Chapter 1: Defining Marketing for the 21st Century
Marketing Management Orientations
1. Production Orientation
What it is: Focus on producing efficiently at low cost. "Consumers prefer available, affordable
products."
Philosophy: "Make it cheap and available, customers will buy it."
Example: Henry Ford - "Any color car as long as it's black."
Works When: Product shortage exists, high production costs need reduction.
Problems: Ignores customer preferences and quality, becomes outdated quickly.
2. Product Orientation
What it is: Focus on making superior products with best quality and features.
Philosophy: "Build a better mousetrap and customers will beat a path to your door."
Example: Companies obsessed with latest technology without considering customer needs.
Works When: Product innovation is valued, the market appreciates quality.
Problems: May create products customers don't want or can't afford.
3. Selling Orientation
What it is: Focus on aggressive selling and promotion to push products.
Philosophy: "Customers won't buy unless we push them hard."
Example: Door-to-door salespeople, telemarketing, high-pressure tactics.
Works When: Unsought goods (insurance, encyclopedias), excess inventory.
Problems: May damage customer relationships, focuses on seller needs not buyer needs.
4. Marketing Orientation
What it is: Focus on identifying and satisfying customer needs better than competitors.
Philosophy: "Find needs and fill them."
Example: McDonald's researches what customers want, then creates products to meet those needs.
Works When: Competitive markets, customer choice available.
5. Societal Marketing Orientation
What it is: Balance customer needs, company profits, and society's long-term welfare.
Philosophy: "Do well by doing good."
Example: Patagonia promotes environmental responsibility while selling outdoor gear.
Considers: Environmental impact, social responsibility, ethical business practices.
Works When: Consumers care about social issues, regulations require responsibility.
Holistic Marketing Concept
What it is: Everything matters in marketing - develop, design, and implement programs, processes, and
activities recognizing their breadth and interdependencies.
Four Components:
1. Relationship Marketing
What it is: Build long-term mutually beneficial relationships with key stakeholders.
Example: Toyota's long-term partnerships with suppliers, sharing forecasts and jointly improving
quality.
2. Integrated Marketing
What it is: All marketing activities work together to create, communicate, and deliver value.
Example: Apple's integrated approach - sleek product design, premium pricing, selective
distribution, and consistent advertising all reinforce the premium brand image.
3. Internal Marketing
What it is: Ensure everyone in the organization embraces marketing principles, especially senior
management.
Philosophy: "Marketing is everyone's job."
Activities:
● Hiring right people
● Training employees
● Motivating staff
● Creating customer-focused culture
Example: Singapore Airlines trains all employees to provide exceptional service, from check-in staff to
pilots.
4. Performance Marketing
What it is: Understanding financial and non-financial returns from marketing activities and
programs.
Measures:
● Brand awareness and equity
● Customer satisfaction and retention
● Market share growth
● Profitability and ROI
● Social and environmental impact
Example: Unilever measures not just sales but also social impact of campaigns promoting hygiene and
health in developing countries.
Chapter 2: Developing Marketing Strategies and Plans
The Value Delivery Process
What it is: Framework showing how businesses choose, provide, and communicate superior value to
customers.
Marketing Strategy: Analyze each activity to find ways to add more customer value or reduce costs.
Core Competencies
What it is: A combination of skills and resources that distinguish a firm in the marketplace.
Focus: What businesses to be in, resource allocation across business units
● Activities:
○ Define corporate mission
○ Establish Strategic Business Units (SBUs)
○ Assign resources to each SBU
○ Assess growth opportunities
○ Business Unit Level
Focus: How to compete in specific industry
● Activities:
○ Analyze competitive environment
○ Choose target markets
○ Develop positioning strategy
○ Create business unit mission
○ Product Level
Focus: How to build profitable products within business unit
● Corporate Mission
What it is: Fundamental purpose - why organization exists, what it aims to accomplish.
Peter Drucker's Questions:
○ What is our business?
○ Who is the customer?
○ What is of value to the customer?
○ What should our business be?
● Characteristics of Good Mission:
○ Limited number of goals - Focus on few key objectives
○ Stresses company's major policies and values
○ Defines competitive scope - Industry, products, market segments
○ Takes long-term view - Not easily changed
○ Memorable - Easy to understand and remember
Examples:
● Google: "To organize the world's information and make it universally accessible and useful"
● Tesla: "To accelerate the world's transition to sustainable transport"
Strategic Business Units (SBUs)
What it is: Single business or collection of related businesses that can be planned separately from rest of
the company.
SBU Characteristics:
● Separate business with own set of competitors
● Own mission and objectives
● Manager responsible for strategic planning and profit performance
● Separate planning from rest of company
GROWTH STRATEGIES
Ansoft Growth Matrix:
Current Products New Products
Current Markets Market Penetration Product Development
New Markets Market Development Diversification
1. Market Penetration
What it is: Grow sales of current products in current markets
Strategies:
● Encourage more usage from current customers
● Attract competitors' customers
● Attract non-users in same segment
Example:
Coca-Cola encourages people to drink more Coke throughout the day.
2. Market Development
What it is: Sell current products in new markets
Strategies:
● Expand to new geographic markets
● Target new customer segments
● Use new distribution channels
Example:
McDonald's is expanding from the USA to international markets.
3. Product Development
What it is: Develop new products for current markets
Strategies:
● New product features or variations
● Different quality levels
● Completely new products
Example:
Apple is developing iPad for an existing customer base already buying iPhones and computers.
4. Diversification
What it is: Develop new products for new markets (highest risk)
Types:
● Concentric: Related to current business
● Horizontal: New products for current customers
● Conglomerate: Completely unrelated business
Example: Amazon started selling books, now sells everything plus cloud computing services.
BCG Growth-Share Matrix
What it is: Portfolio analysis tool classifying SBUs based on market growth rate and relative market share.
Four Categories:
1. Stars (High Growth, High Share)
Characteristics: Market leaders in fast-growing markets
Strategy: Invest heavily to maintain position
Cash Flow: Usually break-even (high earnings but need investment)
Example: iPhone when smartphones were rapidly growing
2. Cash Cows (Low Growth, High Share)
Characteristics: Market leaders in slow-growing markets
Strategy: Harvest - maintain position with minimal investment
Cash Flow: High positive cash flow
Example: Microsoft Windows operating system
3. Question Marks (High Growth, Low Share)
Characteristics: Small share in fast-growing markets
Strategy: Build share or divest - requires major investment decision
Cash Flow: Negative (need investment but low earnings)
Example: Google+ when trying to compete with Facebook
4. Dogs (Low Growth, Low Share)
Characteristics: Weak position in slow-growing markets
Strategy: Harvest or divest
Cash Flow: Low or negative
Example: BlackBerry smartphones in recent years
Marketing Strategy: Use Cash Cows to fund Stars and promising Question Marks. Divest Dogs unless
they serve strategic purpose.
SWOT Analysis
What it is: Framework analyzing internal Strengths and Weaknesses plus external Opportunities and
Threats.
Porter's Generic Strategies
What it is: Three basic competitive strategies to achieve above-average performance.
1. Cost Leadership
What it is: Become lowest-cost producer in industry while maintaining acceptable quality
2. Differentiation
What it is: Make products unique in ways valued by customers, allowing premium pricing
3. Focus (Niche Strategy)
What it is: Concentrate on narrow market segment and serve it better than competitors
Marketing Environment
What it is: The external and internal factors that affect a company's ability to build and maintain
relationships with customers.
Microenvironment
What it is: Actors close to the company that affect its ability to serve its customers.
Actors:
● The Company: Internal departments like management, finance, R&D.
● Suppliers: Provide resources needed for production.
● Marketing Intermediaries: Resellers, physical distribution firms, marketing agencies.
● Competitors: Firms that offer similar products or substitutes.
● Publics: Any group with an interest in the organization (media, government, local communities).
● Customers: Consumer, business, reseller, government, and international markets.
Macroenvironment
What it is: Larger societal forces that affect the entire microenvironment.
Forces (PESTEL Analysis):
● Political & Legal: Laws, regulations, government policies.
● Economic: Economic growth, income levels, inflation, exchange rates.
● Social & Cultural: Demographics, cultural values, lifestyle trends.
● Technological: New technologies, research and development, innovation.
● Environmental: Natural resources, weather, climate change, environmental regulations.
● Legal: Specific laws regarding competition, consumer protection, etc.
Market Segmentation
What it is: Dividing a market into distinct groups of buyers with different needs, characteristics, or
behaviors.
Bases for Segmentation:
Geographic: Country, region, city, climate.
Demographic: Age, gender, income, education, occupation.
Psychographic: Lifestyle, personality, values.
Behavioral: Usage rate, benefits sought, loyalty status.
Target Marketing
What it is: The process of evaluating each market segment's attractiveness and selecting one or more
segments to enter.
Strategies:
● Undifferentiated Marketing: Ignoring segment differences and targeting the whole market with
one offer.
● Differentiated Marketing: Targeting several market segments and designing separate offers for
each.
● Concentrated Marketing: Going after a large share of one or a few segments.
● Micromarketing: Tailoring products and marketing programs to the needs of specific individuals
and locations.
Positioning
What it is: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing
products in the minds of target consumers.
Steps:
1. Identify possible competitive advantages.
2. Choose the right competitive advantages.
3. Select an overall positioning strategy.
4. Develop a positioning statement.
Positioning Statement Template: To [target market], [brand] is the [point of differentiation] that [reason to
believe].
Example: "To busy professionals, Brand X is the premium coffee delivery service that guarantees fresh,
artisanal coffee at your door within 15 minutes."
The Marketing Mix (12 Ps)
What it is: The set of controllable, tactical marketing tools that a company uses to produce the response it
wants in the target market.
1. Product:
● What is being sold (goods, services, ideas, experiences).
● Features, design, branding, packaging, warranty.
2. Price:
● The amount of money customers must pay for the product.
● Pricing strategies, discounts, payment terms.
3. Place:
● How the product is made available to the customer.
● Distribution channels, logistics, market coverage.
4. Promotion:
● Activities that communicate the product's merits and persuade target customers to buy it.
● Advertising, sales promotion, public relations, personal selling, digital marketing.