Module 3 - Background PRINCIPLES OF MARKETING All readings are required unless noted as “Optional” or “Not Required.” Introduction In practice, Marketers use various models to describe the different marketing functions. Some of the more popular models are the 7 step model, STP (segmentation, targeting, positioning), or the 4 C's (Consumer Behavior, Company Analysis, Competitor Analysis, and Context). Each has advantages and drawbacks regarding comprehensiveness. Readings describing each of these models are provided in the Optional Reading list at the end of this section. For this module, however, we will use a model that integrates and abridges these other models. Consumers, Markets, and Competition Though many people think of marketing as consisting of sales and advertising, one of the most important marketing functions begins even before the final product or service has been developed. In this early stage, the organization conducts research to determine customer needs, how the market is structured, and the number and nature of competitors addressing that need. As you will see below, these three topics are intertwined. Consumers The purpose of marketing is to discover how to provide value to consumers while earning a profit. Marketers must understand the entire consumer base: the customer served by the organization, the customer currently served by competitors, and customers who may be served in the future. One way marketers do this is by analyzing buyer behavior (i.e., how consumers get information and how consumers make buying decisions). Consumer behaviors are influenced by a number of considerations such as psychological factors, convenience, competing choices, and cultural preferences. Read the following book chapter on consumer behavior. Tanner, J., and Raymond, M. (2012). Marketing Principles (v. 2.0). Ch. 3: Consumer behavior: How people make buying decisions. Sections 3.1-3.6. Retrieved from https://2012books.lardbucket.org/pdfs/marketing-principles-v2.0.pdf Markets Any business needs to know the characteristics of the markets in which the firm operates. Understanding the customer and the market requires extensive and sophisticated research efforts to gather and analyze social and economic trends, human decision-making, and potential competitors. The goal of market research is to enable the firm to identify opportunities and threats in the business environment as well as the organization’s capacity to exploit its strengths and shore up its weaknesses. Market research can be either primary (collected directly from the source), or secondary (collected/published by someone outside the organization). Some examples of secondary data include: · US Census · www.Data,gov · Internal data (such as customer cards at grocery stores that collect data on buying patterns) · Nielsen or Arbitron ratings · Published articles and reports · Blog posts · Social media The following chart illustrates the differences between primary and secondary market re ...

1. Module 3 - Background
PRINCIPLES OF MARKETING
All readings are required unless noted as “Optional” or “Not
Required.”
Introduction
In practice, Marketers use various models to describe the
different marketing functions. Some of the more popular models
are the 7 step model, STP (segmentation, targeting,
positioning), or the 4 C's (Consumer Behavior, Company
Analysis, Competitor Analysis, and Context). Each has
advantages and drawbacks regarding comprehensiveness.
Readings describing each of these models are provided in the
Optional Reading list at the end of this section. For this module,
however, we will use a model that integrates and abridges these
other models.
Consumers, Markets, and Competition
Though many people think of marketing as consisting of sales
and advertising, one of the most important marketing functions
begins even before the final product or service has been
developed. In this early stage, the organization conducts
research to determine customer needs, how the market is
structured, and the number and nature of competitors addressing
that need. As you will see below, these three topics are
intertwined.
Consumers
The purpose of marketing is to discover how to provide value to
consumers while earning a profit. Marketers must understand
the entire consumer base: the customer served by the
organization, the customer currently served by competitors, and
customers who may be served in the future. One way marketers
do this is by analyzing buyer behavior (i.e., how consumers get
information and how consumers make buying decisions).
Consumer behaviors are influenced by a number of
considerations such as psychological factors, convenience,

2. competing choices, and cultural preferences. Read the following
book chapter on consumer behavior.
Tanner, J., and Raymond, M. (2012). Marketing Principles (v.
2.0). Ch. 3: Consumer behavior: How people make buying
decisions. Sections 3.1-3.6. Retrieved
from https://2012books.lardbucket.org/pdfs/marketing-
principles-v2.0.pdf
Markets
Any business needs to know the characteristics of the markets
in which the firm operates. Understanding the customer and the
market requires extensive and sophisticated research efforts to
gather and analyze social and economic trends, human decision-
making, and potential competitors. The goal of market research
is to enable the firm to identify opportunities and threats in the
business environment as well as the organization’s capacity to
exploit its strengths and shore up its weaknesses.
Market research can be either primary (collected directly from
the source), or secondary (collected/published by someone
outside the organization). Some examples of secondary data
include:
· US Census
· www.Data,gov
· Internal data (such as customer cards at grocery stores that
collect data on buying patterns)
· Nielsen or Arbitron ratings
· Published articles and reports
· Blog posts
· Social media
The following chart illustrates the differences between primary
and secondary market research:
Source: http://www.mymarketresearchmethods.com/primary-
secondary-market-research-difference/
Competition
Competition is either direct or indirect. Direct competitors, such

3. as Coke and Pepsi, offer similar products or services. Indirect
competitors offer similar functions or meet similar needs, but
with different products, such as hardwood flooring vs. granite
countertops in a re-model. These are different products, but they
compete for the same re-modeling dollar. As we saw in Module
1, when there are substitute products, elasticity of demand is
increased. This creates a need for marketing to differentiate the
product from that of the competition.
Also relevant to understanding the competitive environment is
to know the market share of the industry players. This is
initially determined through market research. One important
way of competing is to formulate a strategy to increase market
share, because when competitors have similar products or
services, larger market share generally equates to larger profits.
Some common approaches to increasing market share are:
1. Lower production costs
2. Spend more on research
3. Spend more on equipment
4. Spend more on advertising
In analyzing the competition, the business must have a good
understanding of itself. What are its own capacities and
weaknesses? It may have the capacity to deliver the product –
but at what level? Local, regional, national, international? Mass
merchandising or boutique market niche? These decisions may
be governed by the firm’s capacity to finance its activities. The
best way to analyze the competitive situation and the firm’s
capacity to respond to internal and environmental challenges is
to conduct a SWOT analysis (Strengths, Weaknesses,
Opportunities, and Threats). For an example of a SWOT
analysis of Costco, review this report in the Trident Online
Library:
GuruFocus.com: SWOT analysis: Costco wholesale corporation.
(2015). Chatham: Newstex. Available in the Trident Online
Library.
Market Segmentation, Targets, and Positioning
Once the firm has gained a broad understanding of its customers

4. and competitive environment, it is time to make some more
specific decisions about the services or products it offers. The
first step is to divide the population of potential customers into
homogeneous subgroups of consumers with similar needs and
desires. This is called segmentation. The second step is to select
from among these subgroups, which one(s) the firm will serve
best. This is called the target market. Finally, the marketers
determine the approach they will take in emphasizing the value
their product/service had for the target group. This is called
positioning.
Segmentation
Many firms differentiate among their customers and offer
different products or level of service depending on customer
type. This allows the firm to direct marketing efforts effectively
and efficiently to the “right” people to maximize sales and
profit. For example, banks may offer their “preferred
customers” (large depositors or borrowers) free checking, better
interest rates, complementary safety deposit boxes, personal
bankers, etc. These perks are geared toward attracting and
keeping their most profitable customers. Other firms do not
differentiate and offer everyone the same thing. Though
segmentation may initially be more expensive than mass-
marketing, firms that segment are more profitable than those
that do not. The most common categories of segmentation are:
· Demographic (age, gender, income)
· Geographic (SMSA, census)
· Psychographic (lifestyle, personality)
· Behavioral (usage, loyalty, occasion, price consciousness)
The following video offers an excellent overview of these topic
areas:
Tutor2u (2016) Market Segmentation, Targeting and Position.
Retrieved from
https://www.youtube.com/watch?v=0srjdRDh99Y
Targeting
Once the customer base has been segmented by need and

5. characteristics, the firm needs to decide which group it can
pursue most successfully. Considerations include which
group(s) the firm can 1) best satisfy, 2) fit best with the firm’s
strategy, and 3) be most profitable in the future.
Many things must be considered. The fastest-growing segment
may attract more competitors and thus be more expensive to
capture and retain. Segments can also overlap. For example,
business users of internet services also make decisions about
ISP's for personal use. Another consideration is that a product
may appeal to a non-targeted segment, thus decreasing its
appeal to the targeted segment. For example, when XYZ product
becomes the product of choice of “gray hairs,” it may no longer
appeal to the 20-something demographic who were the desired
customers (think Facebook). This may require the firm to
change its strategy. Read about some of the disadvantages of
target marketing in this short article from the Houston
Chronicle:
Suttle, R. (2019). The disadvantages of target marketing. Small
Business, Chron. Retrieved from
http://smallbusiness.chron.com/disadvantages-target-marketing-
36131.html
Positioning
When the target market has been selected, the firm has a very
important decision to make. How will it position its product or
service in relationship to the other offerings in the market? This
is the essence of marketing strategy: Positioning determines
how the target will view the product or even the firm. Think of
the different images that come to mind when you think about
Target vs. Saks Fifth Avenue. Do you immediately think of
price and quality? Now consider Target vs. Walmart. Both offer
low prices, but Target emphasizes that the customer “gets more”
while paying less. They are positioning themselves for the more
discerning customer by appearing to offer better quality along
with value pricing.
Positioning maps are used by marketers to understand customer
perceptions of a marketplace and the relative positions of

6. different firms, products, and brands.
The following study guide illustrates how to construct a
positioning or perceptual map:
A Step-by-Step Guide to Constructing a Perceptual Map. (n.d)
Retrieved from
http://www.segmentationstudyguide.com/understanding-
perceptual-maps/a-step-by-step-guide-to-constructing-a-
perceptual-map/
The Marketing Mix
While positioning describes the firm’s strategic approach to
marketing a product or brand, the 4 P's are direct tactical
decisions regarding delivering customer value. The 4 P's are as
follows:
Product
What fundamental need does the purchase satisfy? “Product” is
more than the actual product; it can involve meeting needs for
status, convenience, reliability, ability to customize, etc. Thus,
packaging, warrantees, design, options, reputation, or customer
service may be just as important as the product itself. Branding
is an integral part of product management. Think of BMW or
Apple. What comes into your mind when you hear these names?
Our imagination translates these brands into descriptive and
evaluative phrases having to do with the qualities or attributes
of products carrying these brands. Similarly, Target, Pepsi,
McDonald's, your favorite restaurant, and even yourself can be
said to "have a brand," (i.e., be identified by certain qualities
that mean something to those who perceive these brands).
Price
To a marketer, price is more than how much the customer pays
at purchase – it also involves the time the consumer spends in
making the decision to buy, and the opportunity cost of
choosing one product over the other available choices. The
price a firm sets for a product is called pricing strategy.
Choosing the right price is a complex decision that needs to
take a number of factors into account, including the
characteristics of your target market and the overall strategy of

7. the firm to gain market share, given the competitive
environment. Options include skim pricing and penetration
pricing. To review some of the factors involved with pricing
strategies and gain insight into how a firm could decide which
might be appropriate, read:
Woodruff, J. (2019) Different types of pricing strategy. Chron
Retrieved from https://smallbusiness.chron.com/different-types-
pricing-strategy-4688.html
Promotion
No matter how good a product or service is – or how much
value it provides to the target market - it will not sell if people
do not know about it. This is where advertising and selling
come in. There are many approaches and tools marketers can
use in promotion. The decision depends on the firm’s strategy,
the budget, and availability. TV reaches the most people, but it
is very expensive. Personal selling by employing a sales force
can also be expensive, but the cost can be mitigated through
telemarketing and/or digital marketing online.
Coupons, discounts, and rewards programs are effective tools
and can be applied selectively at critical times during the year.
Some companies price the product very low to entice sales – but
the replacement parts may be very expensive. For example,
consider cheap razors with expensive razor blades or free
cellphones with expensive data plans.
There are basically two kinds of promotion strategies: the push
and pull strategies. Each has advantages and disadvantages. For
an explanation of the differences between the two approaches,
take a couple of minutes to read this short article from the
online Houston Chronicle:
Robertson, T. (2019). Difference between push & pull
marketing. Small Business, Chron. Retrieved
from http://smallbusiness.chron.com/difference-between-push-
pull-marketing-31806.html
Place
Few companies design a product, manufacture it, and sell it
directly to the consumer. Most rely on distributors to transport

8. and independently owned stores to actually sell the product.
This is termed the distribution channel. Wholesalers and
retailers are critical to the marketing function as they comprise
major parts of the distribution channel. Firms prefer that
members of the distribution channel act as partners. But when
distributors become large and powerful, an imbalance can occur,
drastically affecting the marketing strategy of the firm.
Distributors can add value in multiple ways. You can buy an
unassembled bicycle on the internet at a discount, or buy the
same bike from a specialty shop that will assemble, customize,
and service your purchase for a higher price. Some distributors
also provide logistics management to ensure the timely delivery
of the products to the consumers at the low costs. With the
popularity of Internet and e-commerce, more and more
companies deliver their products or services directly to the end
consumers, using direct distribution channels.
For more information on distribution channels, refer to the
following optional resources.
Fontelera, J. (2019). Distribution Channels and Marketing
Analysis. Retrieved
from http://smallbusiness.chron.com/distribution-channels-
marketing-analysis-60985.html
Blunt, L. (2019) Types of Marketing Channels. Retrieved
from http://smallbusiness.chron.com/types-marketing-channels-
21627.html
Quain, S. (2018). How Does Logistics Differ From
Distribution? Retrieved from
http://smallbusiness.chron.com/logistics-differ-distribution-
77542.html
For a quick review of the 4 P's of the Marketing Mix, view the
following video:
Paxton/Patterson (2017) The 4 Ps of the Marketing Mix.
Retrieved
from https://www.youtube.com/watch?v=Mco8vBAwOmA
Summary

9. Product, price, promotion, and place strategies are highly
interdependent. Mass distribution generally is coupled with low
price, whereas boutique or limited distribution is generally
associated with higher product and advertising prices.
Perhaps the area where these interdependencies become most
clear is when considering product life cycle. It is in the firm’s
best interest to sell the greatest number of products as long as
possible. To do this, the firm must capture the greatest market
share it can for as long as it can. Product, price, place, and
promotion must change over time through product introduction,
growth, maturity, and decline. For a summary on how the
marketing mix should change according to the product life
cycle, read:
Claessens, M. (2015) Product Life Cycle Stages (PLC) –
Managing the Product Life Cycle. Retrieved
from https://marketing-insider.eu/product-life-cycle-stages/
Finally, for an overview of general marketing topics from the
perspective of a marketeer, review the following optional
chapters:
Popky, L. (2015) Chapter 3. What hasn’t changed: Timeless
Marketing Truths. Marketing Above the Noise: Achieve
Strategic Advantage with Marketing that Matters. Bibliomotion.
Available in the Skillsoft data in the Trident University Library.
Popky, L. (2015) Chapter 4. What has changed: The New
Realities. Marketing Above the Noise: Achieve Strategic
Advantage with Marketing that Matters. Bibliomotion.
Available in the Skillsoft data in the Trident University Library.
Videos
Learnloads. (2014, March 10). What are distribution channels?
Retrieved from https://youtu.be/ALoo4vrKKUw
Marcy Research. (2018, November 8). Perceptual mapping.
Retrieved from https://youtu.be/L9hgJ-4hLYg. Standard
YouTube License.
Marketing 91. Product life cycle. Retrieved
from https://youtu.be/pq3e1b_7uho. Standard YouTube License.
Patel, N. (2019, May 8). Pricing strategies. How to price your

10. product or services for maximum profit. Retrieved
from https://youtu.be/0NGQLgrHRe4. Standard YouTube
License.
Paxton/Patterson. (2017). The 4 Ps of the marketing mix.
Retrieved
from https://www.youtube.com/watch?v=Mco8vBAwOmA. Stan
dard YouTube License.
The audiopedia. (2018). What is perceptuak mapping? Retrieved
from https://youtu.be/CeNpI2ufn44. Standard YouTube License.
Tutor2u (2016) Market Segmentation, Targeting and Position.
Retrieved
from https://www.youtube.com/watch?v=0srjdRDh99Y. Standar
d YouTube License.
Required Reading
A Step-by-Step Guide to Constructing a Perceptual Map. (n.d)
Retrieved from
http://www.segmentationstudyguide.com/understanding-
perceptual-maps/a-step-by-step-guide-to-constructing-a-
perceptual-map/
Kemp, E. A., Borders, A. L., Anaza, N. A., & Johnston, W. J.
(2018). The heart in organizational buying: Marketers'
understanding of emotions and decision-making of buyers. The
Journal of Business & Industrial Marketing, 33(1), 19-28.
Available in the Trident Online Library.
Paxton/Patterson. (2017). The 4 Ps of the marketing mix.
Retrieved
from https://www.youtube.com/watch?v=Mco8vBAwOmA. Stan
dard YouTube License.
Phillips, T. (2017, March 10). Digital marketing strategy: Push
vs pull? The Guardian. Available in the Trident Online Library.
Pricing strategy (2010). NetMBA. Retrieved
from http://www.netmba.com/marketing/pricing/
Suttle, R. (2015). The disadvantages of target marketing. Small
Business, Chron. Retrieved
from http://smallbusiness.chron.com/disadvantages-target-
marketing-36131.html

11. The product life cycle. (2010). Quick MBA. Retrieved
from http://www.quickmba.com/marketing/product/lifecycle/
Tutor2u (2016) Market Segmentation, Targeting and Position.
Retrieved
from https://www.youtube.com/watch?v=0srjdRDh99Y. Standar
d YouTube License.
Vanegas, J. G., Restrepo, J. A., Barros, G. A., & Moreno, G. A.
(2018). Service quality in Medellin hotels using perceptual
maps. Cuadernos de Administración, 34(60). Retrieved from
http://cuadernosdeadministracion.univalle.edu.co/index.php/cua
dernos_de_administracion/article/view/5927. Available in the
Trident Online Library. CC BY-NA.
Optional Reading
Annual Reports & Proxies. (2014) Walmart. Retrieved
from http://stock.walmart.com/investors/financial-
information/annual-reports-and-proxies/default.aspx
Chaffey, D. (2013) Marketing models that have stood the test of
time. Smart Insights. Retrieved
from http://www.smartinsights.com/digital-marketing-
strategy/online-business-revenue-models/marketing-models/
Cohen, H. (2013). 7 step marketing framework. Actionable
Marketing Guide. Retrieved from http://heidicohen.com/7-step-
marketing-framework/
D’Aveni, R.A. (2007). Mapping your competitive position.
Harvard Business Review. Retrieved
from https://hbr.org/2007/11/mapping-your-competitive-
position
Hanlon, A. (2013) How to use Segmentation, Targeting and
Positioning (STP) to develop marketing strategies. Smart
Insights. Retrieved from http://www.smartinsights.com/digital-
marketing-strategy/customer-segmentation-
targeting/segmentation-targeting-positioning-model/
Hanlon, A. (2015) The 4 C’s marketing model. Smart Insights.
Retrieved from http://www.smartinsights.com/marketing-
planning/marketing-models/4cs-marketing-model/
Jorina, F, (n.d.). Distribution Channels and Marketing Analysis.

12. Retrieved from http://smallbusiness.chron.com/distribution-
channels-marketing-analysis-60985.html
Lanee, B. (n.d.). Types of Marketing Channels. Retrieved
from http://smallbusiness.chron.com/types-marketing-channels-
21627.html
Neil, K. (n.d.). How Does Logistics Differ From Distribution?
Retrieved from http://smallbusiness.chron.com/logistics-differ-
distribution-77542.html
Respond to the attached post. Must include citations and
references. 250 words
Module 3, Week 1 Discussion
Tavis Salas posted Nov 15, 2019 7:58 PM
It’s unreal to think that fast food chains and distributors are to
blame for the obesity crisis. There are healthier options and
lifestyle alternatives open to everyone. I firmly believe that it
is a choice, and no one is FORCED to eat a certain way or
follow a specific unhealthy diet. Even though it is the
marketing that catches the consumers’ eyes with commercials,
billboards, or other means of advertising, that doesn’t mean the
public HAS to have it. It really comes down to what ideas
companies come up to better serve their customers. (Tanner &
Raymond, 2012). It’s business 101. What attracts them? How
does an organization grab the market’s attention? Businesses
only exist if society allows them to. The one thing food
marketing may do is highlight their new products. Everyone
wants to see new, and everyone wants to try something new.
Look at the noise that was made when Popeye’s released their
chicken sandwich. The public went wild! In terms of the
“obesity” crisis, companies should (and already do) make
nutrition facts available so consumers know what their products
contain. It is not their responsibility to monitor how much and
how often the public buys them. At the end of the day, a fast

13. food market is only concerned about profitability. Yes, I do
think it costs more to eat healthier, but a lifestyle change other
than dieting also contributes to a good fitness journey. It’s not
always about what you see, but what you decisions you can
make to better yourself. But to blame someone else for the
decisions YOU choose to make is a little far-fetched. I enjoy a
nice Big Mac from time to time, but I also know I’ll have to put
in some work in the gym…because I know McDonald’s isn’t the
reason I may or may not put on a couple pounds.
Tanner, J., and Raymond, M. (2012). Marketing Principles (v.
2.0). Ch. 3: Consumer behavior: How people make buying
decisions. Sections 3.1-3.6. Retrieved
from https://2012books.lardbucket.org/pdfs/marketing-
principles-v2.0.pdf