ch01 Strategic Marketing

8/8/2019 ch01 Strategic Marketing

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Understand the historical origins of marketingand why markets have evolved

Specify how marketing has evolved into atrading relationship exchange process

Show how marketing as an organizationalprocess revolves around the marketingprocess, and note the fundamental conceptsthat comprise marketing strategy



Understand how the marketing environmentaffects strategic decisions

Describe and identify best practices inmarketing strategy



R aw Material Scarcity²occurs whenvaluable raw material resources are

geographically concentrated in somelocations and not in others, there willbe resource scarcity in some locations

Spontaneous Economic Combustion

The Evolution of Marketing ViaSpontaneous Economic Combustion

R aw Material Scarcity



Labor Specialization²occurs whenlabor and management undertake

specific activities and processes, therepetition and focus increase theeffectiveness, efficiency, and learningof labor management



Labor Specialization



Consumption Satiation²occurs whenmore units of a product are consumed

in a short period of time, the less theadded value of consuming another unitof the same product and the greater thevariety-seeking behavior



Consumption Satiation





Consumption Satiation



The Evolution of Marketing into a TradingR elationship Exchange Process

Traditional View of Marketing¶s Evolution





Production Era²´good products´ sellthemselves

Sales Era²Find consumers for theunsold inventories of before





Marketing Era²Importance placed onidentifying customer needs and wants

prior to producing the product

R elationship Marketing Era²R einforceand broaden the scope of the customer-oriented focus of the marketing era




An Alternative to the Traditional View

Primary problem²does not fit the facts

Companies in reality are forced by thecompetition to become more customer-oriented

Example²www.motorola.com




Marketing as an Exchange Process

Marketing is the process of planningand executing the conception, pricing,

promotion, and distribution of ideas,goods, and services to createexchanges that satisfy individual andorganizational goals





Learning EnvironmentLearning EnvironmentLearning EnvironmentLearning Environment

TuitionTuitionTuitionTuition

Promised ActionPromised ActionPromised ActionPromised Action

VotesVotesVotesVotes





FeeFeeFeeFee

ConsultingConsultingConsultingConsulting

Products/servicesProducts/servicesProducts/servicesProducts/services

MoneyMoneyMoneyMoney





Producer

Wholesaler

Retailer

Consumer





This principle is derived from the rawmaterial scarcity, labor specialization,

and consumption satiation principles





Comparative Advantage²results whena strategic advantage is held relative to

the competition





Marketing exchange activities include:

BuyingSelling

Transporting

StoringFinancing

R isk TakingStandardization andgrading

Obtaining market

information

Fostering trust with tradingpartners



Marketing as an Organizational Process

The Marketing Concept

Marketing Concept²refers to howorganizational goals are achieved byidentifying the needs and wants of customersand delivering products that satisfy customersmore effectively than competitors could




The Marketing Concept

Marketing Strategy²refers to using vision andplanning to create and deploy a company¶sassets and capabilities most profitably




The Fundamentals of Marketing Strategy

Market segments²are those segments of themarket or submarkets that seek similarbenefits from product usage, and that shopand buy in similar ways that are different fromother market segments and submarkets





Marketing mix²is composed of product, price,place (distribution), and promotion decisionsand programs that the company decides topursue in implementing its marketing strategy





Target markets²are those market segmentswhose needs and demands a company seeks toserve and satisfy





Product positioning²refers to how customersperceive a product¶s position in themarketplace relative to the competition





















Marketing Mix





Product Decisions and Activities

Form utility²is achieved by the conversion of

raw and component materials into finishedproducts that are desired by the marketplace





Pricing Decisions

1. Support a product¶s marketing strategy

2. Achieve the financial goals of theorganization

3. Fit the realities of the marketingenvironment





Distribution (Place) Decisions

Example²www.fedex.com

Promotion Decisions

Example²www.disney.com



The Marketing Environment

Overview

Marketing environment²involves the micro-and macroenvironmental influences, includingthe company¶s own objectives and resources,the sociocultural environment, the competitiveenvironment, the economic environment, thetechnological environment, and the politicaland legal environment







Overview

Environmental scanning²identifies importanttrends in the micro and macroenvironments,then considers the potential impact of thesechanges on a firm¶s existing marketingstrategy




The Internal Marketing Environment

Objectives and R esources




The External Marketing Environment

Sociocultural Environment

Economic Environment

Legal/Political Environment

Competitive Environment

Technological Environment



Marketing Strategy in Action:Best/Worst Practices

Boeing versus Airbus

Strategic marketing concept²is a company¶smission to identify, generate, and sustaincompetitive advantage through superiorpositioning and vision

www.boeing.com

www.airbus.com



Supplemental Material



Broader Definition of Broader Definition of MarketingMarketing


The definition of

marketingincludes the non-

profit sector of society (homeless

shelter)

d fi i i fd fi i i fd fi i i fd fi i i f



The definition of marketing

includes thenon-profit

sector of

society (U.S.Army)



d fi i i fd fi i i fd fi i i fd fi i i f





sector of

society (societalcause)



B d D fi i i fB d D fi i i fB d D fi i i fB d D fi i i f





sector of

society (forestprotection)





Four Types of UtilityFour Types of Utility

UtilityUtilityUtilityUtility



Transformationof raw materials

and/or laborinto a finishedgood and/orservice that the

consumerdesires

Form UtilityForm Utility



Transformationof raw materials

and/or laborinto a finishedgood and/orservice that the

consumerdesires

Form UtilityForm Utility







Availability of agood and/orservice wherethe consumer

wants or needs it

Place UtilityPlace Utility



Availability of a good and/or servicewhere the consumer wants or needs it




Availability of a

good and/orservice wherethe consumerwants or needs

it








Transferringtitle of a goodand/or servicefrom producer

to consumer

Ownership UtilityOwnership Utility







Availability of agood and/orservice whenconsumer

wants/needs it

Time UtilityTime Utility



Availability of agood and/orservice whenconsumer

wants/needs it

Time UtilityTime Utility

The MarketingThe Marketing



The MarketingEnvironment


Political - LegalPolitical - Legal



Political - LegalConsiderationsPolitical - LegalConsiderations

Component of the marketing

environment consisting of laws andinterpretations of laws that requirefirms operate under competitiveconditions and to protect consumer

rights



Regulatory AgenciesRegulatory Agencies

FTC Federal Trade Commission

FCC Federal CommunicationCommission

FDA Federal Drug Administration

EPA Environmental ProtectionAgency

CPSC Consumer Product and SafetyCommission




Federal Trade CommissionFederal Trade Commission

Has broadest powers to influencemarketing activities

Has authority to enforce lawsregulating unfair business practices

Can take action to stop false anddeceptive advertising



Reg lato AgenciesReg lato Agencies




Created in 1906 to set productstandards ensuring consumersafety and to require

disclosure of product contents

Food And Drug AdministrationFood And Drug Administration

R l t A iR l t A i




Federal agency empowered toenforce anti-pollutionstandardsthat can affect product design,production, and distribution

Environmental Protection AgencyEnvironmental Protection Agency

R l t A iR l t A i




Created in 1972

Is the federal agency withthe responsibility for

product safety

Consumer Product SafetyConsumer Product SafetyCommissionCommission

G t R l tiG t R l ti



G overnment RegulationG overnment Regulation

Procompetitive Laws

Consumer Protection Laws

Deregulation Laws





Procompetitive laws havebeen enacted to end unsavorybusiness practices and to

preserve competition

Procompetitive LawsProcompetitive Laws





ProcompetitiveProcompetitiveLawsLaws

ProcompetitiveProcompetitiveLawsLaws





Laws enacted to protect consumersagainst unscrupulous producers

Many of major consumer protection

laws enacted during past 40 years

Consumer Protection LawsConsumer Protection Laws





Consumer ProtectionConsumer ProtectionLawsLaws

Consumer ProtectionConsumer ProtectionLawsLaws



G overnment RegulationG overnment RegulationConsumer ProtectionConsumer Protection

LawsLawsConsumer ProtectionConsumer Protection

LawsLaws



G overnment RegulationG overnment RegulationConsumer ProtectionConsumer Protection

LawsLawsConsumer ProtectionConsumer Protection

LawsLaws




In the 1980s, the federalgovernment deregulated someindustries in an effort to cut costs,administrative paperwork, and

regulatory agencies

Deregulation LawsDeregulation Laws



G overnment RegulationG overnment RegulationDeregulationDeregulation

LawsLawsDeregulationDeregulation

LawsLaws








The competitive forces environmentincludes the number and type of competitors, along with the marketshare each holds

Competitive ForcesCompetitive Forces



Pure CompetitionPure Competition



Pure CompetitionPure Competition

Many firms selling the samebasic products

Monopolistic CompetitionMonopolistic Competition



M onopolistic CompetitionM onopolistic Competition

A large number of sellersproducing and selling similarproducts that are only slightlydifferentiated

OligopolyOligopoly



Oligopoly Oligopoly

A few firms controlling the majorityof the industry¶s sales

MonopolyMonopoly



M onopoly M onopoly

One firm producing and sellinga product to an entire market

Anticipating & Analyzing CompetitionAnticipating & Analyzing Competition



Anticipating & Analyzing Competition Anticipating & Analyzing Competition

R esearch the Market

Identify Current Competition

Anticipate Competitive Action




How old is the market

What are the technologicalchanges?

What are the pricing trends?

Why did early market leaders fail?

Research The MarketResearch The Market





Who are the competitors?

What are the market shares?

Have market shares fluctuated?

What are the strengths and

weaknesses of competitors?

Identify Current CompetitionIdentify Current Competition





How will the competition respondto«?

How will potential competitive

responses affect sales?

Anticipate Competitive ActionAnticipate Competitive Action







Social ForcesSocial Forces



The social forces environmentrequires marketers to stay abreastof demographic developments,changes in consumer values, andsocial trends

Social ForcesSocial Forces



Changing Age StructureChanging Age Structure



Changing Age StructureChanging Age Structure

3031.4

32.834.3

35.7

38.539.3

20

25

30

35

40

1980 1985 1990 1995 2000 2005 2010

Median Age of Resident Population

1980-2050

Changing Family StructureChanging Family Structure



Changing Family StructureChanging Family Structure

90

72

68

50

55

60

65

70

75

8085

90

1955 1985 2000

Percent of FamiliesWith Father, Mother, and Children

Levi¶s MarketingLevi¶s Marketing



Levi s M arketingLevi s M arketing

Changing MinoritiesChanging Minorities



Changing M inoritiesChanging M inorities

0

5

10

15

20

25

30

1980 1989 1991 2000

Black

Hispanic

Asian

Am. Indian



ObjectivesObjectives



Obj ectivesObj ectives

Guide efforts

Must fit into companyobjectives

ResourcesResources



ResourcesResources

FinancialFinancial

TechnologicalTechnological ProductionProduction

ManagerialManagerial

OthersOthers




gEnvironment

gEnvironment

E conomic ConditionsE conomic Conditions



co o c Co d t o sco o c Co d t o s

Economic factors that influenceconsumer buying power and marketing strategies

IncomeIncomeIncomeIncome

Resource AvailableResource AvailableResource AvailableResource Available

InflationInflationInflationInflation

Business CyclesBusiness CyclesBusiness CyclesBusiness Cycles



Economic ConditionsEconomic Conditions









InflationInflation



I nflation I nflation

Consumer r ce I

ndex

Consumer r ce I

ndex

Consumer r ce I

ndex

Consumer r ce I

ndex

1 9 8 0

1 9 8 2

1 9 8 4

1 9 8 6

1 9 8 8

1 9 9 0

1 9 9 2

1 9 9 4

1 9 9 6

1 9 9 8

0

50

100

150

200





Economic factors that influenceconsumer buying power and marketing strategies.

Income Income Income Income

Resource Availability Resource Availability Resource Availability Resource Availability



Resource AvailabilityResource Availability



Resource Availability Resource Availability

If resources areIf resources areavailableavailableIf resources areIf resources areavailableavailable Prices decreasePrices decrease

Demand increasesDemand increases

If resources are notIf resources are not

availableavailable

If resources are notIf resources are not

availableavailable Prices increasePrices increase

Demand decreasesDemand decreases














Monitoring income levels± Opportunity for market development








EnvironmentEnvironment

T echnological DevelopmentsT echnological Developments



g pg p

New manufacturing processNew manufacturing process

New ingredientsNew ingredients New distributionNew distribution

New advertising mediumNew advertising medium

New eCommerce strategiesNew eCommerce strategies

New manufacturing processNew manufacturing process

New ingredientsNew ingredients New distributionNew distribution

New advertising mediumNew advertising medium

New eCommerce strategiesNew eCommerce strategies

ch01 Strategic Marketing

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