2 Good Marketing is No Accident Boston Beer Company, maker of Samuel Adams, constantly innovates
3 What is Marketing? Marketing is an organizational function and a set of processes for creating,communicating, and delivering valueto customers and for managingcustomer relationshipsin ways that benefit theorganization and its stakeholders.
4 What is Marketing? Marketing Defined: “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others”Marketing is about managing profitable customer relationshipsAttracting new customersRetaining and growing current customers
5 What is Marketing Management? Marketing management is theart and scienceof choosing target marketsand getting, keeping, and growingcustomers throughcreating, delivering, and communicatingsuperior customer value.
6 Selling is only the tip of the iceberg “There will always be need forsome selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.”Peter Drucker
8 Understanding the Marketplace NeedState of felt deprivationExample: Need foodWantsThe form of needs as shaped by culture and the individualExample: Want a Big MacDemandsWants which are backed by buying powerCore ConceptsNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfactionExchange, transactions and relationshipsMarkets
9 Understanding the Marketplace Core ConceptsMarketing offerCombination of products, services, information or experiences that satisfy a need or wantOffer may include services, activities, people, places, information or ideasNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfactionExchange, transactions and relationshipsMarkets
10 Understanding the Marketplace Core ConceptsValueCustomers form expectations regarding valueMarketers must deliver value to consumersSatisfactionA satisfied customer will buy again and tell others about their good experienceNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfactionExchange, transactions and relationshipsMarkets
11 Value and Satisfaction Perceived ValueThe customer’s evaluation of the difference between benefits and costs.Customers often do not judge values and costs accurately or objectively.Customer SatisfactionProduct’s perceived performance relative to customer’s expectations.
12 Understanding the Marketplace Core ConceptsExchangeThe act of obtaining a desired object from someone by offering something in returnOne exchange is not the goal, relationships with several exchanges are the goalRelationships are built through delivering value and satisfactionNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfactionExchange, transactions and relationshipsMarkets
13 For an exchange to occur…. There are at least two parties.Each party has something that might be of value to the other party.Each party is capable of communication and delivery.Each party is free to reject the exchange offer.Each party believes it is appropriate or desirable to deal with the other party.
14 Understanding the Marketplace Core ConceptsMarketSet of actual and potential buyers of a productMarketers seek buyers that are profitableNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfactionExchange, transactions and relationshipsMarkets
15 What is Marketed? Goods Services Events & Experiences Persons Places & PropertiesOrganizationsInformationIdeas
16 Demand States Nonexistent Latent Negative Irregular Declining Full OverfullUnwholesome
17 Structure of Flows in a Modern Exchange Economy
19 The marketplace isn’t what it used to be… Changing technologyGlobalizationDeregulationPrivatizationEmpowermentCustomizationConvergenceDisintermediation
20 Company OrientationsProductionProductSellingMarketing
21 Marketing Management Philosophies Consumers favor products that areavailable and highly affordable.Improve production and distribution.Consumers favor products that offerthe most quality, performance, andinnovative features.Consumers will buy products only ifthe company promotes/ sells theseproducts.Focuses on needs/ wants of targetmarkets & delivering satisfactionbetter than competitors.markets & delivering superior value.Production ConceptProduct ConceptSelling ConceptMarketing ConceptHolistic Marketing Concept
25 Marketing Mix and the Customer Four P’sProductPricePlacePromotionFour C’sCustomer solutionCustomer costConvenienceCommunication
26 The New Four Ps People Processes Programs Performance If we update them to reflect the holistic marketing concept, we arrive at a more representative set that encompasses modern marketing realities: people, processes, programs, and performance, as in Figure 1.5.People reflects, in part, internal marketing and the fact that employees are critical to marketing success.Processes reflects all the creativity, discipline, and structure brought to marketing management. Programs reflects all the firm’s consumer-directed activities. It encompasses the old four Ps as well as a range of other marketing activities that might not fit as neatly into the old view of marketing.We define performance as in holistic marketing, to capture the range of possible outcome measures that have financial and nonfinancial implications (profitability as well as brand and customer equity), and implications beyond the company itself (social responsibility, legal, ethical, and community related).PerformanceCHP: 1&5-26
32 Value and Satisfaction Perceived ValueThe customer’s evaluation of the difference between benefits and costs.Customers often do not judge values and costs accurately or objectively.Customer SatisfactionProduct’s perceived performance relative to customer’s expectations.
33 Determinants of Customer Perceived Value Total customer benefitTotal customer costProduct benefitMonetary costServices benefitTime costPersonal benefitEnergy costImage benefitPsychological cost
34 Determinants of Customer-Delivered Value TotalcustomervalueProductvaluePersonalvalueCustomer-deliveredvalueTotalcustomercostMonetarycostEnergycost
35 Loyalty A deeply held commitment to re-buy or re-patronize a preferred productor service in the future despite situationalinfluences and marketing efforts havingthe potential to cause switching behavior.
36 The Value Proposition The whole cluster of benefits the company promises to deliver
37 Measuring Satisfaction Periodic SurveysCustomer Loss RateMystery ShoppersMonitor competitive performance
38 Product and Service Quality Quality is the totality of features andcharacteristics of a product orservice that bear on itsability to satisfystated or implied needs.
39 Total Quality Management TQM is an organization-wideapproach to continuouslyimproving the quality ofall the organization’s processes,products, and services.
40 Maximizing Customer Lifetime Value ProfitabilityCustomerEquityLifetimeValue
42 Framework for CRM Identify prospects and customers Differentiate customers by needsand value to companyInteract to improve knowledgeCustomize for each customer
43 CRM Strategies Reduce the rate of defection Increase longevity Enhance “share of wallet”Terminate low-profit customersFocus more effort on high-profit customers
44 Mass vs. One-to-One Marketing Average customerCustomer anonymityStandard productMass productionMass distributionMass advertisingOne-way messageEconomies of scaleOne-to-OneIndividual customerCustomer profileCustomized market offeringCustomized productionEconomies of scopeShare of customer
45 Customer RetentionAcquisition of customers can cost 5 times more than retaining current customers.The average company loses 10% of its customers each year.A 5% reduction to the customer defection rate can increase profits by 25% to 85%.The customer profit rate increases over the life of a retained customer.
46 The Marketing FunnelFigure 5.4 shows the main steps in attracting and retaining customers in terms of a funnel. The marketing funnel identifies the percentage of the potential target market at each stage in the decision process, from merely aware to highly loyal. Consumers must move through each stage before becoming loyal customers. Some marketers extend the funnel to include loyal customers who are brand advocates or even partners with the firm.CHP: 1&5-46
47 The Customer-Development Process SuspectsProspectsDisqualifiedFirst-timecustomersRepeatcustomersClientsMembersPartnersEx-customers
48 Building LoyaltyPartnershipProactiveAccountableReactiveBasic