Introduction to Business

Marketing Function
Module Learning Outcomes

Explain the key components of marketing function

13.1: Explain the role of customers in marketing

13.2: Explain the role of segmentation and targeting in marketing
13.3: Explain the marketing mix
Role of Customers
Learning Outcomes: Role of Customers

13.1: Explain the role of customers in marketing

13.1.1: Define the term marketing
13.1.2: Explain the marketing concept
13.1.3: Identify and describe an organization’s value proposition
13.1.4: Explain the importance of managing the customer relationship
13.1.5: Explain the factors that influence customer decisions
13.1.6: Explain the consumer buying process
Marketing Defined
Marketing is a set of activities related to creating,
communicating, delivering, and exchanging offerings that
have value for others.
In business, the function of marketing is to bring value to
customers, whom the business seeks to identify, satisfy,
and retain.
The Exchange Process
The Exchange Process is the act of obtaining a desired object from
someone by offering something of value in return.
• customer (buyer): a person or organization with a want or need who is willing to
give money or other personal resource to address this need
• product: a physical good, a service, experience or idea designed to fill the
customer’s want or need
• provider (seller): the company or organization offering a need-satisfying thing
• transaction: the terms around which both parties agree to trade value-for-value

Individuals on both sides try to maximize rewards and minimize costs in

transactions in order to gain the most profitable outcomes.

Marketing creates a bundle of goods and services that the company

offers at a price to its customers. The bundle consists of a tangible good, an
intangible service or benefit, and the price of the offering.
Understanding the Marketing Concept

Marketing generates value by creating the connections between people and

products, customers and companies.

The role of marketing is to identify, satisfy, and retain customers.

The Role of Marketing
Understanding Company Orientations
Companies’ marketing efforts can focus on customer, product, sales, or
production.

Types of Company Orientations:

• The Marketing Concept focuses on knowing as much about the
consumer as possible and bases marketing, product, and strategy
decisions on this information.
• The Product Concept focuses on building and showcasing impressive
features and product advances.
• The Sales Concept emphasizes the sale process and tries to make it as
effective as possible.
• The Production Concept focuses on low-production costs, highly
efficient processes, and mass distribution.
What is Value?

Value is the measure of the benefit gained from a product or service

relative to the full cost of the item.

Value is more than price.

The process of determining the value of an offering and then aligning it

with the wants and needs of a target customer is challenging.

Value = benefit – cost

Competition and Substitutes
The presence of competitors further complicates perceptions of value.
Customers instinctively make choices between competitive offerings based
on perceived value.

Alternatives generally fall into two categories:

• Competitors: provides the same offering but is accentuating different
features and benefits.
• Substitutes: Not a perfect replication of the offering, which means it will
provide different value to customers.
Differentiation and Competitive Advantage

Differentiation: the process of identifying and optimizing the elements of

an offering that provide unique value to a customer.

Competitive Advantage: an advantage in the marketplace whereby an

organization’s offering provide greater value because of a unique strategy,
asset, or approach that others cannot easily copy.
Value Proposition

• A value proposition is a clear

and succinct statement to the
customer of the value being
offered by a company’s products
or services.
• It should set the offering apart
or differentiate it from other
offerings.
Elements of the Value Proposition

Why should someone buy what you are offering? The value proposition
should address:
• Who? The value proposition does not name the target buyer, but it must
show clear value to the target buyer.
• What? The offering needs to be defined in the context of that buyer.
• Why? It must show that the offering is uniquely valuable to the buyer.
How do you create an effective value proposition?
• Clear: short and direct
• Compelling: conveys the benefit in a way that motivates the buyer to act
• Differentiating: sets the offering apart from other offerings
Class Activity: Making a Value Proposition

Divide into groups of 3–4. Imagine that you’re on the marketing team for a
small start-up providing one of the following services:

• Custom-tailored clothes, ordered online

• Symptom tracking app for chronic illness
• Language exchange program matching native speakers with learners

• Or come up with your own!

Present: Making a Value Proposition
Managing Customer Relationships

The Internet and digital social media have created new platforms for
customers and product providers to find and communicate with one another.

Marketing applies a customer-oriented mindset and, through particular

marketing activities, tried to make initial contact with customers and move
them through various stages of the relationship – all with the goal of
increasing lifetime customer value.
What is Customer Lifetime Value?

• Customer lifetime value predicts how

much profit the company will make
from the customer during his or her
lifetime relationship with the
company.
Relationship Stage and Typical Marketing
Activities
Relationship Stage Typical Marketing Activities

• Find desirable target customers, including those likely to deliver a

high customer lifetime value
Meeting and Getting Acquainted • Understand what these customers want
• Build awareness and demand for what you offer
• Capture new business

• Measure and improve customer satisfaction

• Track how customers’ needs and wants evolve
Providing a Satisfying
• Develop customer confidence, trust, and goodwill
Experience
• Demonstrate and communicate competitive advantage
• Monitor and counter competitive forces

• Convert contacts into loyal repeat customers, rather than one-time

customers
Sustain a Committed
• Anticipate and respond to evolving needs
Relationship
• Deepen relationships, expand reach of and reliance on what you
offer
More on Customer Relationships

Customer Relationship as Competitive Advantage

When customers feel satisfaction with and affinity for a specific company or product,
it simplifies their buying choices. A consistently positive customer experience
matures into a relationship in which the customer becomes increasingly receptive to
the company and its products.

When Customers Become Your Best Marketing Tools

Customer testimonials and recommendations often work to persuade new customers
to give something a try. In today’s digital media landscape there is unprecedented
opportunity for companies to engage customers as credible advocates.
When people take a public stance on a product or issue, they tend to become more
committed to that position.
Factors that Influence Consumer Decisions

The factors that influence the consumer problem-solving process are many
and complex.

We can group these influencing factors into four sets:

1. Situational Factors
2. Personal Factors
3. Psychological Factors
4. Social Factors
What Influences a Purchase?
Stages of the Buying Process
Buying-Process Stages

1. Need Recognition: recognizing there is a problem or unmet need and

that this need warrants some action.
2. Information Search: seeking information to help identify and evaluate
alternative products, services, experiences, and outlets that will meet
that need.
3. Evaluation of Alternatives: Identify alternative products, services, and
outlets that are viable options, evaluate these alternatives, and make a
choice.
4. The Purchase Decision: Consumers must decide whether they are
going to buy. Anything marketers can do to simplify the decision will be
attractive to buyers.
5. Post-purchase Behavior: A consumer’s feelings and evaluations after
the sale are significant because they influence repeat sales and what the
customer tells others about the product or the brand.
Complex and Simple Decision Making

Complex decision making: The six-stage buying process represents the

steps customers undergo when they make a conscious effort to learn about
the options and select a product. This can happen when a customer
purchases a product for the first time.

Simple decision making: the customer has learned from past experiences
what will best satisfy their need, so they can bypass the second or third
stage of the processes.
Practice Question 1
You have just been hired as a marketing manager at one of the Acme Corps
product lines. What are the primary questions you would ask in order to get
yourself up to speed on the marketing efforts for this product line?
A. How many stores/sites feature our products? How does our pricing compare with
the competition? When is the next major delivery to our warehouses?
B. Who is the customer for our products? How happy are the customers based based
on our latest surveys? How strong is the repeat business? What is our value
proposition?
C. What is the gross margin of the product line? How many style items are in the
product assortment? How many engineers do we have working on the development
side?
D. Are we getting needed support from senior management for our ad campaign?
What are the sizes and colors of our new release? Can we increase production for
next quarter sales?
Practice Question 2

The difference between the marketing concept versus the production

concept or the sale concept is in the marketing concept:
A. the customer drives the business strategy.
B. the market drives the business strategy.
C. the revenue goals drive the business strategy.
D. Fortune 500 companies drive the business strategy.
Practice Question 3

The following describe/explain the four factors that influence customer

decisions EXCEPT:
A. Social Factors: the influence of culture, social class, family and reference groups.
B. Situational Factors: consumer’s level of involvement in a buying task and the
market offerings available.
C. Personal Factors: the consumer’s attitude towards the company and prior
experiences with their products and services.
D. Psychological Factors: the consumer’s motivation, learning, socializing attitudes
and beliefs.
Segmentation and Targeting
Learning Outcomes: Segmentation and Targeting

13.2: Explain the role of segmentation and targeting in marketing

13.2.1: Explain the concepts of segmentation and targeting
13.2.2: Explain how segmentation and targeting relate to marketing
strategy
13.2.3: Explain the process and goal of market research
13.2.4: Explain how market research helps marketers validate their target
markets
Defining a Target Market

1. Identify the customer need you

address
2. Segment your total market
3. Profile your target customer
segment(s)
4. Research and validate your market
opportunity
Segmentation and Profile for Your Target Customer

Segmentation: Once you define your total market, you can break down your total
market into segments. You can use a variety of approaches to segment your total market
into groups with common wants or needs. In this case, we can segment by vehicle
ownership and related behavior. Specific segments might include the following:

● People who restore classic automobiles.

● People who drive old clunkers and run them through the car wash occasionally.
● People who own “status” cars.
● Truck drivers.
● Motorcycle owners.

Profile your target customer segment(s): Develop a profile for your target
customer(s) using a number of categories including but not limited to geographic,
demographic, psychographic, and behavioral traits.
Market Information

Marketing research is the process of identifying marketing opportunities

and solving marketing problems using customer insights.

A marketing information system is a combination of people,

technologies, and processes for managing marketing information,
overseeing market research activities, and using customer insights to guide
marketing decisions and broader management and strategy decisions.

Marketing information and research are essential tools for marketers and
the management team as they align strategy with customer wants and
needs.
Questions for Market Research

• Who is the customer?

• What problems is the customer trying to solve with a given purchase?
• What does the customer desire in the way of satisfaction?
• How does the customer get information about available choices?
• Where does the customer choose to purchase?
• Why does the customer buy or not buy?
• When does the customer make a purchase?
• How does the customer go about seeking satisfaction in the market?
Class Discussion: Market Research

Consider the market research questions on the prior slide. As a group, walk-
through those questions for the following markets:

• Luxury shoes (e.g. Jimmy Choo, Prada, Kate Spade).

• D-I-Y home repair.
• Business travel.
• Prepared meal services (e.g. Hello Fresh, Sun Basket, Home Chef).
The Marketing Research Process
Understanding The Marketing Research Process

1. Identify the Problem: Start by stating the marketing or business

problem you need to address. Next, articulate the objectives for the
research.
2. Develop a Research Plan: Identify what information you need to
answer your question and achieve your objective.
3. Conduct the Research: Conducting research begins to generate
information that helps answer your urgent marketing questions. This
process could include reviewing existing research and conducting
primary research.
4. Analyze and Report Findings: Transform the data into useful
information and insights that answer the research question.
5. Take Action: Help managers understand the research and take action
based on research findings.
Practice Problem 4

In marketing, segmentation and targeting refer to:

A. the process of abbreviating customer data so that it can be easily captured and
input
B. the process of narrowing, refining, and “boiling down” your potential target market
to the point where your can construct an actionable profile
C. the process of selecting which budget items can best be served with additional
investment
D. the process of narrowing job candidates and deciding which ones to hire
Practice Problem 5

Marketing strategy follows from _____.

A. direct response to competitor activities.
B. direction from the CEO.
C. the segmentation and targeting process.
D. what has worked in the past.
Practice Problem 6

How does market research help businesses validate their target markets?
A. Market research “boils down” the larger population into manageable target
customer groups.
B. Market research dictates advertising campaigns to appeal to the broadest set of
customers.
C. Market research helps businesses confirm which are their most popular products.
D. Market research helps businesses implement appropriate CRM systems.
Marketing Mix Introduction
Learning Outcomes: Marketing Mix Introduction

13.3: Explain the marketing mix

13.3.1: Define product
13.3.2: Define promotion
13.3.3: Define place
13.3.4: Define price
13.3.5: Give examples of the marketing mix
13.3.6: Evaluate how marketing strategies align with corporate strategies
Understanding the Marketing Mix

There are multiple factors that can influence a customer’s decision about
what to buy—a mix of factors.

The marketing mix, also known as the four Ps:

• Product: the goods and services offered
• Promotion: communication and information
• Place: distribution or delivery
• Price: ensuring fair value in the transaction
The Four Cs

Over time, new categories of the marketing mix have been proposed. Most are more
consumer oriented and attempt to better fit the movement toward a marketing
orientation and a greater emphasis on customer value.

One example is the four Cs, proposed by Robert F Lauterborn in 1990:

1. Customer solution: what the customer wants and needs
2. Communication: a two-way dialogue with the customer
3. Convenience: an easy process to act or buy
4. Cost: the customer’s cost to satisfy that want or need[2]

The four Cs include a greater focus on the customer but align nicely with the older four
Ps. They also enable one to think about the marketing mix for services, not just products.
The Marketing Mix
 Evolving Definitions of the Marketing
Mix
Four Ps Four Cs Definition

A company will only sell what the consumer specifically wants

Consumer
Product to buy. So, marketers should study consumer wants and needs
solution
to attract them.

Communications can include advertising, public relations, personal selling, viral

advertising, and any form of communication between the organization and the
Promotion Communication
consumer.

Marketers should know how the target market prefers to buy, how to be there and
be ubiquitous, in order to provide convenience of buying. With the rise of Internet
and hybrid models of purchasing, “place” is becoming less relevant. Convenience
Place Convenience
takes into account the ease of buying the product, finding the product, and finding
information about the product.

Price is only a part of the total cost to satisfy a want or a need. For example, the
total cost might be the cost of time in acquiring a good or a service, along
with the cost of conscience in consuming it. It reflects the total cost of ownership.
Price Cost Many factors affect cost, including but not limited to the customer’s cost to change
or implement the new product or service and the customer’s cost for not selecting a
competitor’s product or service.
Understanding Product
Understanding Promotion
Understanding Place
Understanding Price
Finding the Right Marketing Mix

How does an organization determine the right marketing mix? The answer
depends on the organization’s goals.

Decisions about the marketing-mix variables are interrelated. Each of the

marketing mix variables must be coordinated with the other elements of the
marketing program.

An effective marketing mix centers on a target customer. Each element of

the mix is evaluated and adjusted to provide unique value to the target
customer. The goal of the marketing mix is to align marketing activities with
the needs of the target customer.
 Example of Marketing Mix: Shampoo
4 Ps Discount Upscale Premium
Cleansing product,
Cleansing
Cleansing product, pleasant smell
product, pleasant
Product pleasant smell, created by named
smell, low-cost
attractive packaging ingredients,
packaging
premium packaging
Differentiating
features and
ingredients
National commercials highlighted (e.g., safe
Few, if any,
Promotio show famous female for colored hair), as
broad
n “customers” with well as an emphasis
communications
clean, bouncy hair on the science behind
the formula.
Recommended by
stylist in the salon.
Distributed in Distributed in
Distributed only in
Place grocery stores grocery stores and
licensed salons
and drugstores drugstores
Highest price in the
Lowest price on grocery store (8 3 to 5 times the price
Price
the shelf times the prices of of Upscale
Creating and Aligning the Marketing Strategy

The marketing strategy defines how the marketing mix can best be used
to achieve the corporate strategy and objectives.

The marketing strategy needs to work with – not apart from – the corporate
strategy.

The centerpiece of the marketing strategy is the target customer.

Objectives can create alignment between corporate and marketing

strategies. If the corporate objectives are clearly defined and
communicated, they can guide and reinforce each step of the marketing
planning process.
The Marketing Planning Process
Practice Problem 7

You are a product marketing manager for a large tech company. You post an
announcement on the company’s Facebook account regarding a new version
release of a popular tax preparation application. You monitor your post as
hundreds of consumers post responses, questions, and opinions. You are
engaging in this one of the four Ps of the marketing mix.
A. promotion
B. product
C. price
D. place
Practice Problem 8

Which of the following is the most comprehensive example of a marketing

mix?
A. A restaurant creates a new lunch menu at reduced prices to draw people into their
restaurant.
B. A nursery sells kitchen herbs, promoting them in-store as an easy way to save
money in the kitchen.
C. A spa conducts an email blitz in order to inform clients of their new location.
D. A yarn company creates a new line of premium, more expensive yarn for baby
blankets, available at niche craft stores and advertised by prominent craft bloggers
on social media.
Practice Problem 9

How does the marketing strategy for a business align with the corporate
strategy?
A. The marketing strategy must establish a brand name that consumers will
recognize.
B. The marketing strategy must address target customers, markets and activities that
are consistent with the mission, goals, and objectives of the business.
C. The corporate strategy must be based on the results of marketing segmentation
and targeting.
D. The marketing strategy must address the competition effectively.
Class Discussion: Is there More to Marketing?

• Many people think that marketing is

mostly about promotions or
communications, what more is there to
marketing?
Quick Review

• What is the role of customers in marketing?

• What is the role of segmentation and targeting in marketing?
• What is the marketing mix?