Marketing (BADM 370) Chapter 1

Two goals of marketing

1. Attract new customers (promising superior value) 2. Grow current customers (deliver satisfaction)

Just like Nike, what are two things that all companies have in common?

1. Strongly customer focused 2. Heavily committed to marketing (they share a passion for understanding and satisfying customer needs)

In the book, they talk about how Nike remains as one of the largest brands in the world. List examples of how Nike dominates with value-driven marketing.

1. The primary reason why Nike is so successful is because they build relationships and engagements with the customer. A. "Nike's mission isn't to make better gear, it's to connect with and inspire athletes around the world" B. Nike placed first in creating brand tribes (tribes are groups of highly engaged users that use social-media platforms) in social media. C. Nike excels at cross-media campaigns that integrate digital media with traditional tools to connect with customers. I \/ An example of this is Nike's Risk Everything (world cup soccer campaign). In short, this movie stars Christian Renoldo's (One of the best soccer players in the world that's sponsored by Nike) upbringing and his story about winning the World Cup. IT'S THE PERFECT BLEND OF PRODUCT PLACEMENT, STORY-TELLING, AND REAL-TIME MARKETING. This campaign has produced 372 million views, 22 million engagements (social media), and 650,000 hashtags of #riskeverything.

Two important questions for marketing management

1. What customers will we serve? 2. How can we serve these customers best? (by trying to serve all customers, they may not serve any customers well)

What are some ways firms can increase share of customer?

1. greater variety to customers 2. create programs to cross/up-sell more products and services to existing customers

5 customer and marketplace concepts for step 1

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

5 concepts organizations design and carry out their marketing strategies

1. production 2. product 3. selling 4. marketing 5. societal marketing

Examples of "perceived value" to customers

1. sensible products at affordable prices 2. paying more to get more

Exchange example

A customer exchanging money to a business in order to get a product that satisfies their needs and wants.

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 sense-and-response philosophy (rather than make-and-sell)

Marketing Mix

A set of marketing tools the firm uses to implement its market strategy Used for an integrated marketing plan

Is keeping customers loyal cheaper than finding new customers?

Absolutely It's five times cheaper to keep an old customer than acquire a new one. That's why customer loyalty and retention is important.

Example?

Amazon offers a huge variety of products and they constantly recommend products to the customer based on their browsing history. Because of this, this causes most customers to spend more than what they expected. Also, their two-day shipping policy reduces the amount of time for a customer to wait on a product. Therefore, this also creates a desire to buy more products. As the book states, an Amazon Prime Subscriber spends 2.4x as much as a non-prime user

3 types of customer satisfaction

Below expectations - dissatisfied customer meets expectations - satisfied customer above expectations - highly satisfied/delighted customer

Projected Loyalty diagram

Butterflies = profitable but not loyal (we enjoy them for a short while, and then they're gone) Stock Market Investors True friends = both profitable and loyal Barncacles - loyal but not very profitable (limited fit between their needs and the company's offerings) smaller bank customers who bank regularly but don't generate enough return to cover the costs of maintaining the customers. (Just like barnacles on a ship, they drag down the business) Strangers = low profitability and low projected loyalty

How does a company select customers to serve

By dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing) Marketing management is CUSTOMER management and DEMAND management

Step 5: The final step of the marketing process

Capturing Value from customers

Selling Concept

Consmers will not buy enough of the firm's products unless it undertakes a large-scale selling and promotion effort. (aggressive/forceful selling) Typically practiced with unsought goods (things that buyers don't normally think of buying) such as life insurance or blood donations.

How do consumers choose among a broad array of products and services that might satisfy a given need?

Customers form expectations about the value and satisfaction that various market offerings will deliver. Then they buy accordingly based on their expectations.

Step 2 of the marketing process

Designing a Customer Value-Driven Marketing Strategy (once a company fully understands its consumers and the marketplace, it must decide which customers it will serve and how it will bring them value)

Example of marketing management

Dollar General profitably targets families with more modest means (richer).

Step 4 of the marketing process

Engaging Customers and Managing Customer Relationships

What is marketing?

Engaging customers and managing profitable customer relationships

How should marketers set expectations of a product to consumers?

Expectations should be set in the middle. If they set expectations too low, they'll fail to attract enough buyers. Although, the people who buy the product will be satisfied. If they set expectations too high, they'll attract a lot of customers, but the buyers will be disappointed with the product.

True or False? Marketing is only being carried out by sellers

False Buyers also carry out marketing. Consumers market when they search for products, interact with companies to obtain information, and make their purchases customer-managed relationships - "how can our customers influence us" With the power of social media, marketing is a two-way affair.

True or False? Marketing is only selling and advertising

False Marketing is more than just selling and advertising. Marketing is about satisfying customer needs and building profitable, value-laden relationships.

True or False? Market Offerings are only limited to physical products

False They include services, activities, or benefits offered for sale that are intangible (technically no ownership of anything). banking, airlines, retailing

True or False? Customer's often judge values and costs "accurately" or "objectively"

False They tend to act on perceived value

Expanded Marketing Model

First 4 steps = create value for customers

In a market with only a few customers and high margins, a company may seek to develop ______ with them

Full Partnerships P&G (Proctor and Gamble) works very closely with Walmart, Kroger and other retailers that sell Tide detergent

Demands

Human wants that are backed by buying power (People demand products and services with benefits that add up to the most value and satisfaction)

Production Concept

Idea that consumers will favor products that are available and highly affordable The organization should focus on improving production and distribution efficiently (to lower the price/fulfill demand) Lenovo electronics strives for low labor costs, high production efficiency, and mass distribution.

Risks of the selling concept

It focuses on creating sales transactions rather than on building long-term, profitable customer relationships. the aim is to sell what the company makes, rather than to make what the market wants. I \/ This assumption assumes that customers who are coaxed (persuaded by flattery) by a product will automatically like it. - Poor assumption Or if they don't like it, they'll forget about it and buy it again later - Another poor assumption

downsides to consumer-generated marketing

It's very difficult and time-consuming to find a quality consumer ad, especially since there's a lot of garbage. Also, users could hijack the marketing into something unfavorable. #McDStories was supposed to be about heart-worming stories, but the users of the hashtag posted negative stories about their experiences with McDonalds. (otherwise known as a bashtag)

Step 3 of the marketing process:

Preparing an Integrated Marketing Plan and Program

There are four broad groups used in the major marketing mix tools. Four P's. What are they

Product - create a need-satisfying market offering Price - how much it will charge for the offering Place - how it will make the offering to customers Promotion - persuade consumers of the offer's merits

Frequency Marketing Programs

Rewards customers who buy frequently or in large amounts Sam's Club reward points

Step 1. Understanding the Marketplace and Customer Needs

Since marketing is about appealing to the needs of the customer

Needs

States of felt deprivation (hunger, thirst, physical need for clothes [coat when it's snowing], safety)

Examples of companies catering to the demands of customers

Target's CEO Brian Cornell making unannounced visits to Target stores in order to get unbiased feedback from the customers. This will help to cater to Target's demands for the customer.

Exchange

The act of obtaining a desired object from someone by offering something in return. The customer exchanging something in order to satisfy their needs/wants

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 market offering relative to those of competing offers. Perceived value is the worth that a product or service has in the mind of the consumer.

Customer satisfaction

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

Societal Marketing Concept

The idea that a company's marketing decisions should consider consumer's wants, the company's requirements, consumers' long-run interests, and society's long-run interest.

Product Concept

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

Marketing Myopia

The mistake of paying more attention to specific products a company offers, rather than to the benefits and experiences produced by these products Forgetting that a product is only a tool for solving a customer problem. (A manufacturer of a quarter inch drill-bit may think that the customer needs a drill bit. But what the customer really needs is a quarter inch hole) I \/ (Because of this, if there's a new/cheap invention that makes a quarter-inch hole without a drill-bit needed, then that drill-bit company will be in trouble)

(extended) Marketing definition

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

customer lifetime value

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

What's the goal of marketing?

To create value for customers in order to capture value from customers in return.

True or False Marketing is critical for the success of for-profit and non-profit organizations.

True

Company example of the two-fold marketing goal.

Walmart - "Save money, live better" Attract new customers = save money [promising superior value} Grow current customers = live better [deliver satisfaction] Facebook - "Connect and share with the people in your lives" Connect with people = attract new customers (superior value with connecting) share with the people in your lives = grow current customers (delivering satisfaction)

Partner Relationship Management

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

Company that uses perceived value

YETI Coolers' slogan is "Wildly Stronger, Keeps Ice Longer". The added durability and ice-cooling technology gives perceived value for their higher-end/more expensive coolers.

Does higher levels of customer satisfaction lead to greater customer loyalty?

Yes Companies aim to delight customers by promising only what they can deliver and then delivering more than they promise Higher customer loyalty leads to repeated purchases of the brand Amazon's customer service for example

Is there a downside to the production concept?

Yes This concept could lead to a marketing myopia if the company focus only/narrowly on their operations. Thus losing the site of the real objective. Focusing too much on reducing labor cost and maximizing efficiency on a product, but not satisfying the consumer's needs.

Could this also lead to a Market Myopia.

Yes, Let's say that one company wants to offer the best mouse trap available. Buyers want to get rid of mice, but they might want a better alternative to handle this situation (such as a chemical spray). Therefore, the mouse-trap company will lose focus on the customer's wants/demands.

Market Offerings

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

The marketing program builds customer relationships by transforming the marketing strategy into _____

action

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

basic relationships Tide detergent doesn't make personal phone calls to each of their customers. They use social-media

Consumer-generated Marketing

consumers are playing an increasing role in shaping their own brand experiences and those of other customers (Middle Seat doritos ad) - made by consumers Samsung with Youtubers

The aim of customer relationship management is to create not only customer satisfaction but also customer ____

delight

Marketing Management Orientations

design strategies that will ensure target customers and build profitable relationships with them

The marketing manager's aim is to ___, _____, and ____ target customers by creating, delivering, and communicating superior customer value

engage, keep, grow

Different types of customers require different _____

engagement and relationship management strategies

simple Marketing definition

engaging customers and managing profitable customer relationships

Customer-Engagement Marketing

fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community

Choosing a value proposition

how a company will serve its targeted customers and position themselves in the marketplace

Wants

human needs take as they are shaped by culture and individual personality Short def = how society views human needs (American hunger = hamburger and French fries) (Papua, New Guinea hunger = taro, rice, yams, and pork) Wants are shaped by one's society and are described in terms of objects that will satisfy those needs. (pg. 6)

Current goal for marketers (according to the textbook)

marketers want to become a part of your life and enrich your experiences with their brands (to help you live their brands). (pg. 5)

Share of customer

portion of the customer's purchasing that a company gets in its product categories Banks wants more of the "share in the wallet" Supermarkets want to get more "share of stomach"

Customer Relationship Management

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

Market

the set of all actual and potential buyers of a product or service sellers must 1. search for and engage buyers 2. identify their needs 3. design good market offerings 4. set prices for them 5. promote them 6. store and deliver them

Value Proposition

the set of benefits or values it promises to deliver to consumers to satisfy their needs JetBlue Airlines promises to put "You Above all" by putting "humanity back in travel" Vine promises to give you "the best way to see and share life in motion through short, beautiful, looping videos"

What's the ultimate aim of customer relationship management?

to produce high customer equity

Customer equity

total combined customer lifetime values of all of the company's current and potential customers

Digital and social media marketing

using digital marketing tools (web-sites, social media, mobile apps) to engage consumers anywhere, at any time, via their digital devices Xbox with their MIXER/Social apps

Can loyal customers be unprofitable?

yes

Do market offerings also include other entities (such as persons, places, organizations, information, and ideas?)

yes San Diego "Happiness Is Calling" Advertising campaign (Invites visitors to come and enjoy the city's great weather and good times [such as bays and beaches]