing management. Also noted are the trends
pointing to the continued importance of strategic marketing.
Exhibit 1-1 shows the role that the marketing function plays at different levels in the organization. At the
corporate level, marketing inputs (e.g., competitive analysis, market dynamics, and environmental shifts)
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are essential for formulating a corporate strategic plan. Marketing represents the boundary between the
marketplace and the company, and knowledge of current and emerging happenings in the marketplace is
extremely important in any strategic planning exercise. At the other end of the scale, marketing
management deals with the formulation and implementation of marketing programs to support the
perspectives of strategic marketing, referring to marketing strategy of a product/market. Marketing
strategy is developed at the business unit level.
Within a given environment, marketing strategy deals essentially with the interplay of three forces known
as the strategic three Cs: the customer, the competition, and the corporation. Marketing strategies focus
on ways in which the corporation can differentiate itself effectively from its competitors, capitalizing on
its distinctive strengths to deliver better value to its customers. A good marketing strategy should be
characterized by (a) a clear market definition; (b) a good match between corporate strengths and the
needs of the market; and (c) superior performance, relative to the competition, in the key success factors
of the business.
Table1-1: Marketing’s Role in the Organization
Organizational Level Role of Marketing* Formal Name
Corporate Provide customer and competitive perspective for Corporate marketing
corporate strategic planning.
Business unit Assist in the development of strategic perspective Strategic marketing
of the business unit to direct its future course.
Product/market Formulate and implement marketing programs. Marketing management

*Like marketing, other functions (finance, research and development, production, accounting, and
personnel) plan their own unique roles at each organizational level. The business unit strategy emerges
from the interaction of marketing with other disciplines.
For a marketing manager, the question is: Given the array of environmental forces affecting my business,
the past and the projected performance of the industry or market, and my current position in it, which
kind of investments am I justified in making in this business? In strategic marketing, on the other hand,
the question is rather: What are my options for upsetting the equilibrium of the marketplace and
reestablishing it in my favor? Marketing management takes market projections and competitive position
as a given and seeks to optimize within those constraints. Strategic marketing, by contrast, seeks to throw
off those constraints wherever possible. Marketing management is deterministic; strategic marketing is
opportunistic. Marketing management is deductive and analytical; strategic marketing is inductive and
intuitive.
Table 1-2: Major Differences between Strategic Marketing and Marketing Management
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Point of Difference Strategic Marketing Marketing Management
Time frame Long range; i.e., decisions have Day-to-day; i.e., decisions have relevance
long-term implications in a given financial year
Decision process Top to bottom Bottom up
Nature of job Requires high degree of Requires maturity, experience, and control
creativity and originality Orientation
Leadership style Requires proactive perspective Requires reactive perspective
Opportunity Ongoing to seek new Ad hoc search for a new opportunities
sensitivity opportunities
Relationship with Considered ever-changing and Considered constant with occasional
environment dynamic disturbances
Mission Deals with what business to Deals with running a delineated business
emphasize

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