Ch. 1 Marketing: Creating and Capturing Customer Value

Peter Drucker

"The aim of marketing is to make selling unnecessary"

Five core customer and marketplace concepts:

(1) needs, wants, and demands (2) market offerings (products, services, and experiences) (3) value and satisfaction (4) exchanges and relationships (5) markets

Social responsibility

(community engagement and individual well-being)

Major environmental forces:

(demographic, economic, natural, technological, political, and social/cultural).

The company must first decide whom it will serve. It does this by dividing the market into segments of customers:

(market segmentation) and selecting which segments it will go after (target marketing).

environmental stewardship

(operating efficiently and protecting the environment)

Economic prosperity

(profitable growth through a customer focus)

The relationship management strategy

- Strangers show low potential profitability and little projected loyalty - Butterflies are potentially profitable but not loyal - True friends are both profitable and loyal *It wants to turn true friends into true believers, who come back regularly and tell others about their good experiences with the company. - Barnacles are highly loyal but not very profitable

The 2-fold goal of marketing:

1) Attract new customers by promising superior value 2) To keep and grow current customers by delivering satisfaction

The Marketing Process

1) Understanding the Marketplace and Customer needs and wants 2) Designing a Customer-Driven Marketing strategy 3) Construct an integrated Marketing Plan and Program that deliver superior value 4) Building Customer relationships and create customer delight 5) Capture value from customers to create profits and customer equity

Companies should balance 3 considerations in setting their marketing strategies:

1) company profits 2) consumer wants 3) society's interests

Marketing concept

A philosophy in which achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. - a product-centered make-and-sell philosophy, - a customer-centered sense-and-respond philosophy

Marking mix

A set of marketing tools that work together to satisfy customer needs and build customer relationships. - the set of marketing tools the firm uses to implement its marketing strategy - The major marketing mix tools are classified into 4 broad groups, called the four Ps of marketing: 1) product 2) price 3) place 4) promotion

Consumer-generated marketing

Brand exchanges created by consumers themselves—both invited and uninvited—by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers.

Demands

Human wants that are backed by buying power.

Customer-engagement marketing

Making the brand a meaningful part of consumers' conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations, experiences, and community.

The simplest definition of marketing:

Marketing is managing profitable customer relationships.

Market offerings

Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Needs

States of felt deprivation ex: physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self- expression

Exchange

The act of obtaining a desired object from someone by offering something in return. ex: A political candidate wants votes; a church wants membership; an orchestra wants an audience; and a social action group wants idea acceptance

Marketing management

The art and science of choosing target markets and building profitable relationships with them.

Customer-perceived value

The customer's evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.

Customer satisfaction

The extent to which a product's perceived performance matches a buyer's expectations.

Wants

The form human needs take as they are shaped by culture and individual personality. ex: a Big Mac, french fries, and a soft drink

Societal marketing concept

The idea that a company's marketing decisions should consider consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests. - questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare

Production concept

The idea that consumers will favor products that are available and highly affordable; therefore, the organization should focus on improving production and distribution efficiency.

Product concept

The idea that consumers will favor products that offer the most quality, performance, and features; therefore, the organization should devote its energy to making continuous product improvements.

Selling concept

The idea that consumers will not buy enough of the firm's products unless the firm undertakes a large-scale selling and promotion effort.

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

Customer relationship management

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Share of customer

The portion of the customer's purchasing that a company gets in its product categories.

Marketing

The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

Market

The set of all actual and potential buyers of a product or service.

Customer equity

The total combined customer lifetime values of all of the company's customers.

Customer lifetime value

The value of the entire stream of purchases a customer makes over a lifetime of patronage.

Digital and social media marketing

Using digital marketing tools such as Web sites, social media, mobile apps and ads, online video, e-mail, and blogs that engage consumers anywhere, at any time, via their digital devices.

Partner relationship management

Working closely with partners in other company departments and outside the company to jointly bring greater value to customers.

services

activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything

The act of obtaining a desired object from someone by offering something in return is called ________.

an exchange

the fourth and most important step of the marketing process:

building and managing profitable customer relationships

Marketing is a social and managerial process by which individuals and organizations obtain what they need and want through ________ with others.

creating and exchanging value

attraction

creating market offerings and messages that engage consumers rather than interrupt them

The ultimate aim of customer relationship management is to produce high _________ ________.

customer equity

Simply put, marketing management is

customer management and demand management.

in addi- tion to customer relationship management, today's marketers must also deal effectively with ________ ________

customer-managed relationships

Supply chain

describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers. Through supply chain management, companies today are strengthening their connections with partners all along the supply chain.

The marketing manager's aim is to

find, attract, keep, and grow target customers by creating, delivering, and communicating superior customer value

The most basic concept underlying marketing is that of __________ _________.

human needs

Customers have different concepts of value. Value to a customer is a(n) ________thing.

individual

The selling concept takes an __________ perspective, and the marketing concept takes an __________ perspective

inside-out, outside-in

Greater consumer empowerment means that companies can no longer rely on marketing by ________. Instead, they must practice marketing by ________.

intrusion, attraction

value proposition

is the set of benefits or values it promises to deliver to consumers to satisfy their needs

customer-centered firm seeks to deliver high customer satisfaction relative to competitors, it does not attempt to __________ customer satisfaction

maximize

Outstanding marketing companies go to great lengths to learn about and understand their customers' ________.

needs, wants, and demands

_______ _______ involved marketing brands to consumers, The _______ _______ is customer-engagement marketing.

old marketing, new marketing

Market offerings are not limited to physical _________.

products ex: services, banking, airline, hotel, retailing, and home repair services, persons, places, organizations, information, and ideas

Marketing consists of actions taken to create, maintain, and grow desirable exchange ________ with target audiences involving a product, service, idea, or other object

relationships

The goal is to build the _______ _______ with the ______ _______.

right relationships, right customers.

caring capitalism

setting themselves apart by being civic minded and responsible

Sustainable marketing

socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs

5 alternative concepts under which organizations design and carry out their marketing strategies:

the production, product, selling, marketing, and societal marketing concepts.

Customer-driven marketing

understanding customer needs even better than custom- ers themselves do and creating products and services that meet both existing and latent needs, now and in the future - research customers deeply to learn about their desires, gather new product ideas, and test product improvements.

Market managers must decide ________ they want to target and on the level, timing, and nature of their demand.

which customers

Shared value

which recognizes that societal needs, not just economic needs, define markets. The concept of shared value focuses on creating economic value in a way that also creates value for society