MARKETING ADMINISTRATION 301

BACHELOR OF BUSINESS
ADMINISTRATION

MARKETING ADMINISTRATION 301

MODULE GUIDE

Copyright © 2024
REGENT BUSINESS SCHOOL

All rights reserved; no part of this book may be reproduced in any form or by any means, including
photocopying machines, without the written permission of the publisher.

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Table of Contents

INTRODUCTION TO MARKETING ADMINISTRATION 301 ...........................3

CHAPTER 1: Understanding Marketing and the Marketing Process ...............9

CHAPTER 2: Company and marketing strategy: partnering to build customer

engagement, value and relationships. .......................................47

CHAPTER 3: Analysing the marketing environment ......................................71

CHAPTER 4: Managing marketing information to gain customer insights ....104

BIBLIOGRAPHY ..........................................................................................128

List of Figures – please note the page numbers listed below may change after
edits

Figure 1.1: Marketing Process - p12

Figure 1.2: Contemporary marketing system p17
Figure 1.3: Selling versus marketing concept p21
Figure 1.4: The societal marketing concept - p24
Figure 1.5: Customer Relationship Categories - p36
Figure 2.1: p50
Figure 2.2: Boston Group Matrix p54
Figure 2.3: Product/ Market Expansion Grid p57
Figure 2.4: Marketing Strategies and Marketing Mix p59
Figure 2.5: Marketing Mix: Four P’s p67
Figure 3.1: Stakeholders in the Micro-environment p75
Figure 3.2: The Macro-environment p82
Figure 4.1: Marketing information system p109
Figure 4.2: Marketing research process p114

List of Tables

Table 2.1: Product versus market-oriented business definitions p51

Table 4.1: Planning primary data collection p117

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INTRODUCTION TO MARKETING ADMINISTRATION

301

1. Introduction

Welcome to Marketing Administration 301, a module that offers a comprehensive

exploration of marketing operations and strategies. Throughout this course, you will
delve into the intricacies of marketing administration, acquiring the knowledge and
skills essential for navigating the dynamic and ever-changing landscape of
contemporary marketing. The primary objective of this module is to equip you with an
in-depth understanding of marketing operations within a business context. By the end
this course, you should be able to demonstrate profound knowledge of how marketing
functions as a pivotal element of an organisation's success.

One of the central goals of this module is to foster a customer-centric approach to

marketing strategy and mix. You will learn how to advocate for and execute strategies
centred around delivering exceptional customer value. This approach is imperative in
today's competitive marketplace, where customer satisfaction and loyalty play a critical
role in organisational growth and sustainability.

In the realm of marketing, change is a constant. Therefore, this module provides the
tools to effectively navigate and manage change within marketing operations. We will
explore sound change management practices, specifically tailored to drive marketing
operations. This skill set enables you to adapt to evolving market trends, technologies,
and consumer behaviours, ensuring the continued relevance and effectiveness of their
marketing strategies.

We will thoroughly examine the concept of creating a competitive advantage and

sustainable marketing. You will develop a profound understanding of how to
differentiate their brand within a crowded marketplace, ultimately leading to long-term
success and growth.

Marketing Administration 301 offers you a transformative learning experience,

providing them with the knowledge and skills required to excel in the field of marketing
administration. Whether you are seasoned marketing professionals or just
commencing their journey, this module equips them with the tools and insights
necessary to thrive in today's dynamic business environment. You can anticipate an

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engaging exploration of marketing administration, taking their initial steps toward

becoming proficient and strategic marketing leaders.

2. Module Overview

Marketing Administration 301 provides a comprehensive exploration of marketing

operations and strategy designed to prepare you for success in the dynamic world of
business. In this module, you will develop a strong foundation in marketing principles,
learning how to craft strategies that create and deliver value to customers while
fostering engagement and building lasting relationships. Building on this foundation,
you will discover the crucial alignment between marketing strategy and overall
company objectives, emphasising the role of marketing in achieving organisational
goals through customer engagement, value delivery, and relationship-building. You
will also delve into assessing the marketing environment, understanding market
trends, competition, and regulatory changes, enabling informed decision-making in
response to dynamic market conditions. Additionally, you will gain valuable skills in
managing marketing information to derive customer insights, essential for shaping
effective marketing strategies. Understanding consumer markets and buyer behaviour
will be explored, empowering you to engage with consumers effectively. Finally, the
module will delve into business markets and the behaviour of business buyers,
providing insights into B2B relationships, procurement processes, and strategies
required for success in this unique marketing landscape. When you have completed
Marketing Administration 301, you will have acquired comprehensive knowledge and
practical skills essential for success in marketing administration, preparing them for a
fulfilling career in the field.

3. Aim of the Module

The aim of Marketing Administration 301 is to provide you with a comprehensive

understanding of marketing operations and strategy, enabling them to effectively
create and deliver customer value, align marketing efforts with overall company
objectives, analyse the marketing environment, harness data for customer insights,
comprehend consumer and business buyer behaviour, and ultimately excel in the field
of marketing administration. This module seeks to equip you with the knowledge and

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practical skills necessary for a successful and fulfilling career in the dynamic world of
business.

4. Essential (Prescribed) Reading

Your essential (prescribed) reading comprises the following:

4.1. Prescribed Reading

Kotler, P., Armstrong, G., Harris, L.C., Hongwei, HE (2020) Principles of Marketing.,
8th Edition. Pearson., Global.

4.2. Recommended Reading

Kotler, P., & Keller, K. L. (2021). Marketing Management. Pearson.

5. How to use the Module

This module should be studied using the recommended and prescribed textbook/s and
the relevant sections of this module. You should read about the topic that you intend
to study in the appropriate section before you start reading the textbook/s in detail.
Ensure that you make your own notes as you work through both the textbook/s and
this module. You will find a list of objectives and outcomes at the beginning of each
section. These outline the main points that you need to understand when you have
completed the section/s. The purpose of this guide is to help you study. It is important
for you to work through all the tasks and self-assessment exercises as they provide
guidelines for examination purposes.

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6. Navigational Icons

Think Point

When you see this icon, you should think about and reflect on the
issues/challenges/themes presented.

Tasks

When you see this icon, you will know that you are required to perform
some kind of task to gauge how well you remember or understand
what you have read or how good you are at applying what you have
learnt.

Definitions

This icon will alert you to a specific definition related to the topic under
discussion.

Case Studies

Case studies are often used to illustrate a concept within the setting
of a real-life scenario. Answer the questions that follow to ensure that
you have a proper understanding of what has been discussed.

7. Specific Outcomes and Chapter Alignment

SPECIFIC PROGRAMME OUTCOMES CHAPTER

ALIGNMENT

SO 1: Display in-depth knowledge of the marketing operations Chapter One

of a business.

SO 2: Promote a customer value-driven strategy and mix. Chapter Two

SO 3: Implement sound change management practices to drive Chapter Three

marketing operations.

SO 4: Optimise marketing data management and governance. Chapter Four

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8. Specific Outcomes and Assessment Criteria

SPECIFIC PROGRAMME ASSESSMENT CRITERIA

OUTCOMES
The student should demonstrate the ability to:

SO 1: Display in-depth knowledge • 1.1. Ability to describe the key components

of the marketing operations of marketing operations within a business
of a business. context.

• 1.2. Demonstrate a deep understanding of

marketing strategies and tactics employed
by businesses.

• 1.3. Analyse and critically evaluate the

effectiveness of marketing operations in a
real-world business scenario.

• 1.4. Apply relevant marketing concepts

and frameworks to address complex
marketing challenges.

SO 2: Promote a customer value- • 2.1. Articulate the concept of customer

driven strategy and mix. value and its significance in marketing
strategy.

• 2.2. Develop a marketing strategy that

prioritises and aligns with customer value
creation.

• 2.3. Effectively integrate the marketing mix

elements (product, price, place, and
promotion) to deliver superior customer
value.

• 2.4. Evaluate the impact of the customer

value-driven strategy on customer
satisfaction and loyalty.

SPECIFIC PROGRAMME ASSESSMENT CRITERIA

OUTCOMES
The student should demonstrate the ability to:

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SO 3: Implement sound change • 3.1. Identify and analyse the need for
management practices to change within marketing operations.
drive marketing operations.
• 3.2. Develop a well-structured change
management plan that addresses the
specific needs of marketing operations.

• 3.3. Apply change management

methodologies and techniques to
successfully implement marketing
changes.

• 3.4. Evaluate the outcomes of change

initiatives, including their impact on
marketing performance and efficiency.

SO 4: Optimise marketing data • 4.1. Be proficient in data collection,

management and storage, and analysis methods relevant to
governance. marketing.

• 4.2. Develop data governance policies and

practices to ensure data accuracy,
security, and compliance.

• 4.3. Effectively use of marketing analytics

tools and techniques to derive actionable
insights from data.

• 4.4. Apply data-driven insights to improve

marketing decision-making and campaign
effectiveness.

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CHAPTER 1:
Understanding Marketing and the Marketing Process

Specific Learning Outcomes

When you complete this chapter, you should be able to:

• Display in-depth knowledge of the marketing operations of a business

• Examine the marketing concept and outline the steps in the marketing process
• Elabourate on the significance of understanding the marketplace and customers
• Determine the five core marketplace concepts
• Formulate strategies to anticipate the marketplace and consumer needs
• Develop customer-centric marketing strategies
• Examine each of the different marketing orientations and their implications for
organisations
• Develop a customer value-driven marketing strategy and plan
• Examine the concept of customer relationship management systems
• Examine the trends and forces that impact the marketing landscape, and
• Analyse the impact of technological advancements, societal shifts, and economic
factors on marketing strategies and practices.

1.1. Introduction

Today's thriving companies have a common trait: they share a strong customer focus
and unwavering commitment to marketing. These organisations collectively exhibit a
deep passion for satisfying the needs of their well-defined target markets. They inspire
all members within the organisation to contribute to the development of enduring
customer relationships, built on the delivery of substantial value.

The importance of customer relationships and value is particularly pronounced in the

contemporary business landscape. Confronted with sweeping technological advances
and substantial economic, social, and environmental challenges, modern consumers

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are in the process of reevaluating their interactions with brand entities. Digital, mobile,
and social media innovations have revolutionised the consumer shopping experience
and interactions, thereby necessitating the formulation of innovative marketing
strategies and tactics. Establishing robust customer engagement, relationships, and
advocacy rooted in genuine and enduring customer value have become increasingly
critical.

The following chapters will delve into the captivating challenges faced by both
consumers and marketers in today's context. First though, we need to understand the
basics of marketing (Kotler, Armstrong, Harris, Hongwei, 2020).

1.2. Defining marketing

Marketing, more than any other business function, revolves around customers.
Although more detailed definitions of marketing will be explored in the following
sections, perhaps the simplest definition is as follows: Marketing involves engaging
customers and effectively managing profitable customer relationships. The
overarching goal of marketing can be divided into two parts - attracting new customers
through the promise of superior value and retaining and expanding the relationships
with current customers by consistently delivering value and satisfaction. Dyson, as a
company, adheres to a philosophy that centres on taking everyday products that are
not particularly efficient and making them more effective and superior. This approach
has catapulted Dyson to global success. Facebook, on the other hand, has garnered
more than 3 billion active web and mobile users worldwide (2023) by facilitating
connections and sharing among individuals. Virgin Atlantic embodies its motto of
'embracing the fun spirit and letting it fly' by being exceptionally appealing and
responsive to the needs, desires, and demands of its customers. Similarly, Coca-Cola
has achieved an impressive 49 percent global market share in the carbonated
beverage market, more than double Pepsi's share, by living up to its 'Taste the Feeling'
motto with products that offer a straightforward pleasure, making everyday moments
more special.

The significance of sound marketing practices cannot be overstated when it comes to

the success of any organisation. Not only do large for-profit corporations like Unilever,
Nestlé, Shell, and Santander employ marketing strategies, but not-for-profit

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organisations such as colleges, hospitals, museums, symphony orchestras, and even

churches also rely on marketing approaches to achieve their objectives.

Individuals already possess a substantial amount of knowledge about marketing as it

is omnipresent. Marketing manifests in the traditional forms that have been around for
a while. It is visible in the plethora of products available at local shopping centres and
in the advertisements that populate television screens, magazines, and mailboxes.
Today, people have access to various imaginative websites, smartphone apps, blogs,
online videos, and social media platforms. These extend beyond broadcasting generic
messages to the masses; they establish direct, personalised, and interactive
connections with individuals. Modern marketers aspire to integrate themselves into the
lives of consumers and enhance their experiences with their brands. Their aim is to
assist consumers in embodying their brands in their daily lives.

Whether individuals are at home, at school, in the workplace, or engaging in

recreational activities, marketing is an ever-present element in virtually every aspect
of their lives. However, beyond the surface, marketing involves a complex network
comprising individuals, technologies, and activities, all vying for the attention and
patronage of consumers. This module guide offers a comprehensive introduction to
the fundamental principles and techniques of contemporary marketing. This chapter
defines marketing and explains the marketing process. (Kotler et al., 2020). Currently,
the concept of marketing transcends the traditional notion of simply making a sale
through conventional 'telling and selling' approaches. Instead, it revolves around the
modern perspective of effectively meeting customers’ needs. When marketers adeptly
engage with consumers, understand their needs, develop products that offer
exceptional value, and implement effective pricing, distribution, and promotional
strategies, the result is products that effortlessly find their way to consumers. In fact,
according to the insights of management expert Peter Drucker, "The objective of
marketing is to render selling unnecessary."

Selling and advertising represent only a segment of the comprehensive marketing mix,
which comprises a collection of marketing tools designed to function in harmony,
engaging customers, addressing their needs, and nurturing customer relationships. In
a more expansive context, marketing emerges as a social and managerial process
through which both individuals and organisations secure what they require and desire

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by creating and exchanging value with others. In a narrower context within the realm
of business, marketing centres on the establishment of profitable, value-driven
exchange relationships with customers. Thus, marketing is fundamentally defined as
the process undertaken by companies to actively engage customers, cultivate robust
customer relationships, and generate customer value, ultimately yielding value from
customers in return (Kotler et al., 2020).

1.3. Marketing Process

In Figure 1.1 illustrates a straightforward five-step model of the marketing process,
emphasising the creation and acquisition of customer value. In the initial four stages,
organisations focus on understanding consumers, crafting customer value
propositions, and nurturing robust customer relationships. The concluding step allows
companies to enjoy the benefits arising from the generation of exceptional customer
value. Through the act of delivering value to consumers, organisations, in return,
harvest value from consumers in the shape of increased sales, profits, and the
establishment of enduring customer equity.

Figure1.1: Marketing Process, Adapted from Kotler et al., 2020:6

1.4. Understanding the marketplace and customer needs

As a first step, marketers need to understand customer needs and wants and the
marketplace in which they operate. We examine five core customer and marketplace
concepts:
1. Needs, wants and demands
2. Market offerings (goods, services and experiences)
3. Value and satisfaction
4. Exchanges and relationships
5. Markets

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Let’s consider each in turn.

1.3.1. Customer needs, wants, and demands

The fundamental concept that underlies marketing revolves around human needs,
which are inherent states of perceived deprivation. These needs encompass the
fundamental physiological requirements for sustenance, such as food, clothing,
warmth, and safety, as well as the social desires for belonging and affection, and
individual aspirations for knowledge and self-expression. It's essential to recognise
that marketers are not responsible for the creation of these needs; they are an intrinsic
aspect of human nature. Wants, on the other hand, represent the specific forms that
human needs take as they are influenced by cultural norms and individual
personalities.

For instance, a German consumer may possess the fundamental need for food but
may express it as a desire for sauerkraut, sausage, and beer. An American, similarly,
may have the same need for sustenance but may express it as a want for a Big Mac,
fries, and a soft drink. Likewise, an individual in Papua New Guinea may require food
but may express this need as a want for taro, rice, yams, and pork. Wants are
intrinsically shaped by the prevailing societal context, and they are articulated in terms
of specific objects or products that have the potential to fulfill those needs. When
individuals possess the financial means to back their wants, these wants are
transformed into demands. With their wants and available resources in mind,
individuals demand products and services that offer the most value and satisfaction.

Companies undertake extensive efforts to gain insights into and comprehend

customer needs, wants, and demands. These efforts encompass consumer research,
the meticulous analysis of vast amounts of customer data, and direct observations of
customers as they engage in shopping and interaction, both offline and online.
Individuals across all echelons of an organisation, including top-level management,
maintain proximity to customers. For instance, James Averdiek, Founder and MC of
the remarkable Gü Chocolate Puds, argues that a fundamental principle of any
successful business entails establishing a strong connection with customers by
understanding their actions and actively participating in their experiences. At
companies like P&G, executives, right from the CEO downwards, allocate time to
engage with customers in their homes and during shopping excursions. P&G brand
managers routinely immerse themselves in the budget constraints of budget-

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conscious consumers for a week or two to acquire insights into how they can enhance
the lives of customers (Kotler et al., 2020).

1.3.2. Market Offerings

Market offerings include a wide array of elements, comprising products, services, and
experiences, all intended to fulfil consumers' needs and desires. They represent
various combinations of products, services, information, or experiences strategically
presented to a market to address specific needs or wants. It's crucial to note that
market offerings extend beyond physical products; they also encompass services—
activities or benefits offered for sale, primarily intangible in nature and not resulting in
ownership of tangible goods. Examples of such services encompass banking, airline,
hotel, retailing, and home repair services.

Taking a broader perspective, market offerings encompass an even wider spectrum,

including entities such as individuals, locations, organisations, information, and
concepts. For instance, consider the case of Fáilte Ireland, a new tourism focused on
"Ireland's Hidden Heartlands" represents a relatively new tourism initiative in Ireland.
Launched by Fáilte Ireland, the country's national tourism development authority, this
campaign aims to promote and develop a specific region of Ireland that may not be as
widely recognised as some of the more famous tourist destinations in the country.

The "Hidden Heartlands" refers to a region in the centre of Ireland that includes
counties such as Longford, Roscommon, East Clare, Cavan, and Westmeath, among
others. This region is characterised by its picturesque landscapes, tranquil lakes,
winding rivers, and charming towns and villages. It offers a more relaxed and authentic
Irish experience, away from the hustle and bustle of major tourist hubs.

The "newness" of this tourism initiative lies in its effort to draw attention to and develop
this particular region as a tourist destination. It involves marketing the area's natural
beauty, outdoor activities, cultural experiences, and local hospitality to both domestic
and international travelers. Fáilte Ireland has likely introduced various attractions,
activities, and accommodations to make the "Hidden Heartlands" an appealing and
memorable destination for tourists, hence making it relatively new in the context of
Ireland's tourism offerings. Many sellers suffer from marketing myopia. In other words,
they make the mistake of paying more attention to the specific products they offer than
to the benefits and experiences produced by these products. Such sellers are so taken
with their products that they focus only on existing wants and lose sight of underlying

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customer needs. They forget that a product is only a tool to solve a consumer problem.
A manufacturer of quarter-inch drill bits may think that the customer needs a drill bit.
But what the customer really needs is a quarter-inch hole. These sellers will have
trouble if a new product comes along that serves the customer’s need better or less
expensively. The customer will have the same need but will want the new product.

Smart marketers look beyond the attributes of the products and services they sell. By
orchestrating several services and products, they create brand experiences for
consumers (Kotler et al., 2020).

1.3.3. Customer value and satisfaction

Consumers usually face a broad array of products that might satisfy a given need.
How do they choose among these many market offerings? Customers form
expectations about the value and satisfaction that various market offerings will deliver
and buy accordingly. Satisfied customers buy again and tell others about their good
experiences. Dissatisfied customers often switch to competitors and disparage the
product to others. Marketers must be careful to set the right level of expectations. If
they set expectations too low, they may satisfy those who buy but fail to attract enough
buyers. If they set expectations too high, buyers will be disappointed. Customer value
and customer satisfaction are key building blocks for developing and managing
customer relationships.

1.3.4. Exchanges and relationships

Marketing is the process that unfolds when individuals decide to fulfill their needs and
desires by engaging in exchange transactions. Exchange involves acquiring a desired
item from someone by offering something in return. In a broader context, marketers
aim to elicit a response to a particular offering in the market. This response can extend
beyond simple product purchases or trade; it can involve a political candidate seeking
votes, a church seeking membership and engagement, an orchestra seeking an
audience, or a social action group seeking acceptance of their ideas.

Marketing encompasses a series of actions aimed at establishing, sustaining, and

expanding favourable exchange relationships with specific target audiences, whether
it involves a product, service, concept, or any other entity. Companies aspire to
cultivate robust connections by consistently delivering exceptional value to their
customers (Kotler et al., 2020).

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1.3.5. Markets

The ideas of exchange and relationships are integral to the concept of a market. A
market refers to the group of existing and potential purchasers of a product or service
who share a specific need or desire that can be fulfilled through exchange
relationships.

Marketing, in essence, is the management of markets to establish profitable customer

relationships. However, building these relationships requires effort. Sellers need to
actively seek out and engage with buyers, identify their needs, develop attractive
market offerings, set prices, promote their offerings, and efficiently handle distribution
and service. Core marketing activities encompass consumer research, product
development, communication, distribution, pricing, and service.

While we typically associate marketing with sellers, buyers also engage in marketing.
Consumers engage in marketing when they search for products, interact with
companies for information, and make purchases. In fact, contemporary digital
technologies, such as online platforms, smartphone applications, and the proliferation
of social media, have empowered consumers, transforming marketing into a two-way
interaction. Thus, in addition to managing customer relationships, modern marketers
must adeptly handle customer-managed relationships. They are no longer solely
focused on "How can we influence our customers?" but also consider "How can our
customers influence us?" and even "How can our customers influence each other?"

Figure 1.2 illustrates the key components of a marketing system. Marketing involves
serving a market of end consumers amidst competition. Companies and competitors
engage in market research and interact with consumers to grasp their needs.
Subsequently, they create and exchange market offerings, messages, and other
marketing content with consumers, whether directly or indirectly. Marketing
intermediaries play a crucial role in this system. All parties within this system are
influenced by significant external forces, including demographic, economic, natural,
technological, political, and social/cultural factors. Each participant in the system
contributes value to the next level. The arrows in the diagram symbolise the
relationships that need to be established and carefully managed. Therefore, the
success of a company in engaging customers and establishing profitable relationships
depends not only on its own actions but also on how effectively the entire system
caters to the needs of ultimate consumers. For instance, Lidl or Aldi cannot uphold

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their commitment to offering low prices unless their suppliers provide products at cost-
effective rates. Similarly, Peugeot or Citroen cannot provide a superior car ownership
experience unless their dealers excel in sales and service.

Figure 1.2: Contemporary marketing system (Kotler et al., 2020).

1.4.Designing a customer value-driven marketing strategy and plan

After gaining a comprehensive understanding of consumers and the market, marketing

management can develop a marketing strategy centred around delivering value to
customers. We Marketing management is the skillful and analytical process of
selecting specific target markets and establishing profitable connections with them.
The primary objective of the marketing manager is to attract, retain, and expand
relationships with the chosen customer base by providing exceptional customer value.

To formulate an effective marketing strategy, the marketing manager must address

two critical questions: First, who are the customers we intend to serve (what
constitutes our target market)? Second, what is the most effective way to meet the
needs of these customers (what is our unique value proposition) (Kotler et al., 2020)?

1.4.1. Customer Selection Process

In the initial stages, the company needs to determine its target customer base. This
involves breaking down the market into customer segments through market
segmentation and then choosing which of these segments to focus on (target
marketing). While some may perceive marketing management as a quest to acquire
as many customers as possible and boost demand universally, marketing managers
recognise the impracticality of trying to cater to every customer in every possible way.
Such an approach could lead to inadequate service for all customers. Instead, the

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company should selectively target customers who it can effectively and profitably
serve. For instance, La Perla, headquartered in Italy, successfully targets affluent
professionals, while Aldi effectively caters to families with more modest financial
means. Ultimately, marketing managers must make decisions regarding the specific
customer groups they intend to target, as well as the degree, timing, and nature of
their demand. In essence, marketing management involves both the management of
customers and the management of demand (Kotler et al., 2020).

1.4.2. Choosing a value proposition

The company also needs to make choices about how it will cater to its selected
customers—how it will set itself apart and establish its position in the market. A brand's
value proposition represents the collection of advantages or values it commits to
providing to consumers to meet their requirements. For example, Proximus, a
telecommunications provider in Belgium, offers exceptionally efficient service with a
personalised touch. Meanwhile, the compact Smart car encourages you to embrace a
vehicle that disrupts conventional norms, and Infiniti positions itself as a brand that
luxury affordable’, and BMW promises ‘the ultimate driving machine’. Facebook helps
you ‘connect and share with the people in your life’, whereas YouTube ‘provides a
place for people to connect, inform, and inspire others across the globe’. Such value
propositions differentiate one brand from another. They answer the customer’s
question: ‘Why should I buy your brand rather than a competitor’s?’ Companies must
design strong value propositions that give them the greatest advantage in their target
markets (Kotler et al., 2020).

1.5. Marketing management orientations

Marketing management seeks to develop strategies that engage target customers and
establish profitable relationships with them. However, the question arises: which
guiding philosophy should shape these marketing strategies? How should we balance
the interests of customers, the organisation, and society, especially when these
interests often clash?

Organisations can use five alternative concepts to formulate and execute their
marketing strategies: the production concept, product concept, selling concept,

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marketing concept, and societal marketing concept (Kotler et al., 2020). Let’s consider
each in turn.

1.5.1. The Production Concept

The production concept asserts that consumers prefer products that are readily
available and affordable. Accordingly, management should focus on enhancing
production and distribution efficiency. This concept has a long history and still holds
value in specific scenarios. For example, both Lenovo, a personal computer
manufacturer, and Haier, a home appliance maker, dominate the competitive and
price-sensitive Chinese market through low labour costs, efficient production, and
widespread distribution. However, reliance on the production concept can lead to
marketing myopia, as companies risk narrowing their focus on their own operations,
losing sight of the primary goal: satisfying customer needs and cultivating customer
relationships (Kotler et al., 2020).

1.5.2. Product Concept

In contrast, the product concept contends that consumers favour products that excel
in quality, performance, and innovative features. Marketing strategy here emphasises
continual product enhancements. While product quality and improvement remain
pivotal in most marketing strategies, concentrating solely on the company's products
can also result in marketing myopia. For instance, some manufacturers believe that
building a superior mousetrap will automatically attract customers. However, they
often discover that buyers may be seeking a different solution to a mouse problem,
such as a chemical spray, extermination service, or a house cat. Moreover, even a
superior mousetrap requires attractive design, packaging, pricing, distribution,
promotion, and persuasion to succeed in the market (Kotler et al., 2020).

1.5.3. Selling Concept

The concept of selling is adopted by many companies, and it posits that consumers
will not purchase enough of the firm's products unless a substantial selling and
promotional effort is employed. This approach is typically applied to unsought goods—
items that consumers do not typically consider buying, such as life insurance or blood
donations. In these industries, it is essential to excel in identifying potential customers
and persuading them of the benefits of the product.

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However, this aggressive selling strategy comes with significant risks. It primarily
concentrates on generating sales transactions rather than establishing enduring and
profitable customer relationships. The objective often revolves around selling
whatever the company produces, rather than producing what the market truly desires.
This approach assumes that customers who are convinced to buy the product will
automatically like it or, if they don't, they may eventually forget their dissatisfaction and
make repeat purchases. These assumptions are generally flawed (Kotler et al., 2020).

1.5.4. Marketing Concept

The marketing concept revolves around the idea that achieving organisational
objectives hinges on understanding the needs and desires of target markets and
delivering the desired satisfaction more effectively than competitors. Under this
concept, the key to generating sales and profits lies in prioritising customer focus and
value. It stands in contrast to a product-centric approach of creating and selling,
instead adopting a customer-centric approach of sensing and responding. The primary
goal is not to find the right customers for your product but to identify the right products
for your customers.

Figure 1.3: Selling versus marketing concept. Adapted from Kotler et al., 2020.

As illustrated in Figure 1.3, the selling concept adopts an internal perspective,

commencing with the factory, emphasising the company's existing products, and
relying on intensive selling and promotion to secure profitable sales. Its primary focus
is on customer acquisition, with minimal regard for who the customers are and why
they buy.

Conversely, the marketing concept adopts an external perspective. It starts with a well-
defined market, concentrates on understanding customer needs, and seamlessly
integrates all marketing activities that impact customers. For instance, Liverpool
Football Club has a dedicated Customer Experience Department solely focused on

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enhancing supporters' off-the-pitch experiences. Ultimately, the marketing concept

generates profits by establishing relationships with the right customers based on
customer value and satisfaction.

Implementing the marketing concept often goes beyond simply reacting to customers'
explicit desires and evident needs. Customer-centric companies conduct in-depth
research to gain insights into customer desires, gather ideas for new products, and
test product enhancements. This customer-driven marketing approach is effective
when a clear need exists, and customers are aware of what they want.

However, in many instances, customers may not be aware of their needs or even what
is technologically feasible. As exemplified by Henry Ford's famous quote, "If I'd asked
people what they wanted, they would have said faster horses." For instance, consider
how few consumers, even just two decades ago, would have envisioned
commonplace products like tablet computers, smartphones, digital cameras, 24-hour
online shopping, digital video and music streaming, and GPS systems integrated into
their cars and phones. In such scenarios, a customer-driving marketing approach
becomes crucial – one that entails a deep understanding of customer needs, even
beyond what customers themselves are aware of (Kotler et al., 2020).

Think Point

Marketing Thinkpoint: The Marketing Concept and the Influence of Henry Ford

The marketing concept represents a fundamental shift in how businesses view their
customers and approach their markets. This concept places customers at the centre
of all business decisions and strategies, emphasising their needs, preferences, and
satisfaction. Henry Ford, the iconic industrialist and founder of Ford Motor Company,
played a pivotal role in shaping the marketing concept as we know it today. Let's
explore how the marketing concept evolved and how Henry Ford contributed to this
transformation.

The Marketing Concept: A Paradigm Shift

The marketing concept revolves around the idea that a business's success is
not solely determined by its products or services but by understanding and
satisfying customer needs. It encompasses four key principles:

• Customer Orientation: Focus on understanding and meeting customer needs

and desires.
• Integrated Marketing: Coordinate all marketing activities to deliver a
consistent message and customer experience.

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• Profitability: Achieve organisational goals by satisfying customer needs

better than competitors.
• Long-term Perspective: Aim for customer loyalty and long-term relationships
rather than short-term profit.

Henry Ford's Impact on the Marketing Concept

Henry Ford's innovative approach to manufacturing and marketing automobiles

during the early 20th century played a transformative role in the evolution of the
marketing concept:

• Mass Production: Ford revolutionised manufacturing with his introduction of

the assembly line. This innovation enabled the mass production of automobiles
at lower costs, making them affordable to a broader segment of the population.
Ford's Model T became an iconic example of how efficient production could lead
to lower prices and increased accessibility, aligning with the marketing concept's
focus on customer affordability.
• Customer-Centric Pricing: Ford famously declared, "Any customer can have
a car painted any colour that he wants so long as it is black." While this
statement may seem counter to customer choice, it was a strategic move to
reduce production complexity and lower costs, resulting in a lower price point.
Ford recognised that affordability was a key driver of customer satisfaction and
loyalty.
• Product Innovation and Customer Value: Although often associated with
standardisation, Ford's innovations extended to product design. His continuous
efforts to improve the Model T, add new features, and enhance overall quality
demonstrated a commitment to meeting changing customer needs and
expectations.
• Market Expansion: Ford's vision extended beyond the domestic market. He
recognised the global potential of the automobile industry and expanded Ford's
presence internationally. This expansion reflected a customer-centric approach,
acknowledging the worldwide demand for automobiles.

In conclusion, the marketing concept, with its emphasis on understanding and

fulfilling customer needs, was significantly influenced by Henry Ford's pioneering
work in manufacturing and marketing. Ford's commitment to affordability,
innovation, and customer value resonates with the core principles of the marketing
concept. Today, businesses continue to draw inspiration from his legacy,
recognising the enduring importance of customer-centricity in achieving success
and sustainability in a dynamic marketplace.

Adapted from: https://www.forbes.com/sites/forbesagencycouncil/2017/07/18/how-

henry-ford-ate-your-advertising-brain/

1.5.5. Societal Marketing Concept

The societal marketing concept raises questions about whether the traditional
marketing concept adequately considers potential conflicts between satisfying
immediate consumer desires and ensuring long-term consumer well-being. Does a

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company that caters to the immediate needs and wants of its target markets always
act in the best interests of consumers in the long run? The societal marketing concept
asserts that marketing strategies should provide value to customers while
simultaneously maintaining or enhancing both the consumer's and society's overall
welfare. It advocates for sustainable marketing practices—those that are socially and
environmentally responsible. Such practices meet the current needs of consumers and
businesses while also safeguarding or improving the capacity of future generations to
meet their needs.

Moreover, a growing number of influential business and marketing thinkers are

advocating for the concept of shared value. This perspective acknowledges that
markets are defined not solely by economic needs but also by societal needs. The
shared value concept emphasises the creation of economic value in a manner that
also generates value for society. Several renowned companies known for their profit-
focused approaches, including BP, GlaxoSmithKline, Siemens, Google, IBM, Intel,
Johnson & Johnson, Nestlé, Unilever, and Marks and Spencer, are reevaluating their
relationships with society and corporate performance. They are shifting their concerns
beyond short-term economic gains to include the well-being of their customers, the
sustainable use of crucial natural resources vital to their operations, the viability of key
suppliers, and the economic prosperity of the communities in which they operate.

Some marketers refer to this approach as Marketing 3.0, emphasising that Marketing
3.0 organisations are driven by a set of values, not just one. They prioritise caring
about the state of the world as part of their mission. Another term used to describe this
concept is purpose-driven marketing, with a focus on the idea that the future of
profitability lies in having a meaningful purpose that extends beyond pure economic
interests (Kotler et al., 2020). The societal marketing concept is illustrated in Figure
1.4 below:

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Figure 1.4: The societal marketing concept

1.6. Creating an Integrated Marketing Plan and Program

The company's marketing strategy delineates the specific customers it aims to serve
and outlines the approach to generate value for these customers. Following this, the
marketer formulates an integrated marketing program designed to effectively provide
the envisioned value to the target customers. The marketing program translates the
marketing strategy into practical steps that help cultivate customer relationships.

This program consists of the firm's marketing mix, which comprises the various
marketing tools utilised to execute the marketing strategy. The primary marketing mix
tools can be categorised into four overarching groups, commonly known as the four
Ps of marketing: product, price, place, and promotion.

To fulfill its value proposition, the company must begin by crafting a market offering
that satisfies the needs of the consumers (product). Subsequently, it needs to
determine the pricing strategy for this offering (price) and establish the means through
which the offering will be accessible to the target audience (place). Finally, the
company must actively engage with the target consumers, communicate information
about the offering, and convince consumers of the merits of the product or service
(promotion). The company's task is to seamlessly integrate each of these marketing

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mix elements into a comprehensive, integrated marketing program that effectively

conveys and delivers the intended value to the selected customer base (Kotler et al.,
2020).

1.6.1. Building customer relationships

The first three steps in the marketing process – understanding the marketplace and
customer needs, designing a customer value-driven marketing strategy and
constructing a marketing programme – all lead up to the fourth and most important
step: engaging customers and managing profitable customer relationships. We first
discuss the basics of customer relationship management. Then we examine how
companies go about engaging customers on a deeper level in this age of digital and
social marketing (Kotler et al., 2020).

1.6.2. Customer relationship management

Customer relationship management is perhaps the most important concept of modern

marketing. In the broadest sense, customer relationship management (CRM) is the
overall process of building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction. It deals with all aspects of
acquiring, engaging and growing customers.

1.6.3. Foundations of Building Relationships: Customer Value and Contentment

The cornerstone of establishing enduring customer relationships lies in the creation of

exceptional customer value and contentment. Contented customers are more inclined
to remain loyal and allocate a larger portion of their business to the company.

Attracting and retaining customers can be quite challenging, given the multitude of
goods and services available for selection. Customers often confront a diverse range
of options and make their choices based on the customer-perceived value—their
personal evaluation of how the benefits offered by a market offering compare to the
costs in relation to competing alternatives. Importantly, customers often make
judgments about values and costs based on their perceptions rather than objective
measurements (Kotler et al., 2020).

To certain consumers, value may signify practical products at reasonable prices, while
to others, value may involve paying a premium for enhanced benefits. For instance,
owners of Renault electric cars receive several advantages, notably increased fuel
efficiency, especially in the face of rising oil prices. Yet, they might also experience

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status and image benefits, feeling and appearing more environmentally responsible.
When deciding whether to purchase a Renault electric car, customers evaluate these
and other perceived values against the financial, effort, and psychological costs
associated with the acquisition.

Customer satisfaction hinges on how a product's perceived performance compares to

a buyer's expectations. If the product's performance falls short of expectations, it
results in dissatisfaction. If it meets expectations, it leads to satisfaction. When it
exceeds expectations, it results in a high level of satisfaction or even delight.

Exceptional marketing companies exert extra effort to keep crucial customers

satisfied. Most studies confirm that higher levels of customer satisfaction foster greater
customer loyalty, subsequently leading to improved company performance.
Companies that aim to delight their customers make and deliver promises they can
fulfill and often go beyond these promises. Delighted customers not only become
repeat purchasers but also transform into enthusiastic advocates, actively sharing their
positive experiences with others.

For companies with a vested interest in delighting their customers, the provision of
exceptional value and service becomes an integral part of their organisational culture.
For example, Ritz-Carlton consistently ranks among the top players in the hospitality
industry in terms of customer satisfaction. Their dedication to customer satisfaction is
epitomised in the company's credo, which pledges to deliver an unforgettable
experience at their luxury hotels—one that stimulates the senses, promotes well-
being, and fulfils even unspoken desires and needs of their guests (Kotler et al., 2020).

1.6.4. Diverse Levels of Customer Relationships and Strategies

Companies have the flexibility to cultivate customer relationships at various levels,

depending on the characteristics of their target market. In situations where a company
serves a broad customer base with relatively low profit margins, the focus may be on
establishing fundamental relationships. For instance, Häagen-Dazs, instead of
individually contacting or visiting each of its consumers, opts to build relationships
through brand-centric advertising, public relations efforts, newsletters, its website
(www.haagendazs.com), and interactions with its Facebook followers.

Conversely, in markets characterised by a small customer base with high profit

margins, sellers aim to forge comprehensive partnerships with key customers. To

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illustrate, Häagen-Dazs sales representatives collaborate closely with major retailers

like Tesco, Carrefour, and others.

Between these two extremes, there are various other levels of customer relationships
that are suitable, depending on the specific circumstances.

In addition to consistently providing high value and satisfaction, marketers employ

specific marketing tools to fortify their connections with customers. For example, many
companies offer frequency marketing programs that incentivise customers who make
frequent or substantial purchases. Airlines introduce frequent-flyer programs, hotels
extend room upgrades to frequent guests, and supermarkets offer discounts to their
"very important customers."

In the contemporary business landscape, nearly every brand has embraced the
concept of loyalty rewards programs. These programs have the potential to enrich and
fortify a customer's overall brand experience. For instance, KLM Airways and Air
France have established the Flying Blue program, which offers frequent-flyer points to
its members that can be redeemed for seats on any KLM or Air France flight. Flying
Blue pledges to reward its members' loyalty by providing an expanding array of
services, making each journey more special. By simply presenting their Flying Blue
card, members can access numerous additional services, making their travels,
including their time spent at airports, more convenient and enjoyable.

Some innovative loyalty programs transcend the conventional approach. Certain

companies sponsor club marketing initiatives that offer members exclusive benefits
and create vibrant member communities. For instance, BMW sponsors the BMW Car
Club, providing BMW drivers with a platform to share their passion for driving.
Membership in the BMW Car Club includes perks such as a quarterly magazine,
discounts on BMW servicing, parts, and accessories, and access to the club shop,
which offers BMW books, clothing, model cars, and other merchandise at discounted
rates. Additionally, the club arranges track events and BMW festivals for its members.

Nevertheless, substantial shifts are taking place in the dynamics of customer-brand

relationships. Present-day digital technologies, including the internet and the
proliferation of online, mobile, and social media platforms, have profoundly altered how
people across the globe interact with one another. These changes have had a
profound impact on how companies and brands engage with customers and how

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customers, in turn, influence each other's behaviours related to brands (Kotler et al.,
2020).

1.7. Engaging Customers in the Digital Age and Social Media Era

The digital era has ushered in a remarkable array of new tools for building customer
relationships. These tools encompass websites, online advertisements, videos, mobile
advertisements and applications, blogs, online communities, and major social media
platforms such as TikTok, Twitter, Facebook, YouTube, Snapchat, Pinterest, and
Instagram.

In the past, companies predominantly employed mass marketing strategies, reaching

broad customer segments from a distance. In contrast, contemporary companies
harness online, mobile, and social media channels to refine their targeting and engage
customers in a more profound and interactive manner. The traditional approach
involved marketing brands to consumers, while the new paradigm is customer-
engagement marketing—a strategy that encourages direct and continuous customer
participation in shaping brand discussions, brand experiences, and brand
communities. Customer-engagement marketing transcends mere brand selling; its
objective is to integrate the brand into consumers' conversations and daily lives.

The expanding influence of the internet and social media has significantly amplified
the scope of customer-engagement marketing. Modern consumers are better
informed, highly connected, and more empowered than ever before. Empowered
consumers possess extensive brand knowledge and access numerous digital
platforms for expressing and sharing their opinions about brands with others.
Consequently, marketers are now embracing not only customer relationship
management but also customer-managed relationships, where customers connect
both with companies and with fellow consumers to collectively mould and share their
unique brand experiences (Kotler et al., 2020).

The increased empowerment of consumers means that companies can no longer rely
solely on intrusive marketing methods. Instead, they must adopt attraction-based
marketing approaches, and craft market offerings and messages that genuinely
engage consumers rather than interrupt them. Therefore, most marketers combine
their traditional mass-media marketing endeavours with a diverse blend of online,
mobile, and social media marketing initiatives. These efforts aim to foster brand-

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consumer engagement, stimulate brand conversations, and encourage brand

advocacy among customers.

For example, companies share their latest advertisements and videos on social media
platforms, hoping that they will become viral sensations. They maintain a prominent
presence on various social media networks, including Twitter, YouTube, Facebook,
Google+, Pinterest, Instagram, Snapchat, and others, to generate buzz around their
brands. They also launch their blogs, mobile applications, online microsites, and
consumer-generated review systems—all designed to engage customers on a more
personalised, interactive level. Consider Twitter, for instance. A wide range of
organisations, including FC Barcelona, Santander, Munich Airport, Le Tour de France,
and Volvo, along with institutions like Howells School Llandaff, have established their
presence on Twitter and initiated promotional activities. They utilise tweets as a means
to initiate dialogues with Twitter's vast user base, which boasts over 645 million active
users. Through Twitter, these entities address customer service inquiries, gauge
customer reactions, and direct traffic towards pertinent articles, web and mobile
marketing platforms, contests, videos, and other brand-related initiatives.

Similarly, nearly every company is now active on Facebook. For example, Burberry
has amassed approximately 18 million Facebook "fans," Converse boasts around 44
million, Subway maintains around 24 million, Zara commands about 26 million,
Starbucks enjoys a following of more than 36 million, and Coca-Cola exceeds 96
million. Furthermore, virtually all major marketers maintain a YouTube channel where
the brand and its enthusiasts share current advertisements and other captivating or
informative videos. Social media platforms like Instagram, LinkedIn, Pinterest, and
Snapchat have also surged in popularity within the marketing realm, offering brands
diverse avenues for engaging and interacting with customers. Proficient utiliaation of
social media can encourage consumers to actively participate with a brand, initiate
discussions about it, and advocate for it among their networks.

An exemplary instance of effective engagement through social media is IKEA's

ingenious Facebook campaign to promote the opening of a new store in Malmö,
Sweden. The company created a Facebook profile for the store manager, Gordon
Gustavsson, and subsequently uploaded images of IKEA showrooms to Gustavsson's
Facebook photo album. IKEA announced that the first person to tag a product in these
images with their name would win it. This prompted a surge of customers to quickly
engage in tagging items. The news rapidly spread to their friends, resulting in

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customers eagerly requesting more images. IKEA's Facebook promotion went beyond
conventional advertising by enticing people to meticulously examine the images,
scrutinising the products item by item.

The core principle of engagement marketing involves discovering avenues to become

a part of consumers' discussions by delivering engaging and pertinent brand
messages. Mere actions such as posting a humorous video, establishing a social
media page, or hosting a blog are insufficient. To truly succeed in engagement
marketing, brands must make valuable and authentic contributions to consumers' lives
and dialogues (Kotler et al., 2020).

1.7.1. Consumer-Driven Marketing

A variant of customer-engagement marketing is consumer-driven marketing, where

consumers actively participate in shaping not only their own brand experiences but
also those of others. This participation can occur through spontaneous exchanges
between consumers in blogs, video-sharing platforms, social media networks, and
other digital forums. However, an increasing number of companies are now actively
encouraging consumers to take on a more involved role in influencing products and
brand content.

Some companies solicit new product and service ideas from consumers. For instance,
the LEGO Ideas website encourages customers to submit and vote on concepts for
new LEGO building sets. Likewise, at the My Starbucks Idea website, Starbucks
welcomes customer input on new products, store enhancements, and virtually any
idea that could enhance their Starbucks experience. The company emphasises, "You
know better than anyone else what you want from Starbucks," inviting customers to
share their suggestions, engage in discussions, and vote on the ideas proposed by
others. The website also showcases the ideas that Starbucks has implemented.

Other companies are involving customers in the creative process of shaping

advertisements. For example, Redrow, T-Mobile, L'Oréal, MasterCard, Unilever, H.J.
Heinz, and numerous other companies have organised contests for consumer-
generated commercials, some of which have aired on national television. T-Mobile, in
particular, has sponsored and filmed 'flashmob' events in various locations, such as
Times Square in 2018, Liverpool Street Station, and Trafalgar Square in London.
These events have garnered significant attention and inspired T-Mobile to produce a

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humorous parody of a royal wedding, featuring actors portraying the Royal Family
dancing down the aisle. In the USA, PepsiCo's Doritos brand has conducted the 'Crash
the Super Bowl' contest for a decade, inviting consumers to submit 30-second ads,
with the best ones airing during the Super Bowl. This contest has attracted thousands
of submissions.

Many brands incorporate user-generated content from social media into their
traditional marketing and social media campaigns. For instance, Santander recently
launched a multi-channel campaign centred around user-generated content. They
created a smartphone app that allowed users to capture one second of video footage
each day, which was then compiled chronologically into a complete video. The focus
was on videos that conveyed Santander's message that prosperity encompasses a
broader range of experiences and goals beyond just financial measures. Keith Moor,
the chief marketing officer at Santander, stated, "Our new campaign signifies a fresh
approach to our communications. Not only are we openly discussing our purpose for
the first time, but we are also taking an innovative approach to convey our message.
By using warm, engaging, humorous, and authentic footage, we aim to showcase our
purpose and Santander's role in people's lives in a compelling and sincere manner."

Nevertheless, despite the successes, harnessing consumer-generated content can be

time-consuming and costly. Companies may struggle to extract valuable content from
the vast volume submitted by consumers. Moreover, since consumers wield significant
control over social media content, inviting their input can sometimes have adverse
consequences. For instance, McDonald's initiated a Twitter campaign using the
hashtag #McDStories, expecting heartwarming stories about Happy Meals but instead
faced a barrage of negative messages from users, resulting in the campaign being
pulled within two hours. Starbucks faced a similar issue when they asked UK
customers to tweet messages with the hashtag #spreadthecheer, which were
displayed on a screen at the National History Museum in London. Some tweets
criticised Starbucks for alleged tax avoidance, and the situation escalated quickly.
British Gas experienced a backlash on Twitter when they held a question-and-answer
session on the same day they announced an unpopular 11 percent price hike, with
thousands of angry responses, including threats and accusations of greed.

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As consumers become more connected and empowered, and digital and social media
technologies continue to flourish, consumer brand engagement, whether solicited by
marketers or not, is becoming an increasingly significant marketing force. Through a
multitude of consumer-generated videos, shared reviews, blogs, mobile apps, and
websites, consumers are playing a growing role in shaping their own and others' brand
experiences. Engaged consumers are now influencing various aspects, from product
design, usage, and packaging to brand messaging, pricing, and distribution. Brands
must embrace this new consumer empowerment and become proficient in using digital
and social media relationship tools, or they risk falling behind (Kotler et al., 2020).

1.7.2. Partner Relationship Management

Partner relationship management is a crucial aspect of modern marketing. Marketers

recognise that they can't operate in isolation when it comes to delivering customer
value and nurturing strong customer relationships. It's essential to collaborate closely
with various marketing partners, both within and outside the organisation. In addition
to excelling in customer relationship management, marketers must also excel in
partner relationship management. This involves working collaboratively with internal
and external stakeholders to collectively engage with customers and deliver enhanced
value.

Traditionally, marketers were responsible for understanding customer needs and

representing these needs to various departments within the company. However, in
today's interconnected business environment, every functional area within the
organisation has opportunities to interact with customers. The evolving perspective is
that irrespective of one's role within a company, there's a need to comprehend
marketing principles and maintain a customer-centric approach. Instead of allowing
each department to operate independently, organisations should integrate all
departments to align their efforts in the pursuit of creating customer value (Kotler et
al., 2020).

Marketers should also establish partnerships with suppliers, channel partners, and
external parties beyond the organisation. Marketing channels encompass entities like
distributors and retailers, who serve as intermediaries connecting the company with
their customers. A broader perspective on the distribution process involves the supply
chain, which extends from sourcing raw materials to assembling components and
delivering final products to end consumers. In today's business landscape, companies

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are intensifying their collaborations with partners across the entire supply chain
through effective supply chain management. They recognise that their success hinges
not only on their individual performance but also on the collective performance of their
supply chain, which must outperform competitors' supply chains to deliver superior
customer value (Kotler et al., 2020).

1.7.3. Capturing value from customers

Capturing value from customers involves the final step in the marketing process. The
initial four steps are centred on engaging customers and fostering customer
relationships by providing exceptional customer value. The ultimate objective is to
obtain value in return, such as sales, market dominance, and profitability. When a firm
delivers superior customer value, it leads to contented customers who exhibit loyalty
and make additional purchases. Consequently, this translates into long-term benefits
for the company. In the following sections, we explore the outcomes of delivering
customer value: customer loyalty and retention, market share, customer share, and
customer equity (Kotler et al., 2020).

1.7.4. Establishing Customer Loyalty and Retention

Effective customer relationship management results in customer satisfaction. Satisfied

customers, in turn, become loyal and spread positive word-of-mouth about the
company and its products. Research underscores the stark contrast in loyalty between
satisfied and dissatisfied customers, where even slight dissatisfaction can cause a
substantial decline in loyalty. Therefore, the objective of customer relationship
management extends beyond mere satisfaction to strive for customer delight.
Maintaining customer loyalty is not only economically viable but also cost-effective.
Loyal customers tend to spend more and remain engaged for longer periods. Studies
also indicate that retaining an existing customer is five times less expensive than
acquiring a new one. Conversely, customer defections can be financially draining as
they imply the loss of not just a single transaction but the entire stream of potential
purchases that a customer would have made over their lifetime. For instance, consider
the concept of customer lifetime value, which illustrates this:

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Lexus estimates that a single satisfied and loyal customer is worth more than €800,000
in lifetime sales, while the estimated lifetime value of a young mobile phone consumer
is approximately €34,000. In fact, a company might incur a loss on a specific
transaction but still derive substantial benefits from a long-term customer relationship.
This underscores the need for companies to strive for excellence in building customer
relationships. Customer delight fosters an emotional connection with a brand,
surpassing mere rational preference and ensuring continued customer patronage.

1.7.5. Expanding Share of Customer

Beyond retaining valuable customers to capture their lifetime value, adept customer
relationship management empowers marketers to augment their share of customer –
the portion of a customer's spending within their product categories. Banks, for
instance, aim to increase their 'share of wallet,' while supermarkets and restaurants
strive for a larger 'share of stomach.' Similarly, car manufacturers seek to enhance
their 'share of garage,' and airlines aspire to secure a more significant 'share of travel.'

To boost their share of customer, companies can offer a wider array of products and
services to their existing customer base. They can also implement programs for cross-
selling and up-selling, encouraging customers to purchase more products and
services from them. For example, Amazon effectively leverages its relationships with
its 304 million global customers to expand its share of each customer's spending
budget (Kotler et al., 2020).

1.7.6. Customer Equity

The significance of not only acquiring but also retaining and expanding customers is
now evident. A company's value is derived from the worth of its existing and
prospective customers. Customer relationship management adopts a long-term
perspective, seeking to establish not only profitable customers but also to maintain
enduring relationships, secure a greater share of their purchases, and capture their
customer lifetime value.

But what exactly is customer equity? Customer equity represents the cumulative
customer lifetime values of all the company's present and potential customers. It
serves as an indicator of the future worth of the company's customer base. Clearly,
higher customer equity is achieved when the company retains more loyal and

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profitable customers. Customer equity often proves to be a more insightful

performance metric for a company compared to its current sales or market share.
While sales and market share provide insights into the past, customer equity offers a
glimpse into the future.

1.7.7. Building and managing customer equity

Building and managing customer equity is a crucial task for companies. Customers
should be regarded as valuable assets that require careful management to maximise
their worth. However, not all customers, even those who appear loyal, prove to be
profitable. It may surprise you to learn that some loyal customers can be unprofitable,
while some disloyal ones can be profitable. Therefore, the company must make
thoughtful decisions about which customers to acquire and retain.

To do this, the company can categorise customers based on their potential profitability
and then develop tailored relationship management strategies for each group. Figure
1.5 divides customers into four relationship groups, considering both their profitability
and projected loyalty.

Figure 1.5: Customer Relationship Categories, Adapted from:

Each group necessitates a distinct approach to relationship management:

Strangers: These customers show low potential profitability and minimal projected
loyalty. Their needs don't align well with the company's offerings. The best strategy for
these customers is to minimise investment and focus on making a profit from each
transaction.

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Butterflies: Butterflies are potentially profitable but lack loyalty. Their needs match
the company's offerings, but they tend to flit between providers, similar to stock market
investors who seek the best deals without forming lasting relationships. Efforts to
convert butterflies into loyal customers are often unsuccessful. Instead, the company
should aim to capture as much business as possible during their brief interactions.

True Friends: True friends are both profitable and loyal. There is a strong alignment
between their needs and what the company provides. For these customers, the
company should make continuous relationship investments to cultivate loyalty, retain,
and expand the relationship. The goal is to transform true friends into true believers
who return regularly and recommend the company to others.

Barnacles: Barnacles are highly loyal but not very profitable. Their needs only partially
align with the company's offerings, such as smaller bank customers who maintain
accounts without generating sufficient returns to cover costs. Managing barnacles can
be challenging, as they create a drag on resources (Kotler et al., 2020).

1.8. Digital Marketing

The remarkable expansion of digital technology has brought about profound changes
in our lifestyles. It has revolutionised the way we communicate, share information,
access entertainment, and make purchases. We have now entered the era of the
Internet of Things (IoT), a global ecosystem where every entity and individual is
interconnected digitally with everything and everyone else. Currently, more than 3.3
billion people, which accounts for 46 percent of the world's population, are connected
to the internet. In Europe, seven countries have internet usage rates exceeding 90
percent, with Iceland and Norway leading the way at 98 and 97 percent, respectively.
Over 87 percent of Europe's population is now connected, and Eastern Europe boasts
the highest daily internet usage, with users in countries like Poland and Russia
spending an average of 4.8 hours online each day. Italy leads in mobile internet usage,
with an average of 2.2 hours per day. Moreover, Europe is home to approximately 300
million active social media users, constituting roughly half of the population. In Western
Europe, Facebook is the dominant platform with 376 million active users in 2018, while
in Eastern Europe, VKontakte holds sway, boasting 60 million active Russian users
alone (Kotler et al., 2020).

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Most consumers have a strong affinity for all things digital. For instance, more than
half of Europeans keep their mobile phones beside them even while they sleep. They
consider it the first item they touch upon waking and the last thing they interact with
before sleep. They have developed an affinity for various online and mobile
destinations, including the multitude of websites and social media platforms that have
proliferated.

Consumers' deep-seated affection for digital and mobile technology has created fertile
ground for marketers seeking to engage with their target audience. It is, therefore,
unsurprising that the internet and the rapid advancements in digital and social media
have significantly impacted the marketing landscape. Digital and social media
marketing involve the utilisation of digital marketing tools such as websites, social
media platforms, mobile advertisements, apps, online videos, email, blogs, and other
digital platforms to engage consumers at any time and place through their computers,
smartphones, tablets, and other devices. In today's business landscape, it has become
commonplace for every company to engage with customers through a variety of
channels, including multiple websites, informative tweets, Facebook pages, viral
advertisements and videos shared on YouTube, visually rich emails, and mobile
applications designed to address consumer needs and facilitate shopping.

At a fundamental level, marketers establish both company and brand websites, which
serve the dual purpose of disseminating information and promoting the company's
range of products. Furthermore, many companies create dedicated community
websites under their brand umbrella. These platforms provide a space for customers
to gather and share their mutual interests and insights related to the brand. To
illustrate, consider the Avia Premiership Rugby Club's website tailored for the
Harlequins, which functions as a central hub for the club's enthusiastic fan base. Here,
fans can access the latest team updates, purchase tickets, interact with players, delve
into the world of the 'Quins,' shop for team merchandise, connect with community
initiatives, and stay informed about the most recent team-related news and
discussions (Kotler et al., 2020).

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Definitions

Marketing as a Process:
• Definition: Marketing is a systematic process that involves identifying,
anticipating, and satisfying customer needs and wants profitably.
• Explanation: This definition emphasises that marketing is not a one-time
activity but an ongoing process that revolves around understanding
customer preferences, creating products or services that fulfil those
preferences, and ensuring that these offerings are available and promoted
effectively to generate profit.

Marketing as Customer Value Creation:

• Definition: Marketing is the art and science of creating value for customers
by offering products or services that meet their needs and desires.
• Explanation: This definition highlights that marketing's primary goal is to
provide customers with something valuable, whether it's a product, service,
or experience. It underscores the importance of understanding and fulfilling
customer needs to build strong, lasting relationships.

Marketing as Relationship Building:

• Definition: Marketing involves building and maintaining mutually beneficial
relationships between a company and its customers, partners, and
stakeholders.
• Explanation: This perspective underscores the role of marketing in
fostering long-term relationships with various stakeholders. It goes beyond
one-off transactions to focus on creating loyalty and trust.

Marketing as Communication and Promotion:

• Definition: Marketing encompasses all activities aimed at communicating
the value of products or services to target audiences and persuading them
to take desired actions.

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• Explanation: This definition emphasises the promotional aspect of

marketing, including advertising, public relations, and sales efforts. It
highlights the importance of effective communication to convey the benefits
of a product or service.

Marketing as Strategic Decision-Making:

• Definition: Marketing is a strategic approach to identifying opportunities,
analysing markets, and making informed decisions to achieve a company's
objectives.
• Explanation: This definition positions marketing as a critical component of
overall business strategy. It involves researching market trends, assessing
competition, and making informed choices to align a company's offerings
with its goals.

1.8.1. Social Media Marketing

Social media marketing has become an integral part of brand promotion and
engagement, with nearly every brand website or traditional media advertisement
featuring links to various social media platforms such as Facebook, Instagram, Twitter,
Google+, YouTube, Snapchat, Pinterest, LinkedIn, and others. Social media offers
exciting opportunities to enhance customer engagement and encourage discussions
about a brand.

Several social media platforms boast substantial user bases, with Facebook leading
the way with over 1.59 billion active monthly members. Instagram enjoys more than
400 million active monthly users, Twitter has over 315 million monthly users, Google+
attracts 300 million active monthly visitors, and Pinterest engages more than 100
million users. Smaller, niche-oriented social media sites are also thriving. For instance,
CafeMom and mumsnet serve as online communities for millions of mothers who
exchange advice, entertainment, and support across various online platforms,
including Facebook, Twitter, Pinterest, YouTube, Google+, and mobile sites. Even
smaller platforms like Birdpost.com for avid birdwatchers and Ravelry.com for knitting
and crocheting enthusiasts can attract active audiences.

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Online social media platforms serve as digital hubs where people can connect and
share significant information and moments from their lives. Consequently, they offer
an ideal platform for real-time marketing strategies, allowing marketers to engage with
consumers by associating their brands with trending topics, real-world events, causes,
personal occasions, or other important occurrences in consumers' lives.

Leveraging social media may involve relatively straightforward activities such as

contests or promotions to gain Facebook 'Likes,' tweets, or YouTube posts. However,
more frequently, large organisations across various industries employ a
comprehensive approach that integrates a wide range of social media channels (Kotler
et al., 2020).

1.8.2. Mobile Marketing

Mobile marketing is emerging as one of the most rapidly growing segments within
digital marketing. With smartphones omnipresent, always connected, highly targeted,
and deeply personal, they provide an ideal platform for engaging customers
throughout their purchasing journey, regardless of their location. For instance, Costa
Coffee customers in the UK can leverage their mobile devices for a range of activities,
from locating the nearest Costa Coffee and discovering new product offerings to
placing orders and making payments.

Approximately four out of every five smartphone users employ their devices for
shopping purposes, including activities like browsing product details through mobile
apps or web browsers, conducting in-store price comparisons, reading online product
reviews, finding and utilising digital coupons, and more. Mobile devices now account
for nearly 30 percent of all online purchases, and their share of online sales is
expanding at a rate 2.6 times faster than total online sales. During the recent holiday
season, mobile shoppers represented over 70 percent of traffic to Walmart.com and
were responsible for nearly half of the site's orders during the Black Friday weekend.

Unilever's innovative Wish-Bone campaign exemplified a unique approach to mobile

marketing. Their goal was to raise awareness of their new line of Italian salad
dressings. To achieve this, the company ran full-page advertisements and crafted
content that emphasised crucial keywords such as "zesty," "tangy," and "tasty." To
engage customers, they encouraged individuals to input keywords associated with the
brand to unlock exclusive content. This inventive strategy resulted in a 122 percent
increase in brand awareness and an 87 percent boost in purchase intent.

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While online, social media, and mobile marketing hold immense potential, most
marketers are still in the process of mastering their effective use. The key lies in
seamlessly integrating these new digital approaches with traditional marketing
strategies and tactics, a theme we will explore throughout this text as digital, mobile,
and social media marketing intersect with nearly every facet of marketing strategy
(Kotler et al., 2020).

1.9. Changing economic environment

The Great Recession of (year?) and its subsequent aftermath had a profound impact
on consumers, forcing them to confront the harsh realities of their financial situations.
After two decades of excessive spending, consumers had to make substantial
adjustments to align their consumption with their incomes and rethink their spending
priorities. In the present post-recession era, consumer incomes and spending have
started to recover. However, rather than reverting to their previous habits of excessive
spending, Europeans have developed a newfound appreciation for frugality.
Responsible and mindful consumption has made a resurgence, and it seems to have
become a lasting trend. The current values guiding consumer spending emphasise
simpler lifestyles and a greater emphasis on getting value for their money. Despite the
improvement in their financial situations, consumers are buying less, using coupons
more frequently, reducing their credit card usage, and saving more money.

Many consumers are reevaluating their perception of the "good life." According to a
consumer behaviour expert, people are finding happiness in traditional virtues such as
thrift, savings, do-it-yourself projects, self-improvement, hard work, faith, and
community. This shift represents a transition from thoughtless to thoughtful
consumption. The renewed focus on frugality and mindful spending does not mean
that people have resigned themselves to a life of deprivation. With the improved
economy, consumers are once again indulging in luxuries and larger purchases, but
they are doing so more sensibly (Kotler et al., 2020).

In response to these changing consumer behaviours, companies across various

industries, ranging from discount retailers like Lidl and Aldi to luxury brands like Lexus
and Montblanc, have adjusted their marketing strategies to align with the new
economic realities. Marketers are placing greater emphasis than ever on the value
offered by their products and services. They are highlighting the practicality and

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durability of their offerings in their marketing campaigns. A marketing executive noted

that "value" has become a crucial term, with consumers becoming more thoughtful
and calculating in their purchase decisions. Companies are now dedicated to helping
consumers recognise the value in their offerings. Even wealthier consumers have
joined the frugality trend, as conspicuous and extravagant spending is no longer as
fashionable. Consequently, luxury brands are also focusing on delivering value to their
customers (Kotler et al., 2020).

1.9.1. Not for Profit Marketing

In recent years, marketing has emerged as a significant component of the strategies

employed by numerous non-profit organisations, including educational institutions,
healthcare facilities, cultural institutions such as museums and symphony orchestras,
charitable foundations, and even religious institutions. Non-profit entities across the
nation face formidable competition when it comes to garnering support and
membership. Effective marketing plays a crucial role in helping them attract members,
funding, and backing.

Take, for example, WaterAid's marketing efforts. Their mission is rooted in the belief
that "WaterAid is an international non-profit organisation committed to making clean
water, proper sanitation facilities, and good hygiene accessible to everyone,
everywhere, within a generation. By addressing these three essential needs in
sustainable ways, people can transform their lives for the better." They contend that
with access to clean water, adequate sanitation, and good hygiene, children can lead
healthier lives, attend school, and grow into productive adults. Both women and men
can pursue livelihoods, and entire communities can thrive. This vision of a better world
is what WaterAid aims to make normal.

To promote their noble cause, WaterAid employed various marketing strategies. They
created emotionally charged television advertisements and embraced video blogging,
providing coverage of diverse events such as the G8 summit and the Glastonbury
Music Festival. Notably, they became the first international development charity to
conduct a 24-hour 'Australia to Zambia' 'tweetathon,' significantly boosting the charity's
global visibility. In this manner, WaterAid serves as a stellar example of how charitable
organisations and other non-profits are wholeheartedly embracing marketing in all its
facets (Kotler et al., 2020).

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1.9.2. Globalisation Proliferation

As they redefine their customer relationships, marketers are also reassessing their
interactions with the broader global landscape. In today's interconnected world, nearly
every company, regardless of its size, is influenced in some way by the pressures of
global competition. For instance, a neighbourhood florist relies on flowers sourced
from Dutch nurseries, while a prominent French electronics manufacturer faces
competition from Korean giants in its domestic markets. Simultaneously, an emerging
internet retailer finds itself receiving orders from customers worldwide, just as a
European consumer goods producer introduces new products in emerging markets
abroad (Kotler et al., 2020).

The effective marketing strategies employed by American and Asian multinational

corporations have posed challenges to European firms on their home turf. Companies
like Toyota, Nestlé, and Samsung have frequently outperformed their competitors in
European markets. Similarly, European companies spanning various industries have
expanded their operations to achieve true global reach, manufacturing and selling
products across the world (Kotler et al., 2020).

A quintessentially American brand like McDonald's now caters to 70 million customers

daily through more than 36,000 local restaurants located in over 100 countries
worldwide, with 68 percent of its corporate revenues originating from outside the
United States. Likewise, although 80 percent of IKEA's sales occur in Europe, China
and Russia are emerging as their fastest-growing markets. Presently, companies are
not solely focused on selling more of their locally produced goods in international
markets; they are also diversifying their sourcing of supplies and components from
abroad and designing new products tailored to specific markets around the globe.

As a result, managers and marketers must adapt to this globalised landscape and
implement strategies that align with the complexities of international business (Kotler
et al., 2020).

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Task

Marketing Task: Create a Marketing brief for a Product/Service

Objective: Apply marketing concepts to develop a practical plan.

Instructions:

• Choose a Product/Service: Pick something real or imaginary.

• Market Research: Learn about the market, customers, competitors, and
trends.
• Identify Your Audience: Define your target customers and explain why you
chose them.
• Set Your Product Apart: Describe what makes your product special.

This task helps you apply marketing knowledge to a real or fictional product,
improving your practical marketing skills and strategic thinking.

1.10. Conclusion

The first four stages of the marketing process centre around the creation of value for
customers. Initially, the company acquires a comprehensive understanding of the
marketplace by researching customer needs and managing marketing information.
Subsequently, it devises a customer-centric marketing strategy, guided by two
fundamental questions. The first inquiry pertains to identifying the consumers the
company will serve, known as market segmentation and targeting. Recognising that
it's impractical to cater to all customers equally, astute marketing companies
concentrate their resources on serving those customers they can serve optimally and
profitably. The second question relates to the most effective means of serving the
targeted customers, encompassing differentiation and positioning. In this context, the
marketer articulates a value proposition that elucidates the values the company will
provide to win over target customers.

With the marketing strategy established, the company proceeds to assemble an

integrated marketing program, incorporating a blend of the four marketing mix

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elements, often referred to as the four Ps. This process translates the marketing
strategy into tangible value for customers. The company formulates product offerings
and cultivates robust brand identities for them. Pricing strategies are devised to
generate tangible customer value, and distribution strategies are established to ensure
the availability of these offerings to the intended consumers. Finally, the company
orchestrates promotional campaigns to engage target customers and convey the value
proposition persuasively, motivating customers to take action on the market offering.

Arguably, one of the most critical phases in the marketing process revolves around
the construction of value-driven, profitable relationships with target customers.
Throughout this process, marketers actively practice customer relationship
management to foster customer satisfaction and delight. They actively engage
customers in crafting brand interactions, experiences, and communities.
Nevertheless, it's important to note that the company cannot navigate this journey
independently.

The first four steps in the marketing process lay the foundation for customer value
creation. In the final stage, the company reaps the rewards of its robust customer
relationships by capturing value from customers. By delivering exceptional customer
value, the company cultivates highly satisfied customers who exhibit increased
purchasing behaviour and loyalty. This, in turn, enables the company to capture the
customer's lifetime value and a larger share of their spending. The net result is the
growth of long-term customer equity for the organisation.

Lastly, considering the evolving marketing landscape, companies must also consider
three additional factors. While building relationships with customers and partners, they
must harness marketing technologies in the contemporary digital age. They should
seize opportunities on a global scale, and they must conduct their operations
sustainably, adopting environmentally and socially responsible practices.

SELF-ASSESSMENT QUESTIONS

1.1. What is the primary goal of marketing in a business context?

1.2. Why is market segmentation important in marketing strategy?

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1.3. How does customer relationship management (CRM) contribute to marketing

success?

1.4.. Examine the difference between marketing and advertising.

1.5 In what ways can digital marketing benefit a business in today's competitive
landscape?

Suggested Answers

1.1 The primary goal of marketing in a business context is to identify and meet
customer needs profitably. It involves creating products or services that address
these needs, promoting them effectively, and building strong customer
relationships.
1.2 Market segmentation is crucial because it helps businesses divide a diverse
market into smaller, more manageable segments based on shared
characteristics. This enables companies to tailor their marketing efforts to
specific customer groups, delivering more relevant messages and offerings.
1.3 CRM is essential for marketing success because it focuses on building and
maintaining strong, long-term relationships with customers. It helps businesses
understand individual customer preferences, personalise interactions, and
create loyal customers who are more likely to repurchase and advocate for the
brand.
1.4 Marketing encompasses a broader range of activities, including market
research, product development, pricing, distribution, and promotion.
Advertising is just one element of marketing and specifically involves creating
and delivering persuasive messages through various media to attract and
inform potential customers.

1.5 Digital marketing offers several advantages, including cost-effectiveness,

precise targeting, real-time tracking, and global reach. It allows businesses to
engage with a larger and more diverse audience, gather valuable data, and
adapt marketing strategies quickly based on customer feedback and trends.

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CHAPTER 2:
Company and marketing strategy: partnering to
build customer engagement, value and
relationships.

Specific Learning Outcomes

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When you complete this chapter, you should be able to:

• Demonstrate the ability to articulate the concept of companywide strategic

planning, including its underlying four-step process;

• Exhibit proficiency in examining the formulation of business portfolios and the

development of growth strategies;

• Understand marketing's role within the context of strategic planning and the
collaborative efforts between marketing and its partners in generating and
delivering customer value;

• Showcase the capability to outline the components of a marketing strategy

focused on delivering customer value, along with an understanding of the
external factors impacting these elements; and

• Manifest the skill to enumerate the various functions of marketing management,

encompassing the essential components of a marketing plan. Additionally, the
learner will analyse the significance of measuring and managing marketing
return on investment.

2.1. Introduction: Company-wide strategic planning: Clarifying the

Role of Marketing

Every organisation must identify a long-term strategy for sustaining and expanding its
presence, one that aligns with its unique circumstances, opportunities, goals, and
resources. This is the essence of strategic planning - the method of crafting and
preserving a strategic harmony between the company's objectives, capabilities, and
the evolving marketing landscape.

Strategic planning establishes the foundation for all other planning within the company.
Companies typically prepare yearly plans and long-term plans that focus on sustaining
their existing business operations. In contrast, the strategic plan is all about adapting

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the organisation to seize opportunities presented in its dynamically changing

surroundings.

At the corporate level, the strategic planning process begins with the establishment of
the organisation's overall purpose and mission, as illustrated in Figure 2.1. This
mission then becomes the basis for creating specific objectives that guide the entire
organisation. Subsequently, the headquarters makes decisions regarding the optimal
business and product portfolio for the company, along with the level of support each
should receive. In response, each business unit and product creates detailed
marketing and departmental plans that uphold the organisation-wide strategy. Thus,
marketing planning takes place at various levels, including the business unit, product,
and market segments, and it underpins the company's strategic planning with
comprehensive plans geared toward distinct marketing prospects (Kotler et al., 2020).

Figure 2.1: Adapted from Kotler et al., 2020.

2.2. Defining a Customer-Centric Mission

An organisation exists to achieve a specific purpose, and this objective should be

clearly articulated. Crafting a sound mission begins by addressing fundamental
questions: What is our core business? Who are our primary customers? What do
customers value? What should our business aspire to be? These seemingly simple
questions represent some of the most challenging queries a company will face.
Successful organisations consistently revisit these questions and answer them
meticulously and comprehensively.

Many organisations develop formal mission statements to respond to these questions.

A mission statement is an articulation of the organisation's purpose - what it aims to
achieve within the broader context. A clear mission statement functions as an "invisible
hand" that provides guidance to individuals within the organisation.

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While some companies define their missions in a product or technology-centric

manner ("We manufacture and sell furniture" or "We are a chemical-processing
company"), mission statements should be market-oriented and expressed in terms of
fulfilling fundamental customer needs. Products and technologies may eventually
become outdated, but fundamental market needs can endure indefinitely. For
instance, the social scrapbooking platform Pinterest doesn't limit its identity to merely
an online image-sharing space. Its mission is to provide people with a social media
platform for collecting, organising, and sharing their cherished interests. Virgin
Atlantic's mission statement doesn't just revolve around selling flights; it is centred on
cultivating a profitable airline where both passengers and employees deeply
appreciate the experience. Table 2.1 presents a variety of instances contrasting
product-centreed with customer-centred business definitions. Mission statements
must possess depth and precision while also serving as a source of inspiration.
Frequently, mission statements are crafted primarily for public relations purposes and
lack specific, actionable directives. Instead, they should underscore the company's
competencies and assertively articulate its strategy for achieving success in the
market. Ultimately, as exemplified by the Rolex narrative that commenced this chapter,
a company's mission should not be framed as a pursuit of increased sales or profits;
profits should be viewed as a consequence of delivering value to customers. Rather,
the mission should be centred on customers and the exceptional customer experience
that the company endeavours to create (Kotler et al., 2020).

Adapted from Kotler et al., 2020.

2.3. Establishing Company Objectives and Goals

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As an illustration, let's consider Kohler, a company engaged in the production and

marketing of familiar kitchen and bathroom fixtures, including Mira showers, bathtubs,
toilets, and kitchen sinks. However, Kohler's product and service offerings extend
beyond these to encompass furniture, tile and stone, as well as small engines and
backup power systems (in specific regions like Italy and China). Furthermore, the
company owns and operates golf resorts and spas in both the United States and
Scotland. Kohler unifies this diverse product portfolio under the overarching mission
of "enhancing the quality of gracious living for individuals touched by our products and
services." This comprehensive mission leads to a hierarchy of objectives, spanning
business objectives and marketing objectives. The primary goal for Kohler is to
cultivate profitable customer relationships by crafting efficient yet aesthetically
pleasing products that align with the mission of "gracious living." Achieving this
necessitates substantial investments in research and design. However, since research
requires funding, bolstering profits emerges as another prominent objective for Kohler.
Enhancing profits can be realised through increased sales or reduced costs, often
entailing strategies to enhance the company's market share domestically and
internationally. These strategies, in turn, shape the current marketing objectives of the
company (Kotler et al., 2020).

2.4. Designing the Business Portfolio

In alignment with the company's mission statement and objectives, management is

tasked with strategising its business portfolio, which comprises a collection of
businesses and products within the company. The most favourable business portfolio
is one that best capitalises on the company's strengths and weaknesses in the context
of environmental opportunities. Many large companies manage intricate portfolios of
businesses and brands, making strategic and marketing planning for such portfolios a
challenging yet indispensable endeavour. For instance, consider General Electric or
GE, a mammoth conglomerate with a vast array of products and services,
encompassing segments related to "moving, powering, building, and curing the world."
Although most consumers may recognise GE primarily for its home appliances and
lighting products, the company's scope extends further, including divisions like GE
Aviation, GE Power, and GE Healthcare, offering products ranging from jet engines

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and wind turbines to medical imaging equipment. Effectively managing such an

extensive portfolio necessitates exceptional managerial skills, unwavering operational
focus, and, in line with GE's long-standing corporate slogan, a great deal of
"Imagination at work."

Designing the business portfolio involves two key steps. First, the company conducts
an analysis of its current business portfolio, deciding which businesses should receive
more investment, less investment, or no investment at all. Second, it shapes the future
portfolio by formulating strategies for both growth and downsizing (Kotler et al., 2020).

2.4.1. Analysing the Current Business Portfolio

The pivotal aspect of strategic planning lies in the evaluation of the products and
businesses constituting the company, known as strategic business units (SBUs).
SBUs can comprise a company division, a product line within a division, or, in some
cases, a single product or brand. To make informed investment decisions, the
company evaluates the attractiveness of its various SBUs and allocates the
corresponding support they require. When developing a business portfolio, it is
advisable to add and reinforce products and businesses that closely align with the
firm's core principles and competencies.

The core purpose of strategic planning is to determine how the company can
effectively leverage its strengths to seize attractive environmental opportunities. For
this reason, many conventional portfolio analysis methods evaluate SBUs based on
two essential dimensions: the market or industry's attractiveness and the SBU's
strength within that market or industry. One of the most well-known portfolio planning
methodologies was developed by the Boston Consulting Group (BCG).

Using the BCG approach, a company classifies its SBUs using the growth-share
matrix, as illustrated in Figure 2.2. The vertical axis represents market growth rate,
indicating market attractiveness, while the horizontal axis denotes relative market
share, indicating the company's strength in the market. This matrix categorises SBUs
into four types: Stars, Cash Cows, Question Marks, and Dogs. These classifications
assist in deciding how to allocate resources and effort. Subsequently, the company

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must determine the role each SBU will play in the future, considering strategies for
investment and market share maintenance.

Figure 2.2: Boston Group Matrix, Adapted from Kotler et al., 2020.

Opt to exploit the SBU's resources by maximising its immediate cash flow without
concern for its long-term implications. Alternatively, consider liquidating the SBU by
either selling it or gradually phasing it out, reallocating the resources elsewhere.

Over time, SBUs undergo shifts in their positions within the growth-share matrix.
Numerous SBUs initiate their journey as question marks and advance into the star
category if they perform successfully. Subsequently, as market growth diminishes,
they evolve into cash cows. Eventually, they either decline or transition into the dogs
category as they reach the latter stages of their life cycle. To sustain growth and
prosperity, the company must continually introduce new products and units, fostering
the potential for some to evolve into stars and, ultimately, cash cows. This, in turn, will
provide financial support for other SBUs (Kotler et al., 2020).

2.4.2. Challenges Associated with Matrix Approaches

Matrix methodologies, such as the BCG model and other structured techniques,
introduced significant advancements in the realm of strategic planning. Nevertheless,
these centralised approaches come with inherent limitations. They can be
burdensome, time-intensive, and costly to put into practice. Defining strategic business
units (SBUs) and gauging market share and growth can pose challenges for
management. Additionally, these methods predominantly concentrate on classifying
existing businesses, offering limited guidance for future planning.

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In response to these issues, numerous companies have shifted away from formal
matrix methodologies in favour of tailored approaches better suited to their unique
circumstances. Furthermore, today's strategic planning has undergone
decentralisation. Increasingly, organisations are entrusting strategic planning to cross-
functional teams of divisional managers who maintain proximity to their respective
markets. In this digital age, these managers possess a wealth of current data at their
disposal and can swiftly adapt their strategies to accommodate changing conditions
and market dynamics.

Portfolio planning can present complexities. Take, for example, The Walt Disney
Company. Many Europeans primarily associate Disney with theme parks and family-
oriented entertainment. However, in the mid-1980s, Disney established a formidable,
centralised strategic planning unit to steer its direction and expansion. Over the
subsequent two decades, this strategic planning unit transformed The Walt Disney
Company into a vast and diversified conglomerate of media and entertainment
enterprises. The expansive company encompassed everything from theme resorts
and film studios (including Walt Disney Pictures, Touchstone Pictures, Pixar
Animation, and Marvel Studios) to media networks (such as ABC Television, ESPN,
Disney Channel, portions of A&E and the History Channel, and several others) to
consumer products (ranging from apparel and toys to interactive games) and a cruise
line (Kotler et al., 2020).

However, this extensively transformed company posed formidable management

challenges and exhibited inconsistent performance. In an effort to enhance
performance, Disney dismantled the centralised strategic planning division and
distributed its responsibilities to divisional managers within Disney. Consequently,
Disney maintained its position as one of the world's leading media conglomerates.
Even in the face of recent economic turbulence, Disney's effective strategic
management of its diverse range of businesses, coupled with a touch of the renowned
Disney enchantment, enabled it to outperform rival media companies (Kotler et al.,
2020).

2.5. Formulating Growth and Streamlining Strategies

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In addition to assessing existing business components, the process of shaping the

business portfolio involves identifying prospective businesses and products that
warrant consideration in the future. The quest for growth is vital for companies to
enhance their competitive edge, meet the expectations of their stakeholders, and
attract top talent. Nonetheless, it is imperative for a company to refrain from regarding
growth as an end. The primary objective should revolve around achieving "profitable
growth." The lion's share of responsibility for realising profitable growth within a
company falls upon the marketing function. Marketing is tasked with the crucial role of
identifying, assessing, and choosing market opportunities while devising strategies for
their capture. A valuable tool for pinpointing growth prospects is the product/market
expansion grid, as illustrated in Figure 2.3. We can exemplify its application by
considering the case of Vivago Oy, a Finnish healthcare technology enterprise
specialising in the development, sale, and promotion of automatic personal security
systems, as well as the monitoring and analysis of users' activity levels.

Vivago markets the world's pioneering system capable of monitoring the physiological
signals of wearers, encompassing factors like movement, skin conductivity, and body
temperature. It employs this data to transmit alerts through local networks (Kotler et
al., 2020).

Figure 2.3: Product/ Market Expansion Grid, Adapted from Kotler et al., 2020.

Regarding the Vivago system, which functions as an automatic personal security

system and monitors wearers' health, alerting the telephone network in case of a
wearer's declining health or manual alarm activation – all while being worn as a
wristband watch, it has garnered numerous international accolades for its innovative
design.

First, Vivago might explore the potential for enhancing market penetration, which
involves increasing sales without altering the core product. This can be achieved

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through refining the marketing mix, encompassing product design, advertising, pricing,
and distribution strategies. For instance, Vivago could expand its product range by
offering various styles, colours, and designs catering to diverse users. The company
could also introduce direct-to-consumer distribution channels such as proprietary retail
stores or a toll-free call centre.

Secondly, Vivago could contemplate market development, whereby it identifies and

nurtures new markets for its existing products. Given the globally aging population,
multiple markets hold promise. Both Japan and the United States, with their sizeable,
prosperous aging populations, could serve as potentially lucrative, long-term markets.

Thirdly, Vivago might explore product development by introducing modified or new

products to its existing markets. For instance, the company could create and launch
additional physiological monitoring devices to be worn on the wrist or the body,
targeting sports and fitness enthusiasts. While this may place Vivago in direct
competition with current sports technology providers, it also offers substantial growth
potential.

Lastly, Vivago could consider diversification by venturing into new businesses outside
its current product and market domains. One conceivable direction could involve
entering broader security and monitoring industries. However, in the diversification
process, companies should exercise caution to avoid overstretching their brand's
positioning. They need to devise strategies not only for expanding their business
portfolios but also for rationalising them (Kotler et al., 2020).

Various factors may drive a company to consider discontinuing products or markets.

Rapid growth, ventures into unfamiliar territories, changing market conditions, and
economic downturns may all trigger the need to streamline a portfolio. During
challenging economic periods, firms often eliminate less profitable products and
markets to allocate resources more efficiently. Furthermore, as products or business
units mature, they may naturally decline.

When a company identifies unprofitable brands or businesses that no longer align with
its overarching strategy, it must meticulously decide whether to trim, maximise short-
term returns, or divest them. A case in point is Procter & Gamble (P&G), which has
divested numerous prominent brands in recent years, concentrating on household

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care and beauty and grooming products. Similarly, General Motors (GM) has pruned
underperforming brands from its portfolio, including Oldsmobile, Pontiac, Saturn,
Hummer, and Saab. In such cases, underperforming businesses can demand an
inordinate amount of management attention, diverting resources away from promising
growth opportunities. It's essential for managers to direct their efforts toward fruitful
endeavours instead of expending energy on rescuing declining ones (Kotler et al.,
2020).

2.6. Formulating Marketing Strategies by Collaborating to Cultivate Customer

Relationships

The company's strategic blueprint defines the types of businesses it will operate and
sets forth objectives for each. Subsequently, within each business unit, more intricate
planning unfolds. The primary functional departments within each unit – encompassing
marketing, finance, accounting, procurement, operations, information systems, human
resources, and others – must collaborate harmoniously to fulfill strategic objectives.

Marketing assumes a pivotal role in the company's strategic planning, contributing in

several vital ways. Firstly, marketing provides a guiding principle – the marketing
concept – advocating that the company's strategy should pivot around creating value
for customers and forging profitable relationships with key consumer segments.
Secondly, marketing offers insights to strategic planners by pinpointing appealing
market opportunities and assessing the firm's capacity to capitalise on them. Finally,
within individual business units, marketing devises strategies to attain the unit's goals.
After establishing the unit's objectives, marketing's mission is to facilitate their fruitful
accomplishment. The marketer's recipe for triumph centres on customer engagement
and value. However, as highlighted in Chapter 1, marketing cannot, on its own,
orchestrate engagement and deliver superior value to customers. It serves as a
partner in the pursuit of attracting, engaging, and nurturing customers. Beyond
customer relationship management, marketers must also cultivate partner relationship
management. They are compelled to collaborate closely with associates in other
departments of the company, forging an efficacious internal value chain that caters to
customers. Furthermore, they must establish effective partnerships with other firms
within the marketing ecosystem to craft a competitively superior external value delivery
network. Let's delve deeper into the concepts of a company value chain and a value
delivery network (Kotler et al., 2020).

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2.6.1. Collaborating with Internal Departments

Every department within a company can be likened to a link in the firm's internal value
chain. Each department engages in activities that create value, encompassing product
design, production, marketing, delivery, and support. The company's triumph hinges
on not only the efficiency of each department in carrying out its tasks but also on how
effectively these departments synchronise their efforts.

For instance, Aldi aspires to generate customer value and satisfaction by offering
desired products at the lowest feasible prices. The marketing team at Aldi plays a
crucial role in this endeavour. They discern customer needs, ensure the availability of
desired products at unbeatable prices, formulate advertising and promotional
initiatives, and provide customer support. In doing so, Aldi's marketers contribute to
delivering value to customers.

Nevertheless, the marketing department cannot accomplish this alone and relies on
the support of other departments. For Aldi to deliver the right products at low prices, it
depends on the purchasing department to secure favourable supplier deals. The
information technology (IT) department must furnish real-time and accurate data on
product sales, while the operations team must ensure efficient and cost-effective
product handling. A company's value chain is only as robust as its weakest link, and
success hinges on the efficacy of each department's contribution to adding customer
value and coordinating their activities. In the case of Aldi, if the purchasing department
cannot secure the lowest prices from suppliers, or if the operations department cannot
manage merchandise distribution at minimal costs, the marketing department cannot
uphold its promise of unbeatable low prices – "Like Aldi, Like the Price."

In an ideal scenario, different functions within a company should work together

harmoniously to generate value for consumers. However, in practice,
interdepartmental interactions often encounter conflicts and misunderstandings. The
marketing department champions the customer's perspective, yet its actions to
enhance customer satisfaction may inadvertently disrupt the operations of other
departments. Consequently, achieving alignment between these departments can be
a challenging (Kotler et al., 2020).

2.6.2. Collaborating with Stakeholders in the Marketing Ecosystem

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In the pursuit of engaging customers and delivering customer value, companies must
extend their focus beyond their internal value chain to encompass the value chains of
suppliers, distributors, and ultimately, customers. Consider IKEA, for example.
Customers flock to IKEA, not merely for its furniture but also for the high standard of
quality, service, cleanliness, and value offered by its finely-tuned value delivery
network. IKEA's effectiveness hinges on successful partnerships with its suppliers and
others, all working together to create "a better everyday life" for customers.

Today, an increasing number of companies collaborate with other members of the

supply chain – suppliers, distributors, and even customers – to enhance the
performance of the customer value delivery network. For instance, cosmetics
manufacturer L'Oréal recognises the significance of cultivating close relationships with
its extensive network of suppliers, who provide everything from polymers and fats to
spray cans and packaging, production equipment, and office supplies.

In the contemporary marketplace, competition no longer centres solely around

individual competitors; instead, it transpires among the entire value delivery networks
established by these competitors. A company's success depends on the quality of its
overall value delivery network relative to that of its competitors. For instance, Citroën's
performance against Ford depends on the effectiveness of Citroën's value delivery
network compared to Ford's. Even if Citroën manufactures superior cars, it might
struggle in the market if Ford's dealer network offers more satisfying sales and service
to customers (Kotler et al., 2020).

2.7. Crafting Marketing Strategy and the Marketing Mix

The company's strategic plan outlines its overall mission and objectives. Figure 2.4
summarises the key activities associated with managing a customer-driven marketing
strategy and the marketing mix, which work together to deliver value to customers and
build profitable customer relationships.

Customers occupy the central position, and the objective is to generate value for them
and cultivate profitable customer relationships. Subsequently, marketing strategy,
representing the marketing rationale through which the company aims to create
customer value and establish profitable relationships, takes the forefront. The
company selects the customers it will serve (segmentation and targeting) and defines
how it will serve them (differentiation and positioning). The process involves identifying

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the total market, segmenting it into smaller units, targeting the most promising
segments, and ultimately serving and satisfying customers in these segments (Kotler
et al., 2020).

Figure 2.4: Marketing Strategies and Marketing Mix, Adapted from Kotler et al.,
2020.

Underpinned by marketing strategy, the company constructs an integrated marketing

mix, incorporating elements within its control: product, price, place, and promotion (the
four Ps). The company undertakes marketing analysis, planning, implementation, and
control to identify the most effective marketing strategy and mix. These activities
enable the company to adapt to changes in the marketing environment. While a brief
overview of each activity is provided here, subsequent chapters delve deeper into
each.

Think Point

L’Oréal, the world's largest cosmetics manufacturer, boasts a

portfolio of 25 renowned brands, including Maybelline, Kiehl’s,
Lancôme, and Redken. The company places paramount importance
on its supplier network, considering them esteemed partners in their
journey. L’Oréal has high expectations of its suppliers, seeking
design innovation, uncompromising quality, and socially responsible

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practices. The company rigorously evaluates potential new suppliers

and continually assesses the performance of its existing ones.

However, L’Oréal doesn't just set high standards; it collaborates

closely with its suppliers to support them in meeting these exacting
criteria. Unlike companies that place undue pressure on their
suppliers for short-term gains, L’Oréal cultivates enduring supplier
relationships built on mutual benefits and long-term growth. In the
company's own words, as stated on its supplier website, it treats
suppliers with "fundamental respect for their business, their culture,
their growth, and the individuals who work there. Each relationship is
built on shared efforts aimed at fostering growth and achieving
mutual profits that enable suppliers to invest, innovate, and remain
competitive."

As a result of this approach, over 75 percent of L’Oréal's supplier

partners have sustained fruitful collaborations with the company for a
decade or more, with the majority being partners for several decades.
The head of purchasing at L’Oréal succinctly sums it up by stating,
"The CEO aspires to make L’Oréal a top performer and one of the
world’s most esteemed companies. Gaining respect also involves
earning the respect of our suppliers."

2.7.1. A Marketing Strategy Focused on Customer Value

In the fiercely competitive contemporary marketplace, companies must place the

customer at the core of their operations. They must attract customers away from
competitors and nurture and expand these relationships by delivering superior value.
However, before satisfying customers, a company must first comprehend their needs
and desires. Hence, effective marketing necessitates market segmentation, market
targeting, differentiation, and positioning (Kotler et al., 2020).

2.7.2: Market Segmentation

Within the market, there is a diversity of consumers, products, and needs. The task of
the marketer is to discern which segments present the most promising opportunities.

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Consumers can be categorised and catered to based on factors such as geographic,

demographic, psychographic, and behavioural attributes. This process, known as
market segmentation, involves dividing the market into discrete groups of buyers who
exhibit distinct needs, characteristics, or behaviours, and who may require customised
marketing strategies or blends.

Every market exhibits varying segments, yet not all methods of segmenting a market
prove equally valuable. To illustrate, consider Advil, a brand of ibuprofen. It would
provide little benefit to differentiate between low-income and high-income pain-relief
users if both groups respond similarly to marketing endeavours. A market segment is
comprised of consumers who react in a similar manner to a given array of marketing
initiatives.

For instance, in the automobile market, there are consumers seeking the largest, most
luxurious vehicles, regardless of cost, forming one market segment. In contrast,
another segment consists of consumers who prioritise price and operational efficiency.
Crafting a single car model that perfectly aligns with both segments is a challenging
task. Therefore, companies make prudent decisions to focus their efforts on
addressing the unique needs of distinct market segments.

2.7.3. Market Targeting

Once a company has delineated its market segments, it can proceed to engage with
one or more of these segments. Market targeting entails a thorough assessment of
the appeal of each market segment and the selection of one or more segments to
pursue. A company's focus should be on segments where it can generate substantial
customer value profitably and sustain it over time.

In instances where a company possesses limited resources, it may opt to cater

exclusively to a single or a few specialised segments or market niches. These niches
specialise in serving customer segments that major competitors tend to disregard or
neglect. For instance, Ferrari annually sells approximately 8,400 of its ultra-high-
performance cars on a global scale, commanding premium prices ranging from a
staggering €232,000 for its Ferrari 488 GTB to an astounding €2.6 million for the
Pininfarina Sergio super sports car. Most niches, however, are not as exotic. Tetra
GmbH, for instance, dominates the fish food market with its Tetramin flakes, focusing
on aquarist and pond-related products. Additionally, small online-search startup

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DuckDuckGo thrives among privacy-conscious users in the shadows of search giants

like Google and Microsoft's Bing.

Conversely, a company might opt to serve various interconnected segments,

potentially comprising distinct customer types with fundamental shared desires. For
example, Gap Inc. targets diverse age, income, and lifestyle clothing and accessory
segments through five distinct store and online brands: Gap, Banana Republic, Old
Navy, Athleta, and INTERMIX. The Gap store brand further subdivides its segments
into even smaller niches, encompassing Gap, GapKids, babyGap, GapMaternity, and
GapBody. Alternatively, larger companies, such as car manufacturers like Honda and
Ford, may decide to offer a comprehensive array of products to serve all market
segments.

Most companies venture into a new market by initially catering to a single segment. If
this approach proves successful, they can then expand their reach into additional
segments (Kotler et al., 2020).

2.7.4. Market Differentiation and Positioning

After a company has determined which market segments to engage with, it must then
decide how to make its market offering distinct for each selected segment and identify
the positions it intends to hold within those segments. A product's position pertains to
its location relative to competing products in the minds of consumers. Marketers aim
to craft unique market positions for their products, as consumers would have no
compelling reason to purchase a product if it is perceived as identical to others in the
market.

Positioning entails the task of ensuring that a product occupies a distinct, easily
identifiable, and appealing place concerning competing products in the minds of the
target consumers. Marketers develop positions that set their products apart from rival
brands, thereby granting them a considerable advantage within their designated target
markets.

Consider brand slogans as illustrations: BMW pledges 'Sheer driving pleasure,'

Subaru is characterised by 'Confidence in Motion,' Philips opts for 'Sense and
Simplicity,' Coca-Cola invites consumers to 'Taste the Feeling,' and Pepsi urges them

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to 'Live for now.' Del Monte signifies 'Bursting with Life,' whereas Burger King
empowers customers to have their burger 'Your way.' These seemingly simple
statements form the core of a product's marketing strategy. For example, Burger King
has constructed its entire global integrated marketing campaign—spanning from
television and print advertisements to its websites—around the original tagline 'Have
it your way,' which has since evolved into the current 'Your way' positioning.

When positioning its brand, a company first identifies potential customer value
disparities that can serve as competitive advantages upon which to establish its
position. A company can deliver greater customer value by either charging lower
prices than competitors or providing additional benefits that validate higher prices.
However, if the company commits to providing superior value, it must also fulfill that
commitment. Consequently, effective positioning commences with differentiation,
which involves the actual modification of the company's market offering to create
superior customer value. Once the company has selected its desired position, it must
take robust measures to both deliver and convey that position to the target consumers.
The company's entire marketing strategy should align with the chosen positioning
strategy (Kotler et al., 2020).

2.8. Developing a Coordinated Marketing Mix

Once the company has determined its overarching marketing strategy, it is prepared
to commence the detailed planning of the marketing mix, a fundamental concept in
modern marketing. The marketing mix constitutes the assortment of tactical marketing
tools the company combines to generate the desired response in the target market. It
encompasses everything the company can do to engage consumers and deliver
customer value, and these diverse possibilities can be categorised into four groups of
variables, often referred to as the four Ps. Figure 2.5 illustrates the marketing tools
associated with each of the Ps (Kotler et al., 2020).

Recommend that Figure 2.5 be placed here

Product: This encompasses the combination of goods and services the company
provides to the target market. For instance, an Alfa Romeo Stelvio is composed of an
intricate assembly of components such as nuts, bolts, spark plugs, pistons, and
headlights. Alfa Romeo offers several Stelvio models with numerous optional features,
and their product offering also includes service and warranty provisions.

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Price: Price denotes the amount customers need to pay to acquire the product. Alfa
Romeo calculates suggested retail prices for their Stelvio models, although in practice,
dealerships often negotiate the final price with each customer. This negotiation
process considers various factors, such as discounts, trade-in allowances, and credit
terms, which help to align prices with the perceived value of the car based on the
current competitive and economic conditions.

Place: This aspect pertains to the company's activities that make the product available
to the target consumers. Alfa Romeo collabourates with a network of independently
owned dealerships that specialise in selling a range of Alfa Romeo models. The
company takes great care in selecting its dealerships and provides robust support.
These dealers maintain inventories, conduct product demonstrations, negotiate
prices, finalise sales, and offer post-sale servicing.

Promotion: Promotion refers to activities aimed at conveying the merits of the product
and persuading target customers to make a purchase. Alfa Romeo allocates
substantial funds annually to advertising to inform consumers about the company and
its extensive product lineup. Dealership sales staff plays a crucial role in assisting
potential buyers and convincing them that Alfa Romeo is the best choice. Special
promotions, including sales, cash rebates, and low financing rates, are used as
supplementary incentives. Moreover, Alfa Romeo employs social media platforms
such as Facebook, Twitter, YouTube, Instagram, and others to interact with
consumers and fellow brand enthusiasts.

An effective marketing program harmonises the elements of the marketing mix to

create an integrated marketing strategy that aligns with the company's marketing
objectives. The marketing mix serves as the company's tactical toolkit for establishing
a strong market position in target markets.

While some critics argue that the four Ps may overlook or downplay certain significant
activities, such as services and packaging, marketers counter that services are, in fact,
a type of product, namely service products. Packaging is considered one of many
product-related decisions. As Figure 2.5 indicates, many marketing activities that
might initially appear to be excluded from the marketing mix can be categorised under
one of the four Ps. The essential focus is not on the quantity of Ps but on the most

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useful framework for designing integrated marketing programs.

Figure 2.5: Marketing Mix: Four P’s, Adapted from Kotler et al., 2020.

Nevertheless, a legitimate concern is raised - the four Ps are seller-centric, not buyer-
centric. In today's age of customer value and relationships, some suggest that the four
Ps might be more aptly represented as the four A’s. Under this more customer-centred
framework, acceptability is the extent to which the product exceeds customer
expectations; affordability the extent to which customers are willing and able to pay
the product’s price; accessibility the extent to which customers can readily acquire the
product; and awareness the extent to which customers are informed about the
product’s features, persuaded to try it and reminded to repurchase. The four As relate
closely to the traditional four Ps. Product design influences acceptability, price affects
affordability, place affects accessibility and promotion influences awareness.
Marketers would do well to think through the four As first and then build the four Ps on
that platform (Kotler et al., 2020).

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2.9. Marketing Planning

Within the broader context of strategic planning, a company outlines its objectives and
strategies for each business unit. Marketing planning, specifically, is the process of
selecting marketing strategies aligned with the company's overarching strategic goals.
To effectively plan marketing initiatives, a comprehensive marketing plan is
indispensable. The following discussion primarily focuses on product or brand
marketing plans.

The marketing plan commences with an executive summary, which briefly

encapsulates significant assessments, goals, and recommendations. The core of the
plan proceeds to furnish a thorough SWOT analysis, elucidating the current marketing
landscape along with potential threats and opportunities. Following this, the plan
articulates primary objectives for the brand and delineates the specifics of the
marketing strategy intended to achieve these objectives.

The marketing strategy encompasses specific strategies related to target markets,

positioning, the marketing mix, and marketing expenditure levels. It elucidates how the
company intends to engage its target customers and create value, with the objective
of capturing value in return. Within this section, the planner expounds on how each
strategy addresses the threats, opportunities, and vital issues outlined earlier in the
plan. Subsequent sections of the marketing plan detail an action program for executing
the marketing strategy, along with the particulars of the supporting marketing budget.
The final section lays out the control mechanisms that will monitor progress, measure
the return on marketing investment, and facilitate corrective actions (Kotler et al.,
2020).

2.10. Marketing Implementation

Conceptualising and devising sound marketing strategies is just the starting point for
successful marketing. The actual implementation of these strategies is a crucial aspect
of translating marketing plans into concrete actions that help realise strategic
marketing objectives. While marketing planning addresses the "what" and "why" of
marketing activities, implementation addresses the "who," "where," "when," and "how."

Many managers believe that executing these plans effectively, or "doing things right"
(implementation), is as significant as, or perhaps even more so than, conceiving the
"right things" in terms of strategy. In reality, both aspects are vital for success, and

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companies can attain a competitive edge through the efficient execution of their
strategies. Two firms with essentially identical strategies can distinguish themselves
in the market by executing those strategies more swiftly or effectively. Nevertheless,
it's important to note that implementation is often challenging, as it's often simpler to
conceive effective marketing strategies than it is to bring them to life (Kotler et al.,
2020).

In our increasingly interconnected world, individuals at various levels within the

marketing system must collaborate to put marketing strategies and plans into action.
Take Mercedes-Benz, for instance, where marketing implementation for car
manufacturing necessitates day-to-day decisions and actions from thousands of
people both within and outside the organisation. Marketing managers are responsible
for choices regarding target segments, product design, pricing, promotion, and
distribution. They interact with engineering for product development, manufacturing for
production and inventory management, and finance for funding and financial planning.
Additionally, they engage with external stakeholders such as advertising agencies for
ad campaigns and the media for public relations support. The sales force plays a
pivotal role by encouraging and supporting dealers in persuading customers that
choosing a Mercedes-Benz means choosing 'The Best or Nothing'(Kotler et al., 2020).

2.11. Marketing Control

Given the unexpected developments that often arise during the implementation of
marketing strategies and plans, it's essential for marketers to consistently practise
marketing control. This involves the ongoing evaluation of results and the adoption of
corrective measures to ensure that the defined objectives are achieved. Marketing
control entails a four-step process. Initially, management sets specific marketing
objectives. Subsequently, it assesses its performance in the market and examines the
underlying factors contributing to any disparities between anticipated and actual
performance. Finally, management implements corrective actions to bridge the gap
between the objectives and actual performance, which may entail modifying the action
programs or even reevaluating the goals themselves (Kotler et al., 2020).

Operating control focuses on reviewing ongoing performance against the annual plan
and initiating corrective measures when necessary. Its primary objective is to ascertain

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that the company attains the sales, profits, and other objectives outlined in its annual
plan. It also entails assessing the profitability of various products, territories, markets,
and distribution channels. Strategic control, on the other hand, involves evaluating the
alignment of the company's fundamental strategies with its existing opportunities.
Marketing strategies and programs can swiftly become obsolete, so it is advisable for
companies to periodically reevaluate their overall approach to the market (Kotler et al.,
2020).

Conclusion

Strategic planning sets the stage for the rest of the company’s planning. Marketing
contributes to strategic planning, and the overall plan defines marketing’s role in the
company. Strategic planning involves developing a strategy for long-run survival and
growth. It consists of four steps: (1) defining the company’s mission, (2) setting
objectives and goals, (3) designing a business portfolio and (4) developing functional

plans. The company’s mission should be market oriented, realistic, specific, motivating
and consistent with the market environment. The mission is then transformed into
detailed supporting goals and objectives, which in turn guide decisions about the
business portfolio.

SELF-ASSESSMENT QUESTIONS

Read the following mini case study and answer the questions that follow:

Online, Mobile, and Social Media Marketing: The Mission of Google (Alphabet)

Established in 1998 as an internet search engine, Google maintains its original mission
statement: to 'organize the world's information and make it universally accessible and
useful.' Google has achieved remarkable success, with revenues surging from €2.8
billion in 2002 to €100 billion in 2017, predominantly sourced from advertising.
Expanding beyond its search engine roots, Google is venturing into diverse realms,
including self-driving cars, innovative smart contact lenses for blood sugar monitoring,
internet-transmitting balloons capable of creating global internet hotspots, and
magnetic nanoparticles for detecting diseases in the human bloodstream. Google has
diversified so extensively that it recently introduced a broader entity, a parent holding
company known as Alphabet, to encompass its myriad ventures.

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Lately, Google/Alphabet has been on an acquisition spree, acquiring companies

specialising in security, biotechnology, and robotics to capitalise on the Internet of
Things (IoT) phenomenon. Experts anticipate that by 2020, there will be around 25
million interconnected devices in our homes and workplaces. Google has also
introduced its IoT operating system, aptly named Brillo (drawing inspiration from the
Brillo scrubbing pad), which serves as a streamlined version of its Android operating
system. It is primarily intended for developers of smart, internet-connected products
like ovens, thermostats, and even toothbrushes. In parallel, Google has devised
Weave, a complementary IoT language that facilitates communication between smart
products. Perhaps one day, you'll find yourself in your Google/Alphabet self-driving
car, simultaneously streaming the news, monitoring your blood sugar levels, and
regulating your home's temperature by adjusting the thermostat during your commute
home from work. Adapted from Kotler et al., 2020.

2.1. Create a new mission statement for Google/Alphabet that will take it through
the rest of this century.

Suggested Answer
2.1. Mission Statement: "To connect, empower, and enhance the world by
innovating and delivering solutions that transcend boundaries and enrich lives. We are
committed to organising the world's information, fostering technological
advancements, and leveraging the power of data, AI, and connectivity for the
betterment of humanity."
This mission emphasises the company's commitment to connectivity, innovation, and
using technology to benefit individuals and society as a whole. It acknowledges the
company's expanded portfolio beyond just information and search and its role as an
enabler for innovation in various fields.
Whether Google/Alphabet should adopt a new mission statement is a matter for the
company's leadership and stakeholders to decide. However, updating the mission
statement can reflect the company's evolution and the broader impact it seeks to make
in the future. It can help guide strategic decisions and communicate the company's
values and goals to employees, partners, and the public.

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CHAPTER 3: Analysing the marketing environment

Specific Learning Outcomes

When you complete this chapter, you should be able to:

• Demonstrate the capacity to elucidate the environmental forces influencing a

company's ability to serve its customers, encompassing the micro-environment
and macro-environment;
• Analyse how alterations in the demographic and economic environments impact
marketing decisions, covering the demographic and economic environments;
• Identify significant trends within the firm's natural and technological
environments, encompassing the natural and technological environments;
• Explain the essential changes occurring within the political, social, and cultural

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environments, encompassing the political, social, and cultural environments;

and
• Engage in discussions regarding how companies can respond to the marketing
environment, focusing on responding to the marketing environment.

3.1. Introduction

A company's marketing environment encompasses the external factors and entities

that influence marketing management's capacity to establish and sustain successful
connections with their intended customers. Companies need to continually monitor
and adjust to these ever-changing conditions, and in many instances, take the lead in
initiating such changes.

Among all the functional units within a company, marketers play a distinct role as trend
trackers and opportunity discoverers in the external environment. While it's essential
for every manager in an organisation to remain attentive to the external environment,
marketers possess two specific competencies. Firstly, they employ systematic
approaches, such as marketing research and marketing intelligence, to gather
information and gain insights about the marketing environment. Secondly, they invest
a significant amount of time in understanding the customer and competitor
landscapes. Through this thorough examination of the environment, marketers can
adapt their strategies to address emerging challenges and capitalise on new market
opportunities.

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The marketing environment can be divided into two key components: the micro-
environment and the macro-environment. The micro-environment encompasses the
entities in close proximity to the company that influence its ability to interact with and
serve its customers. This includes the company itself, suppliers, marketing
intermediaries, customer markets, competitors, and publics. On the other hand, the
macro-environment comprises the broader societal forces that impact the micro-
environment, encompassing demographic, economic, natural, technological, political,
and cultural influences. Let's now focus on the company's micro-environment (Kotler
et al., 2020).

3.2. Micro-environment

The role of marketing management is to cultivate connections with customers by

generating value and contentment for them. Nonetheless, this endeavour doesn't rest
solely on the shoulders of marketing managers. As illustrated in Figure 3.1, numerous
key players exist within the micro-environment that significantly influence marketing
activities. Achieving success in marketing necessitates the establishment of
relationships with various entities, including other internal company departments,
suppliers, marketing intermediaries, competitors, diverse publics, and customers,
collectively forming the company's value delivery network (Kotler et al., 2020).

Figure 3.1: Stakeholders in the Micro-environment, Adapted from Kotler et al.,

2020.

3.2.1. Organisation

Within the organisation’s inner workings, marketing management, when devising

marketing strategies, takes into consideration various company units, such as top
management, finance, research, and development (R&D), procurement, operations,

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human resources, and accounting. All these interconnected departments constitute

the internal environment. Top management defines the organisation’s mission,
objectives, overarching strategies, and policies. Marketing managers then make
decisions within the framework of these broader strategies and plans. As discussed in
Chapter 2, marketing managers must work closely with other departments. With
marketing playing a lead role, all departments, from production and finance to legal
and human resources, share the collective responsibility for understanding customer
needs and fostering customer value (Kotler et al., 2020).

3.2.2. Suppliers

Suppliers are another crucial component in the company's comprehensive network for
delivering customer value. They provide the essential resources needed for the
company to manufacture its products and deliver its services. Challenges with
suppliers can substantially impact marketing operations. Marketing managers must
keep a vigilant eye on the availability and costs of supplies. Shortages or delays in the
supply chain, along with unforeseen events like natural disasters, can result in
immediate sales losses and, in the long term, harm customer satisfaction. In the
contemporary business landscape, the majority of marketers recognise the value of
considering their suppliers as collaborative partners in the creation and delivery of
customer value. Morrisons, a prominent supermarket chain in the United Kingdom,
offers a wide array of products, ranging from seafood, dairy items, and meat to bakery
goods and non-food grocery items. The company has come to realise the pivotal
importance of its supplier relationships, especially in the fiercely competitive retail
sector. Morrisons acknowledges that the numerous accolades it has received over the
years, including distinctions such as 'Supermarket of the Year,' 'Nation's Best Café,'
and 'Most Sustainable Retailer of the Year,' would not have been attainable without
strong ties to its suppliers. This commitment to fostering strong supplier relationships
is evident in various ways. For example, Morrisons' premium milk brand is priced 10
pence per liter higher than the standard Morrisons brand, a strategy that Martyn Jones,
the organisation's corporate services director, explains is designed to support the dairy
farmers supplying the milk. Furthermore, Morrisons actively encourages farmers to
participate in the Groceries Code Adjudicator's annual supplier survey, facilitating
further development of their relationships. The close and productive connection
between Morrisons and its suppliers has even led to unique outcomes, such as the

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company hiring Neil Davison, a former supplier from Express Dairies, to work within
their organisation.

Similarly, the renowned French cosmetics manufacturer L'Oréal recognises the

paramount significance of establishing robust and cooperative relationships with its
extensive network of suppliers. These suppliers provide an extensive range of
essential components, including polymers, fats, spray cans, packaging, production
equipment, and office supplies, contributing to L'Oréal's manufacturing and operations
(Kotler et al., 2020).

3.2.3. Marketing intermediaries

Marketing intermediaries play a crucial role in facilitating the company's efforts to

promote, sell, and distribute its products to end consumers. These intermediaries
encompass various entities, such as resellers, physical distribution firms, marketing
services agencies, and financial intermediaries.

Resellers, for instance, are part of the distribution channel, helping the company in
identifying potential customers or making sales to them. These resellers encompass
wholesalers and retailers who purchase and subsequently resell merchandise.
However, it's noteworthy that selecting and partnering with resellers has become a
more complex task. Manufacturers are no longer dealing with numerous small,
independent resellers. Instead, they face the dominance of large and continually
expanding reseller organisations, like Tesco in the UK, Walmart in the US, and
Carrefour and Metro in Europe. In the UK, Tesco alone accounts for over a quarter of
all grocery sales, and the top four retailers collectively control more than two-thirds of
the food distribution market. These sizable organisations often wield significant power,
enabling them to dictate terms or even exclude smaller manufacturers from large
markets.

Physical distribution firms specialise in managing the stock and transportation of

goods from their origins to their intended destinations. Marketing services agencies
encompass entities such as marketing research firms, advertising agencies, media
companies, and marketing consulting firms that assist the company in targeting and
promoting its products to the most relevant markets. Financial intermediaries, on the
other hand, include banks, credit companies, insurance providers, and other

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businesses that facilitate financing transactions and offer insurance against the risks
associated with buying and selling goods.

Much like suppliers, marketing intermediaries constitute an integral part of the

company's comprehensive value delivery network. Consequently, today's marketers
emphasise the significance of collaborating with these intermediaries as partners,
rather than viewing them solely as channels through which they distribute their
products. For instance, when Coca-Cola secures an exclusive partnership with a fast-
food chain like McDonald's, it extends its commitment beyond just providing soft
drinks; it also offers robust marketing support (Kotler et al., 2020).

3.2.4. Competitors

According to the marketing concept, a company's success hinges on its ability to

deliver greater customer value and satisfaction compared to its rivals. Consequently,
marketers are tasked with more than merely catering to the preferences of their target
consumers. They must also establish a strategic edge by effectively positioning their
offerings against those of their competitors in the perception of consumers.

There is no one-size-fits-all competitive marketing strategy that suits all companies.

Each company should consider its own scale and industry standing in relation to its
competitors. Larger companies with dominant positions in their respective industries
can employ specific strategies that might be financially out of reach for smaller
counterparts. Nevertheless, size alone doesn't guarantee success; there are winning
and losing strategies for large companies. Conversely, smaller firms have the capacity
to develop strategies that yield superior returns compared to what large enterprises
can achieve.

3.2.5. Publics

The company's marketing environment encompasses a variety of public groups. A

public refers to any assembly with an existing or potential interest in or influence over
an organisation's capacity to realise its goals. We can categorise these publics into
seven types:

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• Financial publics: This group holds sway over the company's ability to secure
financial resources. Key constituents include banks, investment analysts, and
stockholders.
• Media publics: This group disseminates news, features, editorial viewpoints,
and other content. It encompasses television stations, newspapers, magazines,
as well as blogs and other social media platforms.
• Government publics: Management must factor in government developments,
and marketers often seek advice from the company's legal counsel on matters
related to product safety, truth in advertising, and other legal concerns.
• Citizen-action publics: Marketing decisions made by a company may come
under scrutiny from consumer organisations, environmental advocacy groups,
minority groups, and similar entities. The company's public relations
department can facilitate communication with these consumer and citizen
groups.
• Internal publics: This category comprises employees, managers, volunteers,
and the board of directors. Large corporations frequently use newsletters and
other channels to keep their internal publics informed and motivated. A positive
atmosphere among employees can influence external public perception.
• General public: The company should be attentive to the general public's
sentiments regarding its products and activities. The public's perception of the
company can significantly impact their purchasing behaviour.
• Local publics: This group encompasses residents and organisations in the local
community where the company operates. Large corporations often strive to
become responsible and respected contributors to their local communities
(Kotler et al., 2020).

Think Point: Artificial intelligence and marketing

The intersection of artificial intelligence and marketing witnessed a

historic moment from March 9 to 15, 2016. During these pivotal days,
Google's AlphaGo achieved a remarkable feat by defeating the 9-dan
Go master, Lee Se-dol, with a final score of 4 to 1 in a five-game match.
This marked the first instance of a computer Go program
outperforming a 9-dan professional in this complex board game. Go, a
game played on a 19-by-19 grid, involves players strategically placing

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black and white stones to control the most territory on the board. While
computers had previously surpassed humans in games like chess,
Go's extraordinary complexity in terms of possible moves, exceeding
the number of atoms in the known universe, made it a formidable
challenge for traditional AI systems reliant on hand-coded strategies.
However, the DeepMind team behind AlphaGo adopted an innovative
approach, utilising actual game sequences as data for a machine-
learning algorithm. AlphaGo repeatedly played against itself, refining
its strategies through deep reinforcement learning, ultimately
achieving victories that resembled human intuition. AlphaGo's triumph
extended to defeating Ke Jie, the world's top-ranked player in 2017.

AI and machine learning have emerged as groundbreaking

technological advancements in recent years. Although AI and machine
learning are often used interchangeably, they encompass distinct
concepts. AI represents the broader concept of simulating human-like
intelligence in machines, enabling them to perform tasks intelligently.
In contrast, machine learning is the practical application of AI, where
machines can autonomously learn from data. AI is typically
categorised into two primary types: applied AI, designed for specific
tasks like stock trading or autonomous driving, and generalized AI,
theoretically capable of performing any task. Most current business
and marketing applications of AI fall under the category of applied AI.
Deep learning, a significant AI development, involves training a system
with vast data through neural networks, allowing it to make informed
decisions and improve over time.

The influence of AI on daily life is already evident. For instance, Apple's

Siri, a voice-activated computer, utilises machine learning to improve
its ability to understand and respond to user queries. From a marketing
perspective, AI offers considerable opportunities for product
development, service enhancement, and customer experience
improvement.

First, AI has facilitated the creation of AI-enabled products and product

innovation. Natural language processing (NLP), a major AI

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breakthrough, has enabled the development of devices like Amazon

Echo and Google Home, equipped with voice-activated intelligent
personal assistants. These devices allow voice interaction, music
playback, and the integration of third-party "skills." Similarly, Google
Duplex extends the capabilities of Google Assistant, allowing it to
conduct natural conversations and perform tasks like booking
appointments.

Companies across various industries have embraced AI to develop

innovative products. For instance, Kolibree, a dental tech company,
designed an AI-enabled electric toothbrush that offers personalised
recommendations for improving dental hygiene. In the fashion
industry, AI is used to predict fashion trends, reducing waste
associated with weak sales.

Second, AI has improved and supported service delivery. IBM's

Watson, for instance, assists in cancer treatment recommendations.
Salesforce employs AI for CRM, enabling more accurate customer
profiling and targeted selling. AI is also being explored in fields like
predicting legal proceedings' outcomes.

Third, AI enhances customer experience. AI-powered content curation

personalises website content, and chatbots simulate service workers,
answering queries and assisting with purchases. For example, L'Oréal
employs an AI-powered Facebook Messenger bot to offer beauty
services based on a customer's profile.

AI is poised to revolutionise various facets of marketing, including

advertising, customer relationship management, and ad serving,
making it a transformative force comparable to the internet itself.
Adapted from Kotler et al., 2020.

3.2.6. Competitors

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According to the marketing concept, a company's success hinges on its ability to

deliver greater customer value and satisfaction compared to its rivals. Consequently,
marketers are tasked with more than merely catering to the preferences of their target
consumers. They must also establish a strategic edge by effectively positioning their
offerings against those of their competitors in the perception of consumers.

It's essential to note that there is no one-size-fits-all competitive marketing strategy

that suits all companies. Each company should take into account its own scale and
industry standing in relation to its competitors. Larger companies with dominant
positions in their respective industries can employ specific strategies that might be
financially out of reach for smaller counterparts. Nevertheless, size alone doesn't
guarantee success; there are winning and losing strategies for large companies.
Conversely, smaller firms have the capacity to develop strategies that yield superior
returns compared to what large enterprises can achieve. (Kotler et al., 2020).

3.3. The Macro-environment

The company, alongside all other relevant entities, operates within a broader macro-
environment, consisting of influential factors that both create opportunities and present
threats to the company. Figure 3.2 illustrates the six major forces within the company's
macro-environment. Even the most influential companies remain susceptible to the
often turbulent and evolving factors within the marketing environment. Some of these
factors are unpredictable and beyond one's control, while others can be foreseen and
managed skilfully. Companies that possess an understanding of their environments
and adapt effectively can prosper, while those that do not may encounter challenging
circumstances. This hard-learned lesson has been experienced by once-dominant
market leaders like Xerox and Sony. Let’s now delve into these forces and explore
how they impact marketing strategies (Kotler et al., 2020).

3.3.1. The Demographic Environment

Demography refers to the examination of human populations, encompassing factors

such as population size, density, distribution, age, gender, ethnicity, occupation, and
various statistical attributes. The demographic environment holds significant relevance
for marketers because it pertains to people, who collectively constitute markets. The
global population is experiencing rapid growth, having surpassed 7.8 billion

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individuals, and projections indicate that it will exceed 8.5 billion by 2030. This
expansive and highly diverse global population presents a spectrum of both
opportunities and challenges.

Alterations in the world's demographic environment have substantial implications for

business. Hence, marketers vigilantly monitor demographic trends and shifts within
their markets. They closely examine changes in age and family structures,
geographical population movements, educational profiles, and the diversity within the
population. We will now look at the most noteworthy demographic trends on a global
scale (Kotler et al., 2020).

Figure 3.2: The Macro-environment, (Kotler et al., 2020).

3.3.2. The Evolving Age Composition of the Population

Changes in the global demographic landscape have substantial consequences for the
business world. Arguably, one of the most critical demographic shifts worldwide is the
transformation in the age composition of the population. To illustrate, India boasts one
of the youngest population profiles globally, with over 70 percent of its populace under
the age of 35. Projections suggest that by 2020, India's median age will be 28, a
noteworthy contrast to figures like 37 in China, 38 in the United States, 45 in Western
Europe, and 49 in Japan. If we consider that demographics shape the future, then
India and Africa appear poised to take centre stage in the coming century. Their
youthful populations ensure a continued abundance of young labour force, which, in
turn, supports a relatively smaller elderly population. In demographic terms, they boast
favourable "dependency ratios." In contrast, European Union nations, the United
States, and China grapple with a growing challenge as their populations age, leading
to increasingly unfavourable dependency ratios. Nations contending with less

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favourable age structures confront concerns related to reduced dynamism and the
growing strain on public finances (Kotler et al., 2020).

3.3.3. Generational Disparities in the Developed World

In developed regions, there exists a common practice of categorising the population

into distinct generational groups. The focus here is on four such groups: the Baby
Boomers, Generation X, the Millennials, and Generation Z. While initially relevant to
developed markets in Europe and the United States, these generational distinctions
are increasingly transcending national boundaries as marketers tailor their strategies
to these specific target groups.

The Baby Boomers

The Baby Boomers, born between 1946 and 1964, have played a pivotal role in
shaping the marketing landscape over the years. Despite the youngest members now
being in their 50s and the oldest in their early 70s, they continue to exert influence.
This generation holds a significant share of wealth in the Western world, rendering
them a prime target for marketers. They represent a lucrative market for a wide range
of products and services, from financial services and housing to travel, entertainment,
and health and fitness products. Contrary to the notion that they are set in their ways,
many Baby Boomers are open to exploring new brands, driven by the desire to remain
current in their choices.

Generation X

Following the Baby Boom, the Generation Xers, born between 1965 and 1976,
constitute a comparatively smaller demographic cohort. They prioritise experiences
over material possessions and are highly family-oriented. As parents, they place family
at the forefront and tend to be less receptive to overt marketing efforts. Generation X
is marked by skepticism, an inclination towards quality over quantity, and an affinity
for unconventional marketing campaigns. Growing up during the advent of the internet,
they are tech-savvy, active on social media, and are thorough researchers before
making purchasing decisions. They hold significant purchasing power and
homeownership.

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The Millennials

Comprising individuals born between 1977 and 2000, the Millennials, or Generation
Y, have surpassed both Generation X and the Baby Boomers in terms of population
size. These consumers, who weathered the post-recession era, often face financial
constraints, marked by higher unemployment and mounting debt. Despite these
challenges, the Millennials constitute an immense and appealing market, renowned
for their innate comfort with digital technology. This generation values authenticity and
actively seeks opportunities to craft and share their brand experiences. They interact
with brands primarily through mobile devices and social media, spurring many
companies to create tailored products and marketing campaigns to meet their unique
needs and preferences.

Generation Z

Generation Z, succeeding the Millennials, encompasses individuals born after 2000

(or in some definitions, after 1995). These young consumers represent the critical
"kids, tweens, and teens" market and are also the consumers of the future. Their
defining characteristic is their seamless integration of digital technology into their daily
lives. Generation Z is highly connected, mobile, and social, with an overwhelming
reliance on digital technologies. They are prolific researchers and display a preference
for online shopping, including a variety of product categories. Brands across diverse
industries are keenly targeting Generation Z, requiring them to balance their presence
in traditional and digital media.

Generational Marketing Challenges

Should brands create distinct products and marketing strategies for each generation?
This question poses challenges for marketers, given the risk of alienating one
generation while catering to another. Generational marketing is complicated by the
diversity within generational groups, often necessitating the segmentation of
generations into more precise age-specific categories. Moreover, defining consumers
solely by their birthdate may be less effective than segmenting them based on lifestyle,

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life stage, or shared values that influence their purchasing decisions (Kotler et al.,
2020).
3.4. The Economic Landscape

Markets are driven not only by individuals but also by their economic capacity. The
economic environment encompasses factors that influence consumer purchasing
ability and spending patterns, exerting a significant impact on consumer behaviour.

For instance, during economic downturns, budget retailers such as Aldi, Lidl,
Poundland, and Primark have flourished, aiming to retain the new customer base they
gained from pricier competitors.

3.4.1. Changing Global Economic Dynamics

Nations exhibit substantial disparities in income levels and distribution. Some

countries boast industrialised economies, fostering rich markets for diverse goods. On
the other end of the spectrum are subsistence economies, which predominantly
consume their own agricultural and industrial outputs, offering limited immediate
market potential. Between these extremes lie developing economies, which can
provide exceptional marketing opportunities for specific products.
Incomes, as gauged by gross domestic product (GDP) per capita, display considerable
global diversity. In 2019, the global average, as per the International Monetary Fund,
was merely $11,570. Western economies, for example, the United States, Germany,
France, and the United Kingdom, reported much higher GDP per capita figures.
Meanwhile, emerging markets like Russia, Brazil, China, and India showcased lower
GDP per capita. Income distribution within countries also fluctuates, further influencing
market value and attractiveness.

However, it is crucial to recognise that the economic world order has undergone
transformative shifts in the twenty-first century, particularly due to the rise of emerging
markets like India and China. While the term 'BRIC' (Brazil, Russia, India, China) is
commonly used to describe this group of newly affluent and rapidly expanding
countries, it now extends to include countries like South Africa, Indonesia, Mexico, and
others. Notably, there are now more billionaires in the BRICS countries than in Europe.

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These shifts emphasise the shift in global economic dominance from the West to the
East.
The effects of these economic transformations should not be underestimated. Recent
years have witnessed a shift away from Western economic hegemony. In 2014, the
International Monetary Fund revealed that China had surpassed the United States as
the world's largest economy. Notably, the same trend was observed when the United
States overtook China in the late 19th century. Economic growth in China significantly
outpaced that in the United States throughout the 2000s. By 2010, China's exports
had multiplied rapidly, leading to millions of Chinese entering the ranks of the
'consumer class.' What does the current landscape look like?
In conclusion, these sweeping economic changes have substantial implications for
consumer buying power, impacting consumer behaviours on a global scale (Kotler et
al., 2020).

3.4.2. Alterations in Consumer Expenditure

Significantly, economic influences wield substantial power over consumer spending

and purchasing behaviours. To illustrate, American and European consumers were,
until relatively recently, indulging in lavish spending, buoyed by escalating incomes,
readily accessible credit, a booming investment market, surging property values, and
other economic fortunes. They displayed a seemingly unchecked appetite for
purchasing, amassing unparalleled levels of debt. Nevertheless, this profligacy and
high expectations encountered a harsh reality with the economic downturn, credit
constraints, and the recession that unfolded in the late 2000s and early 2010s. The
UK, which had taken the lead in consciously reducing its spending deficits, entered a
period of rigorous austerity and is confronting an extended phase of economic
stagnation coupled with soaring unemployment figures.

Consequently, consumers have embraced a back-to-basics approach in their lifestyles

and consumption patterns, which is likely to endure for an extended period. They are
making fewer purchases and are inclined to seek more value in the items they do buy.
Consequently, value-driven marketing has become a central focus for numerous
marketers across various sectors. Marketers are diligently exploring strategies to offer
cost-conscious contemporary buyers the optimal blend of product quality and excellent
service at a fair cost.

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In many Western markets, the prevailing consumer demeanour has shifted towards
thriftiness and restrained spending, giving rise to a 'new age of austerity.' Consumers
are grappling with what global management consulting firm, Bain & Company, has
aptly termed 'luxury shame,' experiencing guilt overindulgent purchases. Coupled with
distrust and scepticism towards businesses, there is potential for enduring alterations
in consumer behaviour, veering away from consumption and gravitating towards
austerity. The 'Great Recession' has been succeeded by a 'New Caution,' leading to
shifts in spending habits and curbing future growth.

However, certain companies have thrived in the face of more challenging economic
circumstances. Effectual marketing strategies in this new economic reality necessitate
an in-depth understanding of how economic conditions have impacted consumer
decision-making (Kotler et al., 2020).

3.4.3. Income Distribution

Marketers must not only consider income levels but also income distribution. Over the
past few decades, the affluent have grown wealthier, the middle class has contracted,
and the impoverished have remained economically disadvantaged. The top 5 percent
of American earners now command 22 percent of the nation's adjusted gross income,
while the top 20 percent absorb 51 percent of the total income. In stark contrast, the
lower 40 percent of American earners lay claim to a mere 11 percent of the overall
income.

The UK exhibits notably high-income inequality in comparison to other developed

countries. The portion of national income received by individuals in the top 1 percent
grew from less than 6 percent in the late 1970s to almost 14 percent in the mid-2010s.
Nevertheless, the overall income inequality in Europe is significantly narrower than
that of the United States. Income distribution across the UK's regions also displays
substantial disparities, with the average household income in London significantly
outstripping that in the Northeast, for instance.

One vital factor in comprehending demand in emerging markets like India, Africa, and
China is the emergence of a thriving middle class characterised by substantial

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disposable income and a willingness to spend. Significantly, luxury brands, such as

upscale automotive manufacturers and high-end fashion labels, often have their sights
set on specific targets. Nevertheless, this affluence tends to be concentrated within a
relatively small segment of the population. It's customary worldwide that the wealthiest
half of the population possesses less than half of the country's total wealth. Deepening
income inequality poses a particular concern, particularly in countries like India and
China. Notably, substantial distinctions emerge among various emerging markets; for
instance, the impoverished population in China tends to fare significantly better than
their counterparts in India.

The freshly affluent individuals within emerging markets present an alluring target for
luxury brands like Versace, LVMH, Cartier, and Coach. The reason behind this allure
is the rapid increase in the number of affluent individuals within these countries. The
spending preferences of the newly wealthy primarily revolve around luxury real estate,
opulent furnishings, and high-end automobiles. It's worth noting that their purchase
priorities differ significantly from those of the affluent in other markets, and they tend
to be notably younger. Nevertheless, emerging markets also exhibit the most
substantial income gap between the wealthy and the impoverished. It's evident that
with robust economic growth, the wealthy tend to accumulate wealth at a faster rate
than the less fortunate, thereby exacerbating income inequality.

Disparities in income distribution within a country create a tiered marketplace. Retail

fashion companies, including prestigious names like Harrods and Harvey Nichols,
aggressively target the most affluent clientele. In contrast, companies such as Primark
and Matalan cater to individuals with more modest financial means. In fact, budget
retailers are currently the fastest-growing retail entities in the UK. Conversely, several
companies customise their marketing offerings to span across a range of market
segments, encompassing both the affluent and the less affluent. Automotive
manufacturers like Volkswagen excel in offering both budget-friendly vehicles (as seen
under the Skoda brand) and exceedingly high-priced models (Audi in the mainstream
market and Bentley in the luxury market).

Alterations in significant economic variables, such as income levels, the cost of living,
interest rates, and savings and borrowing patterns, exert a profound influence on the
marketplace. Corporations closely monitor these variables through economic

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forecasting. There's no need for businesses to be utterly disrupted by an economic

downturn or left unprepared during a boom. With sufficient advance notice, they can
leverage changes in the economic landscape. Nonetheless, marketers must remain
ever vigilant for substantial shifts in this dynamically changing economic milieu (Kotler
et al., 2020).

3.5. The Natural Environment

The natural environment encompasses the physical surroundings and the natural
elements required as inputs by marketers or influenced by marketing activities.
Essentially, unexpected occurrences within the physical environment, ranging from
weather patterns to natural calamities, can impact businesses and their marketing
strategies.

While businesses cannot prevent these natural events, they should prepare to manage
them effectively. For example, shipping companies like FedEx and UPS maintain
teams of meteorologists on their staff to predict weather conditions that could disrupt
global on-time deliveries. A UPS meteorologist points out, "Someone in Bangkok
expecting a package doesn't care about snowfall in Louisville, Kentucky—they want
their shipment."

On a broader scale, concerns about environmental sustainability have steadily risen

over recent decades. Many major cities across the world face alarming levels of air
and water pollution. Global apprehension regarding the potential impacts of global
warming continues to grow, and environmentalists’ express concerns about the
increasing accumulation of waste.

Marketers should take note of several trends within the natural environment. The first
trend relates to the growing scarcity of raw materials. While air and water may appear
to be limitless resources, there are concerns about long-term challenges. Air pollution
plagues many major cities globally, and water shortages are already a significant issue
in various regions. Projections suggest that by 2030, more than a third of the world's

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population may lack access to sufficient drinking water. Renewable resources like
forests and food must be used judiciously. Non-renewable resources, such as oil, coal,
and various minerals, present significant challenges. Companies manufacturing
products dependent on these limited resources will likely experience substantial cost
increases even if these materials remain available.

The second environmental trend pertains to increased pollution. Industrial activities

tend to have adverse effects on the quality of the natural environment. Consider issues
like the disposal of chemical and nuclear waste, elevated mercury levels in the oceans,
and the prevalence of chemical pollutants in soil and food (Kotler et al., 2020).

The third trend involves an increased level of government involvement in the

management of natural resources. Different countries exhibit varying degrees of
concern and commitment to environmental conservation. For instance, the German
government actively pursues the enhancement of environmental quality, whereas
many less affluent nations show limited commitment to addressing pollution due to
insufficient financial resources or political will.

In various nations, businesses face escalating regulations and mounting pressure from
advocacy groups to adopt more environmentally responsible practices. Instead of
opposing such regulations, marketers should contribute to the development of
solutions for the world's material and energy challenges.

The growing concern for the natural environment has given rise to an environmental
sustainability movement. Forward-thinking companies go beyond what governmental
regulations require. They are devising strategies and adopting practices aimed at
establishing a global economy that can be sustained indefinitely by the planet.
Environmental sustainability entails fulfilling current needs without jeopardising the
ability of future generations to meet their own requirements.

Numerous companies are responding to consumer demands by offering more

environmentally responsible products. Some are working on creating packaging that
is recyclable or biodegradable, utilising recycled materials and components,
implementing enhanced pollution control measures, and improving the energy
efficiency of their operations. For instance, consider Walmart, the world's largest

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retailer. Through its own initiatives in environmental sustainability and its influence on
the practices of its suppliers, this American multinational retail corporation,
headquartered in Bentonville, Arkansas, has recently become a prominent global
advocate for eco-conscious practices (Kotler et al., 2020).

3.6. Technological environment

The technological environment is arguably the most powerful influence currently
shaping our future. Technology has introduced marvels like antibiotics, robotic
surgery, smartphones, and the internet, while simultaneously bringing about
nightmares such as nuclear missiles and assault rifles. It has also given rise to mixed
blessings like automobiles, televisions, and credit cards. Our perspective on
technology largely depends on whether we are more impressed by its innovations or
its shortcomings.

Emerging technologies can present compelling opportunities for marketers. For

instance, how would you feel about the idea of having minuscule transmitters
embedded in all the products you purchase, enabling the tracking of those products
from their production point through their usage and disposal? Or envision a bracelet
featuring an embedded chip that allows you to make payments, receive personalised
special offers at retail locations, and even track your or your friends' whereabouts.
Alternatively, think about "beacon" technology that accomplishes all these tasks using
your smartphone. While such technologies can offer numerous advantages to both
buyers and sellers, they can also evoke feelings of unease. Regardless, with the
introduction of technologies like radio-frequency identification (RFID), GPS, Bluetooth,
and virtual reality, such innovations are already becoming a reality.

Numerous businesses are currently utilising RFID technology to trace products and
monitor customers at various stages within the distribution chain. Retailers, for
instance, encourage suppliers who ship products to their distribution centres to attach
RFID tags to their pallets. Some retailers have even implemented item-level RFID
systems within their stores. Companies like Burberry, a fashion and accessories

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manufacturer, use chips embedded in their items and connect them to smartphones
to offer personalised, interactive experiences to customers in their stores and at
runway shows.

Disney has taken RFID technology to a whole new level with its innovative MagicBand
RFID wristband. The technological landscape evolves swiftly, generating fresh
markets and prospects. However, every new technology supersedes an older one.
Transistors displaced the vacuum-tube industry, digital photography disrupted the film
business, and digital downloads and streaming are challenging the DVD and book
sectors. When outdated industries resist or disregard new technologies, their
businesses dwindle. Consequently, marketers must closely monitor the technological
environment. Companies that do not keep pace will soon witness their products
becoming obsolete, leading to missed opportunities in terms of new products and
markets.

As products and technologies grow increasingly complex, it is imperative that the

public is assured of the safety of these items. Many countries have established
agencies and intricate regulations to prohibit potentially hazardous products, set safety
standards for consumer products, and penalise companies that fail to adhere to these
standards. This upsurge in regulation has resulted in higher research and
development expenses and lengthier intervals between the inception of new product
concepts and their introduction. Marketers must be cognisant of these regulations
when incorporating new technologies and developing fresh products (Kotler et al.,
2020).

3.7. The political and social environment

Marketing decisions are significantly influenced by shifts in the political environment.
The political environment encompasses the legal framework, governmental bodies,
and advocacy groups that exert influence over various entities and individuals within
a given society.

3.7.1. Regulation of business practices

Even the most ardent proponents of free-market economies concur that the system
operates most effectively when it is subject to a degree of regulation. Sensibly crafted
regulations can stimulate competition and ensure equitable markets for goods and

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services. Consequently, governments establish public policies to guide commercial

activities, comprising a set of laws and regulations designed to restrict business
operations for the betterment of society. Virtually every facet of marketing is subject to
a diverse array of legal requirements and regulations.

Over time, legislation affecting businesses worldwide has witnessed a continuous

expansion. The United States, along with numerous other countries, has introduced a
plethora of laws governing issues such as competition, equitable trade practices,
environmental conservation, product safety, advertising veracity, consumer privacy,
packaging and labelling, pricing, and numerous other critical domains.

Understanding the policy implications of a specific marketing undertaking is a complex

endeavour. Moreover, regulations are in a state of perpetual flux; what was
permissible in the past may now be forbidden, and what was prohibited might now be
allowed. Consequently, marketers must exert diligence in keeping abreast of changes
in regulations and their interpretations.

Enactment of business legislation serves several purposes. First, it is intended to

safeguard companies from one another. Although corporate leaders may extol the
virtues of competition, they sometimes seek to curtail it when it poses a threat to their
interests. As a result, laws are instituted to define and curb unfair competition.

The second role of government regulation is to shield consumers from unjust business
practices. If left unchecked, certain enterprises might produce substandard products,
encroach on consumer privacy, deceive consumers through their advertising
campaigns, or employ misleading packaging and pricing strategies. Regulations that
delineate and oversee unfair business practices are enforced by various agencies.

The third objective of government regulation is to shield society's interests from

unbridled corporate conduct. Profitable business activities do not invariably translate
into an improved quality of life. Regulations are formulated to ensure that companies
acknowledge and bear the societal costs of their production processes or products. In
other instances, laws are established to pursue and enforce government policies—
examples include sanctions against Russia due to its actions in Ukraine, the Chinese
government's crackdown on bribery and marketing violations, and its control of internet

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access, as well as the Indian government's aim to manage inward investment and
prevent the acquisition of domestic firms by foreign entities (Kotler et al., 2020).

3.7.2. Heightened emphasis on ethics and socially responsible conduct

Written regulations are inherently unable to comprehensively address all potential

misconduct in marketing, and enforcing existing laws often proves to be challenging.
Nevertheless, alongside written laws and regulations, the realm of business is also
governed by societal norms and codes of professional ethics.

Conduct characterised by social responsibility:

Forward-thinking companies actively encourage their managers to look beyond the
bounds of what the regulatory framework permits and to simply 'do the right thing.'
These socially responsible enterprises actively seek out means to safeguard the long-
term welfare of both their consumers and the environment.

Virtually every facet of marketing raises questions of ethics and social responsibility.
Unfortunately, these questions often involve competing interests, which can lead well-
intentioned individuals to genuinely disagree on the most appropriate course of action
in a given situation. Consequently, numerous industry and professional trade
associations have proposed ethical codes. Moreover, an increasing number of
companies are now formulating policies, guidelines, and other responses to intricate
issues related to social responsibility.

The proliferation of online, mobile, and social media marketing has introduced a fresh
set of ethical and social issues. Foremost among these is the concern over online
privacy. The volume of personal digital data available has skyrocketed. A portion of
this data is willingly provided by users themselves. They voluntarily share highly
private information on social media platforms like Facebook or LinkedIn, or on
genealogy websites that can be readily accessed by anyone with a computer or
smartphone.

Nonetheless, a considerable portion of this information is systematically amassed by

businesses aiming to gain a deeper understanding of their customers, often without
consumers being aware that they are under scrutiny. Reputable companies track the

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online browsing and purchasing behaviours of consumers, collecting, analysing, and

disseminating digital data derived from every interaction consumers have on their
websites. Critics are concerned that these companies might possess excessive
information and could potentially misuse digital data to exploit consumers unfairly.
While most companies are transparent about their internet privacy policies and
endeavour to leverage data for the benefit of their customers, abuses do occur.
Consequently, consumer advocates and policymakers are taking measures to
safeguard consumer privacy (Kotler et al., 2020).

3.7.3. Cause-related marketing

To fulfil their social responsibility and cultivate more favourable corporate images,
numerous companies are now affiliating themselves with noble causes. Some
companies are established with missions that revolve around promoting social causes.
Embodied by concepts such as 'values-led business' or 'caring capitalism,' their goal
is to leverage business as a vehicle for enhancing the state of the world.

For instance, Warby Parker, an American online retailer of affordably priced

prescription eyewear based in New York City, was established with the aspiration of
making affordable eyewear accessible to the masses. The company is committed to
'eyewear with a purpose.' For every pair of glasses sold by Warby Parker, a free pair
is distributed to someone in need. The company also collaborates with nonprofit
organisations focused on training low-income entrepreneurs to market affordable
eyeglasses. Their motto is, 'We believe that everyone has the right to see.' Cause-
related marketing has emerged as a prominent avenue for corporate philanthropy,
enabling companies to 'do well by doing good' by associating the purchase of their
products or services with supporting meaningful causes or charitable organisations.
Warby Parker's Buy a Pair, Give a Pair initiative, apart from its commendable social
impact, also carries substantial economic merit for both the company and its
customers. Neil Blumenthal, a co-founder of Warby Parker, emphasises that
'Companies can do good in the world while still being profitable.' He notes that a single
pair of reading glasses, on average, leads to a 20 percent increase in income and
asserts that glasses are among the most effective tools for alleviating poverty globally.

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However, cause-related marketing has not been immune to controversy. Sceptics

express concerns that it functions more as a sales strategy than a charitable
endeavour, labelling it as cause-exploitative' marketing rather than cause-related'
marketing. This has placed companies engaged in cause-related marketing in a
delicate position, navigating between heightened sales and an enhanced reputation,
while also facing potential allegations of exploitation. Nevertheless, when executed
adeptly, cause-related marketing can yield substantial benefits for both the company
and the cause it supports. It provides the company with a powerful marketing tool while
enhancing its public image. Simultaneously, the charitable organisation or cause
receives heightened visibility and vital new sources of financial backing and support.
Expenditure on cause-related marketing in the United States has surged from a mere
$120 million in 1990 to $2 billion in 2016 (Kotler et al., 2020).

3.7.4. Cultural Environment

The cultural environment encompasses the institutions and external influences that
shape a society's fundamental values, perceptions, preferences, and behaviours.
Individuals are raised within a specific societal framework that moulds their
fundamental beliefs and values. They internalise a worldview that dictates their
interactions with others. Various cultural attributes can have implications for decision-
making in marketing.

The Persistence of Cultural Values

Within a given society, individuals uphold numerous beliefs and values. Their core
beliefs and values exhibit a high degree of constancy. These core beliefs serve as the
foundation for more specific attitudes and behaviours that manifest in everyday life.
Core beliefs and values are transmitted from one generation to the next, reinforced by
educational institutions, businesses, religious organisations, and government bodies.

Secondary beliefs and values are more amenable to change. Belief in the institution
of marriage constitutes a core belief, while the belief that individuals should marry early
in life is considered a secondary belief. Marketers may have some opportunity to
influence secondary values, but they have limited capacity to alter core values. For
instance, marketers promoting family planning might more effectively advocate for
later marriage rather than discouraging marriage altogether (Kotler et al., 2020).

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Shifts in Secondary Cultural Values

Despite the resilience of core values, shifts in cultural norms do occur. Consider the
influence of popular music groups, film celebrities, and other public figures on the
hairstyle and clothing preferences of young people. Marketers endeavour to anticipate
these cultural shifts to identify emerging opportunities or challenges.

The dominant cultural values in a society are reflected in individuals' perceptions of

themselves and others, as well as their perspectives on institutions, community,
nature, and the cosmos (Kotler et al., 2020).

People's Views of Themselves

Individuals exhibit varying degrees of self-orientation versus other orientation. Some
prioritise personal gratification, seeking enjoyment, novelty, and escapism. Others
pursue self-actualisation through religion, recreation, or dedicated pursuit of careers
and other life objectives. Some view themselves as collaborators and team players,
while others perceive themselves as independent individuals. People use products,
brands, and services as instruments of self-expression, and they buy products and
services that match their views of themselves.
People's perspectives on others undergo changes over time. In recent years, some
analysts have expressed concerns that the digital era would lead to reduced human
interaction as individuals immersed themselves in social media platforms or
communicated through emails and texts instead of engaging in face-to-face
interactions. However, current digital technologies appear to have ushered in an era
characterised by what one trend observer describes as "mass mingling." Contrary to
decreasing interaction, people are now leveraging social media and mobile
communication to connect more frequently than ever. Essentially, the more individuals
meet, network, text, and socialise online, the greater the likelihood that they will
eventually arrange in-person meet-ups with friends and followers.

Nonetheless, even when people are physically together, they often find themselves
"alone together." Groups of individuals might sit or walk in their own separate bubbles,
deeply engrossed in small screens and keyboards. One expert characterises the latest
communication skill as "maintaining eye contact with someone while texting someone
else; it's challenging but feasible," she suggests. "Enabled by technology, we can be
with one another and simultaneously 'elsewhere,' connected to wherever we wish to

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be." Consequently, whether this new technology-driven communication is

advantageous or disadvantageous remains a subject of extensive debate.

This evolving mode of interaction significantly impacts how companies promote their
brands and engage with customers. Consumers increasingly tap into digital networks
of friends and online brand communities to discover and purchase products, as well
as to influence and share brand experiences. Consequently, it is imperative for brands
to participate in these networks as well.

People's perceptions of organisations differ, encompassing their attitudes toward

corporations, government agencies, labour unions, universities, and other entities. By
and large, individuals are willing to work for major organisations and anticipate that
these organisations will fulfil society's responsibilities.

Over the past two decades, there has been a significant decline in trust and loyalty
toward business and political organisations and institutions in many developed
countries. In workplaces, there has been a general decrease in loyalty toward
organisations. Waves of corporate downsizing have given rise to cynicism and
scepticism. In the last decade alone, prominent corporate scandals, waves of layoffs
due to economic downturns, the financial crisis triggered by Wall Street's financial
mismanagement and greed, and other unsettling developments have further eroded
confidence in large businesses. For many individuals today, work is viewed not as a
source of satisfaction but as an obligatory task to earn money for enjoying their non-
working hours. This trend implies that organisations need to explore new approaches
to gain the trust of both consumers and employees (Kotler et al., 2020).
People's perspectives on society vary significantly, with some individuals acting as
patriots defending it, while reformers aim to bring about change, and malcontents wish
to leave it. These orientations toward society play a role in shaping their consumption
behaviours and attitudes towards the marketplace.

An interesting illustration of how people's view of society influences their consumption

is the concept of consumers' national emotion. For instance, patriotism has seen a
gradual rise over the past two decades in many Western countries. An annual
consumer survey reveals that certain brands are strongly associated with patriotism,
such as Jeep, Coca-Cola, Disney, Levi Strauss, Harley-Davidson, Gillette, and Apple.

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In response, marketers have initiated campaigns and advertisements with a renewed

emphasis on "Made in America" and patriotic themes. For instance, last summer, in
celebration of the Fourth of July, Coca-Cola introduced a limited-edition red, white,
and blue flag-themed can. Apple recently launched a $100 million "Made in America"
initiative with the release of a new high-end Mac Pro personal computer, built in Austin,
Texas, with domestically sourced components. Jeep's recent patriotic Super Bowl ad
titled "Portraits," featuring famous and ordinary Americans who've driven Jeeps
through 75 years of various times, resonated significantly with the American audience.
A similar trend can be observed in the UK when manufacturers and retailers
emphasise the "Made in Britain" label in their promotions.

While most of these marketing efforts are tasteful and well-received, they can
sometimes be seen as clichéd or as token attempts to capitalise on national emotions.
Critics have pointed out that Apple's "Made in America" campaign has had limited real
impact so far, with the Mac Pro contributing less than 1 percent of Apple's total
revenues, while over 70 percent of the company's revenues come from iPhone and
iPad products, both manufactured in China. Marketers need to exercise caution when
appealing to patriotism and other strong national sentiments.

People's views of nature also exhibit a wide range of attitudes, with some perceiving
themselves as subject to nature, others as living in harmony with it, and still others
striving to conquer it. Historically, people have progressively gained mastery over
nature through technology and held the belief that nature is abundant. However, more
recently, people have recognised that nature is finite and fragile, susceptible to
destruction or degradation due to human activities.

This heightened appreciation for the natural world has given rise to a substantial and
growing market of consumers seeking natural, organic, and nutritional products, as
well as fuel-efficient vehicles and alternative medicines. For example, food producers
have found rapidly expanding markets for natural and organic products. It is
noteworthy that even in the wake of a severe economic downturn in the UK, research
indicates that sales of ethical goods continue to rise. It appears that British consumers
are unwilling to compromise their principles for price or convenience. This growth is
partially fuelled by the adoption of fair-trade practices by many brands, such as

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Cadbury's chocolate and Nestlé's Kit Kat bars, ensuring minimum prices and
conditions for producers in emerging markets (Kotler et al., 2020).

3.8. Conclusion
This chapter has provided a comprehensive understanding of the multifaceted
marketing environment. It covered the capacity to elucidate the various environmental
forces that exert influence on a company's ability to serve its customers,
encompassing both the micro-environment and macro-environment.

Furthermore, it addressed the ability to analyse how alterations in the demographic

and economic environments can significantly impact marketing decisions, covering
aspects related to the demographic and economic environments.

Additionally, it focused on the capability to identify and comprehend significant trends

within the firm's natural and technological environments, encompassing the natural
and technological environments.

Moreover, it emphasised proficiency in expounding on the essential changes occurring

within the political, social, and cultural environments, encompassing the political,
social, and cultural environments. Understanding the dynamics of these environments
is vital for companies as they adapt to evolving societal norms and navigate the
complexities of government regulations.

Finally, this chapter discussed how companies can effectively respond to the
marketing environment. By doing so, businesses can better anticipate challenges and
capitalise on opportunities, ultimately leading to more effective marketing strategies.

SELF-ASSESSMENT QUESTIONS

Read the article below and answer the questions that follow:

QUESTIONS:
3.1. What are the various categories of audiences within a company's marketing
environment, and how can they be characterised?

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3.2. Define marketing intermediaries and evaluate their significance for marketers.

3.3. Describe Generation Z and identify the factors that set them apart from other
demographic groups, such as baby boomers, Generation X, and Millennials.

3.4. Analyse the effects of the changing age structure of the population on consumer
spending and buying behaviour and explain its significance for marketers.

3.5. Discuss the reasons why marketers should closely monitor and respond to
changes in the marketing environment.

Suggested Answers:
3.1. The different types of publics in a company's marketing environment can be
categorised into various groups, including:

a. Financial Publics: These include banks, investment firms, and shareholders who
are interested in a company's financial well-being.

b. Media Publics: This group encompasses various media outlets, such as

newspapers, television, and social media platforms, which play a crucial role in
shaping a company's image.

c. Internal Publics: These are individuals within the organisation, such as employees
and management, who influence the company's reputation and performance.

d. Government Publics: This category involves government agencies and regulatory

bodies that can impact a company's operations and compliance with laws.

e. Citizen-Action Publics: This group includes consumer organisations and activist

groups that advocate for specific social or environmental issues and may influence a
company's practices.

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f. Local Publics: These are the communities and neighbours surrounding a company's
operations who can be affected by its actions and may, in turn, influence its activities.

g. General Public: This refers to the broader population and consumer base that can
impact the company's reputation and market perception.

3.2. Marketing intermediaries, often referred to as middlemen, are entities or

individuals involved in the distribution and supply chain of a product or service from
the producer to the end consumer. They include wholesalers, retailers, agents, and
brokers. The importance of marketing intermediaries lies in their ability to enhance the
efficiency of distribution channels. They can help bridge the gap between
manufacturers and consumers, making products more accessible. Intermediaries also
assist with functions like warehousing, transportation, and market research, allowing
marketers to focus on core activities. Their expertise in reaching specific market
segments and regions can be instrumental in expanding a product's reach.

3.3. Generation Z, often referred to as Gen Z, is the demographic cohort born from
the mid-1990s to the early 2010s. They exhibit several distinctive characteristics that
set them apart from other generations:

• Digital Natives: Gen Z grew up in a digital age, surrounded by technology and

the internet from a very young age, making them exceptionally tech-savvy.

• Diversity and Inclusion: This generation is known for its embrace of diversity
and inclusivity, with a strong emphasis on social justice and equality.

• Entrepreneurial: Gen Zers are often seen as entrepreneurial, with many

expressing a desire to start their own businesses or side hustles.

• Pragmatic and Frugal: They tend to be financially cautious, having witnessed

economic hardships in their formative years.

• Short Attention Spans: Gen Z is associated with short attention spans and a
preference for concise, visual content.

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• Values Privacy: They are concerned about online privacy and data security.

3.4. The shifting age structure of the population has significant implications for
consumer spending and purchasing behaviour. With an aging population, there is a
growing demand for products and services catering to older individuals, such as
healthcare, retirement planning, and leisure activities. This demographic change can
result in increased spending on healthcare and wellness products.

On the other hand, an expanding younger population, like Generation Z, may drive
demand for products and services related to technology, education, and sustainable
living. For marketers, understanding these demographic shifts is crucial. They must
adapt their strategies to align with the evolving preferences and needs of different age
groups. Failure to do so can lead to missed opportunities and decreased
competitiveness in the market.

3.5. Marketers should closely monitor and respond to changes in the

marketing environment for several reasons:

• Adaptation to Consumer Trends: Changes in the environment often reflect

shifts in consumer preferences and behaviours. Adapting to these trends allows
marketers to remain relevant to their target audience.

• Competitive Advantage: Staying ahead of the competition requires being aware

of market dynamics. Responding to environmental changes can provide a
competitive edge.

• Regulatory Compliance: Marketers must adhere to evolving laws and

regulations, making it essential to be informed about legislative changes
affecting their industry.

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• Risk Mitigation: Anticipating environmental changes helps in risk management.

Being prepared for potential challenges can mitigate negative impacts on
business operations.

• Innovation Opportunities: Monitoring the environment can reveal opportunities

for innovation and new product development that cater to emerging consumer
needs.

• Sustainability and Responsiveness: Companies that are environmentally and

socially responsible are increasingly valued by consumers. Adapting to a
changing environment is essential for promoting sustainability and maintaining
a positive brand image.

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CHAPTER 4: Managing marketing information to

gain customer insights

Specific Learning Outcomes

When you complete this chapter, you should be able to:

• Explain the significance of information in acquiring insights into the

marketplace and customer behaviour;
• Define the components of the marketing information system and explore its
elements;
• Outline the sequential stages of the marketing research process;
• Elaborate on how organisations analyse and apply marketing information to
enhance decision-making; and
• Discuss the unique challenges encountered by certain marketing researchers,
encompassing concerns related to public policy and ethics.

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4.1. Introduction: Marketing Information and Customer Insights

To deliver value to customers and cultivate meaningful relationships with them,

marketers must initially acquire fresh and profound understandings of customers'
desires and requirements. These customer insights originate from high-quality
marketing information. Organisations leverage these customer insights to establish a
competitive edge. For instance, when Pinterest was introduced, it sought to distinguish
itself from the multitude of existing social networking platforms.

Pinterest's research unveiled a pivotal customer insight: many individuals sought more
than just platforms for exchanging messages and pictures, akin to Twitter or
Facebook. They yearned for a means to collect, arrange, and share internet content
that aligned with their interests and passions. Consequently, Pinterest established a
social scrapbooking platform that allowed users to create and distribute digital
pinboards, which are themed collections of images that inspire them. The company's
motto is, "Pinterest is your personal corner of the internet dedicated solely to the things
you adore."

This unique customer insight catapulted Pinterest to widespread popularity. Currently,

it boasts over 100 million active monthly users who collectively pin over 5 million
articles daily and view more than 2.5 billion Pinterest pages monthly. Furthermore,
over half a million businesses employ Pinterest to engage and captivate their customer
communities. For instance, H&M has amassed half a million Pinterest followers,
Swarovski boasts 1.5 million followers, the United Colors of Benetton maintains 1.2
million followers, and Victoria's Secret garners around half a million followers. Such
followers hold substantial value. For instance, Sephora has determined that its nearly
595,000 Pinterest followers spend 15 times more than its Facebook fans.

While customer and market insights play a vital role in constructing customer value
and engagement, securing these insights can be an intricate task. Customer needs
and purchase motivations often remain obscure – consumers frequently struggle to
articulate precisely what they need and the reasons behind their buying decisions.
To gain valuable customer insights, marketers must effectively manage marketing
information from a wide range of sources (Kotler et al., 2020).

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4.2. Marketing Information and the Era of 'Big Data'

With the surge in information technologies, companies now have the capacity to
produce and locate vast quantities of marketing data. The marketing landscape is
inundated with information originating from myriad sources. Consumers themselves
actively generate copious marketing data. Through their smartphones, personal
computers, and tablets, they contribute to this wealth of information through activities
such as online browsing, blogging, app usage, social media interactions, texting, video
content, and geolocation data sharing.

Far from suffering from a lack of information, most marketing managers currently
grapple with data overload, often finding themselves inundated. This challenge is
encapsulated in the concept of 'big data.' The term 'big data' alludes to the massive
and intricate data sets that stem from the sophisticated technologies involved in data
generation, collection, storage, and analysis today. Annually, the global population and
data systems produce approximately one trillion gigabytes of information, an amount
sufficient to fill 2.47 trillion traditional CD-ROMs, forming a stack tall enough to reach
the moon and return four times. Astonishingly, a substantial 90 percent of all the data
in the world has been generated in just the past two years. (Kotler et al., 2020).
Big data offers marketers substantial opportunities alongside considerable challenges.
Organisations that effectively harness this deluge of data stand to gain valuable and
timely customer insights. Nevertheless, the task of accessing and sorting through such
an extensive volume of data is formidable. To illustrate, when a prominent consumer
brand like Nestlé or Bosch monitors online discussions regarding its products, as
found in tweets, blog posts, social media interactions, and various other sources, it
may encounter an overwhelming 6 million public conversations daily, totalling over 2
billion annually. This quantity surpasses the capacity of any manager to thoroughly
process. Hence, marketers do not require more data; they require superior data
quality. Furthermore, they must enhance their utilisation of the information already at
their disposal.

4.3. Marketing Information System

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Effective utilisation of marketing information is the true source of its value, primarily
through the customer insights it offers. Embracing this perspective, companies,
including notable names like Vodafone, IBM, Samsung, Google, and the American
insurance firm GEICO, have restructured their marketing information and research
functions. They've established teams dedicated to customer insights, with the specific
mission of deriving actionable insights from marketing information and strategically
collaborating with marketing decision-makers for their implementation.

As a result, companies must engineer efficient marketing information systems that

deliver the correct information, in the suitable format, at the precise time, and facilitate
its utilisation for the creation of customer value, engagement, and the cultivation of
stronger customer relationships. A marketing information system (MIS) encompasses
individuals and processes committed to assessing information requirements,
generating the necessary information, and assisting decision-makers in applying the
information to formulate and validate actionable customer and market insights.

Figure 4.1: Marketing information system, Adapted from Kotler et al., 2020.

Figure 4.1 illustrates the MIS, revealing that it commences and culminates with
information users, who include marketing managers, both internal and external
partners, and others in need of marketing information and insights. Initially, the MIS
collaborates with these information users to evaluate their information requirements.
Subsequently, it interacts with the marketing environment to create requisite
information via internal company databases, marketing intelligence operations, and
marketing research. Lastly, the MIS supports users in the analysis and application of

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this information to shape customer insights, devise marketing strategies, and oversee
customer engagement and relationships (Kotler et al., 2020).

4.4. Assessing marketing information needs

The primary recipients of the marketing information system are the company's
marketing team and other managerial staff. Nevertheless, this system may also extend
its information services to external partners, including suppliers, resellers, or marketing
services agencies. For instance, Asda/Walmart's Retail Link system permits key
suppliers to access various information, encompassing customers' purchasing trends,
store inventory levels, and detailed sales data, such as the number of items sold in
specific stores within the last 24 hours.

A robust marketing information system strikes a balance between the information that
users desire, what they genuinely require, and what is practically feasible to provide.
Some managers may request extensive information without thoroughly considering
their actual needs. In the era of big data, certain managers might aspire to accumulate
and store copious amounts of digital data, merely because technology enables them
to do so. Nonetheless, it's essential to recognise that an excess of information can be
just as detrimental as having too little. In contrast, other managers might inadvertently
overlook essential insights or not even realise the necessity of requesting specific
types of information. Consequently, the MIS must vigilantly monitor the marketing
environment to ensure that decision-makers receive the information and insights
required for pivotal marketing decisions.

Moreover, the expenses linked to procuring, analysing, storing, and delivering

information can accumulate rapidly. Companies must decide whether the value
derived from additional information is justifiable in relation to the costs incurred for its
provision. Assessing both the value and cost can frequently present challenges (Kotler
et al., 2020).

Think Point
Ferrero SpA, an Italian producer of branded chocolate and
confectionery goods, stands as the world's third-largest chocolate
manufacturer and confectionery corporation. Established in 1946 by
Pietro Ferrero in Alba, Italy, the company remains under the
ownership of the Ferrero family. In the 2016 listings, Ferrero was

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recognised as the most reputable firm in the food-and-beverages

sector, according to Reputation Institute's Global RepTrak 100, which
ranks companies worldwide based on criteria such as innovation,
governance, and citizenship. The company's recent revenue has
exceeded €8.75 billion, marking a 12% increase from the previous
year, with a global workforce of just over 33,000 employees. Through
its unwavering commitment to innovation and customer-centric
approach, Ferrero has consistently outperformed its competitors in
numerous markets. Ferrero places great emphasis on maintaining
stringent quality standards and, as such, confines its production to
locations where it can ensure consistent quality and establish a
secure retail supply chain. The company prioritises understanding
market preferences and has a demonstrated history of effectively
managing marketing information and gaining valuable customer
insights. An exemplary instance of this is Ferrero's introduction of the
premium chocolate market in India, achieved through sophisticated
marketing analysis. When Ferrero entered the Indian market in 2004,
there was limited demand for premium chocolates in the country.
Given India's price-sensitive nature, most brands offered small packs
at affordable prices. The market leader, Cadbury, had been offering
its flagship Dairy Milk brand at an entry price of €0.06 for over a
decade. However, Ferrero's continuous in-depth analysis of the local
market and its customers paved the way for a new product segment
in the region. Today, premium chocolates constitute approximately
27% of the Indian market, with several companies competing in this
segment, including Cadbury, Nestlé, Mars, Hershey, and Lindt.
Within just a decade, Ferrero has acquired a 6% share of the Indian
chocolate market and is credited with pioneering the premium
segment. Notably, Ferrero successfully launched its Rocher
chocolates in India in 2007, followed by Tic Tac and Kinder Joy in
2009. In October 2011, it inaugurated a factory in Baramati,
Maharashtra, which produces a substantial volume of Kinder Joy
eggs and Tic Tac pellets daily. Ferrero made India its central hub for
Asia and now exports half of its locally manufactured products. The

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company strategically set up its branch office in Chennai, capitalising

on the diverse cultures and distinct consumer needs in the region.

Ferrero had the foresight as early as 2004 to identify a group of

Indian consumers willing to pay a premium for quality chocolates.
Instead of outsourcing market research when test-marketing Rocher,
Ferrero chose to engage directly with the market, demonstrating its
dedication to acquiring and managing essential marketing information
and customer insights (Kotler et al., 2020).

4.5. Developing marketing information

Acquiring marketing information can be achieved through three main avenues: internal
data, marketing intelligence, and marketing research.

Internal data

Numerous companies establish comprehensive internal databases, which consist of

consumer and market data gathered from sources within the organisation's network.
These databases draw information from various origins. The marketing department
contributes data regarding customer attributes, both in-store and online sales
transactions, and visits to the company's websites and social media platforms. The
customer service department maintains records related to customer satisfaction and
any service issues. The accounting department supplies detailed records
encompassing sales, expenditures, and financial flows. Operations provides insights
into production, shipping, and inventory. The sales team reports on reseller responses
and competitor actions, while marketing channel collaborators offer data regarding
sales activities. The utilisation of such information can yield valuable customer insights
and a competitive edge. Internal databases often offer quicker and more cost-effective
access compared to other data sources. Nevertheless, they do come with certain
challenges. Because internal information is typically collected for purposes other than
marketing decisions, it may lack completeness or might not be in the appropriate
format. Additionally, data can rapidly become outdated, necessitating significant
efforts to maintain the database's currency. Managing and extracting useful insights
from the substantial volume of data generated by large companies requires highly
advanced equipment and methodologies (Kotler et al., 2020).

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4.7. Competitive marketing intelligence

Competitive marketing intelligence involves the structured process of monitoring,

gathering, and analysing publicly available information regarding consumers,
competitors, and market trends. The principal objective of competitive marketing
intelligence is to enhance strategic decision-making by comprehending the consumer
landscape, evaluating and tracking competitors' activities, and furnishing early alerts
about potential opportunities and threats. Various techniques fall under the umbrella
of marketing intelligence, ranging from direct observation of consumers to internal
surveys involving company employees, benchmarking of rival products, online
investigations, and monitoring of social media discussions.

Effective marketing intelligence empowers marketers with insights into how

consumers interact with and discuss their brands. Many companies deploy teams of
trained observers who engage with customers directly, observing their product usage
and conversations. On the other hand, some companies, like Philips, Mastercard,
Kraft, and Marriott, have established sophisticated digital command centres tasked
with the continuous monitoring of brand-related online consumer and market-related
activities.

Furthermore, keeping a close eye on competitors is crucial. Monitoring the web and
social media platforms of rivals is common practice. For instance, Amazon's
Competitive Intelligence division frequently purchases items from competing websites
to analyse and compare their product range, speed, and service quality. Leveraging
the internet, companies can search for specific competitor names, events, or trends to
uncover pertinent information. Analysing consumer discussions about competing
brands is often as insightful as monitoring conversations related to the company's own
brands.

Organisations employ competitive marketing intelligence to acquire early insights into

their competitors' moves and strategies and to prepare swift responses. For example,
Samsung regularly observes real-time social media activity surrounding Apple's
product launches, allowing them to swiftly shape marketing responses for their own
Galaxy S smartphones and tablets. While Apple's CEO, Tim Cook, introduces the
latest models to the world, Samsung's marketing team assembles in a war room miles
away, closely monitoring the event's progress. They pay attention not only to the
presentation of each new device feature but also to the inundation of consumer

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commentary on blogs and social media channels. As real-time consumer feedback

and competitive data surge in, the Samsung team crafts responses. Within days, as
Apple's new products hit the shelves, Samsung has already initiated TV, print, and
social media campaigns redirecting the excitement toward their Galaxy product line.

Additionally, a substantial amount of competitor intelligence can be obtained from

within the company itself—through insights from executives, engineers, scientists,
procurement specialists, and the sales force. Vital intelligence can also be acquired
from suppliers, resellers, and key customers. Intelligence seekers can explore a
multitude of online databases, with many of them being readily accessible at no cost.
For example, the European Patent Office offers free access to a vast amount of data
(Kotler et al., 2020).

4.8. Marketing research

Marketing research entails more than the general marketing intelligence that offers
information on consumer behaviour, competitor activities, and overall market trends.
Marketers often require formal studies that yield specific customer and market insights
tailored to particular marketing situations and decisions. For instance, entities like
Heineken N.V. and the UniCredit Group aim to discern the most effective appeals for
their UEFA Champions League Football advertising. Google seeks to gauge the
response of web users to a proposed site redesign, while Aéroports de Paris strives
to understand the demand for airports in the vicinity of Paris, including the types of
passengers and their preferred travel times. In such scenarios, marketing research is
indispensable.

Marketing research, in essence, is the structured process of designing, gathering,

analysing, and presenting data relevant to a precise marketing scenario confronted by
an organisation. Various companies employ marketing research in a multitude of
contexts. It offers marketers deep insights into customer motivations, purchasing
behaviours, and satisfaction levels. Additionally, it facilitates the evaluation of market
potential and market share while measuring the efficacy of pricing strategies, product
offerings, distribution channels, and promotional campaigns.

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In many instances, extensive corporations maintain in-house research divisions that

collaborate with marketing managers on research projects. Furthermore, both large
and smaller companies often enlist the services of external research experts to provide
consultative guidance on specific marketing challenges and to execute research
studies. On some occasions, businesses opt to procure data collected by external
agencies to support their decision-making processes.

The marketing research process encompasses four key phases, as illustrated in

Figure 4.2. These phases comprise problem definition and establishment of research
objectives, formulation of the research plan, execution of the research plan, and
interpretation and communication of the findings (Kotler et al., 2020).

Figure 4.2: Marketing research process (Kotler et al., 2020).

4.8.1. Designing the research plan

Designing the research plan comes into play after researchers have delineated the
research problem and established clear objectives. In this phase, it becomes
imperative to identify the precise information requirements, formulate an efficient
strategy for data collection, and present this strategy to the management. The
research plan delineates the origins of existing data and elaborates on the specific
research methodologies, methods of contact, sampling strategies, and tools that will
be utilised to amass fresh data.

The translation of research objectives into detailed information needs becomes the
focus. For instance, i that Red Bull is interested in gauging consumer responses to a
prospective line of vitamin-enhanced water beverages, bearing multiple flavours, and
to be marketed under the Red Bull brand. Red Bull currently commands a substantial
share of the global energy drink market, with a market share exceeding 43 percent
worldwide and sales of over 6.8 billion cans in the previous year. The brand's product
lineup comprises Red Bull coloured Editions, which are flavoured energy drinks, and
Red Bull Total Zero, an energy beverage catering to calorie-conscious consumers.

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Introducing a novel range of enhanced, carbonation-free waters, akin to Glacéau’s

vitaminwater, presents the potential to leverage Red Bull's robust brand positioning
even further. In the context of this proposed research, specific information
requirements might include:

• The demographic, economic, and lifestyle profiles of existing Red Bull

customers (to assess whether current customers also consume enhanced
water products, ascertain the compatibility of such products with their lifestyles,
and identify the need to target a fresh consumer segment).
• The attributes and consumption patterns of a broader audience that engages
with enhanced water products. This involves understanding their expectations
from such products, locations of purchase, consumption times, usage
practices, as well as the preferred brands and price ranges. (Crucial for
positioning the new Red Bull product effectively within the competitive
enhanced-water market.)
• The responses of retailers to the proposed line of products: Will they stock and
endorse it? Where is it to be showcased? (Crucial, as lack of retailer support
can adversely impact the new product's sales.)
• Projections regarding the sales and profitability of both the upcoming Red Bull
products and the existing product range. (Determining whether the new
enhanced waters will stimulate fresh sales or merely divert sales from the
current Red Bull items, as well as assessing their impact on Red Bull's overall
profitability.) (Kotler et al., 2020).

4.8.2. Secondary Data

Collecting secondary data is typically the initial step for researchers. The company's
internal database serves as a valuable starting point, while a wide array of external
data sources can also be accessed.

External secondary data can be procured from external suppliers. For instance,
Nielsen offers shopper insight data from a consumer panel spanning over 250,000
households across 25 countries. This data includes measurements related to trial and
repeat purchasing, brand loyalty, and buyer demographics. Experian Simmons
conducts comprehensive consumer studies that offer an all-encompassing view of the
American consumer. The MONITOR service by The Futures Company provides

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information on critical social and lifestyle trends. Numerous other companies supply
top-tier data tailored to diverse marketing information requirements.

Moreover, marketing researchers can independently search secondary data sources

through commercial online databases. General database services such as ProQuest
and LexisNexis grant marketing decision makers access to an extensive wealth of
information. Beyond fee-based commercial services, virtually every industry
association, government agency, business publication, and news medium offer free
information accessible through their websites or apps.

Although internet search engines can assist in identifying pertinent secondary data
sources, they may also prove vexing and inefficient. For example, a Red Bull marketer
conducting a Google search on 'enhanced water products' would encounter over
900,000 search results. Nonetheless, well-structured and effectively designed online
searches can serve as a valuable starting point for any marketing research initiative.

Secondary data is generally attainable more swiftly and cost-effectively than primary
data. Furthermore, secondary sources can offer data that an individual company may
be unable to collect independently—either because it is not directly accessible or the
cost of acquiring it would be prohibitive. For instance, it would be economically
unfeasible for Red Bull's marketers to perpetually conduct a retail store audit to gather
information on competitors' market shares, prices, and displays. However, they can
purchase the InfoScan service from SymphonyIRI Group, which provides this data
based on scanner data and information from 34,000 retail stores.

Nevertheless, secondary data collection has its challenges. Researchers often cannot
obtain all the necessary data from secondary sources. For instance, Red Bull would
not find existing information on consumer reactions to a new line of enhanced water
that has not yet been introduced to the market. Even when data is available, its
usability is not guaranteed. Researchers must carefully assess secondary information
to ensure its relevance (alignment with the research project's needs), accuracy
(reliably collected and reported), currency (sufficiently up to date for current decisions),
and impartiality (objectively gathered and reported).

4.8.3. Primary data

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Primary collection typically follows the use of secondary data, often aiding in the
definition of research problems and objectives. The process of designing a plan for
primary data collection necessitates decisions regarding research approaches,
contact methods, sampling strategies, and research instruments, as outlined in Table
4.1.

Adapted from Kotler et al., 2020.

Research approaches for gathering primary data encompass observation, surveys,

and experiments. Each of these will be discussed individually.

Observational research entails the acquisition of primary data through the

observation of relevant individuals, actions, and situations. For instance, a food
retailer like Aldi might assess potential new store locations by examining traffic
patterns, neighbourhood conditions, and the proximity of competing retail chains
such as Lidl, Tesco, and Carrefour.

Researchers frequently employ observational research to understand consumer

behaviour in ways that cannot be obtained solely through direct questioning. Fisher-
Price, for example, has established an observation laboratory to observe the
reactions of young children to new toys. The Fisher-Price Play Lab serves as a
cheerful, toy-filled space where children get to test Fisher-Price prototypes while
being observed by designers aiming to understand the elements that excite them
about a new toy. The lab accommodates around 3,500 children each year, testing
approximately 1,200 products annually. A child research manager at Fisher-Price
notes, "Our designers watch and learn from how [children] play. It really helps us
make better products."

Marketers engage not only in observing consumer actions but also in monitoring
what consumers express. As previously mentioned, marketers frequently monitor

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consumer discussions on blogs, social media platforms, and websites. Observing

naturally occurring feedback can provide insights that are difficult to attain through
more structured and formal research methods.

Ethnographic research is employed by various companies. This research approach

involves sending observers to watch and interact with consumers in their "natural
environments." These observers may include trained anthropologists, psychologists,
or company researchers and managers.

4.8.4. Survey Research

Survey research, which is the most used method for collecting primary data, is
particularly well-suited for obtaining descriptive information. When a company seeks
insights into people's knowledge, attitudes, preferences, or purchasing behaviour, it
can often acquire this information through direct inquiries.

The primary advantage of survey research lies in its adaptability, as it can be employed
to gather a wide array of information in various scenarios. Surveys that address nearly
any marketing-related inquiry or decision can be conducted through methods such as
phone interviews, mail questionnaires, online forms, or in-person interviews.

Nevertheless, survey research does present certain challenges. On occasion,

individuals may struggle to respond to survey questions due to difficulties in
recollection or because they have never contemplated their actions and motivations.
Some respondents may be hesitant to divulge information to unfamiliar interviewers or
about aspects they consider personal. Respondents might offer answers even when
they lack knowledge to appear more knowledgeable or informed. Alternatively, they
may provide responses aimed at pleasing the interviewer. Additionally, busy
individuals may either lack the time or harbour privacy concerns, which could result in
their reluctance to participate.

4.8.5. Experimental research

Experimental research is ideal for obtaining causal information, as opposed to

exploratory or descriptive research, which is better suited for other research methods.
Experiments entail selecting similar groups of subjects, providing them with varying
treatments, maintaining control over unrelated variables, and then examining
differences in how the groups react. Therefore, the primary objective of experimental
research is to elucidate cause-and-effect relationships.

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4.8.6. Personal interviews

Personal interviews come in two main formats: individual interviews and group
interviews. Individual interviews involve conversations with individuals conducted in
various settings such as their homes, offices, on the street, or in shopping malls. This
approach offers flexibility as skilled interviewers can lead the conversations, clarify
complex questions, and delve into topics as needed. They can even present real
products, packaging, advertisements, or videos to participants and observe their
reactions and behaviour. However, individual interviews tend to be more expensive,
often costing three to four times as much as telephone interviews.
Group interviews, or focus group interviews, involve inviting small groups of individuals
to gather with a trained moderator and discuss a product, service, or organisation.
Typically, participants receive a small compensation for their attendance. The
moderator aims to foster open and spontaneous discussion, expecting that group
interactions will reveal deeper emotions and thoughts. Simultaneously, the moderator
keeps the conversation on track, hence the name "focus group interviewing."
In traditional focus group sessions, researchers and marketers observe the
discussions from behind a one-way mirror and record the sessions for future analysis.
With the aid of video conferencing and internet technology, marketers located at a
distance can also observe, listen, and even actively participate in ongoing focus group
discussions.
Focus group interviewing has evolved into a crucial qualitative research method for
gaining new insights into consumer sentiments and thoughts. During focus group
sessions, researchers not only hear participants' ideas and opinions but also can
observe their facial expressions, body language, group dynamics, and conversational
dynamics. However, focus group studies present certain challenges (Kotler et al.,
2020).

4.9. Online Research

The internet has brought about a significant transformation in the field of marketing
research. Researchers are increasingly relying on online methods for collecting
primary data, which encompasses a variety of online marketing research techniques
such as internet and mobile surveys, online focus groups, consumer tracking,
experiments, online panels, and brand communities.

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Online research takes various forms. Companies can employ the internet or mobile
technology as a platform for conducting surveys, incorporating questionnaires on their
websites, social media platforms, or using email and mobile devices to solicit
responses. They can establish online panels for regular feedback and conduct real-
time discussions or online focus groups. Researchers can also conduct experiments
online, testing different elements like pricing, headlines, or product features on
different websites or mobile platforms to gauge their effectiveness. Additionally, they
can simulate virtual shopping environments to evaluate new products and marketing
strategies. Observing the online behaviour of customers, researchers can track their
clickstreams as they navigate through websites, gaining valuable insights.

The internet is particularly well-suited for quantitative research, especially marketing

surveys and data collection. Given the widespread usage of the internet, it serves as
an excellent channel for reaching a diverse consumer base. As response rates decline
and costs rise for traditional survey methods, the internet is swiftly taking the place of
mail and telephone as the primary data collection methodology.

Internet-based survey research offers numerous advantages over traditional

approaches such as phone, mail, and personal interviews. Notably, it offers speed and
cost-efficiency. Researchers can swiftly distribute surveys to thousands of
respondents via email or by posting them on chosen online and mobile platforms.
Responses can be received almost instantly, and as respondents input their
information, researchers can tabulate, analyse, and share research data in real time.

Moreover, online research generally costs significantly less than research conducted
through mail, phone, or personal interviews. The internet eliminates most expenses
related to postage, phone calls, interviewers, and data handling. Additionally, sample
size and respondents' geographical locations have little bearing on costs. Once the
survey is set up, there is minimal difference in cost between a small or large number
of respondents or those from local or distant locations.

The affordability of online research makes it accessible to a wide range of businesses,

regardless of size. In fact, the internet has made what was once a domain for research
experts available to almost anyone interested in conducting research. Even smaller,
less tech-savvy researchers can utilise online survey services such as Snap Surveys

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and SurveyMonkey to create, publish, and distribute customized online or mobile

surveys quickly. Internet-based surveys tend to be more interactive and engaging,
easier to complete, and less intrusive compared to traditional methods like phone or
mail surveys (Kotler et al., 2020).
4.9.1. Online behavioural and social tracking and targeting
In recent years, the internet has evolved into a crucial tool for conducting research and
deriving customer insights. However, contemporary marketing researchers are
pushing the boundaries beyond traditional online research methods like surveys, focus
groups, and online communities. They increasingly focus on actively mining the vast
sources of unsolicited, unstructured, and "bottom-up" customer information circulating
on the internet. While conventional marketing research elicits more structured and
intrusive consumer responses to specific research questions, online listening captures
the genuine passion and spontaneity found in unsolicited consumer opinions.

Online tracking of consumers can range from simple activities like reviewing customer
feedback and comments on the company's website or on e-commerce platforms such
as Amazon, QVC, or Best Buy. On the other end of the spectrum, it may involve using
advanced online analysis tools to deeply dissect the abundant consumer-generated
comments and messages found in blogs or on social media platforms. Listening to
and engaging with customers online offers valuable insights into what consumers are
expressing and feeling about a brand. It also opens doors for creating positive brand
experiences and fostering relationships. Many companies have excelled in this aspect,
actively listening online and responding promptly and appropriately. As mentioned
earlier, an increasing number of companies have established social media command
centres to monitor the digital landscape and analyse brand-related conversations for
marketing insights.

Collecting information about consumers' online behaviours, such as their search

queries, website visits, shopping habits, and purchase choices, is highly valuable to
marketers. Contemporary marketers are capitalising on this information through a
practice called behavioural targeting, where online data is used to tailor
advertisements and offers to specific consumers. For instance, if you place a
smartphone in your Amazon shopping cart but do not make a purchase, you might
expect to encounter ads for similar phones the next time you visit your favourite sports
website to check the latest scores.

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The most recent advancements in web analytics and targeting go even further,
extending online surveillance from behavioural targeting to social targeting. While
behavioural targeting tracks consumers' movements across websites, social targeting
delves into individual social connections and conversations on social networking sites.
Research demonstrates that consumers tend to shop similarly to their friends and are
more likely to respond to advertisements from brands their friends use. Thus, rather
than simply encountering a SportsDirect.com ad for running shoes due to recent online
searches (behavioural targeting), you might see an ad for a specific pair of running
shoes because a friend you are connected to on Twitter purchased those exact shoes
from SportsDirect.com last week (social targeting).

Online listening, behavioural targeting, and social targeting enable marketers to

harness the vast volume of consumer information circulating on the internet.
Nonetheless, as marketers become more adept at traversing blogs, social networks,
and other online and mobile platforms, there are growing concerns about consumer
privacy. When does sophisticated online research cross the line into consumer
surveillance? Advocates argue that behavioural and social targeting benefit
consumers by providing more relevant ads and products based on their interests.
However, for many consumers and public advocates, being tracked online and
bombarded with ads can feel unsettling.

Regulators and other entities are taking action. Neelie Kroes, Vice-President of the
European Commission, has proposed the creation of a "Do Not Track" system, which
would allow people to opt out of having their online activities monitored, similar to the
"Do Not Call" registry. Progress in this area has been mixed. Meanwhile, many major
internet browsers and social media platforms have addressed these concerns by
incorporating enhanced privacy features into their services (Kotler et al., 2020).

4.10. Customer Relationship Marketing

Customer Relationship Management (CRM) presents unique challenges when it
comes to analysing and leveraging individual customer data. In today's era of big data,
most companies have access to vast amounts of information about their customers
and the market. Nevertheless, savvy companies are diligent in collecting data from
every conceivable customer interaction point. These touchpoints encompass various

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interactions, such as customer purchases, engagements with the sales force, service
and support inquiries, visits to websites and social media platforms, participation in
satisfaction surveys, credit and payment transactions, and involvement in market
research studies - essentially, every instance where a customer interacts with a
company.
Regrettably, this data is often dispersed throughout the organisation or buried within
separate databases. To address these challenges, many companies have turned to
Customer Relationship Management (CRM) to effectively manage comprehensive
data about individual customers and optimise customer touchpoints to enhance
customer loyalty.
CRM is comprised of sophisticated software and analytical tools provided by
companies like Salesforce.com, Oracle, Microsoft, and SAS. It functions by
consolidating customer and market data from all available sources, conducting in-
depth analysis, and applying the insights to cultivate stronger customer relationships.
CRM unifies all the information that a company's sales, service, and marketing teams
possess about individual customers, providing a holistic, 360-degree view of the
customer relationship (Kotler et al., 2020).

4.11. Big data and marketing analytics

The potential of today's big data is significant, as mentioned earlier in this chapter.
However, amassing extensive volumes of data in itself doesn't provide much value.
Marketers need to navigate through the immense data reservoirs to unearth valuable
insights, essentially filtering out the portions that offer customer insights. In the words
of one marketing executive, the goal is to "derive significant insights from big data,
which entails discarding 99.999 percent of that data to identify actionable information."
As another data expert puts it, "having the right data is more valuable than having a
large volume of data." This task is what marketing analytics is designed for.

Marketing analytics encompasses the suite of tools, technologies, and processes

employed by marketers to uncover meaningful patterns within big data, ultimately
leading to the acquisition of customer insights and the assessment of marketing
performance. Marketers utilise marketing analytics to scrutinise the extensive and
intricate datasets collected from various sources, including web, mobile, and social
media tracking, customer transactions, and engagements, along with other significant
sources of big data. A prominent example of marketing analytics in practice can be

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seen with Netflix, which maintains an extensive customer database and leverages
advanced marketing analytics to obtain insights. These insights drive
recommendations for subscribers, influence content programming decisions, and
even guide the creation of exclusive content, all aimed at enhancing the customer
experience.

Another illustrative case of marketing analytics in action is found within the food
products giant Kraft. Kraft Food Groups possesses a wealth of marketing data,
accumulated over years of interactions with customers and through its social media
monitoring hub known as "Looking Glass." Looking Glass actively tracks consumer
trends, competitor activities, and over 100,000 brand-related conversations on social
media and blogs each day. Kraft also derives data from customer interactions with its
"Kraft Food & Family" magazine, email communications, and more than 100 web and
social media platforms that cater to its extensive brand portfolio (Kotler et al., 2020).

4.12. Public policy and ethical considerations

Public policy and ethical considerations play a pivotal role in the realm of marketing
research. In most cases, marketing research serves the interests of both the company
funding it and its consumers. It provides valuable insights into consumer needs, which,
in turn, results in the development of more satisfying products and services and fosters
stronger customer relationships. Nevertheless, it's important to acknowledge that the
misuse of marketing research has the potential to harm or irritate consumers. Two
prominent public policy and ethical concerns in the field of marketing research relate
to intrusions on consumer privacy and the misapplication of research findings.

Intrusions on Consumer Privacy

While many consumers perceive marketing research in a positive light and are open
to participating in interviews and offering their opinions, there is another segment of
consumers who have strong reservations about or even distrust marketing research.
These individuals dislike being interrupted by researchers, and they harbour concerns
about marketers accumulating vast databases laden with personal information about
customers. There is also apprehension regarding researchers employing advanced
techniques to delve into their innermost feelings, track their online and mobile device
activities, or observe their shopping behaviours, all of which could potentially be used
to influence their purchasing decisions. A recent survey revealed that over 90 percent

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of consumers feel that they have lost control over the collection and use of their
personal data and the information they share on social media platforms.

Navigating the intricate terrain of marketing research and privacy poses a complex
challenge. For instance, is it considered a positive development that certain retailers
employ mannequins equipped with concealed cameras to record customer
demographics and shopping behaviour for the purpose of enhancing service? Should
companies be commended or criticised for monitoring consumer interactions on social
media platforms like Facebook, Twitter, Instagram, YouTube, or other channels to
improve responsiveness? Is it worrisome when marketers track consumers' mobile
phone usage to provide location-based information, advertisements, and offers?
The marketing research industry is grappling with a significant issue stemming from
growing concerns about consumer privacy. Companies find themselves in the difficult
position of trying to unearth valuable yet potentially sensitive consumer data while also
preserving consumer trust. Simultaneously, consumers are faced with the dilemma of
balancing personalisation and privacy. They desire relevant, customised offers that
cater to their needs, but they harbor concerns or reservations about companies
tracking their activities too closely. This leads to a crucial question: where should the
line be drawn when it comes to collecting and utilising customer data?

A study conducted by TRUSTe, an organisation that monitors website privacy

practices, discovered that over 90 percent of respondents consider online privacy a
highly or moderately important matter. More than 75 percent concurred with the
assertion that "the internet is not well regulated, and naïve users can easily be taken
advantage of." Furthermore, 66 percent of consumers expressed their reluctance to
have marketers monitor their online behaviour and tailor advertisements to their
interests. Consequently, they have become less willing to divulge personal information
on websites.

The marketing research industry is actively exploring potential solutions to address

this challenge. The European Federation of Associations of Market Research
Organizations and ESOMAR have jointly proposed a series of revisions to the
European Commission's Directive 95/46/EC, which deals with data protection.
Additionally, the industry is considering the adoption of comprehensive standards,
potentially based on the worldwide code of ethical practice set forth by ESOMAR and

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the International Chamber of Commerce (ICC/ESOMAR International Code on Market

and Social Research). This code outlines the responsibilities of researchers to
participants and the general public. For example, it stipulates that researchers should
make their contact information available to respondents and prohibits companies from
representing activities like database compilation or sales and promotional pitches as
research.

A majority of major companies, including Shell, Siemens, Deutsche Telekom, IBM,

and Microsoft, have appointed a Chief Privacy Officer (CPO) responsible for
safeguarding the privacy of customers who engage with the company. IBM's CPO
emphasises the need for a multidisciplinary approach, involving all its departments,
from technology, legal, and accounting to marketing and communications, in working
together to protect customer privacy.

Ultimately, if researchers provide value in exchange for customer information,

consumers are more likely to willingly share it. For instance, Amazon customers don't
mind if the company builds a database of their purchased products to offer future
recommendations, as it saves time and provides value. Similarly, Bizrate users
willingly participate in surveys to rate online seller sites because it allows them to view
the overall ratings of other users when making purchase decisions. The best approach
for researchers is to request only the necessary information, use it responsibly to
provide customer value, and refrain from sharing information without the customer's
explicit consent (Kotler et al., 2020).

4.13. Conclusion
To provide value to customers and establish meaningful connections with them,
marketers must initially acquire fresh and profound understandings of customer needs
and desires. These insights are derived from high-quality marketing information. The
recent surge in "big data" and digital technologies has enabled companies to access
substantial amounts of data, often even overwhelming quantities. Concurrently,
consumers are generating an overwhelming surge of grassroots information through
their smartphones, computers, and tablets via online browsing and blogging, apps and
social media interactions, as well as texting and video. The task at hand is to convert
the current extensive volume of consumer data into practical customer and market
insights.

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SELF-ASSESSMENT QUESTIONS:
4.1. What is the concept of big data, and what opportunities and challenges does it
present to marketers?

4.2. Can you distinguish between marketing intelligence and marketing research?
Which of the two holds greater value for a company? Why?

4.3. How do you define Customer Relationship Management (CRM)? How do

companies integrate this information into their marketing and overall business
practices? Provide an example of CRM in a firm.

4.4. Define primary data and secondary data. What are the potential benefits
and drawbacks of using each of these data types?

Suggested Answers
4.1. Big data refers to the vast and complex data sets that can be collected and
analysed using digital technology and data analytics tools. The term
encompasses the tremendous volume, velocity, and variety of data generated
in today's digital world. For marketers, big data offers opportunities to gain
deeper insights into consumer behaviour, preferences, and trends. It allows
for more personalised marketing, better targeting of audiences, and improved
decision-making. However, the challenges include managing and processing
this massive amount of data, ensuring data privacy, and deriving actionable
insights from it.

4.2. Marketing intelligence involves the ongoing process of collecting and

analysing information about general market conditions, competitors, and
consumers, primarily through external sources and non-research methods. In
contrast, marketing research is a more formal and structured process of
gathering specific data through research methods, such as surveys and
experiments.

While both marketing intelligence and marketing research have their merits,
marketing intelligence tends to be more valuable to a company in terms of

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providing real-time, up-to-date insights into market dynamics and competitor

activities. It can help a company stay agile and responsive to changes in the
marketplace. Marketing research, on the other hand, is essential for in-depth
analysis of specific marketing situations, decision-making, and solving unique
challenges.

4.3. Customer Relationship Management (CRM) is a comprehensive approach to

managing interactions and relationships with customers. It involves the use of
technology, data, and processes to understand, segment, and engage with
customers in a personalised and efficient manner. CRM aims to build strong
customer relationships, enhance customer satisfaction, and ultimately drive
business growth. Companies integrate CRM information into their marketing
and business practices by centralising customer data, analysing customer
behaviour and preferences, and using this knowledge to tailor marketing
strategies, product development, and customer service. For example, a firm
might use CRM data to send personalised email offers to customers based on
their past purchases or engagement with the brand. This improves customer
loyalty and overall business performance.

4.4. Primary data refers to information collected directly from original sources
through research methods such as surveys, experiments, and observations.
Secondary data, on the other hand, is data that has been collected and
documented by others and is available for use by researchers.

The benefits of using primary data include its freshness, relevance to specific
research objectives, and control over the data collection process. However, it
can be time-consuming and costly to gather.

Secondary data is readily available, cost-effective, and time-saving. It can

provide historical context and broad market insights. However, the drawbacks
include the potential lack of relevance to specific research needs, data accuracy
concerns, and limitations in availability and timeliness.

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BIBLIOGRAPHY

Kotler,P.,Armstrong, G., Harris, L.C., Hongwei, HE (2020) Principles of Marketing.,

8th Edition. Pearson., Global.

Kotler, P., & Keller, K. L. (2021). Marketing Management. Pearson.

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