Chapter 1: Marketing: Creating and Capturing Customer Value

Marketing is a process by which companies create value for

customers and build strong customer relationships to capture value
from customers in return.

Core Concepts :
Customer needs, wants, and demands:
Needs : State of felt deprivation
Wants : The form human needs take as shaped by culture and
individual personality
Demands : Wants that are backed by buying power
Market offerings (products and services)
Value and satisfaction
Exchanges and relationships
Markets

Market offerings are some combination of products, services,

information, or experiences offered to a market to satisfy a need
or want
Marketing myopia is focusing only on existing wants and losing
sight of underlying consumer needs
Exchange is the act of obtaining a desired object from someone
by offering something in return.
Markets are the set of actual and potential buyers of a product.
Marketing management is the art and science of choosing
target markets and building profitable relationships with them.
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.
The value proposition is the set of benefits or values a
company promises to deliver to customers to satisfy their needs.

Marketing Management Orientations:

Production concept is the idea that consumers will favour
products that are available or highly affordable.
Product concept is the idea that consumers will favour
products that offer the most quality, performance, and features
> continuous product improvements.
Selling concept is the idea that consumers will not buy enough
of the firms products unless it undertakes a large-scale selling
and promotion effort.
Marketing concept is the idea that achieving organizational
goals depends on knowing the needs and wants of the target
markets and delivering the desired satisfactions better than
competitors do.
Societal marketing concept is the idea that a company should
make good marketing decisions by considering consumers
wants, the companys requirements, consumers long-term
interests, and societys long-run interests.
Preparing an Integrated Marketing Plan and Program:
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.
An integrated marketing program is a comprehensive plan
that communicates and delivers the intended value to chosen
customers.
Customer Relationship Management (CRM):
The overall process of building and maintaining profitable
customer relationships by delivering superior customer value and
satisfaction
Relationship Building Blocks: Customer Value and
Satisfaction:
Customer- perceived value: the customers evaluation of the
difference between all benefits and all costs of a market offering
relative to those of competing offers
Customer satisfaction: The extent to which a products
perceived performance matches a buyers expectations
Customer Relationship Levels and Tools:
Partner relationship management involves working closely
with partners in other company departments and outside the

company to jointly bring greater value to customers:

Electronically Using cross-functional teams
Partners outside the company is how marketers connect with
their suppliers, channel partners, and competitors by developing
partnerships.
Supply chain: a channel that stretches from raw materials to
components to final products to final buyers
Supply management
Strategic partners
Strategic alliances

Creating Customer Loyalty and Retention:

Customer lifetime value is the value of the entire stream of
purchases that the customer would make over a lifetime of
patronage.
Share of customer is the portion of the customers purchasing
that a company gets in its product categories.
Customer equity is the total combined customer lifetime
values of all of the companys customers.
Building Customer Equity : Building the right relationships
with the right customers involves treating customers as assets
that need to be managed and maximized.
Building the right relationships with the right customers involves
treating customers as assets that need to be managed and
maximized.

The Changing Marketing Landscape:

The Digital Age

Rapid Globalization
Ethics and Social Responsibility
Not-for-Profit Marketing

Chapter 2: Company and Marketing Strategy: Partnering to

Build Customer Relationships
Companywide Strategic Planning:
Strategic planning is the process of developing and
maintaining a strategic fit between the organizations goals and
capabilities and its changing marketing opportunities.
Steps in Strategic Planning:
1) Defining a Market-Oriented Mission: the organizations
purpose, what it wants to accomplish in the larger environment.
2) Setting Company Objectives and Goals: Build profitable
customer relationships, invest in research Improve profits,
Increase market share, Create local partnerships, Increase
promotion.
3) Designing the Business Portfolio: the collection of
businesses and products that make up the company.
4) Analyzing the Current Business Portfolio: Strategic business
unit (SBU) is a unit of the company that has a separate mission
and objectives that can be planned separately from other
company businesses.

Problems with Matrix Approaches :

Problems with Matrix Approaches:

Difficulty in defining SBUs and measuring market share and
growth
Time consuming
Expensive
Focus on current businesses, not future planning
Developing Strategies for Growth and Downsizing :
Product/market expansion grid is a tool for identifying
company growth opportunities through market penetration,
market development, product development, or diversification.

Market penetration is a growth strategy, increasing sales to

current market segments without changing the product.
Market development is a growth strategy that identifies and
develops new market segments for current products.
Product development is a growth strategy that offers new or
modified products to existing market segments.
Diversification is a growth strategy through starting up or
acquiring businesses outside the companys current products
and markets.

Downsizing is the reduction of the business portfolio by

eliminating products or business units that are not profitable or
that no longer fit the companys overall strategy.

Partnering to Build Customer Relationships:

Value chain is a series of departments that carry out valuecreating activities to design, produce, market, deliver, and
support a firms products.
Value delivery network is made up of the company, suppliers,
distributors, and ultimately customers who partner with each
other to improve performance of the entire system.
Mission Statement and Marketing Strategy:
Customer-Driven Marketing Strategy:
Market segmentation is the division of a market into distinct
groups of buyers who have distinct needs, characteristics, or
behaviour and who might require separate products or marketing
mixes.
Market segment is a group of consumers who respond in a
similar way to a given set of marketing efforts.
Customer-Centred Marketing Strategy:
Market targeting is the process of evaluating each market
segments attractiveness and selecting one or more segments to
enter.
Market positioning is the arranging for a product to occupy a
clear, distinctive, and desirable place relative to competing
products in the minds of the target consumer.
Developing an Integrated Marketing Mix:
Marketing mix is the set of controllable tactical marketing tools
product, price, place, and promotionthat the firm blends to
produce the response it wants in the target market.
4 Ps

4 Cs

Product

Customer Solution

Price

Customer Cost

Place

Convenience

Promotion

Communication

Managing the Marketing Effort:

1. Analysis (SWOT)
2. Planning: Executive summary, Analysis of current situation,
Objectives, Targets and positioning, Marketing mix, Budget,
Controls

3. Implementation: Process that turns strategies and plans into

marketing actions that accomplish strategic marketing
objectives
4. Control: Involves evaluating the results of marketing strategies
and plans and taking corrective action ( audit).
Return on Marketing Investment (Marketing ROI):
the net return from a marketing investment divided by the costs
of the marketing investment. Marketing ROI provides a
measurement of the profits generated by investments in
marketing activities.

Chapter 3: Analyzing the Marketing Environment

The marketing environment consists of the actors and forces

outside marketing that affect marketing managements ability to
build and maintain successful relationships with target
customers.

Microenvironment consists of the actors close to the company that

affect its ability to serve its customers, the company, suppliers,
marketing intermediaries, customer markets, competitors, and publics.
1) The Company: Top management, Finance, R&D,
Purchasing, Operations, Accounting
2) Suppliers
3) Marketing Intermediaries: Consumer, Business, Reseller,
Government, International
4) Competitors

5) Publics
Demographic Environment: the study of human populations in
terms of size, density, location, age, gender, race, occupation, and
other statistics.
Generational marketing is important in segmenting people by
lifestyle or life state rather than by age.
Increased Diversity :
Markets are becoming more diverse:
International
National
Includes:
Ethnicity
Gay and lesbian
Disabled
Natural environment involves the natural resources that are needed
as inputs by marketers or that are affected by marketing activities.
Technological environment is perhaps the most dramatic force now
shaping our destiny. Technology has released such wonders as
antibiotics, robotic surgery, miniaturized electronics, smartphones, and
the Internet.
The political environment consists of laws, government agencies,
and pressure groups that influence or limit various organizations and
individuals in a given society.
The social environment refers to social codes and rules of
professional ethics beyond written laws and regulations.
Economic environment consists of factors that affect consumer
purchasing power and spending patterns.
Changes in Consumer Spending Patterns:
Engels Law
As income rises
the percentage spent on food declines.
the percentage spent on housing remains constant.
the percentage spent on savings increases.
Cultural environment consists of institutions and other forces that
affect a societys basic values, perceptions, and behaviours.
Shifts in Secondary Cultural Values:
Peoples view of society
Patriots defend it.

Reformers want to change it.

Malcontents want to leave it.
Peoples view of nature
Some feel ruled by it.
Some feel in harmony with it.
Some seek to master it.
Peoples view of the universe
Renewed interest in spirituality

Views on Responding:
Uncontrollable: React and adapt to forces in the environment
Proactive: Aggressive actions to affect forces in the environment
Reactive: Watching and reacting to forces in the environment

Chapter 5: Managing Marketing Information to Gain Customer

Insights
Customer Insights: Fresh and deep insights into customers needs
and wants
Difficult to obtain
Not obvious
Customers unsure of their behaviour
Companies are forming customer insights teams.
Include all company functional areas.
Use insights to create more value for their customers.
Customer controlled could be a problem.
Marketing Information Systems (MIS): consists of people and
procedures for the following:
Assessing the information needs
Developing needed information

Helping decision makers use the information for customers

MIS provides information to the companys marketing and
other managers and to external partners, such as suppliers,
resellers, and marketing service agencies.
Characteristics of a Good MIS: Balancing the information
users would like to have against what they need and what is
feasible to offer

Marketers obtain information from the following:

1) Internal databases are electronic collections of consumer and
market information obtained from data sources within the
company network.
Accounting system
Operations/production
Sales reporting system
Past research studies
Internal data is cheap, quick, and easy.
2) Marketing Intelligence: is the systematic collection and
analysis of publicly available information about consumers,
competitors, and developments in the marketplace.
3) Marketing research: the systematic design, collection, analysis, and reporting of
data relevant to a specific marketing situation facing an organization.
Marketing Research Process:
1) Defining the Problem and Research Objectives
Exploratory research
Descriptive research
Causal research
2) Developing the Research Plan
Secondary data consists of information that already exists
somewhere, having been collected for another purpose.
Primary data consists of information gathered for the special
research plan.
3) Research Approaches
Observational research involves gathering primary data by
observing relevant people, actions, and situations.
Ethnographic research involves sending trained observers to
watch and interact with consumers in their natural environment.
Survey research is the most widely used method and is best
for descriptive informationknowledge, attitudes, preferences,
and buying behaviour.
Experimental research is best for gathering causal information
cause-and-effect relationships.

Sampling Plan: Sample is a segment of the population selected for

marketing research to represent the population as a whole.
Implementing the Research Plan:
Collecting the information
Processing the information
Analyzing the information
Interpret findings
Draw conclusions
Report to management
Customer Relationship Management (CRM): sophisticated
software and analytical tools that integrate customer information from
all sources, analyze it in depth, and apply the results to build stronger
customer relationships.
Information distribution involves entering information into
databases and making it available in a time-useable manner.
Intranet provides information to employees and other
stakeholders.
Extranet provides information to key customers and
suppliers.

Chapter 6: Consumer Markets and Consumer Buyer Behaviour

Consumer buyer behaviour refers to the buying behaviour of

final consumersindividuals and households who buy goods and
services for personal consumption.
Consumer market refers to all of the personal consumption of
final consumers.

Factors Influencing Consumer Behaviour:

Culture is the set of basic values, perceptions, wants, and

behaviours learned from family and other important institutions.
Subcultures are groups of people within a culture with shared
value systems based on common life experiences and situations.
Social classes are societys relatively permanent and ordered
divisions whose members share similar values, interests, and
behaviours.

Groups and Social Networks

Membership Groups
Aspirational Groups
Reference Groups
Personal Factors
Occupation affects the goods and services bought by
consumers.
Economic situation includes trends in the following: income,
savings, interest%
Lifestyle is a persons pattern of living as expressed in his or her
psychographics.
Personality and self-concept
Psychological Factors : motivation, perception, learning, Beliefs and
attitudes
Motivation: A motive is a need that is sufficiently pressing to
direct the person to seek satisfaction.
Perception is the process by which people select, organize, and
interpret information to form a meaningful picture of the world
from three perceptual processes:
Selective attention: tendency for people to screen out
most of the information
Selective distortion: tendency for people to interpret
information in a way that will support what they already
believe.
Selective retention: tendency to remember good points
made about a brand they favour and forget good points
about competing brands.
Learning is the change in an individuals behaviour arising from
experience and occurs through interplay of the following: drives,
stimuli, cues, response, reinforcement.
Belief is a descriptive thought that a person has about
something based on the following: Knowledge, Opinion, Faith
Attitudes describe a persons relatively consistent evaluations,
feelings, and tendencies toward an object or idea.
Types of Buying Decision Behaviour:

Complex buying behaviour

Dissonance-reducing buying behaviour
Habitual buying behaviour
Variety-seeking buying behaviour

Buyer Decision-Making Process:

1) Need Recognition: Occurs when the buyer recognizes a
problem or need triggered by Internal Stimuli External stimuli.
2) Information Search:
Personal sourcesfamily and friends
Commercial sourcesadvertising, Internet
Public sourcesmass media, consumer organizations
Experiential sourceshandling, examining, using the product
3) Evaluation of Alternatives: How the consumer processes
information to arrive at brand choices.
4) Purchase Decision: the act by the consumer to buy the most
preferred brand
5) Post-Purchase Decision: The satisfaction or dissatisfaction
that the consumer feels about the purchase
Stages of the Adoption Process:
Adoption process is the mental process an individual goes
through from first learning about an innovation to final regular
use.

Individual Differences in Innovativeness:

Influence of Product Characteristics on Rate of Adoption :

Relative advantage, Divisibility, Communicability,
Compatibility, Complexity
Chapter 8: Customer-Driven Marketing Strategy Creating Value
for Target Customers

Market Segmentation:
Differentiation involves actually differentiating the market
offering to create superior customer value.
Positioning consists of arranging for a market offering to
occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers.
Segmenting consumer markets:
Geographic segmentation divides the market into different
geographical units, such as nations, regions, provinces, counties, cities,
or neighbourhoods.
Demographic segmentation divides the market into groups based
on variables such as age, gender, family size, family life cycle, income,
occupation, education, religion, race, generation, and nationality.
Income segmentation divides the market into different income
groups.
Psychographic segmentation divides buyers into different groups
based on social class, lifestyle, or personality traits.
Behavioural segmentation divides buyers into groups based on
consumer knowledge, attitudes, uses, or responses to a product:
Occasions
Benefits sought
User status
Usage rate
Loyalty status
Segmenting business markets
Business markets can be segmented into the same variables as
consumer markets as well as:
Customer operating statistics
Purchasing approaches
Situational factors
Personal characteristics
Segmenting international markets:
Intermarket (cross-market) segmentation divides
consumers into groups with similar needs and buying behaviours
even though they are located in different countries.
Requirements for effective segmentation

Measurable: The size, purchasing power, and profiles of

segments can be measured.
Accessible: The market segments can be effectively reached
and served.
Substantial: The market seems large or profitable enough to
serve.
Differentiable: The segments are conceptually distinguishable
and respond differently to different marketing mix elements and
programs.
Actionable: Effective programs can be designed for attracting
and serving the segments.

Market Targeting
Target market consists of a set of buyers who share common
needs or characteristics that the company decides to serve.

Target Marketing Strategies:

1) Undifferentiated (mass) marketing targets the whole
market with one offer.
2) Differentiated (segmented) marketing targets several
different market segments and designs separate offers for
each
3) Concentrated (niche) marketing targets a large share of
one or a few segments or niches.
4) Micromarketing is the practice of tailoring products and marketing programs
to suit the tastes of specific individuals and local customer groups.
5) Local marketing involves tailoring brands and promotion to the needs and
wants of local customer groups.
6) Individual marketing involves tailoring products and marketing programs to
the needs and preferences of individual customers.

Choosing a Target Market

Company resources
Product variability
Product life-cycle stage
Market variability
Competitors marketing strategies
Differentiation and Positioning
Product position is the way the product is defined by
consumers on important attributesthe place the product
occupies in consumers minds relative to competing products.
Perceptual positioning maps show consumers perceptions of
their brands versus competing products on important buying
dimensions.

Choosing a Differentiation and Positioning Strategy

Identifying a set of differentiating competitive advantages upon
which to build a position
Choosing the right competitive advantages
Selecting an overall positioning strategy
THEN
Effectively communicating and delivering the chosen position to
the market
Identifying Possible Value Differences and Competitive
Advantages
Competitive advantage is an advantage over competitors
gained by offering greater customer value, either through lower
prices or by providing more benefits that justify higher prices.
Identifying a set of possible competitive advantages to build a position
by providing superior value from:
Product differentiation: differentiated on features,
performance, or style and design.
Service differentiation: differentiated on speedy, convenient
or careful delivery.
Channel differentiation: differentiation through the way they
design their channels coverage, expertise, and performance.
People differentiation: hiring and training people better.
Image differentiation: perceived difference based on a strong,
distinctive image conveying the products distinctive benefits
and positioning.
Choosing the Right Competitive Advantage

Selecting an Overall Positioning Strategy : Value proposition is

the full mix of benefits upon which a brand is positioned.
Developing a Positioning Statement: summarizes the
company or brand positioning.