Customer-Driven

Marketing
 Learning Objectives
5-1 Define marketing and describe the exchange process.
5-2 Specify the functions of marketing.
5-3 Explain the marketing concept and its implications for developing
marketing strategies.
5-4 Examine the development of a marketing strategy, including market
segmentation and marketing mix.
5-5 Investigate how marketers study buying behavior.
5-6 Summarize the environmental forces that influence marketing
decisions.
 Definition
Marketing
• A group of activities designed to expedite (speed up)
transactions by creating, distributing, pricing, and
promoting goods, services, and ideas
• Marketing activities create value
• Important part of a firm’s overall strategy
 The Exchange Relationship
• Each participant must be willing to give up “something
of value” (e.g. money) to receive the “something” held
by the other (e.g. goods).
The Exchange Process: Giving Up One Thing
in Return for Another
 Exchange Relationships

Companies find that communicating with customers

through social media sites can enhance customer
relationships and create value for their brands.
 Function of Marketing 3
• Buying: Everyone who shops for
products (consumers, stores,
businesses, governments) decides
whether and what to buy.
(understand consumer needs)
• Selling: . Marketers usually view selling
as a persuasive (influence) activity that
is accomplished through promotion
(advertising, personal selling, sales
promotion, publicity, and packaging).
• Transporting: is the process of moving
products from the seller to the buyer.
• Storing: is part of the physical
distribution of products and includes
warehousing goods.
• Grading: standardizing products by
dividing them into subgroups and
displaying and labeling them so that
consumers clearly understand their
nature and quality.
• Financing: For many products,
especially large items such as
automobiles, refrigerators, and new
homes, the marketer arranges credit
(financial status) to expedite the
purchase.
• Marketing research:
Through research,
marketers ascertain the
need for new goods and
services. By gathering
information regularly,
marketers can detect
new trends and changes
in consumer tastes.
• Risk taking: Risk is the
chance of loss
associated with
marketing decisions.
Creating Value with Marketing 5
 Customer value
= Customer benefits – Customer costs i.e. cost & time
 Evolution of Marketing Concept 8
• The production orientation
• Second half of 19th century
• 1851 to 1900
• Industrial Revolution
• Manufacturing efficiency

• The sales orientation

• Early 20th century
• January 1, 1901 – 1949
• Supply exceeds demand
• A need to “sell” products
• The market orientation
• Began in the 1950s
• Requires organizations to:
• Gather information about customers’ needs
• Share the information throughout the firm
• Use the information to build long-term relationships with customers
• Customer relationship management (build long-term
relationships with customers)
 Developing a Marketing Strategy 1
Marketing strategy
• A plan of action for developing,
pricing, distributing, and
promoting products that meet
the needs of specific
customers
Selecting a Target Market
• Market
• Target market
• Business-to-business (B2B)
marketing
• Business-to-consumer (B2C)
marketing
 Developing a Marketing Strategy 2
Total-market approach
• Firm try to appeal to everyone and
assumes all buyers have similar needs
and wants
• Also referred to as mass marketing
Market segmentation
• Dividing the total market into groups that
have relatively similar product needs
Market segment
• A collection of individuals, groups, or
organizations who share one or more
characteristics and thus have relatively
similar product needs and desires
Total market approach
 Developing a Marketing Strategy 3
Market Segmentation Approaches
• Concentration approach
• Company develops one marketing strategy for a single market
segment
• Allows a firm to specialize
Concentration approach
 Developing a Marketing Strategy 3
Market Segmentation Approaches
• Multisegment approach
• Marketing efforts are aimed at two or more segments (e.g male
& female; adult & kids; health conscious & not health
conscious) with a marketing strategy for each
Multisegment
approach
 Developing a Marketing Strategy 3
Market Segmentation Approaches
• Niche marketing
• Narrow market segment with unique needs
Niche marketing
Figure 11.2
Target Market
Strategies
 Developing a Marketing Strategy 4
Requirements for a successful concentration or multisegment
marketing approach include:
1.Consumers’ needs for the product must be heterogeneous. (different)
2.The segments must be identifiable and divisible (separated).
3.The total market must be divided in a way that allows estimated sales
potential, cost, and profits of the segments to be compared. E.g. Uniqlo –
office wear ladies – cost $1 mil, profit $2 mil; male office wear – cost $1.5
mil, profit $3 mil,………….
4.At least one segment must have enough profit potential to justify
developing and maintaining a special marketing strategy. E.g. Profit must >
cost
5.The firm must be able to reach the chosen market segment with a
particular market strategy. Marketing strategy reach market segment E.g.
Adult diapers advertise in college websites wrong strategy
 Bases for Segmenting Markets
• Demographic - age, sex, race,
ethnicity, income, education,
occupation, family size, religion,
social class.
• Geographic – climate (cold &
hot countries), terrain, natural
resources, population density,
subcultural values.
• Psychographic - personality
characteristics, motives,
lifestyles.

• Behavioristic - some
characteristic of the
consumer’s behavior toward
the product.
 Developing a Marketing Mix
• The marketing mix refers to four marketing activities
 Developing a Marketing Strategy 7
Product
• A complex mix of tangible and
intangible attributes (characteristics)
that provide satisfaction and benefits
• Good – A physical entity you can touch
(a car, computer, or adopted kitten)
• Service – The application of human
and mechanical efforts to people or
objects to provide intangible benefits to
customers (air travel, dry cleaning, or
haircuts)
• Idea – Can be a concept, philosophy,
image, or issue (attorney advice
or political parties)
 Developing a Marketing Strategy 8
Price
• A value placed on an object exchanged between a buyer
and a seller
• The buyer exchanges purchasing power—income, credit,
wealth—for the satisfaction of utility (satisfaction)
associated with a product
• Key element of the marketing mix because it relates
directly to the generation of revenue and profits
• Can be changed quickly to
stimulate (increase)
demand or respond to
competitors’ actions.
E.g. by reducing price
 Developing a Marketing Strategy 9
Distribution
• Making products available to
customers in the quantities desired
• Sometimes referred to as “place”
• Intermediaries—usually wholesalers and
retailers—perform many of the activities required to
move products efficiently from producers to
consumers or industrial buyers
• Transporting, warehousing,
materials handling, inventory
control, packaging,
and communication
 Developing a Marketing Strategy 10
Promotion
• Persuasive (convince) form of
communication that attempts to expedite a
marketing exchange by influencing
individuals, groups, and organizations to
accept goods, services, and ideas
• Includes advertising, personal selling,
publicity, and sales promotion
• Digital advertising on websites and social
media sites are growing
 Buying Behavior 3
Psychological Variables of Buying
Behavior
•Perception is the process by which a
person selects, organizes, and interprets
information received from his or her
senses, as when experiencing an
advertisement or touching a product to
better understand it.
•Motivation is an inner drive that directs a
person’s behavior toward goals.
•Learning brings about changes in a
person’s behavior based on information
and experience.
• Attitude is knowledge and
positive or negative feelings
about something
• Personality refers to the
organization of an
individual’s distinguishing
character traits, attitudes, or
habits.
Buying Behavior 4
Social Variables of Buying
Behavior
• Social roles which are a set of
expectations for individuals
based on some position they
occupy. E.g mother, student
• Reference groups include
families, professional groups,
civic organizations, and other
groups with whom buyers
identify and whose values or
attitudes they adopt.
• Social classes are
determined by ranking
people into higher or lower
positions of respect.
• Culture is the integrated,
accepted pattern of human
behavior, including thought,
speech, beliefs, actions,
and artifacts
The Marketing Mix and the Marketing
Environment
 The Marketing Environment
External forces that directly or indirectly influence
the development of marketing strategies
• Political, legal, and regulatory forces - laws and
regulators’ interpretation of laws, law enforcement and
regulatory activities, regulatory bodies, legislators and
legislation, and political actions of interest groups.
• Specific laws, for example, require that
advertisements be truthful and that all health claims be
documented.
• Social forces - the public’s opinions and attitudes toward
issues such as living standards, ethics, the environment,
lifestyles, and quality of life.
• For example, social concerns have led marketers to
design and market safer toys for children.
• Competitive and economic forces - competitive
relationships such as those in the technology industry,
unemployment, purchasing power, and general
economic conditions (prosperity, recession, depression,
recovery, product shortages, and inflation).
Technological forces - computers and other
technological advances that improve distribution,
promotion, and new-product development.