1. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 1-1 CHAPTER 1 Developing Customer Relationships and Value through Marketing

2. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 1-2 After reading this chapter you should be able to: Define marketing and explain the importance of: discovering and satisfying consumer needs and wants. Distinguish between marketing mix elements and environmental factors.

3. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 1-3 After reading this chapter you should be able to: Describe how organisations build strong customer relationships using current thinking about customer value and relationship marketing. Explain the meaning of ethics and social responsibility and how they relate to the individual, organisations, and society.

4. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University What is Marketing? 1-4 Marketing: Using Exchanges to Satisfy Needs What you need to remember here is that marketing is about exchanges. As consumers you undertake exchanges every day of the week. What you will learn in this course is the diverse factors that influence that exchange between you as a consumer and the organisation you are buying the product from.

5. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Some of the factors that affect marketing. 1-5

6. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check As we go through the text don’t forget to use the concept checks to ensure that you are understanding the major concepts for each chapter. 1.What is marketing? Marketing is the process of developing, pricing, promoting, and distributing goods, services, and ideas to satisfy the needs of consumers. 2.Marketing focuses on ______ and ______ consumer needs. Discovering and satisfying So how did you go? Any questions? 1-6

7. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University How Marketing Discovers and Satisfies Consumer Needs Discovering consumer needs is about… –The challenge of launching winning products –And understanding it’s about the consumer needs and wants, not the product! Discovering consumer needs though isn’t easy. If it was we would all be happy consumers but we aren’t are we? Being successful in marketing also means having a customer orientation, not a profit orientation. 1-7

8. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Needs and Wants So what exactly are needs and wants? Why are they so important to marketers? A need occurs when a person feels physiologically deprived of basic necessities such as food, clothing and shelter. A want is a felt need that is shaped by a person’s knowledge, culture and personality. –For example, we may have a need for food, but our knowledge, culture and personality may mean that we want a hamburger. It is up to us as marketers to inform consumers how our products can satisfy their needs and wants. 1-8

9. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Evolution of the Marketing Orientation Satisfying consumer needs and wants though wasn’t the aim of many organisations as it has been only recently that the marketing orientation has emerged. Up until the 1960’s consumers had to buy whatever product they were sold by companies, and the art of the selling was more important than meeting customer needs. In the 1960’s the marketing concept began to emerge, which was the idea that an organisation should be trying to satisfy the needs of consumers while also trying to achieve the organisation’s goals. 1-9

10. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Market Orientation and Market From the 1960’s onwards the era of the market orientation emerged. Market orientation is about focusing the organisational efforts on collecting and using information about customers’ needs to create customer value. Market orientation has led to marketing concepts like customer relationship management (CRM). But haven’t we missed something? What a market is? Let’s find out… 1-10

11. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Market A market consists of people with both the desire and the ability to buy a specific product. In other words people who want to exchange a thing of value, usually money, for a thing of value from the organisation, which is a product or service. Therefore markets ultimately are made up of people. 1 - 11

12. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Target Markets As it would not be viable to target the entire market or every market, we target only some markets. A target market is therefore a specific group of potential consumers towards which an organisation directs the marketing program. 1-12

13. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Satisfaction and Customer Loyalty Customer satisfaction and customer loyalty are terms you’ll hear discussed a lot in business. An unhappy customer can be your worst enemy in marketing – one Australian food marketer found that an unhappy customer might tell up to 28 people about their experience! A satisfied customer though is a loyal customer. Keeping a customer loyal is smart business – a loyal customer will often purchase more frequently and spend more when they do so. Keep the importance of these concepts in mind as we work through the course. 1-13

14. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Four P’s: Controllable Marketing Mix Factors Now you’ve learnt about the importance of customer satisfaction and customer loyalty, how does an organisation use marketing to achieve these things? A company develops a marketing plan for each of its products that will ensure that its products will meet the needs and wants of its customers, which of course leads to satisfied and loyal customers. The company uses a combination of four marketing functions, or the 4 P’s, to do this: Product - a good, service or idea to satisfy the consumer’s needs Price – What is exchanged for the product Promotion – a means of communication between the seller and buyer Place – a means of getting the product to the consumer These are called the controllable marketing mix factors because the marketer controls these factors. 1-14

15. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Don’t Forget! The 4 P’s are critical to know and understand for this course. You should never forget the 4 P’s in this course. They are: 1.Product - a good, service or idea to satisfy the consumer’s needs 2.Price – What is exchanged for the product 3.Promotion – a means of communication between the seller and buyer 4.Place – a means of getting the product to the consumer 1-15

16. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Uncontrollable Factors The 4 P’s, which we’ll go over in much more depth during the course, are the factors that we can control in marketing. However there are factors outside our control that we can’t. These factors are: –Social –Economic –Technological –Competitive and Regulatory forces As a marketer you need to be aware of what influence these factors will have on your marketing program before, during and after you implement it. 1-16

17. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Marketing Program: Developing Loyal Customers As customers we are always seeking value in the products we buy and consume. Companies have realised this want in consumers and many companies now seek to offer the best customer value that they can. What is customer value? Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-time delivery and before and after sales service. Companies offer customer value by either a combination of these methods or only one, it all depends upon how the consumer perceives value for that product. 1-17

18. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Marketing Program: Relationship Marketing A firm achieves meaningful customer relationships by creating and maintaining connections with its customers through careful co-ordination of the 4 P’s. Relationship marketing is the process by which the organisations is linked to its individual customers, employees, suppliers and other partners for their mutual long-term benefit. Relationship marketing relies upon a personal, ongoing relationship between the organisation and its individual customers that begins before and continues after the sale. This means that some products never establish a close relationship with their customers, whereas some do so very easily. 1-18

19. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University How does Lexus do Relationship Marketing 1-19

20. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.An organisation can’t satisfy the needs of all consumers, so it must focus on one or more subgroups, which are its____________ 2.What are the four marketing mix elements that make up the organisation’s marketing program? 3.What are uncontrollable variables? 1. Target markets 2. Product, price, place and promotion. 3. Environmental factors the organisation’s marketing department can’t control. These include social, economic, technological, competitive, and regulatory forces. 1-20

21. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Ethics and Social Responsibility: Balancing Interests Many claim that marketing is the most influential business theory in the business world. The drive to be seen as the company that can offer the best consumer value has made many companies act unethically and with little social responsibility. But are these concepts important? Ethics is increasingly becoming important to consumers, and therefore also to companies. Many companies now actively promote their ethical standards as much as their product quality. Social responsibility, that is a company’s responsibility to society, has also become important. Many companies are proud of the fact that they try to minimise their impact on society as a whole. This has led to the societal marketing concept. This is the view that organizations should satisfy the needs of consumers in a way that provides for society’s wellbeing. 1-21

22. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Breadth and Depth of Marketing Marketing affects every person and organisation in the world in some way. To understand how this happens, we need to analyse: 1)who markets, 2)what they market, 3)who buys and uses what is marketed, 4)who benefits from those activities, 5)How they benefit. 1-22

23. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Breadth and Depth of Marketing Who markets? Nearly every organisation undertakes marketing activities, and more of them are increasing their marketing efforts. Marketing will only increase in the future. What is marketed? Nearly anything can be marketed. From products, to services to even ideas such as healthy eating or anti drink driving. Who buys and uses what is marketed? All of us are consumers. Everyday we consume many products, and our lives are now built on consuming those products. Who benefits? All of us. From a better standard of living and increased competition in markets, through to improved products to employment in companies that use marketing to grow. How do consumers benefit? Consumers benefit from increased utility in form, place, time and possession. 1-23

24. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What are the two key characteristics of the marketing concept ? An organisation should: (1) strive to satisfy the needs of consumers; (2) while also trying to achieve the organisation’s goals. 2. What is the difference between goods and services? Goods are physical objects, such as iron ore, apples, a computer, or an airplane. Services include things as diverse as legal advise, a college education or air travel. 1-241-24 1-24

25. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Finish Questions? Next: Linking Marketing and Corporate Strategies. 1-25