MARKETING STRATEGY

O.C. FERRELL • MICHAEL D. HARTLINE

1
Marketing in the
New Economy
 Challenges and Opportunities
In the New Economy

• Power Shift to Customers

• Massive Increase in Product Selection
• Changing Value Propositions
• Shifting Demand Patterns
• New Sources of Competitive Advantage
• Privacy, Security, and Ethical Concerns

1-2
 Discussion Question

• The fact that customers have more power is

one of the major shifts taking place in the
new economy. In what ways have you
personally experienced this shift in power?
Is this shift uniform across all industries and
markets? How so?

1-3
 The Children’s Online
Privacy Protection Act (COPPA)

• Protects the privacy of children under 13

• Five Privacy Criteria:
– Placement of Notice
– Full Disclosure
– Parental Control
– Reasonable Necessity
– Security

Exhibit 1.1 1-4

 Basic Marketing Concepts

• Marketing (AMA definition):

– “…the process of planning and executing
the conception, pricing, promotion and
distribution of ideas, goods and services to
create exchanges that satisfy individual
and organizational objectives.”

1-5
 Basic Marketing Concepts
• Market:
– A collection of buyers and sellers
• Marketspace:
– Electronic marketplaces that are not bound by time or
space
• Metamarket:
– A cluster of closely related goods and services that
center around a specific consumption activity
• Metamediary:
– Provides a single access point where buyers can locate
and contact many different sellers in the metamarket
1-6
Common Metamarkets and Participants

Exhibit 1.2 1-7

Example of a Metamediary

1-8
 What is Exchange?

• Exchange:
– Process of obtaining something of value by offering
something in return
• Five Conditions for Exchange:
– (1) There must be at least two parties to the exchange.
– (2) Each party has something of value to the other party.
– (3) Each party must be capable of communication and delivery.
– (4) Each party must be free to accept or reject the exchange.
– (5) Each party believes it is desirable to exchange with the
other party.

1-9
 What is a Product?

• Product:
– Something that can be acquired via exchange to
satisfy a need or a want.
• Examples:
-Goods -People
-Services -Places
-Ideas -Experiences and Events
-Information -Real or Financial Property
-Digital Products -Organizations
1-10
 The Concept of Utility

• Utility:
– Ability of a product to satisfy a customer’s
desires.
• Four Types of Utility:
– (1) Form Utility
– (2) Time Utility
– (3) Place Utility
– (4) Possession Utility

1-11
 Discussion Question

• Through exchange, marketing creates four

different types of utility for customers. Is it
possible to excel in all four types of utility?
Explain why or why not and give examples.

1-12
 Major Marketing Activities
and Decisions (1 of 4)
• Strategic Planning
– Strategy
– Tactical Planning
• Research and Analysis
– Internal Analysis
– Competitive Intelligence
– Environmental Scanning
– Situation Analysis

1-13
 Major Marketing Activities
and Decisions (2 of 4)
• Developing Goals and Objectives
– SWOT Analysis
• Developing and Maintaining Customer
Relationships
– Transactional Marketing
– Relationship Marketing
• Marketing Strategy Decisions
– Competitive Advantage

1-14
Characteristics of Transactional
and Relationship Marketing

Exhibit 1.3 1-15

 Major Marketing Activities
and Decisions (3 of 4)
• Market Segmentation and Target Marketing
– Market Segmentation
– Target Markets
• Product Decisions
– Product Positioning
• Pricing Decisions
– Leads to revenue and profit
– Directly connected to customer demand
– Easy to change
– Major quality cue for customers
1-16
 Major Marketing Activities
and Decisions (4 of 4)
• Distribution and Supply Chain Decisions
– Distribution and Supply Chain Management
– Supply Chain
• Promotion Decisions
– Integrated Marketing Communications (IMC)
• Implementation and Control
– Marketing Implementation
• Social Responsibility and Ethics
– Social Responsibility
– Marketing Ethics
1-17
Corporate Culture Matters

1-18
 Taking On the Challenges of
Marketing Strategy (1 of 2)
• Unending Change
– Customers change, competitors change, and marketing
organizations change
• Evolution of Marketing and Business Practices in
Society
• Increasing Demands of Customers
• Overall Decline in Brand Loyalty of Customers
• Increasing Price Sensitivity Among Customers
• Increasing Customer Cynicism about Business and
Marketing Activities
1-19
 Discussion Question

• How concerned are you about privacy and

security in the new economy? How have
businesses responded to these concerns?
Which is safer and more secure: online
transactions or face-to-face transactions?
Explain.

1-20
American Customer Satisfaction Index

Exhibit 1.4 1-21

 Taking On the Challenges of
Marketing Strategy (2 of 2)
• Competing in Mature Markets
• Little Real Differentiation Among Product Offerings
• Increasing Expansion into Foreign Markets
• Increasing Numbers and Strength of Foreign
Competitors
• Aggressive Cost-Cutting Measures in Order to Increase
Competitiveness
• Increasing Cooperation with Supply-Chain Partners and
Competitors
1-22
Marketing Strategy in Action
• Increasing expansion into
foreign markets is
becoming a necessity to
compete in the global
marketplace.
• What kinds of
opportunities and threats
are presented by the
increasing global nature
of the marketplace?
1-23
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

2
Strategic Marketing
Planning
 The Strategic Planning Process

• Marketing Plan
– “…a written document that provides the
blueprint or outline of the organization’s
marketing activities, including the
implementation, evaluation, and control of
those activities.”

2-25
 Discussion Question

• What role, if any, should customers play in

the strategic planning process? Should they
have a voice in developing the
organizational mission, marketing goals, or
the marketing strategy?

2-26
Exhibit 2.1 2-27
 Organizational Mission vs.
Organizational Vision (1 of 2)
• Elements of the Mission Statement
– Five basic questions to be answered:
• Who are we?
• Who are our customers?
• What is our operating philosophy?
• What are our core competencies or
competitive advantages?
• What are our concerns and interests related to
our employees, our community, society in
general and our environment?
2-28
 Organizational Mission vs.
Organizational Vision (2 of 2)
• Mission Width and Stability
– Width: Too broad or too narrow?
– Stability: Frequency of modifications
• Customer-Focused Mission Statements
– Ben and Jerry’s 3-part Mission Statement
• Product Mission
• Economic Mission
• Social Mission
– Tylenol
2-29
Marketing Strategy in Action
• As this 1946 ad
demonstrates, railways
were once a prominent
way to travel across the
country.
• How did narrow mission
statements lead to missed
opportunities for the
railroad industry?

2-30
Ben & Jerry’s 3 Part Mission

2-31
 Corporate or Business-Unit Strategy

• Business-Unit Strategy:
– The central means for:
• Utilizing and integrating the organization’s resources
• Carrying out the organization’s mission
• Achieving the organization’s desired goals and objectives
– Associated with developing a competitive advantage
– Determines the nature and future direction of each
business unit
– Essentially the same as corporate strategy in small
businesses
2-32
 Functional Goals and Objectives

• All business functions must support the

organization’s mission and goals.
• Functional objectives should be expressed
in clear, simple terms.
• All functional objectives should be
reconsidered for each planning period.

2-33
 Functional Strategy

• Functional strategies are designed to integrate

efforts focused on achieving the area’s stated
objectives.
• The strategy must:
– (1) Fit the needs and purposes of the functional area
– (2) Be realistic with the organization’s resources and
environment
– (3) Be consistent with the organization’s mission
goals, and objectives.
• The effects of each functional strategy must be
evaluated.
2-34
 Implementation

• Involves activities that execute the

functional strategy.
• Functional plans have two target markets:
– (1) External market
– (2) Internal market
• A company must rely on its internal market
for a functional strategy to be implemented
successfully. 2-35
 Discussion Question

• Defend or contradict this statement:

Developing marketing strategy is more
important than implementing marketing
strategy because if the strategy is flawed, it
doesn’t matter how well it is implemented.

2-36
 Evaluation and Control

• Designed to keep activities on target with goals

and objectives
• Coordination among functional areas is a critical
issue
– Open lines of communication is the key
• Evaluation and control is both an ending and
beginning:
– Occurs after a strategy has been implemented
– Serves as the beginning point for planning in the next
cycle
2-37
 The Marketing Plan

• Detailed formulation of the actions needed

to carry out the marketing program
• An action document:
– The handbook for marketing implementation,
evaluation and control
• Not the same as a business plan
• Requires a great deal of information from
many different sources 2-38
 Marketing Plan Structure (1 of 5)

• Should be well organized

• A good marketing plan outline is:
– Comprehensive
– Flexible
– Consistent
– Logical

2-39
Marketing Plan Structure

Exhibit 2.3 2-40

 Marketing Plan Structure (2 of 5)

• I. Executive Summary
– Synopsis of the overall marketing plan
– Introduces major aspects of the marketing plan
• II. Situation Analysis
– Summarizes information about 3 key environments:
• Internal environment
• Customer environment
• Firm’s external environment

2-41
 Marketing Plan Structure (3 of 5)

• III. SWOT Analysis

– Strengths
– Weaknesses
– Opportunities
– Threats
– Analysis of the SWOT matrix
– Establishing a strategic focus

2-42
 Marketing Plan Structure (4 of 5)

• IV. Marketing Goals and Objectives:

– Formal statements of desired and expected outcomes
of the marketing plan
– Goals:
• Broad, simple statements of what is to be accomplished
– Objectives
• More specific and essential to planning
• V. Marketing Strategy:
– Primary target market and marketing mix
– Secondary target market and marketing mix
2-43
 Marketing Plan Structure (5 of 5)

• VI. Marketing Implementation

– 1. What specific marketing activities will be undertaken?
– 2. How will these activities be performed?
– 3. When will these activities be performed?
– 4. Who is responsible for the completion of these activities?
– 5. How will the completion of planned activities be monitored?
– 6. How much will these activities cost?
• VII. Evaluation and Control
– Formal marketing control
– Informal marketing control
– Financial assessments
2-44
 Using the Marketing Plan Structure

• Tips for using the marketing plan

framework to develop a marketing plan:
– Plan ahead
– Revise, revise, revise
– Be creative
– Use common sense and judgment
– Think ahead to implementation
– Update regularly
– Communicate with others 2-45
 Purposes and Significance
of the Marketing Plan
• A good marketing plan will:
– (1) Explain both the present and future situations of
the organization
– (2) Specify the outcomes that are expected
– (3) Describe the specific actions that are to take place
– (4) Identify the resources that will be needed
– (5) Permit the monitoring of each action and its
results
• Communicating the strategy to top executives is
paramount.
2-46
 Organizational Aspects of the
Marketing Plan
• Top managers ask two questions:
– (1) Will the marketing plan achieve the desired
goals and objectives?
– (2) Are there alternative uses of resources that
would better meet objectives?
• The marketing plan is most often prepared by the
Marketing Director or VP of Marketing
• The final approval lies with the President,
Chairman or CEO
2-47
Major Problems in Developing and
Implementing the Marketing Plan

Exhibit 2.4 2-48

Apple’s Changing Strategic Focus

2-49
 Strategic Planning in the
Market-Oriented Organization
• A Market-Oriented Organization:
– Shifts its focus:
• From products to the requirements of market segments
• From transactions to relationships
• From competition to collaboration
– Puts customer’s needs and wants first
– Focuses on long-term, value-added relationships
– Instills a corporate culture that puts customers at the
top of the organizational hierarchy
– Cooperates with suppliers and competitors to serve
customers better 2-50
 Traditional Organizations

CEO CEO

Competition
Middle Middle
Managers Managers

Frontline Employees Frontline Employees

Customers

Exhibit 2.5 – Part One 2-51

Market-Oriented Organizations

Customers

Frontline Employees Frontline Employees

Middle Cooperation Middle

Managers Managers

CEO CEO

Exhibit 2.5 – Part Two 2-52

 Discussion Question

• In many organizations marketing is not

given a place of importance in the
organizational hierarchy. Why do you think
this happens? What other business
functions get more importance? Why?

2-53
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

3
Situation Analysis
Collecting and Analyzing
Marketing Information
Issues to be Considered
in a Situation Analysis

Exhibit 3.1 3-55

Conducting a Situation Analysis (1 of 2)

• Analysis Alone is Not the Solution

• Data and Information are Not the Same
– Data: A collection of numbers or facts that have
the potential to inform
– Information: Data that has been transformed or
combined with other data in a manner that
makes it useful to decision makers

3-56
Conducting a Situation Analysis (2 of 2)

• The Benefits of Analysis Must Outweigh the

Costs
• Conducting a Situation Analysis is a
Challenging Exercise
– One of the most difficult parts of the marketing plan
– Should provide a complete picture of three key
environments: (1) Internal, (2) Customer, and
(3) External

3-57
 The Relationships Among
Environments in a Situation Analysis

Internal Environment

Exhibit 3.2 3-58

 Discussion Question

• Of the three major environments in a

situation analysis (internal, customer,
external), which do you think is the most
important in a general sense? Why? What
are some situations that would make one
environment more important than others?

3-59
 The Internal Environment (1 of 2)

• Review of Current Objectives, Strategy and

Performance
– An important input to later stages in the planning
process
– Poor or declining performance must be the result
of:
• (1) Goals or objectives that are inconsistent with
customer or external environments
• (2) Flawed marketing strategy
• (3) Poor implementation
• (4) Changes in the customer or external environment
beyond the control of the firm
3-60
 The Internal Environment (2 of 2)

• Availability of Resources
– Includes review of financial, human and experience
resources as well as resources from key relationships
– Financial resources tend to get most attention
– Labor shortages are expected to be a major problem in
the coming years
• Organizational Culture and Structure
– Problems can arise when marketing does not hold a
prominent position in the political hierarchy
– Culture and structure are relatively stable but can be
affected by mergers

3-61
Mergers Affect Corporate Culture

3-62
 The Customer Environment

• Who are our Current and Potential Customers?

• What do our Customers do with our Products?
• Where do Customers Purchase our Products?
• When do Customers Purchase our Products?
• Why (and How) do Customers Select our
Products?
• Why do Potential Customers not Purchase our
Products?
3-63
 The External Environment (1 of 2)

• Competition
– (1) Brand competitors
– (2) Product competitors
– (3) Generic competitors
– (4) Total budget competitors

3-64
Major Types of Competition

Exhibit 3.6 3-65

 Discussion Question

• Do you think brand competitors are always

the most important type of competition?
How would economic conditions affect the
importance of brand competitors? In bad
economic times, would total budget
competitors become more important? Why
or why not?

3-66
 Stages of Competitive Analysis

• (1) Identify all current and potential competitors.

• (2) Assess each key competitor.
• (3) Assess each key competitor’s strengths and
weaknesses.
• (4) Focus the analysis on each key competitor’s
marketing capabilities.
• (5) Estimate each key competitor’s most likely
strategies and responses under different
environmental situations.

3-67
 The External Environment (2 of 2)

• Economic Growth and Stability

• Political Trends
• Legal and Regulatory Issues
• Technological Advancements
• Sociocultural Trends
– Demographic Trends
– Lifestyle Trends
– Trends in Cultural Values

3-68
 Examples of Trends in the
Sociocultural Environment
• Demographic Trends
– Aging of the American population
– Increasing population diversity
– Population growth in the Sun Belt states
• Lifestyle Trends
– Clothing has become more casual, especially at work
– Growing focus on health and nutrition
– Time spent watching television has declined
• Trends in Cultural Values
– Less focus on “me-oriented” values
– Increasing importance of family and children
– Greater focus on ethics and social responsibility

From Exhibit 3.7 3-69

Marketing Strategy in Action
• This 1977 ad for a Technics
turntable discusses its
advanced technology. In less
than a decade the compact
disc would render devices for
playing vinyl records
obsolete.
• How does this illustrate the
importance of being aware of
the technological
environment? How can
companies like Panasonic
prepare for the possible
obsolescence of products that
are currently state-of-the-art?

3-70
 Collecting Environmental Data
and Information (1 of 2)
• Secondary Information Sources
– Internal Data Sources
– Government Sources
– Periodicals/Book Sources
– Commercial (Fee-Based) Sources

3-71
Government Sources of Secondary Data

3-72
 Collecting Environmental Data
and Information (2 of 2)
• Primary Data Collection
– Direct Observation
– Focus Groups
– Surveys
– Experiments
• Overcoming Problems in Data Collection

3-73
 Discussion Question

• Do you think the Internet has made it easier

or more difficult to collect data and
information? Why? How might the major
data collection issues of today compare to
the issues that occurred in the pre-Internet
era?

3-74
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

4
SWOT Analysis
A Framework for Developing
Marketing Strategy
 SWOT Analysis

• “A widely used framework for organizing

and utilizing the pieces of data and
information gained from the situation
analysis…”
• Encompasses both internal and external
environments
• One of the most effective tools in the
analysis of environmental data and
information
4-76
Effectiveness of Analysis Tools

Exhibit 4.1 4-77

 Major Benefits of SWOT Analysis

• Simplicity
• Lower Costs
• Flexibility
• Integration and Synthesis
• Collaboration

From Exhibit 4.2 4-78

 Directives for a Productive
SWOT Analysis
• Stay Focused
• Search Extensively for Competitors
• Collaborate with other Functional Areas
• Examine Issues from the Customers’
Perspective
• Look for Causes, Not Characteristics
• Separate Internal Issues from External Issues

From Exhibit 4.3 4-79

 Stay Focused

• It is a mistake to complete one generic

SWOT analysis for the entire
organization or business unit.
• When we say SWOT analysis, we mean
SWOT analyses.

4-80
Search Extensively for Competitors

• Information on competitors is an
important aspect of a SWOT analysis.
• Look for all four types of competition:
– Brand competitors
– Product competitors
– Generic competitors
– Total budget competitors
4-81
Marketing Strategy in Action
• This 2002 ad for Fruitopia, a
fruit drink by the makers of
Coke, shows that even the soft
drink giants have had to
respond to other sources of
competition than traditional
brand competitors.
• Can you think of other
products that illustrate the
effects of competition other
than the effects of brand
competitors?

4-82
 Collaborate with Other
Functional Areas
• Information generated from the SWOT
analysis can be shared across functional
areas.
• SWOT analysis can generate
communication between managers that
ordinarily would not communicate.
– Creates and environment for creativity and
innovation.
4-83
 Examine Issues from
the Customers’ Perspective
• To do this, the analyst should ask:
– What do customers (and non-customers) believe
about us as a company?
– What do customers (and non-customers) think of
our product quality, customer service, price,
overall value, convenience, and promotional
messages in comparison to our competitors?
– What is the relative importance of these issues as
customers see them?
• Taking the customers’ perspective is the
cornerstone of a well done SWOT analysis.
4-84
Look for Causes, Not Characteristics

• Causes for each issue in a SWOT

analysis can often be found in the firm’s
and competitors’ resources.
• Major types of resources:
-Financial -Organizational
-Intellectual -Informational
-Legal -Relational
-Human -Reputational
4-85
 Separate Internal from
External Issues
• Failure to understand the difference between
internal and external issues is one of the
major reasons for a poorly conducted SWOT
analysis.
• Socratic Advice:
– “Know thyself”
– “Know thy customer”
– “Know thy competitors”
– “Know thy environment”
4-86
 Discussion Question

• Why are industries and firms often so

reluctant to adapt to changes in their
external environments? Other than the
music recording industry, what other
industries or firms seem to be slow to
change? Why?

4-87
The Elements of a SWOT Analysis

• Strengths and Weaknesses

– Scale and Cost Economies
– Size and Financial Resources
– Intellectual, Legal, and Reputational Resources
• Opportunities and Threats
– Trends in the Competitive Environment
– Trends in the Technological Environment
– Trends in the Sociocultural Environment

4-88
The Starbucks Experience

4-89
 SWOT-Driven Strategic Planning

• Four issues the marketing manager must recognize:

– (1) The assessment of strengths and weakness should look beyond
products and resources to examine processes that meet customer
needs. Offer solutions to customer problems instead of specific
products.
– (2) Achieving goals and objectives depends on transforming
strengths into capabilities by matching them with opportunities.
– (3) Weaknesses can be converted into strengths with strategic
investment. Threats can be converted into opportunities with
the right resources.
– (4) Weaknesses that cannot be converted become limitations which
must be minimized if obvious or meaningful to customers.

4-90
 Analysis of the SWOT Matrix

• SWOT Matrix:
– A four-cell array used to categorize information at the
conclusion of a SWOT analysis.
• Should be based on customer perceptions, not the
perceptions of the analyst.
• Elements with the highest total ratings should
have the greatest influence in marketing strategy.
• Focus on competitive advantages by matching
strengths with opportunities.
4-91
The SWOT Matrix

Exhibit 4.6 4-92

 Quantitative Assessment of
Elements Within the SWOT Matrix

Exhibit 4.7 4-93

 Discussion Question

• Strengths, weaknesses, opportunities, and

threats: Which is the most important? Why?
How might your response change if you
were the CEO of a corporation? What if
you were a customer of the firm? An
employee? A supplier?

4-94
 Leveraging Competitive Advantages

• Competitive advantages can arise from many

external or internal sources.
• Competitive advantages refer to real differences
between competing firms.
• Three basic strategies for competitive advantage:
– (1) Operational Excellence
– (2) Product Leadership
– (3) Customer Intimacy

4-95
 Common Sources
of Competitive Advantage

· Relational Advantages · Product Advantages

· Legal Advantages · Pricing Advantages
· Organizational Advantages · Promotion Advantages
· Human Resources Advantages · Distribution Advantages

From Exhibit 4.8 4-96

 Discussion Question

• Support or contradict this statement: “Given

the realities of the new economy and the
rapid changes occurring in business
technology, all competitive advantages are
short lived. There is no such thing as a
sustainable competitive advantage that lasts
over the long term.” Defend your position.

4-97
 Establishing a Strategic Focus

• Four major directions for strategic efforts:

– Aggressive (many internal strengths / many external
opportunities)
– Diversification (many internal strengths / many external
threats)
– Turnaround (many internal weaknesses / many external
opportunities)
– Defensive (many internal weaknesses / many external threats)
• These are the most common, but other combinations of
strengths and weaknesses are possible.
4-98
Strategic Turnaround at Chrysler

4-99
 Developing Marketing
Goals and Objectives
• Developing Marketing Goals
– Attainability
– Consistency
– Comprehensiveness
– Intangibility
• Developing Marketing Objectives
– Attainability
– Continuity
– Time Frame
– Assignment of Responsibility
• Moving Beyond Goals and Objectives
4-100
2003 Baldrige Award Criteria
for Performance Excellence

Exhibit 4.10 4-101

MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

5
Managing Customer
Relationships
Understanding Customer Behavior

• The Consumer Buying Process:

– Depicts the possible range of activities that may
occur in making purchase decisions
– Involves considering which product to buy AND
considering where to buy it
– Choice of a suitable merchant may take
precedence over the choice of a specific product

5-103
The Consumer Buying Process

Exhibit 5.1 5-104

 Need Recognition

• Need:
– Occurs when the consumer’s current level of
satisfaction does not equal their desired level of
satisfaction.
• Want:
– A consumer’s desire for a specific product that
will satisfy the need.
• Demand:
– When the want for a specific product is backed
up by the customer’s ability and willingness to
pay for the product.
5-105
Targeting Consumer Wants - Sportiness

5-106
 Discussion Question

• Many people criticize marketing as being manipulative

based on the argument that marketing activities create
needs where none previously existed. Marketers that are
often implicated include the makers of SUVs, tobacco
products, diet programs, exercise equipment, and luxury
products. Also, any marketer that targets children or the
elderly is often seen as manipulative. Are consumers
being manipulated into believing that they need certain
products, or are marketers creating products that fulfill
previously unmet needs? Explain.

5-107
 Information Search (1 of 2)

• Marketing stimuli can stimulate a desire for

information:
– Passive Information Search
– Active Information Search
• Sources of information:
– Internal Sources
– Personal Sources
– External Sources

5-108
 Information Search (2 of 2)

• Time, effort and expense dedicated to information

search depends on:
– Degree of risk involved in the purchase
• Financial risk
• Social risk
• Emotional risk
• Personal risk
– Amount of expertise with the product category
– Actual cost of the search
• Evoked set:
– A narrowed down set of alternatives that the customer is
considering
5-109
 Evaluation of Alternatives
• Customers evaluate products as bundles of attributes
– Brand attributes
– Product features
– Aesthetic attributes
– Price
• Customers place different levels of importance on
attributes
• Important considerations in the evaluation stage:
– Products must be in the evoked set
– Consumers’ choice criteria must be understood
– Marketing programs must be designed to influence consumers’
opinions about product or brand image
5-110
 Purchase Decision

• Purchase intention and the act of buying are

distinct concepts
• Potential intervening factors between intention
and buying (car example):
– Unforeseen circumstances
– Angered by the salesperson or sales manager
– Unable to obtain financing
– Customer changes mind
• Key issues in the purchase decision stage:
– Product availability
– Possession utility
5-111
 Postpurchase Evaluation
• Four possible outcomes in the postpurchase stage:
– (1) Delight
– (2) Satisfaction
– (3) Dissatisfaction
– (4) Cognitive Dissonance
• Cognitive dissonance is more likely to occur when:
– Dollar value of the purchase increases
– Opportunity cost of rejected alternatives is high
– Purchase decision is very involving or emotional
• Firm’s ability to manage dissatisfaction and cognitive
dissonance is:
– A key to creating customer satisfaction
– A major influence on word-of-mouth communication 5-112
 Factors Affecting the
Consumer Buying Process
• Decision-Making Complexity
– High/Low Complexity
• Individual Differences
– Demographics, perceptions, motives, interests,
attitudes, opinions, lifestyles, etc.
• Social Influences
– Culture, subculture, social class, reference
groups, opinion leaders, etc.
• Situational Influences 5-113
Common Situational Influences

Exhibit 5.2 5-114

 Understanding Business
Buying Behavior
• Four types of Business Markets:
– Producer markets (a.k.a. commercial markets)
– Reseller markets
– Government markets
– Institutional markets
• Unique Characteristics of Business Markets
– The Buying Center
– Hard and Soft Costs
– Reciprocity
– Mutual Dependence 5-115
 The Business Buying Process

• (1) Problem Recognition

• (2) Develop Product Specifications
• (3) Vendor Identification and Qualification
• (4) Solicitation of Proposals or Bids
• (5) Vendor Selection
• (6) Order Processing
• (7) Vendor Performance Review
5-116
 Managing Customer Relationships

• Customer Relationship Management

(CRM):
– “A holistic process of identifying, attracting,
differentiating, and retaining customers.”
• CRM Stakeholders:
– Employees
– Supply Chain Partners
– Lateral Partners
– Customers 5-117
 Strategic Shift from Acquiring
Customers to Maintaining Clients

Exhibit 5.3 5-118

 Discussion Question

• One of the common uses of CRM in

consumer markets is to rank customers on
profitability or lifetime value measures.
Highly profitable customers get special
attention, while unprofitable customers get
poor service or often “fired.” What are the
ethical and social issues involved in these
practices? Could CRM be misused? How
and why?
5-119
 Developing Relationships
in Consumer Markets
• Increase share of customer rather than
market share
• Serve current customers rather than focus
on acquiring new customers
• The 80/20 Rule:
– 20% of the customers provide 80% of the
profit

5-120
 Stages of Customer
Relationship Development

Exhibit 5.4 5-121

“The Relationship People”

5-122
 Developing Relationships
in Business Markets
• Relationships must be built on win-win
strategies
• Changes in business relationships:
– A change in buyers’ and sellers’ roles
– An increase in sole sourcing
– An increase in global sourcing
– An increase in team-based buying decisions
– An increase in productivity through better
integration 5-123
 Quality and Value: (1 of 2)
The Keys to Developing Customer Relationships

• Understanding the Role of Quality

– The core product is not enough
– Supplemental products are critical
• Delivering Superior Quality (four issues)
– Understand customers’ expectations, needs, and wants
– Translate customer research into specifications for
quality
– Deliver on specifications
– Promise only what can be delivered
5-124
 Components of the
Total Product Offering

Exhibit 5.5 5-125

Marketing Strategy in Action
• This Mercedes ad
illustrates the power of
the Mercedes brand in
making its products
instant classics.
• What other name brands
can you think of that
exude quality? What
separates these firms from
other companies making
similar products?
5-126
 Quality and Value: (2 of 2)
The Keys to Developing Customer Relationships
• Understanding the Role of Value
– A simple formula for value:

– A more useful formula for value:

– Core Product, Supplemental Product, and Experiential

Quality
– Monetary and Nonmonetary Costs
• Competing on Value
5-127
 Customer Satisfaction:
Retaining Customers Over the Long Term
• Satisfaction vs. Quality vs. Value
– Expectations
• Customer Satisfaction and Customer Retention
– Understand what can go wrong
– Focus on controllable issues
– Manage customer expectations
– Offer satisfaction guarantees
– Make it easy for customers to complain
– Create loyalty programs
– Make customer satisfaction measurement an ongoing
priority
5-128
Examples of Customer
Satisfaction Guarantees

Exhibit 5.7 5-129

 Customer Satisfaction Metrics

• Lifetime Value of a Customer (LTV)

• Average Order Value (AOV)
• Customer Acquisition/Retention Costs
• Customer Conversion Rate
• Customer Retention Rate
• Customer Attrition Rate
• Customer Recovery Rate
• Referrals
• Viral Marketing 5-130
 Discussion Question

• Why do you think many firms do such a

poor job of understanding the needs, wants,
and expectations of their customers? Do
they buy into the “better mousetrap”
philosophy and believe that quality is the
only necessary requirement of maintaining
customer relationships? Explain.

5-131
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

6
Market Segmentation, Target
Marketing, and Positioning
Market Segmentation Strategies (1 of 2)

• Traditional Approaches to Market

Segmentation
– Mass Marketing
– Differentiated Marketing
• Multisegment Approach
• Market Concentration Approach
– Niche Marketing

6-133
Mass Marketing Strategy

From Exhibit 6.1 (1 of 4) 6-134

Multisegment Strategy

From Exhibit 6.1 (2 of 4) 6-135

Market Concentration Strategy

From Exhibit 6.1 (3 of 4) 6-136

Niche Marketing Strategy

From Exhibit 6.1 (4 of 4) 6-137

 Discussion Question

• Can you think of a product that could be

marketed effectively using a mass
marketing approach? If so, explain and
justify your answer. If not, what types of
changes would have to be made to the
product to make it appropriate for a mass
marketing approach?

6-138
Multisegment Approach

6-139
Market Segmentation Strategies (2 of 2)

• Emerging Approaches to Segmentation

– One-to-One Marketing
– Mass Customization
– Permission Marketing
• Criteria for Successful Segmentation
– Identifiable and Measurable
– Substantial
– Accessible
– Responsive
– Viable
6-140
 Discussion Question

• Many consumers and consumer advocates

are critical of the one-to-one marketing
approach due to personal privacy concerns.
Marketers counter that one-to-one
marketing can lead to privacy abuses, but
that the benefits to both consumers and
marketers far outweigh the risks. Where do
you stand on this issue? Why?
6-141
 Bases for Segmenting
Consumer Markets
• Behavioral Segmentation
– Segments based on actual behavior or product usage
• Demographic Segmentation
– Segments based on demographic factors (e.g., gender,
age, income, education, etc.)
• Psychographic Segmentation
– Segments based on state-of-mind issues (e.g., motives,
attitudes, opinions, values, lifestyles, interests,
personality, etc.)
• Geographic Segmentation
– Segments based on geographic location
6-142
Marketing Strategy in Action
• Demographic segmentation
strategies, such as the one
utilized in this Virginia Slims
advertising campaign, are
common because their ease of
use and measurement.
• What are the limitations of
demographic segmentation?
What can marketers do to
compensate for these
limitations?

6-143
VALS

6-144
Benefit Segmentation of
the Snack Food Market

Exhibit 6.4 6-145

 Discussion Question

• What are some of the ethical and legal

issues involved in targeting sensitive groups
such as children and seniors?

6-146
 Bases for Segmenting
Business Markets
• Type of Organization
• Organizational Characteristics
• Benefits Sought or Buying Processes
• Personal and Psychological
• Relationship Intensity

6-147
 Target Marketing Strategies

• Five basic strategies for target market

selection:
– (1) Single Segment Targeting
– (2) Selective Targeting
– (3) Mass Market Targeting
– (4) Product Specialization
– (5) Market Specialization

6-148
Basic Target Marketing Strategies

Exhibit 6.6 6-149

 Differentiation and Positioning (1 of 2)

• Relative perception
• Process of creating favorable relative position:
– (1) Identification of target market
– (2) Determination of needs, wants, preferences and
benefits desired
– (3) Examination of competitors’ characteristics and
positioning
– (4) Comparison of product offerings with competitors
– (5) Identification of unique position
– (6) Development of a marketing program
– (7) Continual reassessment
6-150
 Differentiation and Positioning (2 of 2)

• Differentiation Strategies
– Product Descriptors
• Product features
• Advantages
• Benefits
– Customer Support Services
– Image
• Positioning Strategies
– Strengthen the Current Position
– Repositioning
– Reposition the Competition
6-151
Using Product Descriptors
for Product Differentiation

Exhibit 6.7 6-152

MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

7
Product Strategy
 Product Classification (1 of 3)

• Consumer Product Classifications

– Convenience Products
– Shopping Products
– Specialty Products
– Unsought Products
• (1) Products of which consumers are unaware
• (2) Products that consumers do not consider
purchasing until a need or emergency
arises
7-154
Specialty Products

7-155
 Product Classification (2 of 3)

• Business Product Classifications

– Raw Materials
– Component Parts
– Process Materials
– MRO Supplies
– Accessory Equipment
– Installations
– Business Services
7-156
 Product Classification (3 of 3)
• Product Lines and Mixes
– Product Line
– Product Mix
• Benefits of offering a wide variety and deep
assortment of products:
– Economies of Scale
– Package Uniformity
– Standardization
– Sales and Distribution Efficiency
– Equivalent Quality Beliefs
7-157
 Product Lines and
Product Mixes at Gillette

Exhibit 7.1 7-158

 Discussion Question

• Consider the number of product choices that

are available in the U.S. consumer market.
In virtually every product category,
consumers have many, many options to
fulfill their needs. Are all of these options
really necessary? Is having this many
choices a good thing for consumers? Why
or why not?
7-159
 New Product Development
• Six strategic product development options:
– (1) New-to-the-world products (discontinuous
innovations)
– (2) New product lines
– (3) Product line extensions
– (4) Improvements or revisions of existing
products
– (5) Repositioning
– (6) Cost reductions
• Customer perception of differentiation is
critical
7-160
Avis: “We Try Harder”

7-161
 Product Strategy
Throughout the Life Cycle
• Development Stage
• Introduction Stage
• Growth Stage
• Maturity Stage
• Decline Stage

7-162
Stages of the Product Life Cycle

Exhibit 7.2 7-163

Marketing Strategy During
the Product Life Cycle

Exhibit 7.3 7-164

 Development Stage

• No sales revenue during this stage

• Components of the product concept:
– An understanding of desired uses and benefits
– A description of the product
– The potential for creating a complete product line
– An analysis of the feasibility of the product concept
• Customer needs should be discerned before
developing marketing strategy
7-165
 Introduction Stage

• Begins when development is complete

• Ends when customers widely accept the product
• Marketing strategy goals during this stage:
– Attract customers by raising awareness and interest
– Induce customers to try and buy
– Engage in customer education activities
– Strengthen or expand channel and supply
relationships
– Build on availability and visibility
– Set pricing objectives 7-166
 Growth Stage (1 of 2)

• Be ready for sustained sales increases

• Rapid increase in profitability early in the growth
stage that decreases at the end of this stage
• Length depends on nature of product and
competitive reactions
• Two strategies:
– (1) Establish a strong, defensible marketing position
– (2) Achieve financial objectives
7-167
 Growth Stage (2 of 2)

• Marketing strategy goals in this stage:

– Leverage the product’s perceived differential advantages
– Establish a clear product and brand identity
– Create unique positioning
– Maintain control over product quality
– Maximize availability of the product
– Maintain or enhance the product’s profitability to partners
– Find the ideal balance between price and demand
– Keep an eye focused on the competition

7-168
 Maturity Stage (1 of 2)

• Few, if any, new firms will enter the market

• Still an opportunity for new product features
and variations
• Typically the longest stage in the product
life cycle

7-169
 Maturity Stage (2 of 2)

• Four general goals in this stage:

– (1) Generate Cash Flow
– (2) Hold Market Share
– (3) Steal Market Share
– (4) Increase Share of Customer
• Four options to achieve these goals:
– (1) Develop a new product image
– (2) Find and attract new users to the product
– (3) Discover new applications for the product
– (4) Apply new technology to the product 7-170
 Decline Stage

• Two options:
– (1) Attempt to postpone the decline
– (2) Accept its inevitability
• Harvesting
• Divesting
• Factors to be considered during this stage:
– Market segment potential
– The market position of the product
– The firm’s price and cost structure
– The rate of market deterioration
7-171
 Marketing Strategy in Action

• Ford has been creative in restyling the 2005 Mustang with retro
styling cues to keep the model viable despite decreasing interest in
“muscle cars.” What other ways can marketers combat the
inevitability of the decline stage of the product life cycle?
7-172
 Discussion Question

• Describe the different product decisions that

impact each phase of the product life cycle.
If you were losing money with a product in
the decline stage, why might you consider
retaining that product? Why would a firm
or brand manager become sentimental about
a product and hold on to it even in the face
of monetary losses?
7-173
 Branding Strategy

• Key Issues In Branding

– Brand Loyalty
– Brand Equity
– Brand Alliances
• Packaging and Labeling
– Packaging
• Protection, storage, convenience, etc.
– Labeling
• The Nutritional Labeling and Education Act of 1990
• Food Choking Prevention Act
7-174
Advantages of Branding

Exhibit 7.4 7-175

The World’s Twenty-Five
Most Valuable Brands

Exhibit 7.5 7-176

 Product Strategy for Services

• Characteristics of Services
• Marketing Strategy for Services
– Product Issues
– Pricing Services
– Promoting Service Benefits
– Distributing Services

7-177
 Unique Characteristics of Services
and Resulting Marketing Challenges

Exhibit 7.6 7-178

 Discussion Question

• Given the unique characteristics of services,

what potential ethical issues could arise in
service marketing and delivery? How can a
service marketer prevent ethical challenges
and convey a sense of trust to customers?

7-179
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

8
Pricing Strategy
 The Role of Pricing in
Marketing Strategy (1 of 2)
• The Seller’s Perspective on Pricing
• Four key issues:
– (1) Costs
– (2) Demand
– (3) Customer value
– (4) Competitors’ prices
• The Buyer’s Perspective on Pricing
– Two key issues:
• (1) Perceived value
• (2) Price sensitivity
8-181
 The Role of Pricing in
Marketing Strategy (2 of 2)
• A Shift in the Balance of Power
– Buyer’s market
• Large number of sellers in the market
• Many substitutes for the product
• Economy is weak
– Seller’s market
• Products are in short supply
• High demand
• Economy is strong
• The Relationship Between Price and Revenue
– Myth #1: When business is good, a price cut will increase
market share.
– Myth #2: When business is bad, a price cut will
stimulate sales. 8-182
 Major Determinants of
Pricing Strategy
• Pricing Objectives
• Supply and Demand
• The Firm’s Cost Structure
• Competition and Industry Structure
– Four basic competitive market structures:
• Pure Competition
• Monopolistic Competition
• Oligopoly
• Monopoly
• Stage of the Product Life Cycle
• Other Elements of the Marketing Mix
8-183
Regulated Utilities as Monopolies

8-184
Description of Common Pricing Objectives

Exhibit 8.1 8-185

Pricing Strategy Over the
Product Life Cycle

Exhibit 8.2 8-186

 Price Elasticity of Demand (1 of 2)

• Formula for calculating price elasticity:

• Situations That Increase Price Sensitivity

– Availability of product substitutes
– Higher total expenditure
– Noticeable differences
– Easy price comparison
8-187
Price Elasticity of Demand

Exhibit 8.3 8-188

 Price Elasticity of Demand (2 of 2)
• Situations That Decrease Price Sensitivity
– Real or perceived necessities
– Lack of product substitutes
– Complementary products
– Product differentiation
– Perceived product benefits
– Situational influences
• Price Elasticity and Yield Management
– Allows simultaneous control of capacity and demand
• Control capacity by limiting available capacity at
certain price points
• Control demand through price changes and
overbooking capacity
8-189
Yield Management for
a Hypothetical Model

Exhibit 8.4 8-190

 Discussion Question

• Discuss the variety of situational factors that

could come into play and impact elasticity
in the purchase of each of the following
products: a) sporting event or concert
tickets, b) staple goods such as milk, eggs,
or bread, c) an electric razor, d) eye surgery
to improve vision.

8-191
 Pricing Strategies (1 of 2)
• Base Pricing Strategies
– Price Skimming
– Penetration Pricing
– Prestige Pricing
– Value-Based Pricing (EDLP)
– Competitive Matching
– Non-Price Strategies
• Adjusting Prices in Consumer Markets
– Promotional Discounting
– Reference Pricing
– Odd-Even Pricing
– Price Bundling 8-192
 Marketing Strategy in Action

• Chrysler’s price skimming strategy for the Pacifica model has not been
successful in attracting customers. Why do you think the $40,000 price
tag has not been successful for the Pacifica? What do you think
Chrysler should do in rethinking its pricing strategy for this model?
8-193
Price Bundling

8-194
 Pricing Strategies (2 of 2)
• Adjusting Prices in Business Markets
– Pricing techniques unique to business markets:
• Trade discounts
• Discounts and allowances
• Geographic pricing
• Transfer pricing
• Barter and countertrade
– Price discrimination

8-195
 Fixed vs. Negotiated Pricing

• Three pricing levels in a negotiated price situation:

– (1) Opening position
– (2) Aspiration price
– (3) Limit
• Guidelines for making concessions:
– Avoid being the first side to make a concession
– Start with modest concessions and make them smaller as
you proceed
– Avoid making concessions early in the negotiation
– Do not give up anything without something in return
8-196
 Discussion Question

• If you were trying to sell your used car

through the newspaper, what factors would
determine how you might set your opening
position, your aspiration price, and your
limit during the negotiation process?

8-197
Major Online Auction Strategies

Exhibit 8.5 8-198

Legal and Ethical Issues in Pricing

• Price Discrimination
• Price Fixing
• Predatory Pricing
• Deceptive Pricing

8-199
 Discussion Question

• One of the key decisions that managers

often make is to change prices that have
been set inappropriately. What issues
should be considered in deciding whether it
is the price that is wrong, or whether the
problem lies in another element of the
marketing mix?

8-200
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

9
Distribution and Supply
Chain Management
 Distribution and
Supply Chain Concepts
• Marketing Channels
– “An organized system of marketing institutions
through which products, resources, information,
funds, and/or product ownership flow from the
point of production to the final user.”
• Physical Distribution
– “Coordinating the flow of information and
products among members of the channel to
ensure that products are available in the right
places, in the right quantities, at the right times,
and in a cost-efficient manner.”
9-202
Graphical Depiction of a Supply Chain

Exhibit 9.1 9-203

 Marketing Channel Functions
• Channel Function Specializations
– Sorting
– Breaking Bulk
– Maintaining Inventories
– Maintaining Convenient Locations
– Providing Services
• Channel Effectiveness and Efficiency
– Distribution Decision Criteria
• (1) Is the channel effective?
• (2) Is the channel efficient?
9-204
 Discussion Question

• Some manufacturers and retailers advertise

that customers should buy from them
because they “eliminate the middleman.”
Evaluate this comment in light of the
functions that must be performed in a
marketing channel. Does a channel with
fewer members always deliver products to
customers at lower prices? Defend your
position.
9-205
 Strategic Issues in Distribution
and Supply Chain Management
• Marketing Channel Structure
– Exclusive Distribution
– Selective Distribution
– Intensive Distribution
• Channel Integration (three key factors)
– Connectivity
– Community
– Collaboration
• Creating and Enhancing Value in the Supply Chain

9-206
 Discussion Question

• Describe the characteristics of a product that

represent something you would go to great
lengths to acquire, thus supporting a
manufacturer’s use of an exclusive
distribution strategy. How much more
knowledgeable are the salespeople at an
exclusive distribution location versus those
at an intensive distribution location? Why is
this so?
9-207
Marketing Strategy in Action
• Clinique cosmetics uses a
selective distribution
strategy as their primary
marketing channel
structure.
• What is the motivation
for using this strategy for
this type of product line?
What are the apparent
benefits that Clinique
receives from this
strategy?
9-208
Maximizing Profit Margin Performance

Exhibit 9.2 9-209

 Conflict and Collaboration
in the Supply Chain (1 of 2)
• The Basis of Conflict in the Supply Chain
– Five basic sources of power:
• Legitimate Power
• Reward Power
• Coercive Power
• Information Power
• Referent Power

9-210
 Factors in Successful
Supply Chain Collaboration

Exhibit 9.3 9-211

 Conflict and Collaboration
in the Supply Chain (2 of 2)
• Collaborative Supply Chains
– Category management must be:
• Customer driven
• Strategically driven
• Multifunctional
• Financially based
• Systems dependent
• Focused on immediate consumer response

9-212
Major Components of
Category Management

Exhibit 9.4 9-213

Trends in Marketing Channels (1 of 2)
• Advancing Technology
– Growth of Internet and e-commerce
– Radio frequency identification (RFID)
• Shifting Power in the Channel
– Discount mass merchandise retailers
• Wal-Mart, Kmart, and Target
– Category focused retailers (category killers)
• Toys “R” Us, Lowe’s, Office Depot, AutoZone, and
Best Buy
• Outsourcing Channel Functions
– Outsourcing is growing rapidly 9-214
Category Killers - AutoZone

9-215
The Trend in Outsourcing

Exhibit 9.5 9-216

Trends in Marketing Channels (2 of 2)

• The Growth of Direct Distribution and

Nonstore Retailing
– Examples of Nonstore Channels
• Catalog and Direct Marketing
• Direct Selling
• E-Commerce
• Home Shopping Networks
• Vending
• Direct Response Advertising
• The Growth of Dual Distribution
9-217
 Discussion Question

• What are the major differences you have

experienced in buying a product through a
physical retail store, a manufacturer’s
physical store, a catalog, and an online
merchant? What have some retailers in
your area done to justify their ongoing
presence in the channel?

9-218
 Legal and Ethical Issues
in the Supply Chain
• Dual Distribution
• Exclusive Channel Arrangements
• Tying Arrangements
• Counterfeit Products

9-219
FDA Against Counterfeit Drugs

9-220
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

10
Integrated Marketing
Communications
Integrated Marketing Communication

• Integrated Marketing Communication (IMC)

– “…the strategic, coordinated use of promotional
elements to ensure maximum persuasive impact
on the firm’s current and potential customers.”
• Reasons that IMC is important:
– Fosters long-term relationships
– Reduces or eliminates promotional redundancies
– Technology allows better targeting of customers

10-222
Promotional Elements Used in IMC

Exhibit 10.1 10-223

 Discussion Question

• How might the IMC strategy for a dot-com

company differ from a traditional company?
Would the dot-com company have an
advantage or a disadvantage relative to its
offline competitors? Explain your answer.

10-224
 Strategic Issues in Integrated
Marketing Communications
• IMC must have clear promotional goals and
objectives
• The AIDA Model
– Attention
– Interest
– Desire
– Action
• Promotional goals with respect to the supply
chain
– Push or pull strategy?
10-225
 Discussion Question

• Review the steps in the AIDA model. In

what ways has promotion affected you in
various stages of this model? Does
promotion affect customers differently
when the product is inexpensive versus
when it is expensive? Explain your answer.

10-226
Promotion Strategy Over
the Product Life Cycle

Exhibit 10.2 10-227

 Advertising
• Types of Advertising
– Institutional advertising
– Advocacy advertising
– Product advertising
• Determining the Advertising Budget
– Objectives and task approach
– Percentage of sales approach
– Competitive matching approach
– Arbitrary approach
10-228
Focusing on Women’s Issues

10-229
Marketing Strategy in Action
• The Dairy Board’s “Got
Milk” campaign is a good
example of successful
pioneer advertising.
• How does this type of
advertising benefit all
sellers in the market?
What is the primary goal
of pioneer advertising?

10-230
Spending on National Advertising:
2003 Projections

Exhibit 10.3 10-231

Top Ten Fortune 500
Online Advertisers

Exhibit 10.4 10-232

 Top Ten Web Properties
Hosting Online Advertising

Exhibit 10.5 10-233

Evaluating Advertising Effectiveness
• Methods
– Evaluating the achievement of advertising
objectives
– Assessing the effectiveness of advertising copy,
illustrations, and layouts
– Evaluating the effectiveness of various media
• Timing of Evaluation
– Pretest
– During campaign
– Posttest
10-234
 Discussion Question

• How does the highly visible nature of

advertising relate to the development of
brand image? If all advertising for a well-
known brand were to stop suddenly, would
the image of the brand suffer? Why or why
not?

10-235
 Public Relations

• Public Relations Methods

- News (or press) releases - Investor relations
- Feature articles - Employee relations
- White papers - Event sponsorship
- Press conferences - Product placement
- Lobbying

• Negative Public Relations

10-236
Degree of Customer Trust
in Selected U.S. Industries

Exhibit 10.6 10-237

Degree of Customer Trust in Selected
Corporations and Nonprofits

Exhibit 10.7 10-238

 Personal Selling and
Sales Management
• The Sales Management Process
– Developing Sales Force Objectives
– Determining Sales Force Size
– Recruiting Salespeople
– Training the Sales Force
– Controlling and Evaluating the Sales Force
• The Impact of Technology on Personal
Selling

10-239
Comparison of Sales Force
Compensation Methods

Exhibit 10.8 10-240

Sales Promotion in Consumer Markets

• Types of Sales Promotion to Consumers

– Coupons
– Rebates
– Samples
– Loyalty programs
– Point-of-purchase promotion
– Premiums
– Contests and sweepstakes

10-241
Coupons: Sales Promotion to Consumers

10-242
Sales Promotion in Business Markets

• Sales Promotion Methods Unique to

Business Markets
– Trade allowances
– Free merchandise
– Training assistance
– Cooperative advertising
– Selling incentives

10-243
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

11
Marketing Implementation
and Control
 Strategic Issues in
Marketing Implementation (1 of 2)
• The Link Between Strategic Planning and
Implementation
– Interdependency
– Evolution
– Separation

11-245
Southwest: Improving Customer Service

11-246
Strategy and Implementation:
A Two-Way Relationship

Exhibit 11.1 11-247

 Discussion Question

• Forget for a moment that planning the

marketing strategy is equally as important
as implementing the marketing strategy.
What arguments can you make for one
being more important than the other?
Explain your answers.

11-248
 The Separation of
Planning and Implementation

Exhibit 11.2 11-249

 Strategic Issues in
Marketing Implementation (2 of 2)
• The Elements of Marketing Implementation
– Shared Goals and Values
– Marketing Structure
– Systems and Processes
– Resources
– People (Human Resources)
• Employee selection and training
• Employee evaluation and compensation policies
• Employee motivation, satisfaction and commitment
– Leadership
11-250
Home Depot Employees

11-251
 The Elements of
Marketing Implementation

Exhibit 11.3 11-252

 Approaches to Marketing
Implementation
• Implementation By Command
• Implementation Through Change
• Implementation Through Consensus
• Implementation as Organizational Culture

11-253
Marketing Strategy in Action
• Chrysler Corporation’s
acquisition of Jeep/Eagle was
a critical step in the process of
rebuilding Chrysler.
• How can an implementation
through change strategy alter
the success of a company?
Can you think of other
mergers/acquisitions that
improved the company’s
competitive position?

11-254
 Discussion Question

• If you were personally responsible for

implementing a particular marketing strategy,
which implementation approach would you be
most comfortable using given your personality
and personal preferences? Why?

11-255
 Internal Marketing
and Marketing Implementation
• The Internal Marketing Approach
– Goals of Internal Marketing
• (1) Help employees understand their roles
• (2) Create motivated and customer-oriented
employees
• (3) Deliver external customer satisfaction
• The Internal Marketing Process
– Internal Customers
– External Customers
• Putting Internal Marketing Into Action
11-256
The Internal Marketing Process

Exhibit 11.5 11-257

 Discussion Question

• What do you see as the major stumbling

blocks to the successful use of the internal
marketing approach? Given the hierarchical
structure of employees in most firms, is
internal marketing a viable approach for
most organizations? Why or why not?

11-258
 Evaluating and Controlling
Marketing Activities
• Four possible causes of differences between
intended strategy and realized strategy:
– (1) The marketing strategy was inappropriate
or unrealistic.
– (2) The implementation was inappropriate
for the strategy.
– (3) The implementation process was
mismanaged.
– (4) Substantial changes occurred in the
environment between development
and implementation.

11-259
A Framework for Marketing Control

Exhibit 11.6 11-260

 Formal Marketing Controls
• Input Controls
– Recruiting, selecting, and training employees
– Resource allocation decisions
• Process Controls
– Commitment to the strategy
– System for evaluating and compensating employees
• Output Controls
– Formal performance standards
– Marketing audits

11-261
 Informal Marketing Controls
• Employee Self-Control
– Employees manage their own behaviors
– Establish personal objectives and monitor results
• Social Control
– Standards, norms, and ethics found in workgroups
– Peer pressure causes employees to conform
• Cultural Control
– Behavioral and social norms of the entire firm
– Shared values throughout the firm

11-262
 Scheduling Marketing Activities

• Basic steps in creating a schedule and

timeline:
– (1) Identify the activities to be performed
– (2) Determine the time required to complete
each activity
– (3) Determine which activities must precede
other activities
– (4) Arrange the proper sequence and timing
of all activities
– (5) Assign responsibility
11-263
 A Hypothetical 3-Month
Marketing Implementation Schedule

Exhibit 11.8 11-264

MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

12
Marketing Ethics and
Social Responsibility
 The Role of Ethics and Social
Responsibility in Marketing Strategy
• Dimensions of Social Responsibility
– Social responsibility
– Marketing ethics
• Marketing Ethics and Strategy
• The Challenges of Being Ethical and
Socially Responsible

12-266
Marketing Strategy in Action
• R.J. Reynolds has been
accused by critics of using its
“Joe Camel” cartoon
character, as shown in this
1988 ad, to target children for
cigarette consumption.
• How has society acted to
protect children from
advertising such as this?
What obligations do
companies have to protect
children?
12-267
The Pyramid of Social Responsibility

Exhibit 12.1 12-268

Potential Ethical Issues in Marketing

Exhibit 12.2 12-269

Perceived Values in the Workplace

Exhibit 12.3 12-270

 Discussion Question

• Why is marketing ethics a strategic

consideration in organizational decisions?
Who is most important in managing
marketing ethics: the individual or the
firm’s leadership? Explain your answer.

12-271
 Deceptive Practices in Marketing

• Deceptive Communication and Promotion

– False/deceptive statements
– Exaggerated claims
– Ambiguous statements
– Product labeling issues
– Fraud
• Regulating Deceptive Marketing Practices
– Trade associations
– Better Business Bureau (BBB)
12-272
Better Business Bureau

12-273
Organizational Determinants of Marketing
Ethics and Social Responsibility (1 of 2)
• Ethical Climate
• Codes of Conduct
– Six highly desirable core values:
• 1) Trustworthiness
• 2) Respect
• 3) Responsibility
• 4) Fairness
• 5) Caring
• 6) Citizenship

12-274
 Key Considerations in Developing and
Implementing a Code of Ethical Conduct

Exhibit 12.4 12-275

Texas Instruments

12-276
 Discussion Question

• Why are we seeing more evidence of

widespread ethical marketing dilemmas
within firms today? Is it necessary to gain
the cooperation of marketing managers to
overstate revenue and earnings in a
corporation?

12-277
Organizational Determinants of Marketing
Ethics and Social Responsibility (2 of 2)
• Marketing Ethics and Leadership
– Great leaders:
• 1) Create a common goal or vision
• 2) Obtain “buy in”
• 3) Motivate others to be ethical
• 4) Use available resources
• 5) Enjoy their jobs
– Ethics training can ensure that everyone:
• 1) Recognizes ethical decision making situations
• 2) Understands the culture and values of the firm
• 3) Is able to evaluate the impact of ethical decisions
12-278
 Ethics, Social Responsibility,
and Marketing Performance
• Firms that are ethical and socially
responsible are rewarded with greater
marketing performance.
• Having a strong ethical climate:
– Increases employee commitment
– Is conducive to a strong market orientation
– Creates trust among a firm’s stakeholders
– Increases customer loyalty

12-279
 Discussion Question

• What is the relationship between marketing

ethics and organizational performance?
What are the elements of a strong
compliance program to support responsible
marketing and a successful marketing
strategy?

12-280
 Incorporating Ethics and Social
Responsibility Into Strategic Planning
• AMA Code of Ethics
• Federal Sentencing Guidelines for
Organizations (FSGO)
• Marketing strategy and implementation
plans should reflect an understanding of:
– 1) The ethical and social consequences of
strategic choices
– 2) The values of organizational members and
stakeholders
12-281
AMA Code of Ethics for the Internet

Exhibit 12.6 12-282

Frequency of Misconduct and
Penalties Under the FSGO

Exhibit 12.7 12-283