BA104 Chapter 1

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Creating Customer
Relationships and Value
through Marketing
Roger A. Kerin
Steven W. H artley
MARKETING
THE CORE
Eighth Edition
CHAPTER
1

2. ©McGraw-Hill Education.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO:
1. Define marketing and identify the diverse factors
influencing marketing actions.
2. Explain how marketing discovers and satisfies
consumer needs.
3. Distinguish between marketing mix factors and
environmental forces.
4. Explain how organizations build strong customer
relationships and customer value through
marketing.
5. Describe the characteristics of a market
orientation.
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CREATING CUSTOMER VALUE:
THE CHOBANI WAY!
Creating an exceptional product.
Connecting with customers:
• Social Media
• CHOmobile
Distribution in major grocery chains.
Today: yogurt drinks, cafes, food incubators.
Chobani Ad
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WHAT IS MARKETING? (1 of 2)
What is marketing?
• You are a marketing
expert already.
• Involved in thousands
of buying decisions.
• Involved in some
selling decisions.
• Marketing is NOT
easy.
Chobani Web Site
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©Kobby Dagan/VWPics via AP Images

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WHAT IS MARKETING? (2 of 2)
Marketing and your career:
• Goal is to “do marketing!”
• Small businesses offer marketing
careers.
You, too, could start a successful
business!
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©Reuters/Alamy Stock Photo

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WHAT IS MARKETING?
DELIVERING VALUE TO CUSTOMERS
Marketing
Seeks to:
• Discover needs and wants of customers.
• Satisfy those needs.
Exchange AMA Definition
of Marketing
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WHAT IS MARKETING?
DIVERSE ELEMENTS INFLUENCE MARKETING ACTIONS
1. The organization itself and its
departments
2. Society
3. Environmental forces
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FIGURE 1-1 A marketing department relates to many
people, organizations, and environmental forces.
Access the text alternative for these images. 1-8

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WHAT IS MARKETING?
REQUIREMENTS FOR MARKETING TO OCCUR
1. Two+ parties with unsatisfied needs
2. A desire and ability to be satisfied
3. A way for the parties to communicate
4. Something to exchange
Domino’s Pizza
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HOW MARKETING
DISCOVERS CONSUMER NEEDS
THE CHALLENGE: NEW PRODUCTS
Consumers may not know or cannot
describe what they need or want.
Most new products fail.
The challenge:
• Focus on the consumer benefit.
• Learn from past mistakes.
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Wearable Computer
What factors are “benefits” and “showstoppers”?
Google Glass
Wearable computer
Mid-calorie soda
Automobile subscription
service
Coca-Cola Stevia
YoYo
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HOW MARKETING
DISCOVERS CONSUMER NEEDS
NEEDS vs. WANTS
Needs
Wants
Does marketing
persuade people to buy
the “wrong” things?
Market
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FIGURE 1-2 Marketing seeks to discover
consumer needs through research and then
satisfy them with a marketing program.
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HOW MARKETING
SATISFIES CONSUMER NEEDS
THE FOUR Ps
Target market
The 4 Ps: Controllable marketing mix
factors
1. Product
2. Promotion
3. Price
4. Place
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HOW MARKETING
DISCOVERS CONSUMER NEEDS
ENVIRONMENTAL FORCES
Customer value proposition
Uncontrollable, environmental forces
• Social
• Competitive
• Economic
• Regulatory
• Technological
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©Luke MacGregor/Bloomberg via Getty Images

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THE MARKETING PROGRAM
HOW CUSTOMER RELATIONSHIPS ARE BUILT
Customer Value Strategies
• Best Price: Target
• Best Service: Nordstrom
• Best Product: Starbucks
Starbucks Ad
Target Ad Nordstrom
Ad
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THE MARKETING PROGRAM
MARKETING PROGRAM AND SEGMENTS
Relationship marketing
• Easy to understand
• Hard to do
Marketing program
Market segments
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©Paul Hilton/Bloomberg/Getty Images

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3M’S STRATEGY AND MARKETING PROGRAM
DISCOVERING AND SATISFYING STUDENT STUDY NEEDS
(1 of 2)
Move from ideas to a marketable
highlighter product.
Add the Post-it® Flag Pen.
Develop a marketing program for the
Post-it® Flag Highlighter and Pen.
3M Post-it
Flag Highlighter
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FIGURE 1-3 Marketing programs for two new 3M Post-it®
brand products targeted at college students and office
workers.
Marketing Program Action to Reach:
Marketing Mix Element College Student Market
Segment
Office Worker Market
Segment
Rationale for Marketing
Program Action
Product Strategy Offer Post-it® Flag
Highlighter to help college
students in their studying.
Offer Post-it® Flag
Highlighter to help office
workers in their day-to-day
activities.
Listen carefully to the needs
and wants of potential
customer segments to use
3M technology to introduce a
useful, innovative product.
Price Strategy Seek retail price of about
$3.99 to $4.99 for a single
Post-it® Flag Highlighter or
$5.99 to $7.99 for a three
pack.
Seek retail price of about
$3.99 to $4.99 for a single
Post-it® Flag Pen; wholesale
prices are lower.
Set prices that provide
genuine value to the
customer segment being
targeted.
Promotion Strategy Run a limited promotion with
a TV ad and some ads in
college newspapers and
then rely on student word-of-
mouth messages.
Run limited promotion
among distributors to get
them to stock the product.
Increase awareness among
potential users who have
never heard of this new,
innovative 3M product.
Place Strategy Distribute Post-it® Flag
Highlighters through college
bookstores, office supply
chains, and mass
merchandisers.
Distribute Post-it® Flag Pens
through office wholesalers
and retailers as well as mass
merchandisers.
Make it easy for prospective
buyers to buy at convenient
retail outlets (both products)
or get at work (Post-it® Flag
Pens only) 1-19

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3M’S STRATEGY AND MARKETING PROGRAM
DISCOVERING AND SATISFYING STUDENT STUDY NEEDS
(2 of 2)
Extending the product line.
Developed third-generation
Post-it® Flag Highlighter
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HOW MARKETING BECAME IMPORTANT
EVOLUTION OF THE MARKET ORIENTATION
Market orientation
Customer relationship
management (CRM)
Customer experience
• What firms think they offer customers
• What customers say they receive
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©Lannis Waters/ZUMA Press/Newscom

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HOW MARKETING BECAME IMPORTANT
ETHICS AND SOCIAL RESPONSIBILITY
Balancing the interests of different groups.
Ethics: Companies develop codes of ethics.
Social responsibility: Organizations are
accountable to a larger society.
Societal marketing concept
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HOW MARKETING BECAME IMPORTANT
BREADTH AND DEPTH OF MARKETING (1 of 2)
Who markets?
What is marketed?
• Products (Goods)
• Services
• Ideas
Hermitage
Tour
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©Izzet Keribar/Getty Images

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HOW MARKETING BECAME IMPORTANT
BREADTH AND DEPTH OF MARKETING (2 of 2)
Who buys and uses what is marketed?
Ultimate consumers
Organizational buyers
Who benefits?
How consumers benefit: Utility
• Form utility
• Place utility
• Time utility
• Possession utility
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Marketing
Marketing is the activity for creating,
communicating, delivering, and exchanging
offerings that benefit its customers, the
organization, its stakeholders, and society at
large.
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Exchange
Exchange is the trade of things
of value between a buyer and a seller so
that each is better off after the trade.
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Market
A market consists of people with both the
desire and the ability to buy a specific
offering.
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Target Market
A target market consists of one or more
specific groups of potential consumers
toward which an organization directs its
marketing program.
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Marketing Mix
The marketing mix consists of the
marketing manager’s controllable factors—
product, price, promotion, and place—that
can be used to solve a marketing problem.
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Market Orientation
Market orientation focuses on efforts on
(1) continuously collecting information
about customers’ needs, (2) sharing this
information across departments, and (3)
using it to create customer value.
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Customer Value Proposition
Customer value proposition is the cluster
of benefits that an organization promises
customers to satisfy their needs.
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Environmental Forces
Environmental forces are the
uncontrollable forces that affect a marketing
decision and consist of social, economic,
technological, competitive, and regulatory
forces.
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Customer Value
Customer value is the unique combination
of benefits received by targeted buyers that
includes quality, convenience, on-time
delivery, and both before-sale and after-sale
service at a specific price.
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Relationship Marketing
Relationship marketing links the
organization to its individual customers,
employees, suppliers, and other partners for
their mutual long-term benefit.
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Marketing Program
A marketing program is a plan that
integrates the marketing mix to provide a
good, service, or idea to prospective buyers.
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Market Segments
Market segments are the relatively
homogeneous groups of prospective buyers
that (1) have common needs and (2) will
respond similarly to a marketing action.
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Marketing Concept
A marketing concept is the idea that an
organization should (1) strive to satisfy the
needs of consumers (2) while also trying to
achieve the organization’s goals.
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Market Orientation
A market orientation occurs when an
organization focuses its efforts on (1)
continuously collecting information about
customers’needs, (2) sharing this
information across departments, and (3)
using it to create customer value.
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Customer Relationship Management (CRM)
Customer relationship management
(CRM) is the process of identifying
prospective buyers, understanding them
intimately, and developing favorable long-
term perceptions of the organization and its
offerings so that buyers will choose them in
the marketplace.
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Customer Experience
Customer experience is the internal
response that customers have to all aspects
of an organization and its offering.
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Societal Marketing Concept
Societal marketing concept is the view
that organizations should satisfy the needs
of consumers in a way that provides for
society’s well-being.
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Product
A product is a good, service, or idea
consisting of a bundle of tangible and
intangible attributes that satisfies
consumers’ needs and is received in
exchange for money or something else of
value.
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Ultimate Consumers
Ultimate consumers consist of the people
who use the products and services
purchased for a household. Also called
consumers, buyers, or customers.
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Organizational Buyers
Organizational buyers are those
manufacturers, wholesalers, retailers, and
government agencies that buy products and
services for their own use or for resale.
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Utility
Utility consists of the benefits or customer
value received by users of the product.
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