MARKETING IN

TODAY’S ECONOMY
Chapter 1
 Chapter 1 Outline
 The Challenges and Opportunities of Marketing in
Today’s Economy
 Basic Marketing Concepts
 Challenges Involved in Developing Marketing
Strategies
 The Challenges and Opportunities of
Marketing in Today’s Economy
 Traditional beliefs about marketing strategy began
to change forever during the mid1990s.
 Advances in computer, communication, and
information technology forever changed the world
and the ways that marketers reach potential
customers.
 Many large companies of the past have weakened
and lost relevance in an economy marked by
continuous change and consumer skepticism.
 Class Exercise
 Advances in computer, communication, and
information technology forever changed the world
and the ways that marketers reach potential
customers.
 Give one example of these changes.
 The Challenges and Opportunities of Marketing in Today’s Economy

 The following are some major changes to marketing and

business practices, as well as to consumer personal buying
behavior:
 1) Power Shift to Customers: Instead of businesses having the
ability to manipulate customers via technology, customers often
manipulate businesses because of their access to information, the
ability to comparison shop, and the control they have over spending.
 In many cases, customers are able to set their own prices, such as
purchasing airline tickets at Priceline.com.
 Also, customers can now interact with one another, as merchants
such as Amazon and eBay allow customers to share opinions on
product quality and supplier reliability.
 The Challenges and Opportunities of Marketing in Today’s Economy

 2) Massive Increase in Product Selection: The

variety and assortment of goods and services offered
for sale on the Internet and in traditional stores is
overwhelming.
 For example: In grocery stores alone, customers are
faced with countless options in the cereal and soft
drink aisles.
 For example: The growth in online retailing now
allows customers to purchase a car from
CarsDirect.com.
 The Challenges and Opportunities of Marketing in Today’s Economy

 Increased transaction efficiency (e.g., 24/7 access,

delivery to home or office) allows customers to
satisfy their needs more easily and conveniently
than ever before.
 3) Audience and Media Fragmentation:
Changes in media usage and the availability of
new media outlets have compelled marketers to
rethink the way they communicate with potential
customers.
 The Challenges and Opportunities of Marketing in Today’s Economy

 Media audiences have become fragmented because:

 A) The sheer number of media choices that consumers have
available today.
 B) The limited time that consumers have devote to any one
medium.
 Today, customers increasingly get information and news from
Facebook and Twitter rather than The New York Times or
CNN.
 Consumer spend a growing amount of time online or
interacting with handheld devices— more time than they
spend reading magazines or watching television.
 The Challenges and Opportunities of Marketing in Today’s Economy

 4) Changing Value Propositions: Even before ‘‘The Great

Recession’’ began in 2008, consumers and business buyers
were already facing increasing costs associated with energy,
gasoline, food, and other essentials.
 As the economy weakened, buyers were forced to spend less
money and look for other ways to lower expenses.
 For example: Many customers now turn to Travelocity and
Expedia, rather than travel agents, for assistance in booking
airline tickets, cruises, or hotel stays.
 This shift to e-commerce impacted travel agents and real
estate agents in a very negative way.
 The Challenges and Opportunities of Marketing in
Today’s Economy

 Weakened economies around the world have forced

consumer and business buyers to rethink value
propositions and focus on the importance of frugality.

 Customers now expect more value for their money

and companies need to respond to this shift in
consumer behavior.
 5) Shifting Demand Patterns: Changes in
technology have shifted customer demand for certain
product categories.
 The Challenges and Opportunities of Marketing in
Today’s Economy

 Example 1: News is one well-known example, where

traditional newspapers are slowing disappearing while
online and mobile news continue to grow.
 Example 2: The success of Apple’s iPod and iTunes,
YouTube, and Netflix, along with the continuing integration
of television and computers, has greatly shifted demand for
the recording and movie industries.
 Hollywood film studios are struggling with soft demand in
theatres and the declining popularity of DVDs as customers
increasingly look for online movie choices or for other
forms of entertainment such as video games.
 The Challenges and Opportunities of Marketing in
Today’s Economy

 6) Privacy, Security, and Ethical Concerns: Technology has

increased the consumers’ concern about privacy, security and
ethical issues.
 This has forced marketers to address real concerns about security
and privacy, both online and offline.
 Businesses have always collected routine information about their
customers.
 Customers are much more aware of these efforts and the purposes
for which the information will be used.
 Even though customers appreciate the convenience of e-commerce,
they want guarantees that their information is safe and
confidential.
 The Challenges and Opportunities of Marketing in
Today’s Economy

 7) Unclear Legal Jurisdiction: When a company

does business in more than one country (as many
Internet-based companies do), that company often
faces a dilemma with regard to different legal
systems.
 Basic Marketing Concepts

 At its most basic level, a market is a collection of

buyers and sellers.
 People tend to think of a market as a group of
individuals or institutions that have similar needs
that can be met by a particular product.
 For example: the housing market is a collection of
buyers and sellers of residential real estate, whereas
the automobile market includes buyers and sellers
of automotive transportation.
 Basic Marketing Concepts

 Until recently, marketers have considered a market to be a physical

location where buyers and sellers meet to conduct transactions.
 Although those venues (e.g., grocery stores, malls, flea markets)
still exist, technology facilitates some of the fastest growing
markets.
 The term marketspace is used to describe these electronic
marketplaces unbound by time or space.
 In a marketspace, physical goods, services, and information are
exchanged through computer networks.
 Some of the largest marketspaces, such as Amazon, eBay, and
Monster, are now household names.
 Basic Marketing Concept
 A metamarket is a cluster of closely related goods
and services that center around a specific
consumption activity.
 Example: Automotive metamarket, Home
ownership metamarket, Wedding metamarket.
 A metamediary provides a single access point
where buyers can locate and contact many different
sellers in the metamarket.
 Class Exercise
 Give an example of a metamarket.
 Basic Marketing Concept
 What Is a Product?
 A product is something that can be acquired via
exchange to satisfy a need or a want.
 Types of products:
 1) Goods: are tangible items ranging from canned
food to commercial aircrafts, from sports
memorabilia to used clothing.
 The marketing of tangible goods is one of the most
widely recognizable business activities in the world.
 Basic Marketing Concept
 2) Services: are intangible products consisting of
acts or deeds directed toward people or their
possessions.
 Banks, hospitals, lawyers, package delivery
companies, airlines, hotels, repair technicians,
nannies, housekeepers, consultants, and taxi drivers
all offer services.
 Services, rather than tangible goods, dominate
modern economies like the U.S. economy.
 Basic Marketing Concept
 3) Ideas: include platforms or issues aimed at
promoting a benefit for the customer.
 4) Information: Marketers of information include
websites, magazine and book publishers, schools
and universities, research firms, and charitable
organizations.
 In the digital age, the production and distribution of
information has become a critical part of an
economy.
 Basic Marketing Concept
 5) Digital Products: such as software, music, and
movies are among the most profitable in many
economies around the world.
 Advancements in technology has damaged industries
that sell digital products because pirates can easily
copy and redistribute digital products in violation of
copyright law.
 Digital products are interesting because content
producers give customers a license to use them,
instead of outright ownership.
 Basic Marketing Concept
 6) People: The individual promotion of people,
such as athletes or celebrities, is big business
around the world.
 The exchange and trading of professional athletes
takes place in a complex system of drafts,
contracts, and free agency.
 Other professions, such as politicians, actors,
professional speakers, and news reporters are also
involved in people marketing.
 Basic Marketing Concept
 7) Places: When people think of the marketing of a place,
they usually think of vacation destinations like Rome or
Orlando.
 However, the marketing of places is quite diverse.
 Cities, states, and nations all market themselves to tourists,
businesses, and potential residents.
 For example: The state of Alabama in the USA has done a
good job in attracting direct investment by foreign firms.
 Over the last twenty years, Alabama has landed assembly
plants from Mercedes, Honda, and Hyundai, as well as many
different parts plants and related firms.
 Basic Marketing Concept
 8) Experiences and Events: Marketers can bring
together a combination of goods, services, ideas,
information, or people to create one-of-a-kind
experiences or single events.
 Examples include theme parks such as Disney
World and Universal Studios, athletic events like
the Olympics or the Super Bowl, or stage and
musical performances like The Phantom of the
Opera or a concert by a musician.
 Basic Marketing Concept
 9) Real or Financial Property: The exchange of
stocks, bonds, and real estate, once marketed
completely offline through real estate agents and
investment companies, now occurs increasingly
online.
 For example: Realtor.com is the largest real estate
listing service in the US, with over 2.5 million
searchable listings.
 Also, Schwab.com is the world’s largest and top-rated
online brokerage.
 Basic Marketing Concept
 10) Organizations: Almost all organizations aim
to create favorable images with the public—not
only to increase sales or inquiries, but also to
generate customer goodwill.
 In this sense, General Electric is no different than a
non-profit organization:
 Both seek to enhance their images in order to
attract more people (customers, volunteers, and
clients) and money (sales, profit, and donations).
 Basic Marketing Concept
 A customer’s decision to purchase one product or
group of products over another is usually a matter
of how well that choice will fulfill that person’s
needs and satisfy his or her wants.
 Economists use the term utility to describe the
ability of a product to satisfy a customer’s desires.
 Basic Marketing Concept
 Customers usually seek out exchanges with
marketers who offer products that are high in one
or more of the following five types of utility:
 1) Form Utility: Products high in form utility have
attributes or features that set them apart from the
competition.
 Usually these differences result from the use of high-
quality raw materials, ingredients, or components; or
from the use of highly efficient production processes.
 Basic Marketing Concept
 For example: Ruth’s Chris Steakhouse, considered by
many to be one of top restaurants in the US, provides
higher form utility than other national chains because
of the quality of beef they use.
 Papa John’s Pizza even emphasizes form utility in its
slogan ‘‘Better Ingredients. Better Pizza.’’
 In many product categories, higher priced product
lines offer more form utility because they have more
features or bells and whistles.
 Cars are a good example.
 Basic Marketing Concept
 2) Time Utility: Products high in time utility are available when
customers want them.
 Often, this means that products are available now rather than later.
 Grocery stores, restaurants, and other retailers that are open
around the clock provide excellent time utility.
 Often the most successful restaurants around college campuses are
those that are open 24/7.
 Many customers are willing to pay more for products available in
a shorter time period (such as overnight delivery via FedEx) or
for products available at the most convenient times (such as
midmorning airline flights).
 Basic Marketing Concept
 3) Place Utility: Products high in place utility are available
where customers want them, which is typically wherever the
customer happens to be at that moment (such as grocery
delivery to a home) or where the product needs to be at that
moment (such as florist delivery to a workplace).
 Home delivery of anything (especially pizza), convenience
stores, vending machines, and e-commerce are examples of
good place utility.
 Products that are high in both time and place utility are
extremely valuable to customers because they provide the
utmost in convenience.
 Basic Marketing Concept
 4) Possession Utility: Possession utility deals with the transfer of
ownership or title from marketer to customer.
 Products higher in possession utility are more satisfying because
marketers make them easier to obtain.
 Marketers often combine supplemental services with tangible goods
to increase possession utility.
 For example: furniture stores that offer easy credit terms and home
delivery enhance the possession utility of their goods.
 In fact, any merchant that accepts credit cards increases possession
utility for customers that do not carry cash or checks.
 Expensive products, like a home or a new factory, require acceptable
financing arrangements to complete the exchange process.
 Basic Marketing Concept
 5) Psychological Utility: Products high in psychological utility
deliver positive experiential or psychological attributes that
customers find satisfying.
 Sporting events often fall into this category, especially when the
competition is based on an intense rivalry.
 The atmosphere, energy, and excitement associated with being at the
game can all create psychological benefits for customers.
 Also, a product might offer excellent psychological utility because it
lacks negative experiential or psychological attributes.
 For example: a vacation to the beach or the mountains might offer
more psychological utility to some customers because it is seen as
less stressful than a vacation to Disney World.
 Challenges Involved in Developing Marketing
Strategies

 The following are some challenges involved in

developing marketing strategies:
 1) Unending change: Customers change,
competitors change, and even the marketing
organization changes.
 Strategies that are highly successful today will not
work tomorrow.
 Customers will buy products today that they will
have no interest in tomorrow.
 Challenges Involved in Developing Marketing
Strategies

 2) Marketing is inherently people-driven:

Marketing strategy is about people (inside an
organization) trying to find ways to deliver great
value by fulfilling the needs and wants of other
people (customers, shareholders, business partners,
society at large), as well as the needs of the
organization itself.
 Challenges Involved in Developing Marketing
Strategies

 Marketing strategy draws from psychology, sociology, and

economics to better understand the basic needs and
motivations of these people— whether they are the
organization’s customers (typically considered the most
critical), its employees, or its stakeholders.
 In summary, marketing strategy is about people serving people.
 3) The basic evolution of marketing and business
practice in society: Most of the changes that marketers
have faced over the past 20 years deal with the basic
evolution of marketing and business practice in society.
 Challenges Involved in Developing Marketing
Strategies

 One of the most basic shifts involves the increasing

demands of customers.
 Today, customers have very high expectations about
basic issues such as quality, performance, price, and
availability.
 4) An overall decline in brand loyalty and an
increase in price sensitivity among customers:
 Today’s customers are very price sensitive, especially in
commoditized markets where products do not have
any real means of differentiation.
 Challenges Involved in Developing Marketing
Strategies

 Customers are always looking for the best value

and thrive on their ability to compare prices among
competing options.
 Furthermore, customers are cynical about business
in general and are not that trusting of marketers.
 In summary, today’s customers not only have more
power, they also have more attitude.
 Challenges Involved in Developing Marketing
Strategies

 5) Increasing expansion into foreign markets by

foreign companies: Foreign companies have moved into
local markets to meet the challenges of maturing markets
in their own countries.
 The result of this expansion is that companies around the
globe face new competition and new challenges.
 6) Aggressive cost-cutting measures in order to
increase competitiveness: In the face of increasing
competition and maturing markets, businesses have been
forced to cut expenses in order to remain competitive.
 Challenges Involved in Developing Marketing
Strategies

 Some businesses do this by eliminating products or

product lines.
 For example: General Motors (GM), for example,
decided to drop its Saturn and Pontiac divisions—a
move similar to its dropping of Oldsmobile and
Hummer
 Other companies have maintained their product mix
but have aggressively tried to find ways to lower their
distribution costs through direct distribution
(manufacturer to end user).
 Challenges Involved in Developing Marketing
Strategies

 Some companies have been forced to take severe

measures such as downsizing and laying off
employees to reduce expenses.
 Class Exercise
 1) Increasing customer power is a continuing
challenge to marketers in today’s economy. In what
ways have you personally experienced this shift in
power; either as a customer or as a business
person? Is this power shift uniform across
industries and markets? How so?
 2) Are the expectations of today’s consumers too
high? Explain your answer with examples.
 Reference
 Ferrell, O. C., & Hartline, M. D. (2016) Marketing
Strategy: Text and Cases, 7th Edition, International
Edition, South-Western Cengage Learning.