Marketing 301-Exam 1- Chapter 1

What Is Marketing?
• The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return
• Satisfying the customers needs
• Goal: to make selling unnecessary and create customer value to get higher profits, and more customers
Apple Example
similar commercials, simple music, no distractions (i.e jewelry on subjects’ hands.) Focuses on product and help consumers envision themselves using the product. The hand shows its easy to use and hold.
Sony Walkman Example
People didn’t understand the idea of the product, so Sony had to use marketing to explain it to consumers.
Amazon Example
Ship before you even order, customizable searches, product suggestions, and fast shipping.
Marketing Myopia
The mistake of paying more attention to specific products than to the benefits of those products; losing sight of underlying customer needs.
Brand Experiences
Marketers create these by looking beyond the attributes of the products they sell and orchestrating several services and products; customers can immerse themselves in the experience.
Creating Value
marketers create value through “products,” physical objects, people, places, information, organizations, ideas.
Ex: Derek Jeter and Avon- If you wear the cologne you will be more like Derek Jeter.
Marketing Process (5-steps)
The first four steps in the marketing process involve building customer relationships by creating and delivering superior customer value and the final step involved capturing value in return in the form of sales, market share and profit
• Steps in the Marketing Process Model:
1. Understand market place and customer needs/wants
2. Design a customer driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Build profitable relationships and create profits and customer equality
5. Capture value from customer and create profits and customer equality
• Consumer Touch Points-any form a consumer is reminded of the product or brand
o They exist before, during and after the purchase
• Before: ads, coupons, commercials, billboards, celebrity sponsorship
• During: experience- employees, food
• After: PR, loyalty clubs, charity
o Ex: Sheetz
The Marketing Concept
• Definition: achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do: to find the right products for your customer rather than finding the right customer for your product”
• “What does the customer need”
• Customers focus and value are the paths to sales and profits
• Ex: Southwest airlines doesn’t have a marketing department, they have a “customer department”
• Ex: Jetblue- quick flights, free TV and snacks, legroom and no first class
• Types of products
o Marketers create value through “products”
o Types of Products include, physical objects, people, organizations, places, information and ideas
• Market→customer needs→integrated marketing→profits though customer satisfaction (Starting Point→Focus→Means→Ends)
The Selling Concept
Selling concept
• Definition: the idea that consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort
• “What are we going to make?
• Usually practiced with goods that buyers do not normal think about buying (insurance and blood donations)
• Focuses on creating sales transactions rather than on building long term, profitable customer relationships
• Goal: to sell what company makes rather than making what the market wants
• Factory→existing products→selling and promoting→profit though sales volume
(Starting Point→Focus→Means→Ends)
The Production Concept
Production Concept
• Definition: Idea that consumers will favor products that can are available and highly affordable; therefor organizations should focus on improving production efficiency.
• Ex: personal computer maker and home appliance maker dominate the highly competitive, price sensitive Chinese market though low labor costs and mass distribution (Lenevo)
The Product Concept
Product Concept
• Definition: idea that consumers will favor products that offer the most quality, performance, and features. Therefor the organization should focus its energy into making continuous product improvements.
• By focusing only on the company’s products it can lead to marketing myopia
o Ex: mousetrap- a company may want to make a better mouse trap to solve a persons mouse problem but the buyer may be looking for a different solution. The improved mouse trap will not sell unless it is priced right, placed in the right places and convinces buyers that its better than the competitors
The Societal Marketing Concept
The Societal Marketing Concept
• Definition: idea that a company’s marketing decisions should consider consumers wants, the company’s requirements, consumer’s long-run interests, and society’s long-run interests
• Society (human welfare) + Company (profits)+ consumer (wants/satisfaction)
o Shows companies should balance 3 considerations in setting their marketing strategies
• Starbucks and UPS-doing what’s right benefits both consumer and company, “It isn’t just good for the planet, its good for the business”
•Ex: Starbucks-started small but then expanded; used marketing to express how they care about human welfare
•Ex: McDonalds- McD’s did not have a healthy image; needed to refocus marketing on telling public it is a healthy option (i.e salads); also increasing emphasis on McCafe drinks
Market Segmentation
The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs.
Marketing Mix
the set of tactical marketing tools that the firm blends to produce the response it wants in the target market (4 P’s product, price, place, promotion)
4 P’s
• Product-variety, quality, design, packaging, features, brand name, services
• Price- list price, discounts, allowances, payment period, credit terms
• Promotion- advertising, personal selling, sales promotion, public relations
• Place- channels, coverage, assortments, locations, inventory, transportation, logistics
Marketing Analysis
Developing company wide marketing strategies and plans; 3 steps:
o Planning- develop strategic plans and marketing plans
o Implementation- carry out the plans
o Control- measure results, evaluate results, take corrective action.

•Looks at company strengths and weaknesses o Internal strengths- positive; internal capabilities that may help a company reach its objectives
o Internal weaknesses- negative; internal limitations that can interfere with a company’s ability to achieve its objective
o External strengths- positive; external factors that the company may be able to exploit to its advantage
o External weaknesses- negative; current and emerging external factors that may challenge the company’s performance

Customer relationship management (CRM)
overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction
•customers bring products to life
•Online social networks- used for customer relationship management; can be the companies own networks or outside networks they join or advertise with; (blogs, Facebook, their own online communities, customer review sites, Twitter.
Customer-managed relationships
marketing relationships in which customers, empowered by today’s new digital technologies, interact with each other to shape their relationships with brands
Customer-generated marketing
o Customer Generated Marketing-
• Brand exchanges created by consumer- both invited and uninvited- by which consumers are playing a big role in shaping their own brand experiences and those of other consumers
• Uninvited-blogs, video sharing, digital forums
• Invited-vitamin water allows consumers to create a flavor
• Con:Time consuming, costly
• Ex: jetblues campaign to put customers first
Partner relationship management
working closely with partners in other departments within or outside of the company to jointly bring a greater value to the customer.
Customer Value
benefit customer gains from using a product compared to the cost of getting that product. based on costs versus benefits
Customer-perceived value
customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to competing offers; customer do not judge values and costs objectively
Customer Satisfaction
Depends on the product’s perceived performance in delivering value compared to the buyer’s expectations
•Satisfied customers- buy again and tell others about their experiences
•Dissatisfied customers- often switch to competitors and speak negatively about the products/companies they do not like
•Customer delight- customers make repeated purchases and also become willing marketing partners (customer evangelists); to delight customers, companies must focus on exceptional value and service
4 components of customer satisfaction and relationships
•Basic Relationships- relating more carefully with selected customers- using tools like a customer profitability analysis to determine which customers to pursue and which to “fire.”
•Full Partnerships- relating more deeply and interactively with customers- companies decide which customers with whom to use new and interactive approaches; building 2-way relationships with customers
•Frequency marketing programs- reward customers who buy frequently or in larger quantities (i.e frequent flyer miles)
•Club marketing programs- members get special benefits and join member communities
Customer Equity
o Customer equity-total combined customer lifetime values of all the company’s customers
• How much money your making from the customer
• Overall value of brand to customer
• Customer lifetime value-value of entire stream of purchases a customer makes over a lifetime of patronage; value of individual
• Ex: Cadillac-customers were getting older/on their last car; their market share was good but their equity was not

o it is 5 times cheaper to keep an old customer than acquire a new one.

Customer loyalty and retention
good customer relationships result in customer satisfaction
• Losing one customer, results in losing their entire stream of purchases
Customer Referrals
• Customer evangelist-a person who preaches why something is so great
Customer Relationship Groups
• Butterflies: profitable but not loyal
• True Friends: profitable and loyal
• Strangers: not profitable and not loyal
• Barnacles: not profitable and loyal
Economic Environment
the Great Recession lead many people to rethink how they spend their money and prioritize their buying; these new habits are expected to stick around for a while; affects consumers’ purchasing power and spending patterns. marketers are responding to changes by emphasizing value
Digital Age
the fast growth in digital technology is changing how customers live, communicate, share information, learn, and shop
Not-for-profit marketing
In recent years, many non-profit agencies have launched marketing efforts to generate support and membership; this includes government agencies, as well
Rapid globalization
more and more, companies are relating to the larger world to source, produce and market products and reach out to customers’ companies may be shifting from a local or domestic view or marketing to a global view of marketing
Sustainable marketing
Marketers are looking at social values and responsibilities and their relationship to these as a company; corporate ethics is a big part of this