Marketing Midterm Chapter 1

Marketing (Definition)
the process by which companies create value for customers & build strong relationships in order to capture value from customers in return
Markets= people
market are not a physical structure!
Marketing process (5 steps)
1. understand the marketplace & customer needs/wants
2. design a customer driven market strategy
3. construct a marketing program that delivers superior value
4. Build profitable relationships & create customer delight
5. Capture value from customers to create profits & customer equity (this is where the company reaps rewards)
Marketer’s 4 tools
Product
Price
Place
Promotion
Customer Needs (definition)
states of felt deprivation
Customer Needs (examples)
physical: food, clothing, warmth, safety

social: belonging, affection

individual: knowledge, expression

Customer Wants (definition)
the form human needs take as they are shaped by culture & individual personality
Wants (example)
An American needs food but wants a big mac, fries, & soft drink.

A new Guinean needs food but wants tacos & rice

needs become wants which are influenced by culture
example: Muslim cultures can’t drink alcohol so maybe they need & want juice?
Demands (definition)
human wants that are backed by buying power

(demand= generates traffic)

What do marketing companies do with customers wants, needs, & demands?
they go to great lengths to understand them. They analyze consumer research & data and try to see the stores through the customer’s eyes (i.e.-amazon)
Marketing uses all these terms interchangeably so when they say needs or wants they are referring to:
“market demand”
Market Offering (definition)
some combination of products, services, information, or experiences offering to a market to satisfy a need or want
Market Offerings (examples)
banking
airline
hotel
retailing
persons
places
organization
“Pure Michigan”- tourism
“Let’s Move”- public service campaign to reduce obesity
Marketing Myopia
the mistake of paying more attention to the specific product a company offers that to the benefits and experiences produced by these products
marketing myopia (example)
if Disneyland were to sell just tickets (focusing on product instead of experience) instead of the “brand experience” of immersing yourself and family in a world of wonder.
Exchange (definition)
the act of obtaining a desired object from someone by offering something in return (doesn’t include just $ in return); marketers want to maintain exchange relationships
exchange (example)
political candidate wants a vote
church wants new membership
Market (definition)
the set of all actual or potential buyers of a product or service
Customer needs:
value & satisfaction
Marketers need to:
set the right level of expectation; not too high & not too low
Major environmental forces
A company & it’s competitors research the market to understand customer needs, they then create & send their market offerings & messages through intermediaries, as long as they find a supplier that meets the requirements.
Marketing Management (definition)
the art and science of choosing target markets and building profitable relationships with them.
marketing management (example)
What customers will we serve? (target market)
How can we best serve them? (value proposition)
Market segmentation
categorizing markets into segments of customers
target marketing
choosing which segments of customers to go after
market segmentation example
Amex ID’d several groups as potential customers such as elderly & business professionals
target marketing example
choosing to serve the elderly
value proposition (definition)
benefits/values a company offers the customers in order to satisfy their needs
value proposition (example)
Facebook helps you “connect & share with people in your life”
5 concepts which companies design & carry out their marketing strategies:
production
product
selling
marketing
social marketing
Production Concept
consumers will favor products that are available and highly affordable

(therefore, management should focus on production/distribution efficiency which could eventually lead to marketing myopia)

Product Concept
consumers favor product that offers the most quality, performance, and features

focus: continuous product improvement; which could also lead to marketing myopia
ex: mouse trap

Selling concept (most companies follow this)
consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort

start with: factory
focus: existing products
Means: selling & promoting
ends: profits through sales volume

Marketing concept
knowing the wants/needs of current target market & delivering desired satisfaction better than competitors do
(ex: frank purdue and his chicken sales)

start with: market
focus: customer needs
Means: integrated marketing
ends: profits through satisfaction

customer-driven marketing
understanding customer needs better than customers do themselves

ex: henry ford ” if i asked them what they wanted they would’ve said faster horses”

social marketing concept
making good marketing decisions by considering: consumer’s wants and long-term interests, company’s requirements, and society’s long-run interests; does it help social welfare? corporate social responsibility

i.e.- sustainable marketing

societal marketing concept triangle
society (human welfare)

consumers company
(want satisfaction) (profits)

what does a marketing strategy do?
outlines which customers it will serve and how it will create value for them
Integrated marketing program
comprehensive plan that communicates and delivers intended value to chosen customers
marketing mix
set of tools the firm uses to implement it’s marketing strategy:
product
price
promotion
place
4th step of marketing process (also most important)
building and managing profitable customer relationships
Customer relationship management
the overall process of building and maintaining profitable customer relationships by delivering superior customer value & satisfaction

(deals with: acquiring, keeping, & growing customers)

relationship building blocks:
customer value & satisfaction
customer-perceived value
the difference between total customer value and total customer cost
(comparing competing offers based on benefits & costs)
examples of customer-perceived values
“you get what you pay for”
“sensible products at affordable prices”
Customer satisfaction
the extent to which a product’s perceived performance matches a buyers expectations

(if happy, these delighted customers not only come back but also recruit new customers)
example: Jet blue- you above all

basic relationships
Nike does not get to know the customers personally, but builds relationships through websites, apps, public relations, and brand-building advertising
full partnerships
nike sales reps work closely with dicks, sports authority, etc
frequency marketing programs
for repeat customers (airline miles, bonus cards)
Changing nature of customer relationships
companies might want to fire those customers that cost more than they’re worth, so they can coddle the ones who provide the money. Instead, they are better to form deeper relationships with certain profitable customers by weeding out the others.
Customer managed relationships
customers, empowered by today’s technologies, interact with companies and each other to shape their relationships with brands
consumer generated marketing
consumers are playing a bigger role in shaping their own brand experience

ex: what’s your starbucks idea?

Partner relationship management
working closely with partners in other company departments and outside the company to jointly bring greater value to customers

ex: IBM guy at professors bank

partner relationship management (cont’d)
Partners inside the company is every functional area interacting with customers

-electronically
-cross-functional teams

partner relationship management (cont’d)
Marketers connect with their suppliers, channel partners, and competitors by developing partnerships

Supply chain is a channel that stretches from raw materials to components to final products to final buyers

Customer Lifetime value
the value of an entire stream of purchases that the customer would make over a lifetime of patronage

(ex: stew leonard- disneyland of dairy store; each customer spends about $100 per week, 50 weeks a year over 10 years= $50,000/ customer)

Share of customer
the portion of a customers purchasing that a company gets in its product categories

ex: companies want to increase “share of wallet” “share of stomach”

customer equity
the total combined customer lifetime value of all the company’s customers
How to build customer equity:
Right relationships with the right customers involves treating customers as assets that need to be managed and maximized;
Different types of customers require different relationship management strategies
the changing economic environment
new consumer frugality; marketers focus on the value for the customer
the changing marketing landscape
the digital age: internet, digital technologies
growth of: not for profit marketing
sustainable marketing: CSR
pulling it all together
review figure 1.6 on page 28