CHAPTER 1
defined by marketing managers).
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.
Target Market – the group of customers on
which marketing efforts are focused; a vast
number of people or a relatively small group (as
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.
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 – (2nd half of 19th
century) electricity, rail transportation, division
of labor, assembly lines, and mass 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 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 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.
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 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 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.
 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 4 general types of competitive structures
THE GLOBAL MARKETING Monopoly - organization offers a product that
ENVIRONMENT has no close substitutes, making that
organization the sole source of supply.

Marketing environment - consists of external  Organization has no competitors; it controls

forces that directly or indirectly influence an supply of the product completely and, as a
organization’s acquisition of inputs (human, single seller, can erect barriers to potential
financial, natural resources and raw materials, competitors.
and information) and creative of outputs (goods, Oligopoly - few sellers control the supply of a
services, or ideas). large proportion of a product.
Six forces:  Each seller considers the reactions of other
 Competitive sellers to changes in marketing activities.
 Economic Monopolistic competition - firm has many
 Political potential competitors and tries to develop a
 Legal and regulatory marketing strategy to differentiate its product.
 Technological Pure competition - a market structure
 Sociocultural characterized by an extremely large number of
Environmental scanning - the process of sellers none strong enough to significantly
collecting information about forces in the influence price or supply.
marketing environment.
Structure No. Ease of Product
 It involves observation; secondary sources
compe entry into
such as business, trade, government, and titors market
internet sources; and marketing research. (barriers)
Monopoly One Many Almost no
Environmental analysis - the process of
substitutes
assessing and interpreting the information Oligopoly Few Some Homogeneous
gathered through environmental scanning. /differentiated
Monopolistic Many Few Product
Proactive approach - can be constructive and
competition differentiation
bring desired results. w/ many
Competitive forces - few firms, if any, operate substitutes
Pure Unlimi No Homogeneous
free of competition.
competition ted
Competition - other organizations that market
products that are similar to or can be substituted Economic forces - in marketing environment it
for a marketer’s products in the same geographic influence both marketer’s and customers’
area.
decision and activities.
4 types of competitors Buying power - resources such as money, goods
Brand competitors - firms that market products and services that can be traded in an exchange.
with similar features and benefits to the same
Major financial sources
customers at similar prices.
 Income
Product competitors - firms that compete in the
 Credit
same product class but market products with  Wealth
different features, benefits, and prices. Income - is the amount of money received
Generic competitors - firms that provide very through wages, rents, investments, pensions, and
different products that solve the same problem or subsidy payments for a given period, such as
satisfy the same basic customer need. month or a year.
Total budget competitors - firms that compete Disposable income - after-tax income and is
for the limited financial resources of the same used for spending or savings.
customers.
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
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
illegalpractice.
 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 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.
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
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
 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.