Chapter 1 Marketing : Creating and Capturing Customer Value
What is Marketing?
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at-large.
More simply: Marketing is the delivery of customer satisfaction at a profit .
What Motivates a Consumer to Take Action?
Needs – NOT invented by marketers. They are a basic parts of human makeup: states of felt deprivation including physical needs for food, social needs for belonging and individual needs for self-expression. E.g. I am thirsty.
Wants - form that a human need takes as shaped by culture and individual personality. E.g. I want a coca-cola.
Demands - human wants backed by buying power. E.g. I have money to buy a coca-cola.
Products - anything that can be offered to a market to satisfy a need or want.
Products also include: Persons, Places, Organizations, Activities, and Ideas.
Services - activities or benefits offered for sale that are essentially intangible and don’t result in the ownership of anything.
Examples: banking, airlines, haircuts, and hotels.
Marketing Offer : Some combination of products, services, information, Or experiences offered to a market to satisfy a need or want.
Experiences – marketers look beyond the attributes of the products and services they sell. They create brand meaning and brand experiences for customers.
Marketing Offers (Cont.)
“ Market” in marketing term: A set of all actual and potential buyers of a product or service.
“ Market” in financial term:
What is the“commodity market”?
Marketing Management Philosophies(1) Production Concept
Demand exceeds supply
Consumers favor products that are available and highly affordable
Improve production and distribution
Run a risk of focusing too narrowly on their own operation
Focuses on needs/ wants of target markets & delivering satisfaction more effectively & efficiently than competitors
Total customer satisfaction
Procter & Gamble, Marriot, Nordstrom, L.L.Bean
Overlook conflicts between consumer short-run wants and long-run welfare
Selling vs. Marketing Concepts Contrasted Starting Point Focus Means Ends The Selling Concept: inside-out The Marketing Concept: Outside-in Factory Existing Products Selling and Promoting Profits through Sales Volume Market Customer Needs Integrated Marketing Profits through Customer Satisfaction
Marketing Management Philosophies (5) Society (Human Welfare) Consumers (Wants) Company (Profits) Societal Marketing Concept Fast-food industry: high in fat and salt; packages lead to waste & pollution Johnson & Johnson: supporting many community and employee programs recalled cyanide-laced Tylenol costing $240 million
How do Consumers Obtain Products and Services?
Exchanges - act of obtaining a desired object from someone by offering something, such as money, another good, or a service, in return.
Transactions - trade of values between parties: one party gives X to another party and gets Y in return. A transaction is marketing’s unit of measurement.
Relationship Marketing – the process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.
Relationship Building Blocks
Customers – refer to both end users and marketing intermediaries.
Customer Perceived Value - difference between the value the customer gains from owning and using a product and the cost of obtaining the product. (perceived benefits – perceived costs)
Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations. (perceived performance- perceived expectations)
Customer Relationship Management
The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
Customer Relationship Levels
Basic Relationships with Low –margin customers
Full Partnership with high-margin customers
Customer Loyalty and Retention Programs
Adding financial benefits: frequent flier program
Adding financial benefits + social benefits: “Swatch: the Club”
Adding financial benefits + social benefits + Structural Ties: FedEx
From Database Marketing to Customer Relationship Management (CRM)
Customer Relationship Management has been defined narrowly as a customer data management activity.
Attract new customers, and create transactions with them
Retain current customers, and build profitable, long-term relationships with current customers
Customer profitability analysis to weed out losing customers and target winning ones.
Connecting with customers more directly.
Customer Relationship Groups Short-term Customers Long-term Customers High- Profit Low- Profit Butterflies Good fit between company’s offerings and customers’ needs; High profit potential True Friends Good fit between company’s offerings and customers’ needs; Highest profit potential Strangers Little fit between company’s offerings and customers’ needs; Lowest profit potential Barnacles Limited fit between company’s offerings and customers’ needs; Low profit potential
Return on Marketing Investment (ROMI) from reading: “Drive ROMI by Tying Brand Equity to Consumers”
Customer Purchase Behavior
Partner Relationship Marketing
Working closely with partners in other company departments and outside the company to jointly bring greater value to customers.
Every employee must be customer focused.
Supply chain management
Modern Marketing System Suppliers End User Market Marketing Intermediaries Competitors Company (Marketer) Environment Environment
The Marketing Process
Understand the marketplace and customer needs and wants
Design a customer Driven marketing strategy
Construct a marketing program that delivers superior value
Build profitable relationships and create customer delight
Capture value from customers to create profits and customer quality
New Marketing Challenges Emerging Challenges Nonprofit Marketing New Marketing Landscape & Information Technology Ethical Concerns Globalization Changing World Economy
Corporate Social Responsibility (CSR)
What corporate actions can be qualified as CSR?
What are the motivations that motivate companies to behave as good corporate citizens?
How to evaluate the result of CSR?
What are the two tests of CSR?
What are the four types of CSR?
Do you agree with the following statements?
“ Corporate philanthropy is charity with other people’s money.”
“ Multinational companies should be responsible for their foreign workers’ benefits.”