CHAPTER 1 In this chapter, we highlighted the value of marketing for consumers, firms, and society.

There are two levels of marketing: micro-marketing and macro-marketing. Micro-marketing focuses on the activities of individual firms. Macro-marketing is concerned with the way the whole marketing system works in a society or economy. We discussed the functions of marketing and who performs them, including marketing specialists who serve as intermediaries between producers and consumers and other specialists who are facilitators. We explained how a marketdirected economy works, through the macro-marketing system, to provide consumers with choices. We introduced macro-marketing in this chapter, and we'll consider macro-marketing issues throughout the text. But the major thrust of this book is on micro-marketing.

The marketing concept provides direction to a marketing-oriented firm. The marketing concept stresses that the company's efforts should focus on satisfying some target customersat a profit. Production-oriented firms tend to forget this. The various departments within a productionoriented firm let their natural conflicts of interest get in the way of customer satisfaction. Satisfaction relates to customer value, and superior customer value is crucial in attracting customers and in building beneficial long-term relationships with them.

We also covered ways that social responsibility and marketing ethics relate to the marketing concept, and ended with the criticisms of marketing-both of the way individual firms work and of the whole macro system.

By learning more about market-oriented decision making, you will be able to make more efficient and socially responsible decisions. This will help improve the performance of individual firms and organizations (your employers). And eventually it will help our macro-marketing system work better. In the next chapter, we introduce a marketing strategy planning process that is the framework for ideas developed throughout the rest of the textand that will guide your marketing thinking in the future. CHAPTER 2

The marketing manager must constantly study the market environment-seeking attractive opportunities and planning new strategies. A marketing strategy specifies a target market and the

marketing mix the firm will offer to provide that target market with superior customer value. A marketing mix has four major decision areas: the four PsProduct, Place, Promotion, and Price.

There are usually more opportunities than a firm can pursue, so possible target markets must be matched with marketing mixes the firm can offer. Then attractive strategiesreally, whole marketing plansare chosen for implementation. Controls are needed to be sure that the plans are carried out successfully. If anything goes wrong along the way, continual feedback should cause the process to be started over againwith the marketing manager planning more attractive marketing strategies. Thus, the job of marketing management is one of continuous planning, implementing, and control.

Firms need effective strategy planning to survive in our increasingly competitive markets. The challenge isn't just to come up with some strategy, but to zero in on the strategy that is best for the firm given its objectives and resourcesand taking into consideration its strengths and weaknesses and the opportunities and threats that it faces. To improve your ability in this area, this chapter introduces a framework for marketing strategy planning. The rest of this text is organized to deepen your understanding of this framework and how to use it to develop profitable marketing mixes for clearly defined target markets. After several chapters on analyzing target markets, we will discuss each of the four Ps in greater detail.

While market-oriented strategy planning is helpful to marketers, it is also needed by financial managers, accountants, production and personnel people, and all other specialists. A marketoriented plan lets everybody in the firm know what ballpark they are playing in and what they are trying to accomplish.

We will use the term marketing manager for editorial convenience, but really, when we talk about marketing strategy planning, we are talking about the planning that a market-oriented manager should do when developing a firm's strategic plans. This kind of thinking should be done-or at least understoodby everyone in the organization. And this means even the entrylevel salesperson, production supervisor, retail buyer, or personnel counselor. CHAPTER 3

Firms need creative strategy planning to survive in our increasingly competitive markets. In this chapter, we saw that carefully defining generic markets and product-markets can help find new opportunities. We stressed the shortcomings of a too narrow, product-oriented view of markets.

We also discussed market segmentationthe process of naming and then segmenting broad product-markets to find potentially attractive target markets. Some people try to segment markets by starting with the mass market and then dividing it into smaller submarkets based on a few dimensions. But this can lead to poor results. Instead, market segmentation should first focus on a broad product-market and then group similar customers into homogeneous submarkets. The more similar the potential customers are, the larger the submarkets can be. Four criteria for evaluating possible product-market segments were presented.

Once a broad product-market is segmented, marketing managers can use one of three approaches to market-oriented strategy planning: (1) the single target market approach, (2) the multiple target market approach, and (3) the combined target market approach. In general, we encouraged marketers to be segmenters rather than combiners.

We also discussed some computer-aided approachesclustering techniques, CRM, and positioning.

In summary, good marketers should be experts on markets and likely segmenting dimensions. By creatively segmenting markets, they may spot opportunitieseven breakthrough opportunities and help their firms succeed against aggressive competitors offering similar products. Segmenting is basic to target marketing. And the more you practice segmenting, the more meaningful market segments you will see. CHAPTER 4 Businesses need innovative strategy planning to survive in our increasingly competitive markets. In this chapter, we discussed the variables that shape the environment of marketing strategy planning and how they may affect opportunities. First we looked at how the firm's own resources and objectives may help guide or limit the search for opportunities. Then we went on to look at the need to understand competition and how to do a competitive analysis. Then we shifted our focus to the external market environments. They are important because changes in these environments present new opportunities, as well as problems, that a marketing manager must deal with in marketing strategy planning.

The economic environmentincluding chances of recessions or inflationalso affects the choice of strategies. And the marketer must try to anticipate, understand, and deal with these changesas well as changes in the technology underlying the economic environment.

The marketing manager must also be aware of legal restrictions and be sensitive to changing political climates. The acceptance of consumerism has already forced many changes.

The cultural and social environment affects how people behave and what marketing strategies will be successful.

Developing good marketing strategies within all these environments isn't easy. You can see that marketing management is a challenging job that requires integration of information from many disciplines.

Eventually, managers need procedures for screening and evaluating opportunities. We explained an approach for developing qualitative and quantitative screening criteriafrom an analysis of the strengths and weaknesses of the company's resources, the environmental trends it faces, and top management's objectives. We also discussed ways for evaluating and managing quite different opportunitiesusing the GE strategic planning grid, SBUs, and portfolio management.

Now we can go on in the rest of the book to discuss how to turn opportunities into profitable marketing plans and programs. CHAPTER 6 In this chapter, we analyzed the individual consumer as a problem solver who is influenced by psychological variables, social influences, and the purchase situation. All of these variables are related, and our model of buyer behavior helps integrate them into one process. Marketing strategy planning requires a good grasp of this material.

Assuming that everyone behaves the way you door even like your family or friends docan lead to expensive marketing errors.

Consumer buying behavior results from the consumers efforts to satisfy needs and wants. We discussed some reasons why consumers buy and saw that consumer behavior cant be fully explained by only a list of needs.

We also saw that most societies are divided into social classes, a fact that helps explain some consumer behavior. And we discussed the impact of reference groups and opinion leaders.

We presented a buyer behavior model to help you interpret and integrate the present findingsas well as any new data you might get from marketing research. As of now, the behavioral sciences can only offer insights and theories, which the marketing manager must blend with intuition and judgment to develop marketing strategies.

Companies may have to use marketing research to answer specific questions. But if a firm has neither the money nor the time for research, then marketing managers have to rely on available descriptions of present behavior and guesstimates about future behavior. Popular magazines and TV shows often reflect the public's shifting attitudes. And many studies of the changing consumer are published regularly in the business and trade press. That materialcoupled with the information in this bookwill help your marketing strategy planning.

Remember that consumerswith all their needs and attitudesmay be elusive, but they arent invisible. Research has provided more data and understanding of consumer behavior than business managers generally use. Applying this information may help you find your breakthrough opportunity. CHAPTER 9 In this chapter, we looked at Product very broadly. We saw that a firms Product is what satisfies the needs of its target market. A product may be a physical good, a service, or some combination.

We introduced consumer product and business product classes and showed their effect on planning marketing mixes. Consumer product classes are based on consumers buying behavior. Business product classes are based on how buyers see the products and how they are used.

Branding and packaging can create new and more satisfying products. Packaging offers special opportunities to promote the product and inform customers. Variations in packaging can make a product attractive to different target markets.

Customers see brands as a guarantee of quality, and this leads to repeat purchasing. For marketers, such routine buying means lower promotion costs and higher sales.

Marketing managers use individual or family brands. In the end, however, customers express their approval or disapproval of the whole Product (including the brand). The degree of brand familiarity is a measure of the marketing managers ability to carve out a separate market. And brand familiarity affects Place, Price, and Promotion decisions.

Warranties are also important in strategy planning. A warranty need not be strongit just has to be clearly stated. But some customers find strong warranties attractive.

Product is concerned with much more than physical goods and services. To succeed in our increasingly competitive markets, the marketing manager must also be concerned about packaging, branding, and warranties. CHAPTER 10

New-product planning is an increasingly important activity in a modern economy because it is no longer very profitable to just sell me-too products in highly competitive markets. Markets, competition, and product life cycles are changing at a fast pace.

The product life-cycle concept is especially important to marketing strategy planning. It shows that a firm needs different marketing mixesand even strategiesas a product moves through

its cycle. This is an important point because profits change during the life cyclewith most of the profits going to the innovators or fast copiers.

We pointed out that a product is new to a firm if it is new in any way or to any target market. But the Federal Trade Commission takes a narrower view of what you can call "new."

New products are so important to business survival that firms need some organized process for developing them. We discuss such a process and emphasize that it requires a total company effort to be successful.

The failure rate of new products is highbut it is lower for better-managed firms that recognize product development and management as vital processes. Some firms appoint product managers to manage individual products and new-product teams to ensure that the process is carried out successfully.

CHAPTER 11 In this chapter, we discussed the role of Place and noted that Place decisions are especially important because they may be difficult and expensive to change.

Marketing specialists, and channel systems, develop to adjust discrepancies of quantity and assortment. Their regrouping activities are basic in any economic system. And adjusting discrepancies provides opportunities for creative marketers.

Channel planning requires firms to decide on the degree of market exposure they want. The ideal level of exposure may be intensive, selective, or exclusive. They also need to consider the legality of limiting market exposure to avoid having to undo an expensively developed channel system or face steep fines.

The importance of planning channel systems was discussedalong with the role of a channel captain. We stressed that channel systems compete with each other and that vertical marketing systems seem to be winning.

In this broader context, the "battle of the brands" is only a skirmish in the battle between various channel systems. And we emphasized that producers aren't necessarily the channel captains. Often middlemen control or even dominate channels of distribution. CHAPTER 12 This chapter deals with logistics activities and how they provide time and place utility to improve value to the customer. We looked at the customer service level and why it is important.

We emphasized the relation between customer service level, transporting, and storing. The physical distribution concept focuses on coordinating all the storing, transporting, and product handling activities into a smoothly working systemto deliver the desired service level and customer value at the lowest cost.

Marketing managers often want to improve service and may select a higher-cost alternative to improve their marketing mix. The total cost approach might reveal that it is possible both to reduce costs and to improve serviceperhaps by identifying creative new distribution alternatives.

We discussed various modes of transporting and their advantages and disadvantages. We also discussed ways to reduce inventory costs. We explained why distribution centers are an important way to cut storing and handling costs, and we explained how computerized information linkswithin firms and among firms in the channelare increasingly important in blending all of the activities into a smooth-running system.

Effective marketing managers make important strategy decisions about physical distribution. Creative strategy decisions may result in lower PD costs while maintaining or improving the customer service level. And production-oriented competitors may not even understand what is happening. CHAPTER 14

Promotion is an important part of any marketing mix. Most consumers and intermediate customers can choose from among many products. To be successful, a producer must not only offer a good product at a reasonable price but also inform potential customers about the product and where they can buy it. Further, producers must tell wholesalers and retailers in the channel about their product and their marketing mix. These middlemen, in turn, must use promotion to reach their customers.

The promotion blend should fit logically into the strategy being developed to satisfy a particular target market. Strategy planning needs to state what should be communicated to the target market and how. The overall promotion objective is to affect buying behavior, but the basic promotion objectives are informing, persuading, and reminding.

Three basic promotion methods can be used to reach these objectives. Behavioral science findings can help firms combine various promotion methods for effective communication. In particular, what we know about the communication process and how individuals and groups adopt new products is important in planning promotion blends.

An action-oriented framework called AIDA can help marketing managers plan promotion blends. But the marketing manager has the final responsibility for combining the promotion methods into one integrated promotion blend for each marketing mix.

In this chapter, we considered some basic concepts that apply to all areas of promotion. In the next two chapters, well discuss personal selling, advertising, and sales promotion in more detail.

CHAPTER 17 The Price variable offers an alert marketing manager many possibilities for varying marketing mixes. What pricing policies should be used depends on the pricing objectives. We looked at profit-oriented, sales-oriented, and status quo-oriented objectives.

A marketing manager must set policies about price flexibility, price levels over the product life cycle, who will pay the freight, and who will get discounts and allowances. While doing this, the manager should be aware of legislation that affects pricing policies.

In most cases, a marketing manager must set prices that is, administer prices. Starting with a list price, a variety of discounts and allowances may be offered to adjust for the something of value being offered in the marketing mix.

Throughout this chapter, we talk about what may be included or excluded in the something of value and what objectives a firm might set to guide its pricing policies. We discuss how pricing policies combine to impact customer value. Price setting itself is not discussed. It will be covered in the next chapter, where we show ways to carry out the various pricing objectives and policies. CHAPTER 19

In this chapter, weve focused on the important role of implementation and control in satisfying customers and ensuring the firms ongoing success. We explained how improvements in information technology are playing a critical role in revolutionizing these areas. Managers should seek new and creative ways to improve implementation, which can often give a firm a competitive advantage in building stronger relationships with customers, even in highly competitive mature markets.

We also went into some detail on how total quality management can help the firm get the type of implementation it needsimplementation that continuously improves and does a better job of meeting customers needs and at lower cost.

A marketing program must also be controlled. Good control helps the marketing manager locate and correct weak spots and at the same time find strengths that may be applied throughout the marketing program. Control works hand in hand with planning.

Simple sales analysis just gives a picture of what happened. But when sales forecasts or other data showing expected results are brought into the analysis, we can evaluate performanceusing performance indexes.

Cost analysis also can be useful. There are two basic approaches to cost analysisfull-cost and contribution-margin. Using the full-cost approach, all costs are allocated in some way. Using the contribution-margin approach, only the variable costs are allocated. Both methods have their advantages and special uses.

Ideally, the marketing manager should arrange for a constant flow of data that can be analyzed routinely, preferably by computer, to help control present plans and plan new strategies. A marketing audit can help this ongoing effort. Either a separate department within the company or an outside organization may conduct this audit.