Principle of Marketing Ch 1 and 2

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Creating and Capturing Customer Value

▪ What Is Marketing?

▪ Understand the Marketplace and Customer Needs

▪ Designing a Customer-Driven Marketing Strategy

▪ Preparing an Integrated Marketing Plan and Program

▪ Building Customer Relationships

▪ Capturing Value from Customers

▪ The Changing Marketing Landscape

Topic Outline

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What is Marketing?

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value

to customers and for managing customer relationships in ways that

benefit the organization and its stakeholders.

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What is Marketed?

• Goods/

commodity

• Services/ ^Car

wash

• Events/ ^World

Cup

•Experiences/

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What is Marketed?

• Places/ ^Vegas

•Organizations/

Human Rights Org

• Information/

how to stop smoking

• Ideas/ ^democracy

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PRODUCT: A product is anything that can be offered to satisfy a need or want.

Products are a bundle of solutions

Products may be physical goods, services or ideas.

Definition

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VALUE:

Value is the consumer’s estimate of the product's overall capacity to satisfy his or her needs.

Value is the satisfaction of customer requirements at the lowest possible cost of acquisition, ownership and use.

Definition

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Transaction:

is a trade of values between two or more parties.

A transaction involves several dimensions:

-at least two things of value.

-agreed upon conditions.

-a time of agreement.

-a place of agreement.

Definition

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Marketing Process

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Understanding the Marketplace  and Customer Needs. 

Core Concepts

▪ Needs, wants, and demands

▪ Market Offerings and brands

▪ Value and satisfaction

▪ Marketing channels

▪ Markets

▪ Exchange and relationships

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Chapter 1- slide ‹#›

Publishing as Prentice Hall

Customer Needs, Wants, and Demands 

Needs

• Physical—food, clothing, warmth, safety

• Social—belonging and affection

• Individual—knowledge and self-expression Wants

• Form that needs take as they are shaped by culture and individual personality

Demands

• Wants backed by buying power

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Market Offerings and Brands

Market offerings are some combination of products, services, information , or experiences offered to a market to satisfy a need or want

Marketing myopia the mistake of paying more attention to the specific

products a company offers than to the benefits and experiences produced by these products.

A brand is an offering from a known source. A brand name such as McDonald’s carries many associations in people’s minds that make up its image: hamburgers, cleanliness, convenience, courteous

service, and golden arches. All companies strive to build a brand

image with as many strong, favorable, and unique brand associations as possible.

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Customer Value and Satisfaction

▪ Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the products to others.

▪ Note: Marketers must be careful to set the right level of expectations – Plz. discuss…..

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Marketing Channels

Communication Distribution

Service/ pre, pro, with selling

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Exchange is the act of obtaining a desired object from someone by offering something in return

There are five conditions for exchange:

1. There are at least two parties.

2. Each party has something that might be of value to the other party.

3. Each party is capable of communication and delivery.

4. Each party is free to accept or reject the exchange offer.

5. Each party believes it is appropriate or desirable to deal with the other party.

Exchange:

Process + Agreement = Transaction

Exchange

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Markets

Markets are the set of actual and potential buyers of a product

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A Modern Marketing System

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Designing a Customer-Driven Marketing Strategy

Marketing management is the art and science of choosing target markets and building

profitable relationships with them

▪ What customers will we serve?

▪ How can we best serve these customers?

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Designing a Customer-Driven Marketing Strategy

Market segmentation refers to dividing the markets into segments of customers

Target marketing refers to which segments to go after

Demarketing is marketing to reduce demand

temporarily or permanently; the aim is not to destroy demand but to reduce or shift it

1. Selecting Customers to Serve

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Designing a Customer-Driven Marketing Strategy

2. Choosing a Value Proposition

The

value proposition is the set of

benefits or values a company promises to deliver to customers to satisfy their needs

Example:

BMW: Promises the ultimate driving machine.

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Product conception

Product

concept Selling concept

Marketi conceptng

Societal concept 3. Marketing Management Orientations

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 Designing a Customer-Driven Marketing Strategy

Production concept The production concept is one of the oldest concepts in business. It holds that

consumers prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution.

Marketing Management Orientations

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 Designing a Customer-Driven Marketing Strategy

Product concept The product concept proposes that consumers favor products offering the most quality, performance, or innovative features.

.

Marketing Management Orientations

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Designing a Customer-Driven Marketing Strategy

Selling concept The selling concept holds that consumers will not buy enough of the

organization’s products unless it undertakes a large scale selling and promotion effort . It is

practiced most aggressively with unsought goods—

goods buyers don’t normally think of buying such as insurance—and when firms with overcapacity aim to sell what they make, rather than make what

Marketing Management Orientations

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Designing a Customer-Driven Marketing Strategy

Marketing concept The marketing

concept emerged in the mid-1950. The

job is to find not the right customers for

your products, but the right products for

your customers.

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Marketing Management Orientations

Societal

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Societal marketing concept is the idea that a company should make good marketing

decisions by considering consumers’ wants, the company’s requirements, consumers’ long- term interests, and society’s long-run interests

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The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing

strategy. It includes product, price, promotion, and place.

Integrated marketing program is a

comprehensive plan that communicates and delivers the intended value to chosen

customers.

Preparing an Integrated Marketing

Plan and Program

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The Marketing Mix

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Building Customer Relationships

The overall process of building and

maintaining profitable customer relationships by delivering superior customer value and

satisfaction

Customer Relationship Management (CRM)

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Building Customer Relationships

Relationship Building Blocks: Customer Value and Satisfaction Customer value: A customer buys from the firm that offer the highest perceived value.

Customer perceived Value: The customer evaluation of the difference between all the benefits and all the cost of a marketing offer relative to those of competing offers.

Customer- perceived value

• The

difference between total

benefits and total

Customer satisfaction

• The extent to which a product’s perceived performanc e matches a buyer’s

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Building Customer Relationships

Customer Relationship Levels and Tools

Basic

Relationships

Full Partnerships

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Partner relationship management

involves working closely with partners in other company departments and outside the company to jointly bring greater

value to customers

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▪ Partners inside the company is every

function area interacting with customers

▪ Electronically

▪ Cross-functional teams

▪ Partners outside the company is how

marketers connect with their suppliers, channel partners, and competitors by developing partnerships

Partner Relationship Management

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Building Customer Relationships

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

products to final buyers

▪ Supply management

▪ Strategic partners

▪ Strategic alliances

Partner Relationship Management

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Capturing Value from Customers

Creating Customer Loyalty and

Growing Share of Customer

Building

Customer

Equity

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1. Customer Loyalty and Retention

• Satisfied customers remain loyal.

• Talk favorably to others about the company and its products.

• Its five times cheaper to keep an old customer than to acquire a new one.

• Loosing the customer means losing the entire stream of purchases that customer would make over a lifetime of patronage.

Customer lifetime value: The value of the entire stream of purchases that customer would make over a lifetime of patronage.

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2. Growing Share of Customer

• Good Customer Relationship Management can help marketers to increase their share of customer – the share they get of the customer’s purchasing in their product categories for ex.,

Supermarkets and Restaurants want to get more “share of stomach” Car companies want to increase “share of garage” and airlines want greater “share of travel”

Share of Customer: The portion of the customer’s purchasing that a company gets in its product categories.

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3. Building Customer Equity

Customer equity: is the total combined customer lifetime values of all the company‘current and

potential customers.

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The Changing Marketing Landscape

1. The Digital Age 2. Rapid Globalization

3. The call for more ethics and social responsibility 4. The Growth of not for Profit Marketing