CHAPTER 1

STRATEGIC MARKETING MANAGEMENT

Definition of Marketing
Marketing – process of creating, distributing, promoting, and pricing
goods, services, and ideas to facilitate satisfying exchange
relationships with customers and develop and maintain favorable
relationships with stakeholders in a dynamic environment.
• It also involves developing and managing a product that will
satisfy customer needs.
• It focuses on making the product available in the right place and
at a price that buyers are willing to pay.
American Marketing Association (AMA) - “the activity, set of
institutions, and processes for creating, communicating, delivering,
and exchanging offerings that have value for customers, clients,
partners, and society at large.
Components of Strategic Management
• Hindrances for modifying products:
Political Forces
Legal and Regulatory Forces
Economic Forces
Competitive Forces
Technological Forces
Socio-cultural Forces
• Marketing Elements
Product
Distribution
Promotion
Price
Marketing Focuses on Customers
Customers – the purchasers of organizations’ products; the focal
point of all marketing elements.
• The essence of marketing is to develop satisfying exchange
relationships from which both customers and marketers benefit.
• Through buyer-seller interactions, a customer develops
expectations about the seller’s future behavior.

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 Target Market – the group of customers on which marketing efforts
are focused; a vast number of people or a relatively small group (as
defined by marketing managers).
Marketing Deals with Products, Distribution, Promotion, and
Price
Marketing Mix – for marketing elements – product, distribution,
promotion, and pricing – that a firm can control to meet the needs of
customers within its target markets.
• A marketing manager is to create and maintain the right mix of
these elements to satisfy customers’ needs for a general product
type. They also strive to develop a marketing mix that matches
the needs of customers in the target market.
The Product Variable – deals with researching customers’ needs and
wants and designing a good product that satisfies them; it involves
creating or modifying brand names and packaging, and it may also
include decisions regarding warranty and repair services.
Product – can be a good, service, or an idea.
Good - physical entity you can touch
Service – the application of human and mechanical efforts of
people or objects to provide intangible benefits to customers.
Ideas – include concepts, philosophies, images, and issues.
!!! actual production of tangible goods is not a marketing
activity
The Distribution Variable – to satisfy customers, products must be
available at the right time and through convenient distribution
methods.
The Promotion Variable – related to activities used to inform
individuals or groups about the organization and its products.
Promotion can aim to increase public awareness of the organization
and of new or existing products.
The Price Variable – relates to decisions and actions associated with
establishing pricing objectives and policies and determining product
prices.
• Price is a critical component of the marketing mix because
customers are concerned about the value obtained in an
exchange; often used as a competitive tool, and intense price
competition sometimes leads to price wars.

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 Marketing Mix Variables – often viewed as controllable because
they can be modified. Limitations: economic condition, competitive
structure, or government regulations.
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. Exchange should provide a benefit or satisfaction to both parties
in the transaction.
3. Each party must have confidence in the promise of the
“something of value” held by the other.
4. Build trust, the parties to the exchange must meet expectations.
Stakeholders – constituents who have a “stake” or claim in some
aspect of a company’s products, operations, markets, industry, and
outcomes.
Marketing Occurs in a Dynamic Environment
Marketing Environment – the competitive, economic, political,
legal and regulatory, technological, and sociocultural forces that
surround the customer and affect the marketing mix. Marketing
environment affect a marketer’s ability to facilitate exchange in three
general ways:
1. They influence customers by affecting their lifestyles, standards
of living, and preferences and needs for products.
2. They help determine whether and how a marketing manager can
perform certain marketing activities.
3. They may affect a marketing manager’s decisions and actions by
influencing buyers’ reactions to the firm’s marketing mix.
Understanding the Marketing Concept
Marketing Concept – a philosophy that an organization should try to
provide products that satisfy customers’ needs through a coordinated
set of activities that also allows the organization to achieve its goals.
Customer Satisfaction – major focus of the marketing concept.
Evolution of the Marketing Concept
The Production Orientation – (2 half of 19 century) electricity,
nd th

rail transportation, division of labor, assembly lines, and mass

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 production made it possible to produce goods more efficiently.
The Sales Orientation – (1920s – 1950s) businesses viewed sales as
the major means of increasing profits and came to adopt a sales
orientation; most important business activities were personal selling,
advertising, and distribution.
The Market Orientation - (1950s) an organizationwide commitment
to researching and responding to customer needs
Managing Customer Relationships
Profits can be obtained through relationships by:
1. Acquiring new customers
2. Enhancing the profitability of existing customers
3. Extending the duration of customer relationships
Relationship Marketing – establishing long-term, mutually
satisfying buyer-seller relationships.
Customer-centric Marketing – developing collaborative
relationships with customers based on focusing on their individual
needs and concerns.
Customer Relationship Management (CRM) – using information
about customers to create marketing strategies that develop ad sustain
desirable customer relationships.
Value-Driven Marketing
Value – a customer’s subjective assessment of benefits relative to
costs in determining the worth of a product; an important element of
managing long-term customer relationships and implementing the
marketing concept. (customer value = customer benefits – customer
costs)
Customer benefits – anything a buyer receives in an exchange.
Customer costs – anything a buyer must give up to obtain he
benefits the product provides. Two nonmonetary costs: time and
effort.

Marketing Management
Marketing Management – the process of planning, organizing,
implementing, and controlling marketing activities to facilitate
exchanges effectively and efficiently. Overall goal: to facilitate highly
desirable exchanges and to minimize the costs of doing so.
Effectiveness – degree to which an exchange helps achieve an
organization’s objectives.
Efficiency – refers to maximizing the resources an organization must

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 spend to achieve a specific level of desired exchanges.
Planning – a systematic process of assessing opportunities and
resources, determining marketing objectives, and developing a
marketing strategy and plans for implementation and control.
• Organizing marketing activities involves developing the internal
structure (key to directing marketing activities) of the marketing
unit.
The Importance of Marketing in Our Global Economy
Marketing costs consume a sizable portion of buyers’ dollars
Marketing is used in nonprofit organization
Marketing is important to business and the economy
Marketing fuels our global economy
Marketing knowledge enhances consumer awareness
Marketing connect people through technology
Socially responsible marketing: promoting the welfare of
customers and society
Green Marketing – a strategic process involving stakeholder
assessment to create meaningful long-term relationships with
customers while maintaining, supporting, and enhancing the natural
environment.
Marketing offers many exciting career prospects

CHAPTER 2
DEVELOPING AND IMPLEMENTING MARKETING
STRATEGIES

Understanding the Strategic Planning Process

Strategic Planning – the process of establishing an organizational
mission and formulating goals, corporate strategy, marketing
objectives, marketing strategy and a marketing plan.
• SP process begins with an analysis of the marketing
environment, including thorough analysis of the industry in
which the company is operating or intends to sell its products.
Market Orientation – it guides the process of strategic planning to

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 ensure that a concern for customer satisfaction is an integral part of
the process and permeates the entire company; important for the
successful implementation of marketing strategies.
Marketing Strategy – a plan of action for identifying and analyzing
a target market and developing a marketing mix to meet the needs of
that market.
Marketing Plan – a written document that specifies the activities to
be performed to implement and control the organization’s marketing
activities.
Assessing Organizational Resources and Opportunities
Core Competencies – things a company does extremely well, which
sometimes give it an advantage over its competition.
Market Opportunity – a combination of circumstances and timing
that permits an organization to take action to reach a particular target
market.
Strategic Windows – temporary periods of optimal fit between the
key requirements of a market and the particular capabilities of a
company competing in that market.
Competitive Advantage – the result of a company matching a core
competency to opportunities it has discovered in the marketplace.
SWOT Analysis – assessment of an organization’s strengths,
weaknesses, opportunities, and threats.
• Strengths – competitive advantages or core competencies that
give the company an advantage in meeting the needs of its target
markets.
• Weaknesses – any limitations a company faces in developing or
implementing a marketing strategy.
• Opportunities – favorable conditions in the environment that
could produce regards for the organization if acted on properly.
• Threats – conditions or barriers that may prevent the company
from reaching its objectives.
Establishing an Organizational Mission and Goals
Mission Statement - a long-term view, or vision, of what the
organization wants to become. It answers the questions: Who are our
customers? What is our core competency?
Corporate identity – an organization’s unique symbols,
personalities, and philosophies to support all corporate activities,
including marketing.

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 Marketing objective – a statement of what is to be accomplished
through marketing activities. It should:
Be expressed in clear simple terms
Be written so it can be measured accurately
Specify a time frame for its accomplishments
Be consistent with carried business-unit and corporate strategy.

Developing Corporate, Business-Unit, and Marketing Strategies

Corporate Strategy – a strategy that determines the means for
utilizing resources in the various functional areas to reach the
organization’s goals; top-level strategy developed within an
organization; pertains to all organizations (sole to corporation);
concerned with broad issues.
Business-Unit Strategy
• Strategic Business Unit (SBU) - a division, product line, or
other profit center within the parent company.
• Market – a group of individuals and/or organizations that have
needs for products in a product class and have the ability,
willingness, and authority to purchase those products.
• Market Share – the percentage of a market that actually buys a
specific product from a particular company.
• Market Growth/Market Share Matrix – a helpful business
tool, based on the philosophy that a product’s market growth
rate and its market share are important considerations in
determining its marketing strategy.
Marketing Strategy – most detailed and specific; it gets the
company the closest to the customers and specifies in great detail
what the company should do to satisfy the needs and wants of the
customers.
Target market selection
Creating the market mix
• Sustainable Competitive Advantage – an advantage that the
competition cannot copy in the foreseeable future.
Creating the Marketing Plan
Marketing Planning – the systematic process of assessing marketing
opportunities and resources, determining marketing objectives,
defining marketing strategies, and establishing guidelines for

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 implementation and control of the marketing program.
Components of the Marketing Plan
Executive Summary
Environmental Analysis
SWOT Analysis
Marketing Objectives
Marketing Strategies
Marketing Implementation
Evaluation and Control
Implementing Market Strategies
Marketing Implementation – the process of putting marketing
strategies into action.
Intended Strategy – the strategy the organization decides on during
the planning phase and wants to use.
Realized Strategy – the strategy that actually takes place
Approaches to Marketing Implementation:
1. Customer Relationship Management – focuses on using
information about customers to create marketing strategies that
develop and sustain desirable long-term customer relationships.
2. Internal Marketing – a management philosophy that
coordinates internal exchanges between the organization and its
employees to achieve successful external exchanges between the
organization and its customers.
• External Customers – individuals who patronize a business –
the familiar definition of “customers”
• Internal Customers – the company’s employees
3. Delivering on Quality. Quality is the major concern in most
organization.
• Total Quality Management (TQM) – a philosophy that
uniform commitment to quality in all areas of the organization
will promote a culture that meets customers’ perception of
quality. It follows standards established by the ISO
(International Organization for Standardization).
• Benchmarking – comparing the quality of the organization’s
goods, service, or processes with that of the best-performing
companies in the industry.
• Empowerment – giving customer-contact employees the
authority and responsibility to make marketing decisions

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 without seeking the approval of their supervisors.
Organizing Marketing Activities
Centralized Organization – a structure in which top-level managers
delegate little authority to lower levels
Decentralized Organization – a structure in which decision-making
authority is delegated as far down the chain of command as possible.
Marketing unit can be organized according to:
• Organizing by Function – may suit a large, centralized
company whose products and customers are neither numerous
nor diverse; functions such as marketing research, sales,
advertising, etc.
• Organizing by Products – sometimes used by businesses that
produce diverse products.
• Organizing by Regions – can be used by large companies that
markets products nationally (or internationally).
• Organizing by Types of Customers – works well with company
that has several groups of customers whose needs and problems
differ significantly
Controlling Marketing Activities
Marketing Control Process – consists of establishing performance,
standards, evaluating actual performance by comparing with
established standards, and reducing the difference between desired
and actual performance by taking corrective actions.
• Formal Marketing Control Process – involves performance
standards, evaluation of actual performance, and corrective
action to remedy shortfalls.
• Informal Marketing Control Process – involves self-control,
social or group control, and cultural control through acceptance
of the company’s value system.
Process:
1. Establishment of performance standards
• Performance standards – an expected level of performance
against which actual performance can be compared.
2. Evaluating actual performance
3. Taking corrective actions
Problems in Controlling Marketing Activities
• Information required is unavailable or is available only at a high
cost.

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 • Time lag between marketing activities and their result limits a
marketing manager’s ability to measure the effectiveness of
specific marketing activities.
• It is very hard to develop exact performance standards for
marketing personnel.

CHAPTER 3
THE GLOBAL MARKETING ENVIRONMENT

Marketing environment - consists of external forces that directly or

indirectly influence an organization’s acquisition of inputs (human,
financial, natural resources and raw materials, and information) and
creative of outputs (goods, services, or ideas).
Six forces:
• Competitive
• Economic
• Political
• Legal and regulatory
• Technological
• Sociocultural
Structure No. Ease of Product
compet entry into
itors market
(barriers)
Monopoly One Many Almost no
substitutes
Oligopoly Few Some Homogeneou
s/differentiate
d
Monopolistic Many Few Product
competition differentiation
w/ many
substitutes
Pure Unlimit No Homogeneou
competition ed s
Environmental scanning - the process of collecting information

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 about forces in the marketing environment.
• It involves observation; secondary sources such as business, trade,
government, and internet sources; and marketing research.
Environmental analysis - the process of assessing and interpreting
the information gathered through environmental scanning.
Proactive approach - can be constructive and bring desired results.
Competitive forces - few firms, if any, operate free of competition.
Competition - other organizations that market products that are
similar to or can be substituted for a marketer’s products in the same
geographic area.
4 types of competitors
Brand competitors - firms that market products with similar features
and benefits to the same customers at similar prices.
Product competitors - firms that compete in the same product class
but market products with different features, benefits, and prices.
Generic competitors - firms that provide very different products that
solve the same problem or satisfy the same basic customer need.
Total budget competitors - firms that compete for the limited
financial resources of the same customers.

4 general types of competitive structures

Monopoly - organization offers a product that has no close
substitutes, making that organization the sole source of supply.
• Organization has no competitors; it controls supply of the product
completely and, as a single seller, can erect barriers to potential
competitors.
Oligopoly - few sellers control the supply of a large proportion of a
product.
• Each seller considers the reactions of other sellers to changes in
marketing activities.
Monopolistic competition - firm has many potential competitors and
tries to develop a marketing strategy to differentiate its product.
Pure competition - a market structure characterized by an extremely
large number of sellers none strong enough to significantly influence
price or supply.

Economic forces - in marketing environment it influence both

marketer’s and customers’ decision and activities.

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 Buying power - resources such as money, goods and services that
can be traded in an exchange.
Major financial sources
Income
Credit
Wealth
Income - is the amount of money received through wages, rents,
investments, pensions, and subsidy payments for a given period, such
as month or a year.
Disposable income - after-tax income and is used for spending or
savings.

Discretionary income - disposable income available for spending

and saving after an individual has purchased the basic necessities of
food, clothing, and shelter.
Credit - it enable people to spend future income now or in the near
future.
Wealth - is the accumulation of past income, natural resources, and
financial resources.
• It exists in many forms, including cash, securities, savings
accounts, jewelry, and real estate.
Willingness to spend - an inclination to buy because of expected
satisfaction from a product, influenced by the ability to buy and
numerous psychological and social forces.
Economic conditions - the overall state of the economy fluctuates in
all countries. Changes in general economic conditions affect (and are
affected by) supply, demand, buying power, willingness to spend,
consumer expenditure levels, and the intensity of behavior.
Business cycle - a pattern of economic fluctuations that has four
stages:
Prosperity - unemployment is low, and the total income is
relatively high.
Recession - unemployment rises, while total buying power
declines.
Depression - unemployment is extremely high, wages are very
low, total disposable income is at a minimum, and consumers lack
confidence in the economy.
Recovery - high unemployment begins to decline, total disposable
income increases, and the economic gloom that reduced

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 consumers’ willingness to buy subsides. Both the ability and
willingness to buy increase.
Political forces - the American Medical Student Association lobbied
against lawmakers to protest rising health-care costs.
• political, legal, and regulatory forces of the marketing environment
are closely interrelated.
Reactive marketers - view political forces as beyond their control
and simply adjust to conditions arising from those forces.
Legal and regulatory forces - a number of national laws influence
marketing decisions and activities.
Procompetitive legislation - precompetitive laws are designed to
preserved competition.
Consumer protection legislation - is not a recent development.
Encouraging compliance with laws and regulations
Regulatory agencies - influence may marketing activities, including
product development, pricing, packaging, advertising, personal
selling, and distribution.
• these bodies have the power to enforce specific laws, as well as
some discretion in establishing operating rules and regulations to
guide certain types of industry practices.
Federal Trade Commission (FTC) - an agency that regulates a
variety of business practices and curbs false advertising, misleading
pricing, ad deceptive packaging and labeling.
FTC tools
• Cease and desist order - a court order to a ​business to stop
engaging in an illegal ​practice.
• Consent decree - an order for a business to ​stop engaging
in questionable activities to ​avoid prosecution (October 21,
2005).
• Redress - money paid to costumer to settle or resolve a
complaint.
• Corrective advertising - a requirement that a business make
new advertisement to correct misinformation.
• Civil penalties - court-ordered civil fines for up to $10,000 per
day for violating a cease and desist order.
Self regulatory forces - these programs are not a direct outgrowth of
laws, many were established to stop or stall the development of laws
and governmental regulatory groups that would regulate the

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 associations’ marketing practices.
Better Business Bureau (BBB) - a system of nongovernmental,
independent, local regulatory agencies supported by local businesses
that helps settle problems between customers and specific business
firms.
• More than 150 bureaus help settle problems between consumers
and specific business firms.

The Council of Better Business Bureaus - is a national organization

composed of all local Better Business Bureaus.
The National Advertising Division (NAD) of the Council -
operates a self-regulatory program that investigates claims regarding
alleged deceptive advertising.
National Advertising Review Board (NARB) - a self-regulatory
unit that considers challenges to issues raised by the National
Advertising Division (an arm of the Council of Better Business
Bureaus) about an advertisement.
Japan Advertising Review Organization (JARO) - is one that
evaluates marketplace complaints related to a company’s advertising
content.
Consumers International (CI) - is an independent organization that
acts as a worldwide protector of consumer rights.
Self-regulatory programs
• Adv. - establishment and implementation ​ ​are usually
less expensive, more realistic ​and operational, reduce the
need to expand ​ ​government bureaucracy.
• Disad. - when a trade association creates a ​set of industry
guidelines for its members, ​nonmember firms do not have
to abide by ​them. ​Lack the tools or authority to
​enforce guidelines and guidelines are often less strict than
those established by ​government agencies.
Technological forces
Technology - the application of knowledge and tools to solve
problems and perform tasks more efficiently.
Effects of technology relate such characteristics:
Dynamics - involve the constant change that often challenges the
structures of social institutions, including social relationships, legal
systems, religion, education, business, and leisure.

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 Reach - refers to the broad nature of technology as it moves through
society.
Self Sustaining nature of technology - relates to the fact that
technology acts as a catalyst to spur even faster development.
Technology assessment - managers try to foresee the effects of new
products and processes on their firms’ operation, on other business
organizations, and on society in general.
Sociocultural forces - the influences in a society and its culture that
change people’s attitudes, beliefs, norms, customs, and lifestyles.
Changes in a population’s demographic characteristics:
Age
Gender
Race
Ethnicity
Marital and parental status
Income
Education

Social Responsibility and Ethics in Marketing

Social responsibility - an organization’s obligation to maximize its
positive impact and minimize its negative impact on society.
The pyramid (dimension) of corporate social responsibility
• Philanthropic (Be a good corporate citizen) - contribute
resources to the community; ​improve quality of life.
• Ethical (Be ethical) - obligation to do what is right, just, and
fair. Avoid harm.
• Legal (Obey the law) - law is society’s codification of right and
wrong. Play by the rules of the game.
• Economic (Be profitable) - the foundation upon which all other
rest.
Marketing citizenship - the adoption of a strategic focus for
fulfilling the economic, legal, ethical, and philanthropic social
responsibilities expected by stakeholders.
Stakeholder orientation - an important element of corporate
citizenship.
Economic dimension - all companies have an economic
responsibility to be profitable so that they can provide a return on
investment to their owners and investors, create jobs for the

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 community, and contribute goods and services to the economy.
Legal dimension - obey laws and regulations.
Deceptive advertising - causes consumers to become defensive
toward all promotional messages and become distrustful of all
advertising; thus, it harms not only consumers but also marketers
themselves.
Ethical dimension - aside from legal responsibilities, economic is
also the most basic levels of social responsibility for a good reason:
failure to consider them may mean that a marketer is not around long
enough to engage in ethical or philanthropic activities.
Marketing ethics - principles and standards that define acceptable
marketing conduct as determined by various stakeholders,
Philanthropic dimension - top of the pyramid, responsibilities of
this dimension go beyond marketing ethics, are not required of a
company, but they promote human welfare or goodwill, as do the
economics, legal, and ethical dimensions of social responsibility.
Cause-related marketing - the practice of ongoing products to a
particular social cause on an ongoing or short-term basis.
Strategic philanthropy - the synergistic use of organizational core
competencies and resources to address key stakeholders’ interests and
achieve both organizational and social benefits.
• Involves employees; organizational resources and expertise; and the
ability to link these assets to the concern of the stakeholders.
• Involves both financial and nonfinancial contributions to
stakeholders (employee time, goods and services, company
technology and equipment, and facilities), but it also benefits the
company.
Sustainability - one of the more common ways marketers
demonstrate social responsibility is through programs designed to
protect and preserve the natural environment.
Green marketing - a strategic process involving stakeholder
assessment to create meaningful long-term relationships with
customers while maintaining, supporting, and enhancing the natural
environment.
Consumerism - organized efforts by individuals, groups, and
organizations to protect consumer’s rights.
Movement major forces:
• Individual consumer advocates

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 • Consumer organizations and other interest groups
• Consumer education
• Consumer laws

4 basics rights (consumer bill of rights) - drafted by Pres. John F.

Kennedy.
Right to safety - marketers have obligation not to market a
product that they know could harm consumers.
- all product must be safe for intended ​use,including
thorough and explicit ​instructions ​for proper and safe
use, ​and have been tested ensure reliability ​and quality.
Right to be informed - consumers should have access to and
the opportunity to review all relevant information about a
product before buying it.
Right to choose - consumers should have access to a variety of
products and services at competitive prices.
Right to be heard - ensures that consumers’ interests will
receive full and sympathetic consideration in the formulation of
government policy.
• promises consumers fair treatment when they complain to
marketers about products.
Ethics - relates to individual and group decision-judgments about
what is right and wrong in a particular decision-making situation.
Social responsibility - deals with the total effect of marketing
decisions on society.
Codes of conduct (code of ethics) - formalized rules and standards
that describe what the company expects of its employees.
Ethical standards - are such a significant part of the company
culture that it recently hired a to auditing firm to conduct an
independent examination of its practice.

https://cdn.fbsbx.com/v/t59.2708-21/50127029_56205619087…=9b8be967899333470b87a7a24bdb6c71&oe=5C3EE5D0&dl=1 14/01/2019, 7H39 PM

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