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Business: A Changing World, 4/e
O.C. Ferrell, Colorado State University
Geoffrey Hirt, DePaul University

Customer-Driven Marketing



Marketing involves planning and executing the development, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Organizations of all sizes and objectives engage in these activities.


Marketing is a group of activities designed to expedite transactions by creating, distributing, pricing, and promoting goods, services, and ideas. These activities create value by allowing individuals and organizations to obtain what they need and want. Marketing is not manipulation to get consumers to buy products they don't want, nor is it just selling and advertising; it is a systematic approach to satisfying consumers.

At the heart of all business is the exchange, the act of giving up one thing (money, credit, labor, goods) in return for something else (goods, services, or ideas). Businesses exchange their goods, services, or ideas for money or credit supplied by customers in a voluntary exchange relationship. For an exchange to occur, buyers and sellers must be able to communicate about the "something of value" available to each, and each must be willing to give up its respective "something of value" to receive the "something" held by the other.

What most consumers want is a way to get a job done, solve a problem, or gain some enjoyment. Thus, the tangible product itself may not be as important as the image or the benefits associated with the product.

The central focus of marketing is to create utility, which refers to a product's ability to satisfy human needs and wants. Place utility is created by making the product available where the buyer wishes to buy it. Time utility is created by making a product available when customers wish to purchase it. Ownership utility is created by transferring ownership of a product to the buyer. Form utility is created through the production process rather than through marketing activities. A key role of marketers is to create place, time, and ownership utility so that human needs and wants are served.

Marketing focuses on a complex set of activities that must be performed to accomplish objectives and generate exchanges. Marketers need to understand buying behavior so that they can focus on buyers' needs and desires to determine what products to make available. Selling is a persuasive activity accomplished through promotion. Transporting is the process of moving products from the seller to the buyer. Storing is a part of physical distribution and includes warehousing activities. Grading refers to standardizing products and displaying and labeling them so that consumers clearly understand their nature and quality. Financing facilitates the exchange process though providing credit for large purchases. Marketing research allows marketers to determine the need for new products and services. Risk taking is the chance of loss associated with marketing decisions.

A basic philosophy that guides all marketing activities is the marketing concept, the idea that an organization should try to satisfy customers' needs through coordinated activities that also allow it to achieve its own goals. The marketing concept suggests that a business should find out what consumers need and want, develop the product that fulfills those needs or wants, and then get the products to the customer. The business must also continually alter, adapt, and develop products to keep pace with changing consumer needs and wants. Although customer satisfaction is the goal of the marketing concept, a company must also achieve its own objectives, such as boosting productivity, reducing costs, or achieving a percentage of a specific market. To implement the marketing concept, a firm must have good information about what consumers want, adopt a consumer orientation, and coordinate its efforts throughout the entire organization; otherwise, it may have too many products that consumers do not want or need.

Relationship marketing is the process of building intimate customer interactions to maximize customer satisfaction. The goal of relationship marketing is to satisfy customers so well that they become loyal, committed to sharing information, and rely on the business. To build this type of long-term customer relationship, businesses are turning to information technology. Customer relationship management focuses on using information about customers to create marketing strategies that develop and sustain desirable customer relationships.


To implement the marketing concept and customer relationship management, a business needs to develop and maintain a marketing strategy, a plan of action for developing, pricing, distributing, and promoting products that meet the needs of specific customers. This definition has two major components: selecting a target market and developing an appropriate marketing mix to satisfy that target market.

A market is a group of people who have a need, purchasing power, and the desire and authority to spend money on goods, services, and ideas. A target market is a more specific group of consumers on whose needs and wants a company focuses its marketing efforts. Some firms use a total-market approach in which they try to appeal to everyone and assume that all buyers have similar needs and wants. Most firms use market segmentation, dividing the total market into groups of people who have relatively similar product needs. A market segment is a collection of individuals, groups, or organizations that share one or more characteristics and thus have relatively similar product needs and desires. In the concentration approach, a company develops one marketing strategy for a single market segment. In the multisegment approach, the marketer aims its marketing efforts at two or more segments, developing a marketing strategy for each. For a firm to use the concentration or multisegment approach successfully, several requirements must be met: (1) consumers' needs for the product must be heterogeneous; (2) the segments must be identifiable and divisible; (3) the total market must be divided to allow estimated sales potential, cost, and profits of the segments to be compared; (4) at least one segment must have enough profit potential to justify developing and maintaining a special marketing strategy; and (5) the firm must be able to reach the chosen market segment with a particular marketing strategy. Businesses segment markets on the basis of several variables: demographics (age, sex, race, income, education, occupation, and so on), geographics (terrain, climate, etc.), psychographics (personality characteristics, motives, and lifestyles), and behavioristic characteristics (how the consumer's behavior toward the product affects its use).

The second step in developing a marketing strategy is to create and maintain a satisfying marketing mix, which refers to four marketing activities--product, price, distribution, and promotion--that the firm can control to achieve specific goals within a dynamic marketing environment.

A product--whether a good, a service, an idea, or some combination--is a complex mix of tangible and intangible attributes that provide satisfaction and benefits. Products are among a firm's most visible contacts with consumers. If they do not meet consumer needs and expectations, sales will be difficult, and product life spans will be brief. The product is an important variable of the marketing mix; price, promotion, and distribution issues must be coordinated with product decisions.

Almost anything can be assessed by a price, a value placed on an object exchanged between a buyer and a seller. Price quantifies value and is the basis of most market exchanges. It is a key element of the marketing mix because it relates directly to the generation of revenue and profits. Prices can be changed quickly to stimulate demand or respond to competitors' actions.

Distribution is making products available to customers in the quantities desired. Intermediaries, usually wholesalers and retailers, perform many of the activities required to move products efficiently from producers to consumers or industrial buyers. These involve transporting, warehousing, materials handling, inventory control, and packaging and communication. Eliminating wholesalers and other intermediaries would not lower prices for consumers, as many critics suggest, because the functions these middlemen perform cannot be eliminated.

Promotion is a persuasive form of communication that attempts to expedite a marketing exchange by influencing individuals, groups, and organizations to accept goods, services, and ideas. Promotion includes advertising, personal selling, publicity, and sales promotion.


Marketing research is a systematic, objective process of getting information about potential customers to guide marketing decisions. This research is vital because the marketing concept cannot be implemented without information about customers. A marketing information system is a framework for accessing information about customers from sources both inside and outside the organization. This information is important to planning and marketing strategy development. Two types of data are usually available to decision makers. Primary data are observed, recorded, or collected directly from respondents; secondary data are compiled inside or outside the organization for some purpose other than changing the current situation.


Buying behavior refers to the decision processes and actions of people who purchase and use products. It includes the behavior of both consumers purchasing products for personal or household use and organizations buying products for business use. Marketers analyze buying behavior because a firm's marketing strategy should be guided by an understanding of buyers.

Psychological and social variables are important to an understanding of buying behavior. Psychological factors include perception--the process by which a person selects, organizes, and interprets information received from his or her senses; motivation--an inner drive that directs a person's behavior towards goals; learning--changes in a person's behavior based on information and experience; attitude--knowledge and positive or negative feelings about something; and personality--the organization of a person's distinguishing character traits, attitudes, and habits. Social factors include social roles--the set of expectations for individuals based on some position they occupy; reference groups--families, professional groups, civic organizations, and other groups with whom buyers identify and whose values or attitudes they adopt; social classes--determined by ranking people into higher or lower positions of respect; and culture--the integrated, accepted pattern of human behavior, including thought, speech, beliefs, actions, and artifacts.

Marketers may not be able to determine accurately what is highly satisfying to buyers, but they know that trying to understand consumer wants and needs is the best way to satisfy them.


The marketing environment influences and structures the development of marketing strategy. Political, legal, and regulatory forces; social forces; competitive and economic forces; and technological forces shape the marketing environment. The forces in the marketing environment are sometimes called uncontrollables, yet they are not totally uncontrollable.