Chapter 1: Defining Marketing and the Marketing Process

Marketing(simplified)
engaging customers and managing profitable customer relationships by creating value FOR customers and capturing value in return
Marketing( broad definition)
a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others
Goal (keys) of marketing
attract new customers by promising superior value and deliver satifaction
marketing
create value FOR customer and build customer relationships
Marketing process: 5 Steps
creating and capturing customer value
Marketing process: 5 Steps
creating and capturing customer value
1). Understand the market place and customers’ needs, wants, and demands

2). Design a customer-driven marketing strategy

3). Construct an integrated marketing plan program that delivers superior value

4). Engage customers, build profitable relationships and create customer delight

5). Capture value from customers to create profits and customer equity

5 Core customer and Marketplace concepts
1). Needs, wants, and demands
2). Market offering
3). Value
4). Exchange relationship
5). Markets
Needs
states of felt deprivation

includes physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self expression

Wants
shaped by ones society(culture and individual personality) and are described in terms of objects that will satisfy those needs
Demands
when wants are backed up by buying power
Market offerings
a combo of Product, services, and experiences offered to the market to satisfy a need or want
services
activities or benefit offered for sale that are intangible and do not result in ownership of anything (ex: banking, hotel, airline)
marketing myopia
sellers are taken with their products that they focus only in existing wants and lose sight of underlying customer needs
customer value and satifaction
key building blocks for developing and managing customer relationships
exchange and relationships
the act of obtaining a desired object from someone by offering something in return
market
the set of actual and potential buyers of a product or service
Step 2: Designing a customer value-driven market strategy
Who will we serve? and How will we be different?

1) selecting customers to serve through (market segmentation) and selecting which segments it will go after (target marketing)

Demo
Geo
Psychological
Behavioral

marketing management
the art and science of choosing target markets and building profitable relationships with them

aim: engage, keep, and grow target customers by creating, delivering, and communicating superior customer value

2 important questions marketing manager must answwer
1). What customers will we serve (what’s our target market?)
2). How can we serve these customers best (What’s our value propositon?)
value propositon
set of benefits and values it promises to deliver to consumers to satisfy their needs

(EX: Vine- “best way to see and share life in motion, through short looping videos”)

5 alternate concepts which orgs design and carry out marketing strategies
1). Production concept
2). Product concept
3). selling concept
4). marketing concept
5). societal marketing concept
Production concept
customers will favor products that are available and highly affordable;
focus on improving production and distribution efficiency
Product concept
consumers will favor products that offer the most quality, performance, and innovative features;
focus on making continuos product improvements
selling concept
customers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort;
Focus on creating sales transactions rather than on building long-term, profitable relationships
(Life insurance, blood donations)
Marketing concept
achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do;

customer focus and value are the paths to sales and profits.
customer centered ‘make and sell’ philosophy

Selling concept vs marketing concept
Selling concept vs marketing concept
Selling:Inside-Out approach

Marketing: Outside-In perspective

Customer driven companies
research customers deeply to learn about their desires, new product ideas, and test product improvements
customer-driving marketing
understanding customers needs even better than customers themselves do and creating products and services that meet both existing and latent need, now and in the future
societal marketing concept
societal marketing concept
questions whether the pure marketing concept overlooks possible conflicts btwn consumer short run wants and long term welfare

marketing strategy should deliver value to customers in a way that maintains or improves both the consumers and society well being
(calls for – sustainable marketing: socially and environmentally responsible, meets needs of consumers and businesses whole preserving the ability of future gen to meet their needs)
-Lush

shared value
focus on creating economic value in a way that also creates value for society
Step 3: Developing An Integrated Marketing Plan and Program
outlines which customers the company will serve and how it will create value for the customers
integrated marketing program
builds customer relationships by transforming the marketing strategy into action, consists of the firms marketing mix
marketing mix
set of marketing tools firms uses to implement the marketing strategy
4 P’s:
-Product
-Price
-Place
-Promotion
Product
firm must create a satisfying market offering
Price
decide how much it will charge for the offering
Place
how will it make the offering available to target consumers
Promotion
it must engage target consumers, communicate about the offering, and persuade consumers of the offers’ merits
Step 4: Engage customers, build profitable relationships and create customer delight
examines how companies go about engaging customers on a deeper level
customer relationship management
the overall process of building & maintaining profitable customer relationships by delivering superior customer value and satisfaction
relationship building blocks
Customer value & Satisfaction: key to building lasting customer relationships is to create superior customer value and satisfaction
Customer value
customer evaluation of the difference btwn all the benefits and all the costs of a market offering relative of those of competing offers

Customers do not judge values and costs “accurately” act on perceived value

Satisfaction
Depends on the product’s perceived performance relative to a buyer’s expectations

dissatisfied-product’s performance falls short of expectations

satisfied-product performance matches expectations

Highly satisfied or delighted- product performance exceeds expectations

(Amazon,Zappos,Chic-fil-a)

Customer centered firm
seeks to deliver high customers satisfaction compared to competitors, but does not attempt to MAX satisfaction

can increase customer satisfaction by lowering prices or increasing services = lower porfits

Company w/ low margins
customers may seek to develop basic relationshiips w/ them

(proctor & gamble’s tide creates brand building ads, web site and social media presence to create engagement)

Markets w/ few customers & high margins
sellers want to create full partnerships with key customers

(P&G sales reps work closely w/ Walmart, Kroger retailers that sell tide)

frequency marketing programs
rewards customers who buy frequently or in large groups

(airlines-frequent fliers programs, supermarkets give discounts)

club marketing
offers special benefits and create member communities
customer-engagement marketing
fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community

goal: make the brand meaningful part of consumers lives

customer-managed relationships
customers connect w/ companies and w/ each other to help forge their own brand experiences
attraction
creating marketing offerings and messages that engage consumers rather than interrupt them

(post ads on social media sites)

consumer generated marketing
consumers themselves are playing a bigger role in shaping their own brand experiences and those of others

(consumer exchanges in blogs, social media, etc)

partner relationship management
working closely with others inside and outside the company to jointly bring more value to customers
supply chain
describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers
supply chain management
companies are strengthening their connections with partners all along the supply chain
Step 5: Capturing value from customers
first 4 steps creates value FOR target customers and builds relations w/ them

if done well, it can capture value FROM customers in return, in the form of loyal customers who buy and continue to buy the company’s brands

customer lifetime value
losing a customer means losing the entire stream of purchases the customer would have made over a lifetime of patronage
share of customer
the share the company gets of customers purchasing in their product categories

to increase they can offer greater variety to current customers: (Amazon)

customer equity
the total combined customer lifetime values of all of the company’s current and potential customers

-more loyal the firm’s profitable customers the higher the customer equity

-measure of firms performance than current sales or market share; the futre

4 relationship groups of customers
4 relationship groups of customers
1). Strangers
2). Butterflies
3). True Friends
4). Barnacles
Strangers
low profit and little loyalty
(don’t invest anything in them; make money on every transaction)
Butterflies
potentially profitable but not loyal
(enjoy them for a while and then they’re gone)
True Friends
profitable and loyal
(continuous relationship investments to delight these customers and nurture, retain, and grown them)
Barnacles
highly loyal but not profitable
(selling more, raising their fees, or reducing services to them)
5 major developments int he changing marketing landscape
1). Uncertain Economic Environment

2). The Digital Age

3). Rapid Globalization

4). Call for more Ethics and Social Responsibility

5). Growth in Not-For-Profit marketing

Uncertain Economic Environment
-balance brand value proposition w/ current times while also enhancing its long term equity
-rather slash prices in uncertain times, marketers hold the line on price and instead explain why their brands are worth it
The Digital Age and marketing
using digital marketing tools such as Web sites, social media, apps, email, blogs and other digital platforms to engage customers anywhere, anytime
Rapid Globalization
We are now all touched by global competition. American firms are challenged by European and Asian multinational companies

Managers taking a global view of the company’s industry, competitors, and opportunities

Call for more Ethics and Social Responsibility: sustainable marketing
Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions
Corporate Ethics and Social Responsibility are Hot Topic

(pantagonia)

Growth in Not-For-Profit marketing
face stiff competition for support and memberships

(colleges, hospitals, zoos, museums, etc)