Basic Marketing Concepts

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

  •  Market-a collection of buyers and sellers.
  •  Marketspace-electronic marketplaces unbound by time or space.
  • Metamarket-a cluster of closely related goods and services that center around a specific consumption activity.
  • Metamediary-provides a single access point where buyers can locate and contact many different sellers in the metamarket; Amazon, Expedia, and Priceline.

What is exchange?

Exchange-the process of obtaining something of value from someone by offering something in return; this usually entails obtaining products for money:
1.     There must be at least two parties to the exchange.

2.     Each party has something of value to offer the other party.
3.     Each party must be capable of communication and delivery.
4.     Each party must be free to accept or reject the exchange.
5.     Each party believes it is desirable to exchange with the other party.

What is a product?

Product-something that can be acquired via exchange to satisfy a need or a want.

  • Goods, Services, Ideas, Information, Digital Products, People, Places, Experiences and Events, Real or Financial Property, and Organizations.
  • Customers usually seek out exchanges with marketers who offer products that are high in one or more of 5 types of utility:
  1. Time Utility-products are available when customers want them; faster transactions.
  2. Place Utility-Products are available where customers want them, which is typically wherever the customer happens to be at the moment or where the product needs to be at that moment.
  3. Place utility-the closer the better.
  4. Possession Utility-the transfer of ownership or title from marketer to customer.  These products are more satisfying because marketers make them easy to acquire.  
  5. Projection utility-example with cars.
  6. Psychological Utility-deliver positive experiential or psychological attributes that customers find satisfying Psychological utility: sporting events.

Major Marketing Activities and Decisions

All marketing activities have one thing in common: They aim to give customers a reason to buy the organization’s product.

Strategic Planning

  • Strategy-outlines the organization’s game plan for success.
  • Tactical planning-concerns itself with specific markets or market segments and the development of marketing programs that will fulfill the needs of customers in those markets
  • Marketing Plan-provides the outline for how the organization will combine product, pricing, distribution, and promotion decisions to create an offering that customers will find attractive.  Also concerns itself with implementation, control, and refinement of these decisions

Social Responsibility and Ethics

  • Social Responsibilityan organization’s obligation to maximize its positive impact on society while minimizing its negative impact.

Research and Analysis
Strategic planning depends heavily on the availability and interpretation of information. Organization must also have access to three other types of information and analysis:
1.     Internal Analysis-
involves the objective review of internal information pertaining to the firm’s current strategy and performance, as well as the current and future availability of resources.
2.     Competitive intelligence-
involves analyzing the capabilities, vulnerabilities, and intentions of competing businesses.
3.     Environmental scanning or External Analysis-
involves the analysis of economic, political, legal, technological, and cultural events and trends that may affect the future of the organization and its marketing effects
Situation analysis-
the overall process of collecting and interpreting internal, competitive, and environmental information

Developing Competitive Advantage-something that the firm does better than its competitors that gives it an edge in serving customers’ needs and/or maintaining mutually satisfying relationships with important shareholders.  They set the tone, or strategic focus, of the entire marketing program.

Marketing Strategy Decisions

  • Market Segmentation-divide the total market into smaller, relatively homogeneous groups or segments that share similar needs, wants, or characteristics.
  • Target Markets-he or she identifies one or more segments of individuals, businesses, or institutions toward which the firm’s marketing efforts will be directed.

Product Decisions

  • Product positioning-involves establishing a mental image, or position, of the product offering relative to competing offerings in the minds of the minds of target buyers.
  • Pricing decision: First, price is the only element of the marketing mix that leads to revenue and profit.  Second, price typically has a direct connection with customer demand.  Third, pricing is the easiest element of the marketing program to change.  Finally, pricing is a major quality cue for customers.   One of these reasons that pricing is so interesting is that price represents a major point in marketing strategy where buyer and seller motivations come into conflict.

Distribution and Supply Chain Decisions

The goal of distribution and supply chain management-to get the product to the right place, at the right time, in the right quantities, at the lowest possible cost.  Distribution and supply chain issues are critical for major reasons: product availability and distribution costs.

Promotional Decisions
Integrated Marketing Communication-
the coordination of all promotional activities (media advertising, direct mail, personal selling, sales promotion, public relations, packaging, store displays, website design, personnel) to produce a unified, customer-faced message.

Implementation and Control

Marketing implementation-process of executing the marketing strategy is the “how” of marketing planning

Developing and Maintaining Customer Relationships

  1. Transactional Marketing-complete a large number of discrete exchanges with individual customers
  2. Relationship Marketing-develop and maintain long-term, mutually satisfying arrangements where both buyer and seller focus on the value obtained from the relationship

Taking on the Challenges of Marketing Strategy
One of the greatest frustrations and opportunities in marketing is change-customers change, competitor’s change, and even the marketing organization changes.  One of the most basic shifts involves the increasing demands of customers.  Decline in satisfaction can be attributed to: customers have become much less brand loyal than in previous generations.  Today’s customers are very price sensitive.  Product commoditization pushes margins lower and reduces brand loyalty even further

Strategic Marketing Plan

The Strategic Planning Process
An in-depth analysis of the organization’s internal and external environments-sometimes referred to as a situation analysis
Marketing Plan-
a written document that provides the blueprint or outline of the organization’s marketing activities, including the implementation, evaluation, and control of those activities; clearly explains how the organization will achieve its goals and objectives

Organizational Mission Versus Organizational Vision

    • Mission/mission statement-seeks to answer the question “What business are we in?”

Elements of the Mission Statement
1.     Who are we?

2.     Who are our customers?
3.     What is our operating philosophy? (basic beliefs, values, ethics, etc)
4.     What are our core competencies or competitive advantages?
5.     What are our responsibilities with respect to being a good steward of our human, financial, and environmental resources?

One portion of the strategic plan that should not be kept confidential, should be included in annual reports and major press releases, framed on the wall in every office, and personally owned by every employee of the organization.  Goals, objectives, strategies, tactics, and budgets are not for public viewing.

Mission Width and Stability
If the mission is too broad, it will be meaningless to those who read and build upon it.  Well-designed mission statement should not stifle and organization’s creativity, it must help keep the firm from moving too far from its core competencies.  Overly narrow mission statements that constrain the vision of the organization can prove just as costly.  The mission should change only when it is no longer in sync with the firm’s capabilities, when competitors drive the firm from certain markets, when new technology changes the delivery of customer benefits, or when the firm identifies a new opportunity that matches its strengths and expertise.

Customer-Focused Mission Statements
Mission statements have become much more customer oriented

Corporate or Business-Unit Strategy
1) Corporate Strategy-
central scheme or means of utilizing and integrating resources in the areas of production, finance, research, and development, human resources, and marketing, to carry out the organization’s mission and achieve the desired goals and objectives
2) Business-unit Strategy-
determines the nature and future direction of each business unit, including its competitive advantages, the allocation of its resources, and the coordination of the functional business areas (marketing, production, finance, human resources, etc.)
Important consideration for a firm determining its corporate or business-unit strategy is the firm’s capabilities.  When a firm possesses capabilities that allow it to serve customers’ needs better than the competition, it is said to have a competitive, or differential, advantage.  The key issue is the organization’s ability to convince customers that its advantages are superior to those of the competition

Functional Goals and Objectives
Marketing and all their business functions must support the organization’s mission and goals, translating these into objectives with specific quantitative measurements
Marketing objectives:
units of measure might include sales volume (in dollars/units), profitability per unit, percentage gain in market share, sales per square feet, average customer purchase, percentage of customers in the firm’s target market who prefer its products, or some other measurable achievement.

Functional Strategy
In marketing strategy, the process focuses on selecting one or more target markets and developing a marketing program that satisfies the needs and wants of members of the target market.

The strategy must:
(1) Fit the needs and purposes of the functional area with respect to meeting its goals and objectives

(2) Be realistic given the organization’s available resources and environment,
(3) Be consistent with the organization’s mission, goals, and objectives.


Involves activities that actually execute the functional area strategy.  All functional plans have at least 2 target markets: an external market and an internal market.  In order for a functional strategy to be implemented successfully, the organization must rely on the commitment and knowledge of its employers-its internal target market.

Evaluation and Control
The key to coordination is to ensure that functional areas maintain open lines of communication at all ties.  Evaluation and control occur after a strategy has been implemented.  The implementation of any strategy would be incomplete without an assessment of its success and the creation of control mechanisms to provide and revise the strategy or its implementation.  Evaluation and control serve as the beginning point for the planning process in the next planning cycle.

Chapter 11 Marketing Implementation and Control

Strivastawan, Sherva, and Fahey
PPM-Product Develoment Management (Brand mand management, brand extensions, line extensions, ,
SCM-Supply Chain Management, place but less important
CRM-Customer Relationship Management-customer satisfaction

Strategic Issues in Marketing Implementation
Marketing Implementation is critical to the success of any firm because it is responsible for putting the marketing strategy into action.  Implementation refers to the “how” part of the marketing plan.  Some of this misunderstanding stems from the fact that marketing strategies almost always turn out differently than expected.  In fact, all firms have two strategies: their intended strategy and a realized strategy.  Intended marketing strategy is what the firm wants to happen-is is the firm’s planned strategic choices that appear in the marketing plan iteself.  The realized marketing strategy, on the other hand, is the strategy that actually takes palce.

The link between Planning and Implementation
Many of the problems of marketing implementation occur because of its relationship to strategic planning.  The three most common issues in this relationship are interdependency, evolution, and separation.

The content of the marketing plan determines how it will be implemented, it is also true that how the marketing strategy is to be implemented determines the content of the marketing plan.
Employee training programs
Profit sharing
Employee training, as a tool of implementation, can also dictate the content of the firm’s strategy.
Stock optioins

Important environmental factors constantly change.  Because planning and implementation are intertwined, each must constantly evolve to fit the other.  Just as strategy often results form trial and erro, so does marketing implementation.  These rapid chagnes require that firms be flexible in both marketing strategy and implementatoin.

The ineffective implementation of marketing strategy is often a self-generated problem that stesm from the way tha planning and implementation are carried out in most firms.  Believing that frontline managers and employees wil lbe exvited about the marketin strategy and motivated to implemetn iit.  Managers and employees often fail to identify with the firms’ goals and objectives, and thus fail to fully understand the marketing strategy.

The elements of Marketing Implementation
Shared Goals and Values
Shared Goals and values among all employees within the firm are the “glue” of successful implementation because they bind the entire organization together as a single, functioning unit.  Firms such as FedEx, Google, and ESPN, are well-known for their efforts to ensure that employees share and are committed to corporate goals and values.  The primary means of creating shared goals and values is through employee training and socialization programs.  Some experts have argued that creating shared gaols and values is the single most important element of implementation because it stimulates organizational commitment so that employees become more motivated to implement the marketing strategy, achieve the frims goals and objectives, and serve more fully the needs of the frim’s customers.

Marketing Strucuture
Organizing a firm’s marketing activities.  Marketing structures establishes fromal lines of authority, as well as the divisoijn of labor witin the marketing function.  One of the most important decisions that firms make is how to divide and integrate marketing responsibilities.  This decision typically comes down to the question of centralization verus decentralization.  In a centralized marketing structure, the top of the markting hierarchy coordinates and manages all marketing activities and decisions.  The front line of the firm coordinates and manages marketing activities and decisions.
Centralized Structures are very cost-efficient and effective in ensuring standardization within the marketing program.  Walmar or Dell.
Decentralized marketing stuctures have the important advantage of placing marketing decisions closer to the front line, where serving customes is the number one priority.  By decentralizing marekting decisions, frontline managers can be creative and flexible, allowing them to adapt to changing market conditions.  Firms that employ a strategy of customer intimacy, such as Ritz-Carlton or Nordstom.  The righ marketing structure will depend on the specific firm, the nature of its internal and external environments, and ts chosen marekting strategy.

Systems and Processes
Organizational systems and processses are collections of work activitis that absorb a variety of inputs to create information and communication outputs that ensure the consistent day-to-day operation of the firm.  Examples include information systems, strategic planniong, capital budgeting, procurement, order fulfillment, manufacturing, quality control, and performance mesurement.

Tangible Resources include financial resources, manufacturing capacity, facilities, and equipment.  Although not quite as obvious, intangible resources such as marketing expertise, customer loyalty, brand equity, corporate goodwill, and external relationships/strategic alliances are equally important.
A critical and hones evaluation of available resources during the plannin phase can help ensure that th emarketing strategy and marketing implementaiton are within the realm of possibility.  This makes the communication aspects of the actual marketing plan document critical ot the success of the strategy.

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