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