Principles of Marketing

Marketing: Creating and Capturing Customer Value

Chapter Concepts

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2. 3. 4. 5. 6. 7.

What Is Marketing? Understanding the Marketplace and Customer Needs Designing a Customer-Driven Marketing Strategy Preparing an Integrated Marketing Plan and Program Building Customer Relationships Capturing Value from Customers The New Marketing Landscape

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What Is Marketing?
Marketing Defined Marketing is the process by which companies create
value for customers and build strong customer relationships to capture value from customers in return

Sales When a company makes a product and then tries to persuade customers to buy it, thats Selling.
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Selling

Marketing

Emphasis is on the product. Company first makes the product and then figures out how to sell it. Management is sales volume oriented.

Planning is short run oriented, in terms of todays products and markets.

Needs of sellers are stressed.

Difference between selling and marketing

Emphasis is on customers wants. Company first determines customers wants and then figures out how to make and delivers a product to satisfy those wants. Management is profit oriented Planning is long run oriented, in terms of new products, tomorrows market, and future growth. Wants of buyers are stressed.

What Can Be Marketed?

Goods Services Places Ideas What is being Events marketed in this ad? Persons Properties Organizations Information Experiences

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Marketing process

Understanding the Marketplace and Customer Needs

Customer Needs, Wants, and Demands
Needs

are the basic human requirements. People need food, air, water, clothing & shelter to survive. People also have needs for recreation, education and entertainment. Eg: Hunger food.
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Understanding the Marketplace and Customer Needs

Customer Needs, Wants, and Demands
Wants

The needs become wants they are directed to specific objects that might satisfy the needs. Eg: Mercedes

Demands are wants backed by buying power

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Understanding the Marketplace and Customer Needs

Market OfferingsProducts, Services, and Experiences Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want

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Understanding the Marketplace and Customer Needs

Market OfferingsProducts, Services, and Experiences

Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs

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Understanding the Marketplace and Customer Needs

Customer Value and Satisfaction

Expectations Customers forms expectation about the

Value and satisfaction that various marketing offers will deliver and buy accordingly.

Marketers
Set the right level of expectations
Not too high or too low
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Understanding the Marketplace and Customer Needs

Exchanges and Relationships Exchange is the act of obtaining a desired object from someone by offering something in return Relationships marketing consist of actions to
build and maintain desirable relationships with Target audience involving product, service, idea or other object.
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Understanding the Marketplace and Customer Needs

Markets are the set of actual and potential buyers of a product Marketing system consists of all of the actors (suppliers, company, competitors, intermediaries, and end users) in the system who are affected by major environmental forces Demographic Economic Physical Technological Politicallegal Socio-cultural
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Figure 1-2: Elements of a Modern Marketing System

Designing a Customer-Driven Marketing Strategy

Selecting Customers to Serve Market segmentation: Dividing the markets into segments of customers Target marketing: Which segments to go after

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Designing a Customer-Driven Marketing Strategy

Selecting Customers to Serve De-marketing: Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it.

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Designing a Customer-Driven Marketing Strategy

Choosing a Value Proposition The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs

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Designing a Customer-Driven Marketing Strategy

Marketing Management Marketing management is the art and science of choosing target markets and building profitable relationships with them What customers will we serve? How can we best serve these

Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations

Production concept Product concept Selling concept Marketing concept Societal concept

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Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations Production concept is the idea that consumers will favor products that are available or highly affordable

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Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations Product concept is the idea that consumers will favor products that offer the most quality, performance, and features for which the organization should therefore devote its energy to making continuous improvements

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Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations 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

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Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations 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

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Marketing and Selling Concepts Contrasted

Starting Point
Factory

Focus
Existing products

Means
Selling and promoting

Ends
Profits through sales volume

The Selling Concept (inside-out)

Market

Customer needs

Integrated marketing

Profits through customer satisfaction

The Marketing Concept (outside-in)

Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations 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

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Societal Marketing Concept

Late 20th Century Still emerging Recognizes potential conflict
Society

(Long-term consumer & societal welfare)

Maintain & improve long-term well-being Social responsibility Societal Marketing Concept Company Be ethical Do good: customer-oriented, environment, innovative (real, valued) product improvements sense-of-highermission, give back Stop doing bad f

(Short-term want satisfaction)

Consumers

(Profits)

Preparing an Integrated and Program

Marketing Plan

Marketing Mix The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy Product Price Promotion Place
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Marketing Strategy gMarketing Mix

The 4 Ps (4 Cs) = controllable, tactical tools
coordinated program
Product (Customer Solution)
Goods-and-services combination the company offers to the target market Price (Customer Cost) Amount of money customers have to pay to obtain the product

Target Customers
Intended Positioning
Advertising Personal Selling Sales Promotion Public Relations

Activities that communicate the merits of the product and persuade target customers to buy it

Activities that make the product available to target customers Place or Distribution

Promotion (Communication)

(Convenience)

Preparing an Integrated Plan and Program

Marketing

Integrated Marketing Program Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers

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Building Customer Relationships

Customer Relationship Management (CRM) Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction

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Building Customer Relationships

Customer Relationship Management (CRM)
Customer perceived value is the difference between total customer value and total customer cost Customer satisfaction is the extent to which a products perceived performance matches a buyers expectations
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Customer Satisfaction
Satisfaction = Performance (P) Expectation (E)

Expectations are largely based on marketer information and promises must create realistically high expectations

Reality = satisfaction has been declining

Performance falls short of expectations Performance matches expectations

Performance exceeds expectations

P>E Customer is highly satisfied or delighted !

P<E Customer is dissatisfied

P=E Customer is satisfied

Building Customer Relationships

Customer Relationship Levels and Tools

Many, low margin customers basic relationships (e.g., provide 800#, web site) Few, high margin customers full partnerships

Building Customer Relationships

Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers

Building Customer Relationships

Partner Relationship Management

Partners inside the company is every function area interacting with customers
Electronically Cross-functional teams

Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships

Capturing Value from Customers

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

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Capturing Value from Customers

Growing Share of Customer Share of customer is the portion of the customers purchasing that a company gets in its product categories

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The New Marketing Landscape

Major Developments

Digital age Globalization Ethics and social responsibility Not-for-profit marketing

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The New Marketing Landscape

The New Digital Age

Recent technology has had a major impact on the ways marketers connect with and bring value to their customers Market research
Learning about and tracking customers

Create new customized products Distribution Communication

Video conferencing Online data services
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The New Marketing Landscape

The New Digital Age Internetcreates marketplaces and marketspaces Information Entertainment Communication

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The New Marketing Landscape

Rapid Globalization

The world is smaller Think globally, act locally

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The New Marketing Landscape

The Call for More Ethics and Social Responsibility Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions in a global economy

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The New Marketing Landscape

The Call for More Ethics and Social Responsibility Social marketing campaigns encourage energy conservation and concern for the environment or discourage smoking, excessive drinking, and drug use

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The New Marketing Landscape

The Growth for Not-for-Profit Marketing

Colleges Hospitals Museums Zoos Orchestras Religious groups

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