Chapter 1 - Marketing

Customer-managed Relationships

"How should our customers reach us?"

The twofold goal of marketing is to

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

3 Types of Needs

1. Physical (food, clothing, warmth) 2. Social (belonging and affection) 3. Individual (knowledge, self expression)

4 Ps of Marketing

1. Product 2. Price 3. Place 4. Promotion

5 Alternative Concepts under which organizations design and carry out their marketing strategies

1. Production concepts 2. Product concepts 3. Selling concepts 4. Marketing concepts 5. Societal marketing concepts

4 Customer Relationship Groups

1. Strangers - short term projected loyalty and low potential profitability 2. Barnacles - long-term projected loyalty and low potential profitability 3. Butterflies - short-term projected loyalty and high potential profitability 4. True Friends - long-term projected loyalty and high potential profitability

5 Step Model of the Marketing Process

1. Understand the marketplace and customer needs and wants 2. Design a customer-driven marketing strategy 3. Construct an integrated marketing program that delivers superior value 4. Build profitable relationships and create customer delight 5. Capture Value from customers to create profits and customer equity

5 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

Basic Relationship

A company with many low-margin customers may seek to develop this

Marketing Myopia in Example

A manufacturer of a quarter-inch drill bits may think that the customer needs a drill bit when really the customer needs a quarter-inch hole

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 (profits through customer satisfaction)

Internet

A vast public web of computer networks that connects users of all types all around the world to each other and to an amazingly large information repository

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

Marketing Management is

Customer Management and Demand Management

Selecting Customers to Serve

Done by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing)

The most basic concept underlying marketing is that of

Human Needs

Demands

Human wants that are backed by buying power

Marketing is

Managing profitable customer relationships

Product Concept can also lead to

Marketing Myopia - mouse trap example

Production Concept can lead to

Marketing Myopia by focusing too narrowly on a company's operations and losing sight of the real objective - satisfying customer needs and building customer relationships

Customer-Managed Relationships are

Marketing relationships in which customers, empowered by today's new digital technologies, interact with each other to shape their relationships with brands

Full partnerships

Markets with few customers and high margins want this

Frequency Marketing Programs

Reward customers who buy frequently or in larger amounts

Value Proposition

Set of benefits or values a brand promises to deliver to customers to satisfy their needs; helps when the company decides how to differentiate and position itself

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

Market Offerings

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

Needs

States of felt deprivation

Exchange

The act of obtaining a desired object from someone by offering something in return

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

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

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 (profits through volume)

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 (CRM)

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

Marketing Mix

The set of marketing tools the firm uses to implement its marketing strategy

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

Partner Relationship Management

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

Once it fully understand consumers and the marketplace (step 1), marketing management

can design a customer-driven marketing strategy (step 2)

The last step of the marketing process

captures value from customers in return

The first 4 steps of the marketing process

create value for customers and build customer relationships

Under the marketing concept,

customer focus and value are the paths to sales and profits

The aim of marketing managers is to

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

Customer Value and Satisfaction are

key building blocks for developing and managing customer relationships

Marketing occurs when

people decide to satisfy their needs and wants through exchange relationships

Market offerings include other entities such as

persons, places, organizations, information, and ideas

Customers form expectations about the value and satisfaction

that various market offerings will deliver and buy accordingly

Customer Relationship Management is

the most important concept of modern marketing

The societal marketing concept questions whether

the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare

Marketing program builds customer relationships by

transforming the marketing strategy into action

Selling concept is typically practiced with

unsought goods - insurance or blood donations

Marketing Managers need to decide

what customers to serve and how to serve them best