Customer-Driven

Marketing

Chapter 11

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 Learning Objectives
11-1 Define marketing and describe the exchange process.
11-2 Specify the functions of marketing.
11-3 Explain the marketing concept and its implications for
developing marketing strategies.
11-4 Examine the development of a marketing strategy, including
market segmentation and marketing mix.
11-5 Investigate how marketers conduct marketing research and
study buying behaviour.
11-6 Summarize the environmental forces that influence marketing
decisions.

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 Nature of Marketing 1
Marketing
• A group of activities designed to expedite transactions
by creating, distributing, pricing, and promoting goods,
services, and ideas
• Marketing activities create value
• Products must be conveniently available, competitively priced,
and uniquely promoted.

Marketing is not…
• Manipulating consumers to get them to buy products
they don’t want
• Just advertising and selling

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 Nature of Marketing 2
The Exchange Relationship
• Each participant must be willing to give up “something
of value” to receive the “something” held by the other
• The tangible product itself may not be as important as
the image of the benefits associated with the product
• Capability gained from using a product
• Image evoked by it
• Brand name

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 Figure 11.1 The Exchange Process: Giving Up One
Thing in Return for Another

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 Exchange Relationships

People often buy designer products, not for the function they perform,
but for the image they portray. For example, Gucci jeans offer an image
of style and success. 6
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 Nature of Marketing 3
Functions of Marketing
• Buying
• Selling
• Transporting
• Storing

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 Nature of Marketing 4
Functions of Marketing continued
• Grading
• Financing
• Marketing research
• Risk taking

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 Nature of Marketing 6
The Marketing Concept
• Idea that an organization should try to satisfy
customers’ needs through coordinated activities that
also allow it to achieve its own goals
• Businesses must:
• Find out what consumers desire
• Develop the good, service, or idea to satisfy that want
• Get the product to the customer
• Continually alter, adapt, and add products to keep pace with
changing customer demands
• Relationship marketing or customer relationship management

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 Nature of Marketing 7
The Marketing Concept continued
• While customer satisfaction is the goal, businesses
must achieve their own objectives
• To implement the marketing concept, a business must:
• Have good information about what consumers want
• Adopt a customer orientation
• Coordinate its efforts throughout the entire organization
• Business must view the customer’s perception of value as the
ultimate measure of work performance

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 The Marketing Concept

By determining what customers want and coordinating their efforts,

Apple was able to create iPhones that have changed the way people
use their phones. To date, Apple has sold over one billion iPhones.

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 Nature of Marketing 8
Evolution of the Marketing Concept
• The production orientation
• Second half of 19th century
• Industrial Revolution
• Manufacturing efficiency

• The sales orientation

• Early 20th century
• Supply exceeds demand
• A need to “sell” products

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 Nature of Marketing 9
Evolution of the Marketing Concept continued

• The market orientation

• Began in the 1950s
• Requires organizations to:
• Gather information about customers’ needs
• Share the information throughout the firm
• Use the information to build long-term relationships with customers
• Customer relationship management

• Social media era

• Consumers can communicate in real time with companies,
share information and search for people's opinions online

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 Developing a Marketing Strategy 1
Marketing strategy
• A plan of action for developing, pricing, distributing,
and promoting products that meet the needs of
specific customers
Selecting a Target Market
• Market
• Target market

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 Developing a Marketing Strategy 2
Total-market approach
• Firm try to appeal to everyone and assumes all buyers
have similar needs and wants
• Also referred to as mass marketing
Market segmentation
• Dividing the total market into groups that have
relatively similar product needs
Market segment
• A collection of individuals, groups, or organizations
who share one or more characteristics and thus have
relatively similar product needs and desires
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 Developing a Marketing Strategy 3
Market Segmentation Approaches
• Concentration approach
• Company develops one marketing strategy for a single market
segment
• Allows a firm to specialize

• Multisegment approach
• Marketing efforts are aimed at two or more segments with a
marketing strategy for each
• Niche marketing
• Narrow market segment with unique needs

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 Figure 11.2
Target Market
Strategies

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 Developing a Marketing Strategy 4
Requirements for a successful concentration or
multisegment marketing approach include:
1. Consumers’ needs for the product must be heterogeneous.
2. The segments must be identifiable and divisible.
3. The total market must be divided in a way that allows estimated
sales potential, cost, and profits of the segments to be compared.
4. At least one segment must have enough profit potential to justify
developing and maintaining a special marketing strategy.
5. The firm must be able to reach the chosen market segment with a
particular market strategy.

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 Developing a Marketing Strategy 5
Bases for Segmenting Markets
• Demographic
• Geographic
• Psychographic
• Behaviouristic

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 Developing a Marketing Strategy 6
Developing a Marketing Mix
• The marketing mix refers to four marketing activities
• Product
• Price
• Distribution
• Promotion

• Firm tries to control these activities to achieve specific

goals

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 Figure 11.3 The Marketing Mix: Product, Price,
Promotion, and Distribution

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 Developing a Marketing Strategy 7
Product
• A complex mix of tangible and intangible attributes
that provide satisfaction and benefits
• Good – A physical entity you can touch (a car,
clothing, lumber or an adopted kitten)
• Service – The application of human and mechanical
efforts to people or objects to provide intangible
benefits to customers (air travel, dry cleaning, or
haircuts)
• A product has emotional and psychological as well as
physical characteristics

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 Developing a Marketing Strategy 8
Price
• A value placed on an object exchanged between a
buyer and a seller
• The buyer exchanges purchasing power—income,
credit, wealth—for the satisfaction of utility associated
with a product
• Key element of the marketing mix because it relates
directly to the generation of revenue and profits
• Can be changed quickly to stimulate demand or
respond to competitors’ actions

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 Developing a Marketing Strategy 9
Distribution
• Making products available to customers in the
locations and quantities desired
• Sometimes referred to as “place”
• The Internet and online sales have greatly impacted
place/distribution
• Intermediaries—usually wholesalers and retailers—
perform many of the activities required to move
products efficiently from producers to consumers or
industrial buyers
• Transporting, warehousing, materials handling, inventory
control, packaging, and communication
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 Developing a Marketing Strategy 10
Promotion
• Persuasive form of communication that attempts to
expedite a marketing exchange by influencing
individuals, groups, and organizations to accept
goods, services, and ideas
• Includes advertising, personal selling, publicity, and
sales promotion
• Growing use of non-traditional marketing

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 Marketing Research and Information Systems 1

Marketing research
• A systematic, objective process of getting information
about potential customers to guide marketing
decisions
• Inside the organization
• Continuous flow of information on prices, sales, and expenses

• Outside the organization

• Data available through public and private reports, census
statistics, digital media sources, etc.

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 Marketing Research and Information Systems 2

Marketing research continued

• Primary data
• New data or new information
• collected either by observation, surveys, personal interviews or
focus groups
• Secondary data
• Compiled inside or outside an organization for some purpose
other than changing the current situation
• Compiled by Statistics Canada, business development centres,
and other government agencies; databases created by
marketing research firms; and sales and other internal reports

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 Marketing Research and Information Systems 3

Online Marketing Research

• Marketing research of the future
• Virtual testing
• Reduction in market research costs
• Digital and social media sites

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 Buying Behaviour 1
Buying behaviour refers to the decision processes
and actions of people who purchase and use
products
• Includes both consumer and business buying
behaviour
• Both psychological and social variables are important
to an understanding of buying behaviour

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 Buying Behaviour 2

Polo appeals to people who want to express social roles or

identify with a reference group.

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 Buying Behaviour 3
Psychological Variables of Buying Behaviour
• Perception
• Motivation
• Learning
• Attitude
• Personality

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 Buying Behaviour 4
Social Variables of Buying Behaviour
• Social roles
• Reference groups
• Social classes
• Culture
Understanding Buying Behaviour
• Difficult to explain why a buyer purchases a particular
product, but trying to understand consumer wants and
needs is the best way to satisfy them

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 The Marketing Environment
External forces that directly or indirectly influence
the development of marketing strategies
• Political, legal, and regulatory forces
• Social forces
• Competitive and economic forces
• Technological forces

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 Figure 11.4 The Marketing Mix and the
Marketing Environment

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