Pride - FoM - 9e - PPT - CHAPTER 01

Chapter 1
Customer-Driven
Strategic Marketing
Pride/Ferrell, Foundations of Marketing, 9th Edition. © 2022 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objectives
By the end of this chapter, you should be able to:
1-1 Define marketing.
1-2 Explain the different variables of the marketing mix.
1-3 Describe how marketing creates value.
1-4 Briefly describe the marketing environment.
1-5 Summarize the marketing concept.
1-6 Identify the importance of building customer relationships.
1-7 Explain why marketing is important to our global economy.
1-1
Defining Marketing
Pride/Ferrell, Foundations of Marketing, 9th Edition. © 2022 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1-1 Defining Marketing
• Marketing – The process of creating, distributing, promoting, and pricing goods,

services, and ideas to facilitate satisfying exchange relationships with customers
and to develop and maintain favorable relationships with stakeholders in a
dynamic environment
• The essence of marketing is to develop satisfying exchanges from which both
customers and marketers benefit.
Marketing Focuses on Customers
• Customers – The purchasers of organizations’ products; the focal point of all
marketing activities
• Target market – A specific group of customers on whom an organization
focuses its marketing efforts
Figure 1.1 Components of Strategic Marketing
1-2
Marketing Deals with Products, Price,
Distribution, and Promotion
1-2 Marketing Deals with Products, Price,
Distribution, and Promotion (1 of 6)
• Marketing is more than simply advertising or selling a product; it involves:

– Developing and managing a product that will satisfy customer needs
– Promoting to help customers learn about the product and determine if the product will
satisfy their needs
– Making the product available in the right place
– Pricing the product at an acceptable level for buyers
– Communicating information to help customers determine if the product will satisfy their
needs
• Marketing mix – Four marketing activities—product, price, distribution, and

promotion—that a firm can control to meet the needs of customers within its
target market
– There is a limit to how much these variables can be controlled.
• Marketers must:
– Develop a marketing mix that matches the needs of customers in the target market
– Constantly monitor the competition and adapt their products, distribution decisions,
promotion, and pricing to foster long-term success
– Collect in-depth, up-to-date information about customer needs
Product
• Product – A good, a service, or an idea
– Good – A physical entity that you can touch
– Service – The application of human and mechanical efforts to people or objects to provide
intangible benefits to customers
– Idea – A concept, a philosophy, an image, or an issue
• The product variable involves creating or modifying brand names and packaging.
– May also include decisions regarding warranty and repair services
• Product variable decisions and activities are important because they directly
relate to customers’ needs and wants.
Price
• The price variable relates to decisions and actions associated with pricing
objectives and policies and actual product prices.
– Price is a critical component of the marketing mix because customers are concerned
about benefits, roles, and costs.
– Price is often used as a competitive tool.
– Higher prices can be used competitively to establish a product’s premium image.
– Other companies are skilled at providing products at prices lower than others.
– Pricing is the most flexible marketing-mix variable and can be changed very quickly.
Distribution
• Products must be available at the right time and in appropriate locations.
• A marketing manager makes products available in the quantities desired to as
many target-market customers as possible while minimizing these three costs:
– Inventory
– Transportation
– Storage
• The advent of the internet and electronic commerce has dramatically influenced
the distribution variable.
Promotion
• The promotion variable relates to activities used to inform and persuade to
create a desired response.
• Promotion can:
– Increase public awareness of the organization and of new or existing products
– Help create a direct response such as accessing a website to order a product
– Inform customers about product features
– Urge people to take a particular stance on a political or social issue
– Help to sustain interest in established products
1-3
Marketing Creates Value
Marketing Creates Value
Customer Customer Customer

Value Benefits Costs
1-3 Marketing Creates Value (1 of 3)
• Value – A customer’s subjective assessment of benefits relative to costs in

determining the worth of a product
• Customer benefits include anything a buyer receives in an exchange.
• Customer costs include anything a buyer must give up to obtain the benefits the
product provides, including cost, time, effort, and risk.
• A product that demonstrates value usually has a feature or an enhancement that
provides benefits:
– Lowest price
– Convenience
– Availability
• In developing marketing activities, it is important to recognize that customers
receive benefits based on their experiences.
Marketing Builds Relationships with Customers and Other Stakeholders

• Exchanges – The provision or transfer of goods, services, or ideas in return for something of
value
• For an exchange to take place, four conditions must exist:
1. Two or more individuals, groups, or organizations must participate, and each must possess
something of value that the other party desires.
2. The exchange should provide a benefit or satisfaction to both parties involved in the transaction.
3. Each party must have confidence in the promise of the “something of value” held by the other.
4. To build trust, the parties to the exchange must meet expectations.
• To maintain an exchange relationship:
– Buyers must be satisfied with the good, service, or idea obtained.
– Sellers must be satisfied with the financial reward or something else of value received.
• Stakeholders – Constituents who have a “stake,” or claim, in some aspect of a

company’s products, operations, markets, industry, and outcomes
Investors and
Customers Employees Suppliers
Shareholders
Governments Communities Competitors
Figure 1.2 Exchange between Buyer and Seller
1-4
Marketing Occurs in a Dynamic Environment
1-4 Marketing Occurs in a Dynamic Environment
(1 of 2)
• Marketing environment – The competitive, economic, political, legal and
regulatory, technological, and sociocultural forces that surround the customer
and affect the marketing mix
• The effects on buyers and sellers can be dramatic and difficult to predict.
• The impact of external forces on value can be extensive as market changes can
easily influence how stakeholders perceive certain products.
• These forces affect a marketer’s ability to facilitate value-driven exchanges in
three general ways:
Marketing
Marketing
Customer Manager
Activity
Influence Decisions and
Determinations
Actions
1-4 Marketing Occurs in a Dynamic Environment
(2 of 2)
• Because marketing environment forces are closely interrelated, changes in one

may cause changes in others.
• Changes in the marketing environment produce uncertainty for marketers and at
times hurt marketing efforts, but they also create opportunities.
• Compared to marketing-mix variables, an organization has far less control over
the forces of the environment.
• Even though marketers know that they cannot predict changes in the marketing
environment with certainty, they must plan for them.
1-5
Understanding the Marketing Concept
1-5 Understanding the Marketing Concept (1 of 5)
• Marketing concept – A managerial philosophy that an organization should try to

satisfy customers’ needs through a coordinated set of activities that also allows
the organization to achieve its goals
– A firm that adopts the marketing concept must satisfy not only its customers’ objectives but
also its own objectives.
Evolution of the Marketing Concept

• The evolution of marketing has gone through three periods, including:
– Production orientation
– Sales orientation
– Market orientation
THE PRODUCTION ORIENTATION

• During the second half of the 19th century, the Industrial Revolution improved
speed and efficiency.
• As a result of new technology and new ways of using labor, products poured into
the marketplace, where demand for manufactured goods was strong.
• Firms were developing the ability to produce more products, and competition
was becoming more intense.
THE SALES ORIENTATION

• During the first half of the 20th century, competition increased and focus shifted
to selling products to many buyers.
• Businesses viewed sales as the major means of increasing profits.
• Businesspeople believed that the most important marketing activities were
personal selling, advertising, and distribution.
• Some people incorrectly equate marketing with a sales orientation.
• Some firms still use a sales orientation.
THE MARKET ORIENTATION

• Market orientation – An organizationwide commitment
to researching and responding to customer needs
• It emerged in the mid-20th century.
• Market orientation is linked to new product innovation by developing a strategic
focus to explore and develop new products to serve target markets.
• A market orientation should recognize the need to create specific types of value-
creating capabilities that enhance organizational performance.
Implementing the Marketing Concept

• Management must first establish an information system to discover customers’
real needs and then use the information to create satisfying products.
– An information system is usually expensive; management must commit money and time
for its development and maintenance.
– Without an adequate information system, however, an organization cannot be market
oriented.
• To satisfy customers’ objectives as well as its own, a company also must

coordinate all of its activities.
• Implementing the marketing concept demands the support not only of top
management but also of managers and staff at all levels of the organization.
1-6
Customer Relationship Management
1-6 Customer Relationship Management (1 of 2)
• Customer relationship management – Using information about customers to

create marketing strategies that develop and sustain desirable customer
relationships
• Achieving the full profit potential of each customer relationship should be the
fundamental goal of every marketing strategy.
• Profits can be obtained through relationships in the following ways:
– By acquiring new customers
– By enhancing the profitability of existing customers
– By extending the duration of customer relationships
• Implementing the marketing concept means optimizing the exchange
relationship.
1-6 Customer Relationship Management (2 of 2)
• Relationship marketing ‒ Establishing long-term, mutually satisfying buyer‒

seller relationships
– Focuses on value enhancement through the creation of more satisfying exchanges
– Continually deepens the buyer’s trust in the company
– Increases the firm’s understanding of the customer’s needs
• To build long-term customer relationships, marketers are increasingly turning to

marketing research and data analytics.
– By increasing customer value over time, organizations try to retain
and increase long-term profitability through customer loyalty.
– Through the use of e-marketing, companies can personalize
customer relationships on a nearly one-on-one basis.
Customer Satisfaction
Factors which drive customer satisfaction:
The core product or service offered
Support services and systems
The technical performance of the firm
Interaction with the firm and its employees
The emotional connection with customers
Customer satisfaction results in relationships.
Relationships reduce the threat of brand switching.
Apple vs PC ads: http://www.youtube.com/watch?v=VCL5UgxtoLs

Never Walk Alone: http://www.youtube.com/watch?v=KvYADPcqMXY
1-7
The Importance of Marketing in
Our Global Economy
1-7 The Importance of Marketing in
Our Global Economy (1 of 5)
Marketing Costs Consume a Sizable Portion of Buyers’ Dollars

• About one-half of a buyer’s dollar goes toward marketing costs.
Marketing Is Used in Nonprofit Organizations
• Government agencies at the federal, state, and local levels engage in marketing
activities to fulfill their mission and goals.
• In the private sector, nonprofit organizations employ marketing activities to
create, distribute, promote, and price programs that benefit particular segments
of society.
Marketing Is Important to Businesses and the Economy

• Marketing activities help to produce the profits that are essential to the survival
of individual businesses.
• Marketing helps to create a successful economy and contributes to the well-
being of society.
Marketing Fuels Our Global Economy
• Advances in technology, along with falling political barriers and the universal
desire for a higher standard of living, have made marketing across national
borders commonplace while stimulating economic growth.
Marketing Knowledge Enhances Consumer Awareness

• Studying marketing allows us to understand the importance of marketing to
customers, organizations, and our economy.
Marketing Connects People through Technology
• Technology helps marketers to understand and satisfy more customers than
ever before.
• Disruptive technology has changed both marketing and business models.
• The internet allows companies to disseminate information about their products
and interact with target markets.
Figure 1.3 How Consumers Use Their Smartphones
Socially Responsible Marketing: Promoting the Welfare of Customers and

Stakeholders
• Social responsibility and ethical conduct are a part of strategic planning and the
implementation of marketing activities.
• Green marketing – A strategic process involving stakeholder assessment to
create meaningful long-term relationships with customers while maintaining,
supporting, and enhancing the natural environment
• By addressing concerns about the impact of marketing on
society, a firm can contribute to society through socially
responsible activities as well as increase its financial
performance.
Marketing Offers Many Exciting Career Prospects

• The marketing field offers a variety of interesting and challenging career
opportunities throughout the world:
Product Social Media

Personal Selling Distribution Pricing
Development Management
Marketing
Advertising Wholesaling Retailing
Research

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Chapter 1

• Marketing – The process of creating, distributing, promoting, and pricing goods,

• Marketing is more than simply advertising or selling a product; it involves:

• Marketing mix – Four marketing activities—product, price, distribution, and

Customer Customer Customer

• Value – A customer’s subjective assessment of benefits relative to costs in

Marketing Builds Relationships with Customers and Other Stakeholders

• Stakeholders – Constituents who have a “stake,” or claim, in some aspect of a

Governments Communities Competitors

• Because marketing environment forces are closely interrelated, changes in one

• Marketing concept – A managerial philosophy that an organization should try to

Evolution of the Marketing Concept

THE PRODUCTION ORIENTATION

THE SALES ORIENTATION

THE MARKET ORIENTATION

Implementing the Marketing Concept

• To satisfy customers’ objectives as well as its own, a company also must

• Customer relationship management – Using information about customers to

• Relationship marketing ‒ Establishing long-term, mutually satisfying buyer‒

• To build long-term customer relationships, marketers are increasingly turning to

Customer satisfaction results in relationships.

Relationships reduce the threat of brand switching.

Apple vs PC ads: http://www.youtube.com/watch?v=VCL5UgxtoLs

Marketing Costs Consume a Sizable Portion of Buyers’ Dollars

Marketing Is Important to Businesses and the Economy

Marketing Knowledge Enhances Consumer Awareness

Socially Responsible Marketing: Promoting the Welfare of Customers and

Marketing Offers Many Exciting Career Prospects

Product Social Media

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