Marketing: An Introduction.

Chapters: 1,2,3,4,5 [Subject:

Foundations of Marketing]
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Part 1 Defining Market and the Marketing Process

UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS
- Marketing = Marketing is managing profitable customer relationships.
Goals:
- Attract new customers by promising superior value.
- Keep and grow current customer-base by delivering satisfaction.
- 5 core customer and marketplace concepts:
1. Needs, wants, and demands
2. Market offerings (products, services, and experiences)
3. Value and satisfaction
4. Exchanges and relationships
5. Markets

Customer Needs, Wants, and Demands

- Needs = States of felt deprivation [Verlust, Mangel].
- Basic physical: Food, clothing, warmth, safety
- Social: Belonging and affection
- Individual: Knowledge, self-expression
They are basic part of the human makeup.
- Wants = The form human needs take as shaped by culture and individual personality.
Are shaped by ones society and are described in terms of objects that will satisfy needs.
- Demands = Human wants that are backed by buying power.
Givens their wants and resources, people demand products with benefits that add up to the most
value and satisfaction.

Market Offerings Products, Services, and Experiences

Consumers needs and wants are fulfilled through
- Market offerings = Some combination of products, services, information, or experiences offered to
a market to satisfy a need or want.
Are not limited to physical products. They include:
- Services = activities or benefits offered for sale that are essentially intangible and do
not result in the ownership of anything (example: Banking, airline, hotel, home repair
services).
- Persons
- Places
- Organizations
- Information
- Ideas
- Marketing myopia [Kurzsichtigkeit] = The mistake of paying more attention to the specific products
a company offers than to the benefits and experiences produced by these products.

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Exchanges and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange relationships.
- Exchange = The act of obtaining a desired object from someone by offering something in return.
In the broadest sense: The response may be more than simply buying or trading products and
services. Example: Church wants membership, political candidate wants votes etc.
- Marketing consists of actions taken to build and maintain desirable exchange relationships with
target audiences involving a product, service, idea, or other project.

Markets
- The concepts of change and relationships lead to the concept of market
- Market = The set of all actual and potential buyers of a product or service.
These buyers share a particular need or want that can be satisfied through exchange relationships.
- Modern Marketing System:
- Main elements in a modern marketing system include:
- Suppliers
- Company (marketer)
- Competitors
- Marketing intermediaries
-Consumers
Major environmental forces affect each element.
Each party in the system adds value for the next level.

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DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY

- Marketing management = The art and science of choosing target markets and building profitable
relationships with them.
Marketing managers aim is to find, attract, keep, and grow target customers by creating,
delivering, and communicating superior customer value.
To design a winning strategy, a manager must ask 2 questions:
1. What customers will we serve?
2. How can we serve these customers best?

Selecting Customers to Serve

- The company must first decide who it will serve.
- It does this by dividing the market into segments of customers (market segmentation) and selecting
which segments it will go after (target marketing).
- Trying to serve all customers, they may not serve any customers well.
- The company wants to select only customers that it can serve well and profitably.
Marketing managers must decide which customers they want to target and on the level, timing,
and nature of their demand. = Marketing management is customer management and demand
management.

Choosing a Value Proposition

- The company must also decide how it will serve targeted customers how it will differentiate and
position itself in the marketplace.
- A brands value proposition = the set of benefits or values it promises to deliver to consumers to
satisfy their needs.
- Value propositions differentiate one brand from another.

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Marketing Management Orientations

- Marketing management wants to design strategies that will build profitable relationships with
target consumers.
- There are 5 alternative concepts under which organizations design and carry out their marketing
strategies: the production, product, selling, marketing, and societal marketing concepts:
- Production concept = The idea that consumers will favor products that are available and highly
affordable and that the organization should therefore focus on improving production and
distribution efficiency.
Companies adopting this orientation run a major risk of focusing too narrowly on their own
operations and losing sight of the real objective satisfying customer needs and building customer
relationships.
- Product concept = The idea that consumers will favor products that offer the most quality,
performance, and features and that that the organization should therefore devote its energy to
making continuous product improvements .
Can lead to marketing myopia: buyer is not necessarily looking for a the better mousetrap, but a
better solution to the mouse problem.
A better (mousetrap) will not sell unless the manufacturer designs, packages, and prices it
attractively; places it in convenient distribution channels; brings it to the attention of people who
need it; and convinces buyer that it is a better product.
- Selling concept = The idea that consumers will not buy enough of the firms products unless it
undertakes a large-scale selling and promotion effort.
Typically practiced with unsought goods = those that buyers do not normally think of buying
(example: insurance, blood donations).
High-risks: Focuses on creating sales transactions rather than on building long-term, profitable
customer relationships.
Aim: Sell what the company makes rather than making what the market (customer) wants.
- Marketing concept = The marketing management philosophy that holds that achieving
organizational goals depends on knowing the needs and wants of target markets and delivering the
desired satisfactions better than competitors do.
Customer focus and value are the paths to sales and profits.
Customer-centered sense and respond philosophy.
Aim: The job is not to find the right customers for your product but to find the right products for
your customers.
- Societal marketing concept = The idea that a companys marketing decisions should consider
consumers wants, the companys requirements, consumers long-run interests, and societys longrun interests.
Concept: Marketing strategy should deliver value to customers in a way that maintains or
improves both the consumers and societys well-being.
Sustainable marketing: Socially and environmentally responsible marketing that meets the
present needs of consumers and businesses while also preserving or enhancing the ability of future
generations to meet their needs.

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BUILDING CUSTOMER RELATIONSHIPS

4 step in the marketing process:
1. Understanding the marketplace and customer needs
2. Designing a customer-driven marketing strategy
3. Constructing marketing programs
4. Building profitable customer relationships
Customer Relationship Management (CRM)
- Customer relationship management = The overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction.
Deals with all aspects of acquiring, keeping, and growing customers.
- Customer-perceived value = The customers evaluation of the difference between all the benefits
and all the costs of a marketing offer relative to those competing offers.
- Customer satisfaction = The extent to which a products perceived performance matches a buyers
expectations.
Customer Relationship Levels and Tools
- Basic relationship
- Full partnership
- Frequency marketing programs = Reward customers who buy frequently or in large amounts.
- Club marketing programs = Offer members special benefits and create member communities.

The Changing Nature of Customer Relationships

Relating with More Carefully Selected Customers
- Yesterdays big companies focused on mass marketing to all customers at arms length.
- Todays companies are building deeper, more direct, and lasting relationships with more carefully
selected customers. They dont want relationships with every customer. They target fewer, more
profitable customers.
Relating More Deeply and Interactively
- Companies choose customers selectively, and now also are relating with chosen customers in
deeper, more meaningful ways.
- Rather than relying only in one-way mass media messages, todays marketers are incorporating
new, more interactive approaches that help build targeted, two-way customer relationships.
- New communication approaches let marketers create deeper consumer involvement and a sense of
community surrounding a brand (to make the brand a meaningful part of consumers conversations
and lives.
- Challenges: Give consumers greater power and control. Consumers have more information about
brand than ever before. Platforms for sharing their brand views with other consumers.
===
- Customer-managed relationships = Marketing relationships in which customers, empowered by
todays new digital technologies, interact with companies and with each other to shape their
relationships with brands.
- Consumer-generated marketing = Brand exchanges created by consumer themselves both invited
and uninvited by which consumers are playing an increasing role in shaping their own brand
experiences and those of the consumers.

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Partner Relationship Management

- Partner relationship management = Working closely with partners in other company departments
and outside the company to jointly bring greater value to customers.
Partners Inside the Company
- No matter what your job in a company you must understand marketing and be customer-focused.
- Today, rather than letting each department go its own way, firms are linking all departments in the
cause of creating customer value.
Marketing Partners Outside the Firm
- Through supply chain management, many companies today are strengthening their connection with
partners all along the supply chain.

CAPTURING VALUE FROM CUSTOMERS

Creating Customer Loyalty and Retention
- Aim: Customer relationship is to create not just customer satisfaction, but customer delight.
- Companies today must shape their value propositions even more carefully and treat their profitable
customers well.
- Customer lifetime value = The value of the entire stream of purchases that the customer would
make over a lifetime of patronage.

Growing Share of Customer

- Share of customer = The portion of the customers purchasing that a company gets in its product
categories.

Building Customer Equity

- Not just acquiring customer, but keeping and growing them as well.
- Customer equity = The total combined customer lifetime values of all of the companys customers.

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Building the Right Relationships with the Right Customers?

- The company can classify customers according to their potential profitability and manage its
relationships with them accordingly.

THE CHANGING MARKETING LANDSCAPE

- Internet = A vast public web of computer networks that connects users of all types all around the
world to each other and to an amazingly large information repository.

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SO, WHAT IS MARKETING? PULLING IT ALL TOGETHER

- Marketing = Process of building profitable customer relationships by creating value for customers
and capturing value in return.

First 4 steps of the marketing process focus on creating value for customers:
- Step 1. Company gains a full understanding of the marketplace by researching customer needs and
managing marketing information.
- Step 2. Designs customer-driven marketing strategy based on the answers to two simple questions:
-1. What consumers will we serve? (market segmentation, targeting):
Good marketing companies know that they cannot serve all customers in every way. Instead, they
needs to focus to their resources on the customers they can serve best and most profitably.
-2. How can we best serve targeted customers? (differentiation, positioning):
Marketer outlines a value proposition that spells out what values the company will deliver in order to
win target customers.
- Step 3. The company now constructs an integrated marketing program consisting of a blend of
the 4 marketing mix elements = 4Ps Transforms the marketing strategy into real value for
customers.
The company develops product offers and creates strong brand identities for customers. It prices
these offers to create real customer value and distributes the offers to make them available to target
customers.
- Finally: The company designs promotion programs that communicate the value proposition to
target consumers and persuade them to act on the market offering.
- Step 4. Building value-laden, profitable relationships with target customers.
- Throughout the process, marketers practice customer relationship management to create customer
satisfaction and delight.
- In creating customer value and relationships, however, the company cannot go it alone. It must
work closely with marketing partners both inside the company and throughout the marketing
system.
Thus, beyond practicing good customer relationship management, firms must also practice good
partner relationship management.
Final step (in the marketing process): Company reaps the rewards of its stronger of its strong
customer relationship by capturing value from customers:
- Delivering superior customer value creates highly satisfied customers who will buy more and will
buy again. This step helps the company to capture customer lifetime value and greater share of
customer. Result: Increased ling-term customer equity for the firm.
Finally: Todays companies must take into account 3 additional factors in building customer and
partner relationships:
- They must harness marketing technology, take advantage of global opportunities, and ensure that
they act in an ethical and socially responsible way.

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Part 2 Company & Marketing Strategy: Partnering to Build Customer Relationship

COMPANY WIDE STRATEGIC PLANNING: DEFINING MARKETINGS ROLE
- Strategic planning = The process of developing and maintaining a strategic fit between the
organizations goals and capabilities and its changing marketing opportunities.
The game plan for long-run survival and growth that makes the most sense given its specific
situation, opportunities, objectives and resources.
Involves adapting the firm to take advantage of opportunities in its constantly changing
environment.
At the corporate level, the company starts the strategic planning process by defining its overall
purpose and mission. Mission then turned into detailed supporting objectives that guide the
whole company.
Headquarters decides what portfolio of businesses and products is best for the
company and how much support to give each one.
Thus: Marketing planning occurs at the business-unit, product, and market levels. It supports
company strategic planning with more detailed plans for specific marketing opportunities.
STEPS IN STRATEGIC PLANNING

Defining a Market-Oriented Mission

- Mission statement = A statement of the organizations purpose what it wants to accomplish in
the larger environment.
Clear mission statement acts as an invisible hand that guides people in the organization.
Should be market-oriented and defined in terms of satisfying basic customer needs.
Should not: A companys mission should not be stated as making more sales or profits profits are
only a reward for creating value for the customer.
Instead: Mission should focus on customers and the customer experience the company seeks to
create.

Setting Company Objectives and Goals

- The company needs to turn its mission into detailed supporting objectives for each level of
management. Each manager should have objectives and be responsible for reaching them.
- This broad mission leads to a hierarchy of objectives, including business objectives and marketing
objectives.
Example: Business objective = Increase profits; Marketing objective = Increase market share of
domestic and international markets.
- Marketing strategies and programs must be developed to support these marketing objectives.
Then: Each broad marketing strategy must then be defined in greater detail.
Example: Increasing the products promotion may require more salespeople, advertising etc.

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Designing the Business Portfolio

Guided by the companys mission statement and objectives, management now must plan its
- Business portfolio = The collection of businesses and products that make up the company.
Best portfolio: The one that best fits the companys strengths and weaknesses to opportunities in
the environment.
Business portfolio planning involves 2 steps:
1. Company must analyze its current business portfolio and decide which business portfolio
should receive more, less, or no investment.
2. It must shape the future portfolio by developing strategies for growth and downsizing.
Analyzing the Current Business Portfolio
The major activity in strategic planning is
- (Business) Portfolio analysis = The process by which management evaluates the products and
businesses that make the company.
Managements first step to identify the key businesses that make up the company = SBUs.
Strategic Business Unit = Can be a company division, a product line within a division, or sometimes
a single product or brand. Next: Company assesses the attractiveness of its various SBUs and
decides how much support each deserves.
When designing a business portfolio: Good idea to add up support products and businesses that
fit closely with the firms core philosophy and competencies.
Purpose of strategic planning: Find ways in which the company can best use its strengths to take
advantage of attractive opportunities in the environment.
Standard portfolio analysis methods evaluate SBUs on 2 important dimensions:
1. Attractiveness of the SBUs market or industry.
2. Strength of the SBUs position in that market or industry.
Best know portfolio-planning method = The Boston Consulting Group Approach:
A company classifies all its SBUs according to the
- Growth-share matrix = A portfolio planning method that evaluates a companys strategic business
units (SBUs) in terms of its market growth rate and relative market share. SBUs are classified as stars,
cash cows, question marks, or dogs.
- Stars = High-growth, high-share businesses or products.
- Needs heavy investments to finance rapid growth.
- Eventually: Growth will slow down, and will turn into cash cows.
- Strategy Build into cash cows via investment (and slow down of growth).
- Cash Cows = Low-growth, high-share businesses or products.
- Established, successful SBUs need less investment to hold market share.
- Thus: Produce a lot of cash that company uses to pay its bills and other SBUs
that need investment.
- Strategy Maintain or harvest for cash to build stars.
- Question Marks = Low-share business units in high-growth markets.
- Require lot of cash to hold share, let alone increase it.
- Management must think hard about which question marks to build into stars and
which should be phased out.
Strategy Build into stars via investment OR reallocate funding and let slip into dog.
- Dogs = Low-growth, low-share businesses and products.
- Generate enough cash to maintain themselves but not promise large cash.
- Strategy Maintain or divest.
Problems: - Difficult, - time consuming, - costly to implement ; Focus on current business (little
advice for future planning), Management find hard to define SBUs and market share and growth.
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Developing Strategies for Growth and Downsizing

One useful device for identifying opportunities is
- Product/market expansion grid = A portfolio-planning tool for identifying company growth
opportunities through market penetration, market development, product development, or
diversification.
New ways for keep growing:
- Market penetration = A strategy for company growth by increasing sales of current products to
current market segments without changing the product.
It can spur growth through marketing mix improvements: adjustments to its product design,
advertising, pricing etc.
- Market development = A strategy for company growth by identifying and developing new market
segments for current company products.
Example: Review demographic markets (advertising for woman only), geographical markets
(expand internationally).
- Product development = A strategy for company growth by offering modified or new products to
current market segments.
- Diversification = A strategy for company growth through starting up or acquiring businesses outside
the companys current products and markets.
companies not only need strategies for growing them, but also for
- Downsizing = Reducing the business portfolio by eliminating products or business units that are not
profitable or that no longer fit the companys overall strategy.

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PLANNING MARKETING: PARTNERING TO BUILD CUSTOMER RELATIONSHIPS

Marketing plays a key role in the companys strategic planning in several ways:
Marketing provides
1. A guiding philosophy - the marketing concept = suggests that company strategy should revolve
around building profitable relationships with important consumer groups.
2. Inputs = to strategic planners helping to identify attractive market opportunities and by assessing
the firms potential to take advantage of them.
3. Strategies = Within individual business units strategies are designed by marketing for reaching
units objectives.
When units objectives are set, marketings task is to help carry them out profitably:
- Customer value is the key ingredient in the marketers formula for success.
- Marketing alone is not enough. It can only be partner in attracting, keeping, and growing
customers.
- In addition to customer relationship management, they must also practice:
Partner relationship management = They must work closely with partners in other company
departments to form an effective internal value chain the serve the customer.
- Also: They must partner effectively with other companies in the marketing system to form a
competitively superior external value delivery network.

Partnering with Other Company Departments

-Value chain = The series of internal departments that carry out value-creating activities to design,
produce, market, deliver, and support a firms products.
Success depends on how well each department performs its work of adding customer value and
on how well the activities of various departments are coordinated.
But, in practice its is full of conflicts and misunderstandings: Marketing department can increase
purchasing costs, disrupt production schedules, increase inventories, and create budget headaches.
Thus, the other departments might resist the marketing departments efforts.

Partnering with Others in the Marketing System

- A firm needs to look beyond its own internal value chain and into the value chain of its suppliers,
distributors, and ultimately, its customers.
- Value delivery network = The network made up of the company suppliers, distributors, and,
ultimately customers who partner with each other to improve the performance of the entire system.

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MARKETING STRATEGY AND THE MARKETING MIX

- Marketing strategy = The marketing logic by which the company hopes to create customer value
and achieve profitable customer relationships.
Guided by marketing strategy, the company designs an integrated marketing mix; made up of
factors under its control: Product, price, place, and promotion (4Ps).
To find the best marketing strategy and mix, the company engages in marketing analysis,
planning, implementation, and control.
Through these activities, the company watches and adapts to the actors and forces in the
marketing environment.

Customer-Driven Marketing Strategy

Before a company can satisfy customers, it must first understand their needs and wants.
Thus: sound marketing requires careful customer analysis.
Market Segmentation
- Market segmentation = Dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviors, and who might require separate products or marketing programs.
- Market segment = A group of consumers who respond in a similar way to a given set of marketing
efforts.
Market Targeting
After a company has defined market segments, it can enter in one or many of these market
segments:
- Market targeting = The process of evaluating each market segments attractiveness and selecting
one or more segments to enter.
A company should target segments: It can profitably generate the greatest customer value and
sustain over time.
Market Differentiation and Positioning
After a company has decided which market segments to enter, it must decide how it will
differentiate its market offering for each targeted segment and what positions it wants to occupy in
those segments:
-Positioning = Arranging for a product to occupy a clear, distinctive and desirable place relative to
competing products in the minds of target consumers.
Why a shopper will pay a little more for your brand.
In positioning its product, the company first identifies possible customer value differences that
provide competitive advantages upon which to build the position.
Company can offer greater customer value either by charging lower prices or by offering more
benefits to justify higher prices.
but if it is promises greater value, it must deliver it. That begins with
- Differentiation = Actually differentiating the market offering to create superior customer value.

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Developing an Integrated Marketing-Mix

After deciding on its overall marketing strategy, the company is ready to begin planning the details
of the
- Marketing mix = The set of controllable tactical marketing tools product, price, place, promotion
that the firm blends to produce the response it wants in the target market.
Consists of everything the firm can do to influence the demand for its products.
- Product: The goods-and-services combination of the company offers to the target market.
- Price = The amount of money customers must pay to obtain the product.
- Place = Includes company activities that make the product available to target consumers.
- Promotion = Activities that communicate the merits of the product and persuade target customers
to buy it.

- Concern: The 4Ps concept takes the sellers view of the market, not the buyers view.
From the buyers view the 4Ps might be better described as the 4Cs:
Marketers would do well to think through the 4Cs first and then build the 4Ps on that platform.
4 Ps Sellers View
- Product
- Price
- Place
- Promotion

4 Cs Buyers View
- Customer Solution (to problems)
- Customer Cost (total of obtaining, using,
disposing of a product)
- Convenience (available as possible)
- Communication (wanting two-way com.)

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MANAGING THE MARKETING EFFORT

- Companies must, beside the marketing in marketing management, also pay attention to the
management.
- Managing the marketing process requires the 4 marketing management functions:
1. Analysis: Provides information and evaluations needed for all of the other marketing
activities.
2. Planning: Company first develops companywide strategic plans and then translates them
into marketing and other plans for each division, product, brand.
3. Implementation: The company turns the plans into actions.
4. Control: Consists of measuring and evaluating the results of marketing activities and taking
corrective action where needed.
MANAGING MARKETING

1. Marketing Analysis
- Begins with a complete analysis of the companys situation. For that a marketer should conduct a
- SWOT analysis = An overall evaluation of the companys strengths (S), weaknesses (W),
opportunities (O), and threats (T).

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2. Marketing Planning
- Company first develops companywide strategic plans and then translates them into marketing and
other plans for each division, product, brand.
- Marketing planning involves deciding on marketing strategies that will help the company attain its
overall strategic objectives.
- Addresses the what and why of marketing activities.
Contents of a Marketing Plan
1) Executive summary
2) Current marketing situation
3) Threats and opportunities analysis
4) Objectives and issues

5)
6)
7)
8)

Marketing strategy
Action programs
Budgets
Controls

3. Marketing Implementation
- Marketing implementation = The process that turns marketing strategies an plans into marketing
actions in order to accomplish strategic marketing objectives.
- Addresses the who, where, when, how of marketing activities.

Marketing Department Organization

- Company must design a marketing organization that can carry out marketing strategies and plans.
- Modern marketing departments van be arranged in several ways:
- Functional organization
- Geographic organization
- Product management organizations
- Market or customer management organization

4. Marketing Control
- Many surprises occur during the implementation, therefore
- Marketing control = The process of measuring and evaluating the results of marketing strategies
and plans and taking corrective action to ensure that objectives are achieved.
- Operating control: Involves checking ongoing performance against the annual plan and taking
corrective action when necessary.
- Purpose = Ensure that the company achieves the sales, profits, and other goals set out in its
annual plan.
- Strategic control: Involves looking at whether the companys basic strategies are well matched to its
opportunities. Marketing strategies and programs can quickly become outdated, and each company
should periodically reassess its overall approach to the marketplace.

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Part 3 Analyzing the Marketing Environment

- Marketing environment = The actors and forces outside marketing that affect marketing
managements ability to build and maintain successful relationships with target customers.
Marketers must be environmental trend trackers and opportunity seekers.
Marketers have 2 special aptitudes:
1. Disciplined methods (marketing research and marketing intelligence) for collecting
information about the marketing environment.
2. They spend more time in customer and competitor environments.
Marketing environment made up of:
- Microenvironment = The actors close to the company that affect its ability to serve its customers:
the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.
- Macroenvironment = The larger societal forces that affect the microenvironment: demographic,
economic, natural, technological, political, and cultural forces.

THE COMPANYS MICROENVIRONMENT

- Marketing managements job is to build relationships with customers by creating customer value
and satisfaction.
- However: Marketing cant do this alone.
- Marketing success will require building relationships with other actors in the microenvironment.

The Company
- In designing marketing plans, marketing management takes other company groups into account groups such as top management, finance, research and development, purchasing, operations, and
accounting). All of these interrelated groups form the internal environment.
- Top management: Set the companys mission, objectives, broad strategies, and policies.
- Marketing managers: Make decisions within the strategies and plans made by top management.
- Marketing managers must work closely with other company departments.
- Other departments have an impact on the marketing departments plans and actions.

Suppliers
- Form and important link in the companys overall customer value delivery system.
- They provide the resources needed by the company to produce its goods and services.
- Supplier problems van seriously affect marketing.
- Can cost sales in the short run and damage customer satisfaction in the long run.
- Marketing managers must watch supply availability and costs.
MICROENVIRONMENT

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Marketing intermediaries
- Marketing intermediaries = Firms that help the company to promote, sell, and distribute its goods
to final buyers.
They include:
- Resellers: Distribution channel firms that help the company find customers or make sales to
them.
- Physical distribution firms: Help the company to stock and move goods from their points of
origin to their destinations.
- Marketing service agencies: Are the marketing research firms, advertising agencies, media
firms, and marketing consulting firms.
- 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.
Thus: Todays marketers recognize the importance of working with their intermediaries as partner
rather than simply as channels through which they sell their products.

Competitors
- The marketing concept states that to be successful, a company must provide greater customer
value and satisfaction than its competitors do.
- Thus: Marketers must do more than simply adapt to the needs of target consumers.
- Each firm should consider its own size and industry position compared to those of its competitors.

Publics
- Public = Any group that has an actual or potential interest in or impact on an organizations ability
to achieve its objectives.
We can identify 7 types of publics:
- Financial publics: Influences the companys ability to obtain funds.
- Media publics: Carries news, features, and editorial opinion.
- Government publics: Management must take government developments into account.
Marketers often consult the companys lawyers on product safety, truth in advertising, etc.
- Citizen-action publics: Companys marketing decision may be questioned by consumer
organizations, etc. Its public relations department helps to stay in touch with citizen groups.
- Local publics: Includes neighborhood residents and community organizations.
- General public: A company needs to be concerned about the general publics attitude
toward its products and activities. Publics image of the company affects the company.
- Internal publics: Includes workers, managers, volunteers, and the board of directors. When
employees feel good about their company, this positive attitude spills over to external
publics.

Customers
- Are the most important actors in the companys microenvironment.
- The aim of the entire value delivery system is to serve target customers and create strong
relationships with them.
- The company might target any or all of 5 types of customer markets:
- Customer markets = Consists of individuals and households that buy goods for personal
consumption.
- Business markets = Buy goods and services for further processing or for use in their production
process.
- Reseller markets = Buy goods and services to resell at a profit.
- Government markets = Are made up of the government agencies that buy goods and services to
produce public services or transfer the goods and services to others who need them.
- International markets = Consists of these buyers in other countries including consumers, producers,
resellers, and governments.

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THE COMPANYS MACROENVIRONMENT

- The company and all of the other actors operate
- Macroenvironment = The larger societal forces that affect the microenvironment: demographic,
economic, natural, technological, political, and cultural forces.
Forces that shape opportunities and pose threats to the company.

Demographic Environment
- Demography = The study of human populations in terms of size, density, location, age, gender, race,
occupation, and other statistics.
Major interest to marketers, because it involves people, and people make up markets.
Marketers keep close track of demographic trends and developments in their markets, both at
home and abroad. They track changing age, family structures, geographic population shifts,
educational characteristics, and population diversity.
Important demographic trends:
- Baby boomers = The 78 million people born during the baby boom, following WO2 and lasting until
1964.
- Generation X = The 45 Million people born between 1965 and 1976 in the birth dearth following
the baby boom.
Generation X called by author Douglas Coupland, because: They lie in the shadow of the boomers
and lack obvious distinguishing characteristics.
- Millennials (Generation Y) = The 83 million children of the baby boomers, born between 1977 and
2000.
Larger than baby boomer segment.
Includes tweens, teens, and young adults.
$733 billion in purchasing power.
Ethnically diverse.
Fluent with digital technology.
Personalization and product customization are key to marketing success.
- Generational marketing Marketers need to form more precise age-specific segments within
each group. More important: Defining people by their birth date may be less effective than
segmenting them by their lifestyle, life stage, or the common values in the products they buy.

Economic Environment
- Economic environment = Factors that affect consumer buying power and spending patterns.
Marketers must pay close attention to major trends and consumer spending patterns both across
and within their world markets.
- Nations vary greatly in their levels and distribution of income. Some countries have:
- Industrial economies = Constitute rich marketers for many different kinds of goods.
- Subsistence economies = They consume most of their own agricultural and industrial output and
offer few market opportunities.
in between are
- Developing economies = Can offer outstanding marketing opportunities for the right kind of
products.
- Engels laws = Differences noted more than a century ago by Ernst Egel in how people shift their
spending across food, housing, transportation, health care, and other goods and services categories
as family income rises.

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Natural Environment
- Natural environment = Natural resources that are needed as inputs by marketers or that are
affected by marketing activities.
Environmental concerns have grown steadily during the past three decades.
- Marketers should be aware of several trends in the natural environment:
1. Shortage of raw materials
2. Increased pollution
3. Increased government intervention (in natural resource management)
Today: Enlightened companies go beyond what government regulations dictate. They are developing
strategies and practices that support
- Environmental sustainability = Developing strategies and practices that create a world economy
that the planet can support indefinitely.
They are responding to consumer demands with more environmentally responsible products.

Technological Environment
- Technological environment = Forces that create new technologies, creating new product and
market opportunities.
Most dramatic force now shaping our destiny.
Our attitude toward technology depends on whether we are more impressed with its wonders or
its blunders.
Changes rapidly.
However: Every new technology replaces an older technology.
Thus: Marketers watch the technological environment closely. If not: Companys products will
become outdated.
And: Marketers should be aware of these regulations when applying new technologies and
developing new products.

Political and Social Environment

- Political Environment = Laws, government agencies, and pressure groups that influence and limit
various organizations and individuals in a given society.
Marketing decisions are affected by it.
Governments develop public policy to guide commerce = sets of laws and regulations that limit
business for the good of society as a whole.
Legislation Regulating Business
Almost every marketing activity is subject to a wide range of laws and regulations:
- Increasing legislation: Affecting business around the world has grown steadily over the years.
Enacted for a number of reasons:
1. Protect companies from each other.
2. Protect consumers from unfair business practices.
3. Protect the interest of society against unrestrained business behavior.
- Changing government agency enforcement: International marketers will encounter a lot agencies
set up to enforce trade policies and regulations.
Because government agencies have some discretion in enforcing the laws, they can have a major
impact on a companys marketing performance.
Marketers need to understand these laws at the local, state, national, and international levels.

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Increased Emphasis on Ethics and Socially Responsible Actions

Beyond written laws and regulations, business is also governed by social codes and rules of
professional ethics.
- Socially Responsible Behavior: Enlightened companies encourage their managers to look beyond
what regulatory system allows and simply do the right thing.
Socially responsible firms seek out ways to protect the long-run interests of their consumers and
the environment.
- Cause-Related Marketing: To exercise their social responsibility and build more positive images,
many companies are now linking themselves to worthwhile causes.
Controversy: Critics worry that cause-related marketing is more a strategy for selling than a
strategy for giving.
However: If handled well, cause-related-marketing can greatly benefit both the company and the
cause.

Cultural Environment
- Cultural environment = Institutions and other forces that affect societys basic value, perceptions,
preferences, and behaviors.
People grow up in a particular society that shapes their basic beliefs and values.
The following cultural characteristics can affect marketing decision making:
- Persistence of cultural values:
Core Beliefs and values are passed on from parents to children and are reinforced by
schools, churches, business, and government.
Secondary Beliefs and values are more open to change. Believing in marriage is a core
belief; believing that people should get married early in life is a secondary belief.
Marketers have some chance of changing secondary values but little chance of changing core
values.
- Shifts in secondary values
Although core values are fairly persistent, cultural swings do take place.
Marketers want to predict cultural shifts in order to spot new opportunities or threats.
The major cultural values of a society are expressed in peoples views of themselves and others, as
well as in their views of organizations, society, nature, and the universe:
- Peoples views of themselves People vary in their emphasis on serving themselves versus serving
others.
- Peoples views of others In past decades, observers have noted several shifts in peoples attitudes
toward others.
- Peoples views of organizations People vary in their attitudes toward corporations, governments
agencies, trade unions, universities, and other organizations.
- Peoples views of society People vary in their attitudes toward their society.
- Peoples views of nature People vary in their attitudes toward the natural world .
- Peoples views of the universe People vary in their beliefs about the origin of the universe and
their place in it.

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RESPONDING TO THE MARKETING ENVIRONMENT

Reactive (Watch things happen):
- Many companies view the marketing environment as an uncontrollable element to which they must
react and adapt.
- They passively accept the marketing environment and do not try to change it.
- They analyze the environmental forces and design strategies that will help the company avoid the
threats and take advantage of the opportunities the environment provides.
Proactive (Make things happen):
- These firms take aggressive actions to affect the publics and forces in their marketing environment.
Whenever possible, smart marketing managers will take a proactive rather than reactive approach
to the marketing environment.

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Part 4 Analyzing the Marketing Environment

MARKETING INFORMATION AND CUSTOMER INSIGHTS
- More than just gathering information, marketers must use the information to gain powerful
customer and market insights.
- To create value for customers and to build meaningful relationships with them, marketers must first
gain fresh, deep insights into what customers need and want.
Companies use such customer insights to develop competitive advantage.
Are useful, but are very difficult to obtain.
- To gain good customer insights, marketers must effectively manage marketing information from a
wide range of sources.
Todays marketers have ready access to plenty marketing information information technology.
But: Most marketers and people are overwhelmed by it.
- Marketers complain: They do not need more information, they need better information.
And they need to make better use of the information they already have.
- Customer insights = Fresh understanding of customers and the marketplace derived from
marketing information that become the basis for creating customer value and relationships.
The real value of marketing research lies in how it is used.
- When gathering and using customer insights, a company must be careful not to go too far and
become customer controlled .
Not give everything they request.
Rather: Understand customers to the core and give them what they need.
- THUS: Companies must design effective marketing information systems that give managers the
right information, in the right form, at the right time and help them to use this information to create
customer value and stronger customer relationship.
- Marketing information system (MIS) = People and procedures for assessing information needs,
developing the needed information, and helping decision makers to use the information to generate
and validate actionable customer and marketing insights.
MIS begins and ends with information users:
1. Interacts with these information users to assess information needs.
2. Interacts with the marketing environment to develop needed information through internal
company databases, marketing intelligence activities, and marketing research.
3. MIS helps users to analyze and use the information to develop customer insights, make
marketing decision, and manage customer relationships.

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ASSESSING MARKETING INFORMATION

- The marketing information system primarily serves the companys marketing and other managers.
However: It may also provide information to external partners.
In designing and information system, the company must consider the needs of the external
partners.
A good MIS balances the information user would like to have against what they really need and
what is feasible to offer.
Company should weigh carefully costs of getting more information against the benfits resulting
from it.

DEVELOPING MARKETING INFORMATION

- Marketer can obtain the needed information from internal data, marketing intelligence, and
marketing research.

Internal Data
- Internal databases = Electronic collections of consumer and market information obtained from data
sources within the company network.
Marketing managers can readily access and work with information in the database to identify
marketing opportunities and problems, plan programs, and evaluate performance.
Strong competitive advantage.
Information in the database can come from many sources.
Advantage: Can be accessed more quickly and cheaply than other information sources.
Problems:
- Because internal information was often collected for other purposes, it may be incomplete
or in the wrong form for making marketing decisions.
- Data ages quickly; keeping the database current requires a lot of effort.
- Managing that much data requires highly sophisticated equipment and techniques.

Competitive Marketing Intelligence

- Competitive marketing intelligence = The systematic collection and analysis of publicly available
information about consumers, competitors, and developments in the marketing environment.
Goal: To improve strategic decision making by understanding the consumer environment,
assessing and tracking competitors actions, and providing early warnings of opportunities and
threats .
Good marketing intelligence can help marketers to gain insights into how consumers talk about
and connect with their brands.
Companies also need to actively monitor competitors activities.
Or it can get good information by observing competitors and monitoring their published.
information.
Intelligence seekers van also pore through any of thousands online databases.
Intelligence game goes both ways:
- Most companies are now taking step to protect their own information.
- Although most of the preceding techniques are legal, and some are considered to be
shrewdly competitive, some may involve questionable ethics.

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MARKETING RESEARCH
- In addition to marketing intelligence information about general consumer, competitor, and
marketplace happenings, marketers often need formal studies that provide customer and market
insights for specific marketing situations and decisions.
Marketing intelligence will not provide the detailed information needed.
Managers will need
- Marketing research = The systematic design, collection, analysis, and reporting of data relevant to a
specific marketing situation facing an organization.
It can help them to assess market potential and market share or to measure the effectiveness of
pricing, product, distribution, and promotion activities.
The marketing research has 4 steps:

Defining the Problem and Research Objectives

- Marketing managers and researchers must work closely together to define the problem and agree
on research objectives.
The manager understands the decision for which information is needed.
Researcher best understands marketing research and how to obtain the information.
After the problem has been defined, the manager and researcher must set research objectives.
3 types:
1. Exploratory research = Marketing research to gather preliminary information that will help define
problems and suggest hypotheses.
2. Descriptive research = Marketing research to better describe marketing problems, situations, or
markets, such as the market potential for a product or the demographics and attitudes of consumers.
3. Casual research = Marketing research to test hypotheses about cause-and-affect relationships.

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Developing the Research Plan

- Researchers must determine the exact information needed, develop a plan for gathering it
efficiently, and present the plan to management.
- Research plan: Outlines sources of existing data and spells out the specific research approaches,
contact methods, sampling plans, and instruments that researchers will use to gather new data.
- Research objectives must be translated into specific information needs.
- Research plan should be presented in a written proposal.
To meet the managers information needs, the research plan can call for gathering:
1. Secondary data = Information that already exists somewhere, having been collected for another
purpose.
Researchers must carefully evaluate the quality of secondary information.
To suit a wide variety of marketing information needs:
- Commercial online databases = Computerized collection of information available from
online commercial sources or via the internet.
- Designing a plan for primary data collection calls for a number of decisions on research approaches,
contact methods, sampling plan, and research instruments.

2. Primary data = Information collected for the specific purpose at hand.

The company must carefully evaluate the quality of primary data. They need to make sure that it
will be relevant, accurate, current, and unbiased.
Research approaches:
Research approaches for gathering primary data include observation, surveys, and experiments.
1. Observational research = Gathering primary data by observing relevant people, actions,
and situations.
To glean customer insights they cant obtain by asking questions.
Some thing cant observed: feelings, attitudes and motives, private behavior, long-term or
infrequent behavior (difficult).
And: Are difficult to interpret.
For: Exploratory research.
A form of observational research:
- Ethnographic research = Involves sending trained observers to watch and interact
with consumers in their natural habitat.
2. Survey research = Gathering primary data by asking people questions about their
knowledge, attitudes, preferences, and buying behavior.
Best: For gathering descriptive information.
Advantage: Flexibility.
Problems: People are unable to answer some questions, are unwilling to respond, or try to
help the interviewer by giving pleasing answers, not take their time, resent the intrusion into
their privacy.
3. Experimental research = Gathering primary data by selecting matched groups of subjects,
giving, them different treatments, controlling related factors, and checking for differences in
group responses.
Best: Casual information.
Thus: Tries to explain cause-and-effect relationships.
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Contact methods:
Information can be collected by:
- Focus group interviewing = Personal interviewing that
involves inviting six to ten people to gather for a few
hours with a trained interviewer to talk about product,
service, or organization. The interviewer focuses the group discussion in important issues.
- Online marketing research = Collecting primary data online through Internet surveys, online focus
groups, Web-based experiments, or tracking consumers online behavior.
- Online focus group = Gathering a small group of people online with a trained moderator to chat
about a product, service, or organization and gain qualitative insights about consumer attitudes and
behavior.
Sampling Plan:
- Sample = A segment of the population selected for marketing research to represent the population
as a whole.
Requires 3 decisions:
1. Who is to be studied (what sampling unit)?
2. How many people should be included (what sample size)?
3. How should the people in the sample be chosen (what sampling procedure)?
Research Instruments:
In collecting primary data, marketing researchers have a choice of 2 main research instruments:
1. Questionnaires:
- Most common instrument.
- Administered in person, phone, or online.
- Flexible: Many ways to ask questions.
- Closed-end questions Provide answers that are easier to interpret and tabulate.
- Open-end questions Useful in exploratory research: Measuring what people think, and
not how many people think in a certain way.
2. Mechanical Instruments:
- To monitor consumer behavior.
- Other mechanical devices measures subjects physical responses.
- Still other researchers are applying neuromarketing, measuring brain activity to learn how
consumers feel and respond (MRI). But: Difficult to interpret. Thus: Used in combination with
other research approaches to gain more complete picture of what goes on inside consumers head.

Implementing the Research Plan

Next: Researcher puts the marketing research plan into action.
Involves:
- Collecting information: Make sure that the plan is implemented correctly.
- Processing information: To isolate important information and insight. Check data for
accuracy and completeness and code for analysis.
- Analyzing information: Tabulate the results and compute statistical measures.

Implementing and Reporting the Findings

Now: Market researcher must interpret the findings, draw conclusions, and report them to
management.
Should: Present important findings and insights that are useful in the major decisions faced in
management.
But: Marketing managers should not left it only to researchers to interpret.

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ANALYZING AND USING MARKETING INFORMATION

- Information gathered in internal databases and through competitive marketing intelligence and
marketing research usually requires additional analysis.
- Managers may need help applying the information to gain customer and market insights that will
improve their marketing decisions.
- Once the information has been processed and analyzed, it must be made available to the right
decision makers at the right time.

Customer Relationship Management (CRM)

The question is how best to analyze and use individual customer data presents special problems.
- Customer relationship management = Managing detailed information about individual customers
and carefully managing customer touch points in order to maximize customer loyalty.
These finding s often lead to marketing opportunities.
By using CRM to understand customers better, companies can provide higher levels of customer
service and develop deeper customer relationships.
Risk/Mistake: To view CRM only as a technology and software solution.
Instead: CRM is just one part of an effective overall customer relationship management strategy.

Distributing and Using Marketing Information

- Marketing information has no value until it is used to gain customer insights and make better
marketing decisions.
- Thus: The marketing information system must make the information readily available to the
managers and others who need it.
- These days: Information distribution involves entering information into databases and making it
available in a timely, user-friendly way.

OTHER MARKETING INFORMATION CONSIDERATIONS

Distributing and Using Marketing Information

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Part 5 Understanding Consumer and Business Buyer Behavior

CONSUMER MARKETS AND BUYER BEHAVIOR
- Consumer buyer behavior = The buying behavior of final consumers individuals and households
that buy goods and services for personal consumption.
- Consumer market = All the individuals and households that buy or acquire goods and services for
personal consumption.

Model of Consumer Behavior

Characteristics Affecting Consumer Behavior

Cultural Factors
- Culture = The set of basic values, perceptions, wants and behaviors learned by a member of society
from family and other important institutions.
- Subculture = A group of people with shared value systems based on common life experiences and
situations.
- Social class = Relatively permanent and ordered divisions in a society whose members share similar
values, interests, and behaviors.
Social Factors
- Group = Two or more people who interact to accomplish individual or mutual goals.
- Opinion leader = Person within a reference group who, because of special skills, knowledge,
personality, or other characteristics, exerts social influence on others.
- Online social networks = Online social communities blogs, social networking Web sites, or even
virtual worlds where people socialize or exchange information and opinions.

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Personal Factors
- Lifestyle = A persons pattern of living as expressed in his or her activities, interests, and opinions.
- Personality = The unique psychological characteristics that distinguish a person or group.
Psychological Factors
- Motive (drive) = A need that is sufficiently pressing to direct the person to seek satisfaction of the
need.
- Perception = The process by which people select, organize, and interpret information to form a
meaningful picture of the world.

- Learning = Changes in a individuals behavior arising from experience.

- Belief = A descriptive thought that a person holds about something.
- Attitude = A persons consistently favorable or unfavorable evaluations, feelings, and tendencies
toward an object or idea.

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The Buyer Decision Process

Marketing: An Introduction