ON MARKETING  A Business Firm  The Profit Generation Mechanism  The Key Business Functions  Marketing as a Business Function Target Interest Groups Main Functions Core Activities

A Business Firm  The Business firms under the capitalism seek profits through production of added values and selling them.  The Function: Provide values to the people to help them do the ‘jobs-to-be-done’ for their happiness  The Goals: Survive and grow, that is, sustain  The Necessities  Profit  Support of the whole interest groups

The Profit Generation Mechanism Marketer’s Costs Price Consumer’ s Benefits & Experienc e Consumer’ s Costs Perceived Value Offerings Purchase (= Sales) Profit

The Key Business Functions Procurement (Resources) Production (Added Value) Selling (Revenue)

Function  The kind of action or activity proper to a person, thing, or institution; the purpose for which something is designed or exists; role.  The role which a subsystem has to perform to help its higher level system accomplish its goal.  The role of the heart?  Its upper level system and its goal  The role of the heart  The activities the heart performs to accomplish its function

The Function of Marketing Demand Management for the Output Preference Management Customer Value Management Customer Satisfaction Management Profitable Customer Relationship Management Customer Loyalty Management Define, Create, and Deliver the Value to the Customers and Capture the Return etc.

Paradigms  Knowledge  Values  Instruments  Imagination

Paradigm Shifts A Paradigm Shift in Procurement

Business Outputs of Interest Product Brand Business  Market Group of People Needs, Wants, and Problems  Product Functions and Quality Production Technology

Target Interest Groups of Marketing Consumers Customers Buyers Users Audience Partners Employees Intermediaries Suppliers Value Network Supply Chain

The Demand Characteristics of Interest  Level  Consistency  Timing  Duration

Consumers’ Brand Choice Customer VALUE Perception Customer Preferences Customer Choices Our Actions (Marketing Mix) Competitor’s Actions (Marketing Mix) Market Share Sales Profits What Else?

The Key Marketing Concepts RevenueDemandRelationship Target Market and Customer Value Proposition (Strategy) Competitive Advantage (Action Program) Preferable Differentiation of Perceived Customer Value Perceived Benefits and Experience (Output of Creativity) Perceived Customer Sacrifice/Costs (Output of Productivity) Drivers/Determinants Knowledge & Skills

The Fundamental Components of Value Source: Hoffman et al. (2005), Marketing Principles & Best Practices, 3 rd ed., South-Western of Thomson, p. 20. Monetary Costs Time Costs Energy Costs Psychic Costs Perceived Sacrifice Product Benefits Service Benefits Personnel Benefits Image Benefits Perceived Benefits VALUE

Three Dimensions of Customer Value Read and Lead! Customer Value FOR the Customers OF the Customers BY the Customers

Transaction vs. Relationship Perceived ValuePreference Choice (Purchase) Use and Experience (Performance) Expectation Satisfaction Loyalty (Customer Share, CLV)

Determinants of Customer Satisfaction Performance Expectation Quality (How) Value (What)

Determinants of Customer Expectation Facts Needs & Wants Expectation Dream Promise Experience Comparison

A Simple Model of Marketing Process

Extended Model of Marketing Process

Marketing Management GoalProfitable Customer RelationshipsRelevant Topics Plan  Objectives  What to do and how to do  Value and Satisfaction  Seek, attract, retain, & utilize  Marketing strategy  Marketing program  Corporate/SBU Strategy  Orientations  Environments  Needs, wants, & demand  Market offerings  Expectation & Performance  CRM in a broader sense  STDP  Marketing mix Do  How to hire, cooperate, and motivate  People, departments, & Organization  Partners  Internal marketing  Partner Relationships See  What to measure and how to control  Relationship Quality  Loyalty and Retention  Customer share, CLV, and Customer Equity

Strategic Marketing Planning Macro Environmental Forces Differentiated Value Customers Competitors Company (Value Chain) Target Market(s) Value Proposition(s) Positioning Marketing Mix Biz Model Competitive Strategies  Segmentation  Targeting  Portfolio  Product/Service Concepts  Differentiation  Identity/Themes  Relative Image  4 P’s  Mix & Synergy SWOT Analyses Strategy Formation Long-term Prosperity Profits Demand or Relationship Determinants

The Process of Marketing Management Source: Armstrong and Kotler (2013), Marketing: An Introduction, 11 rh global ed., Pearson, p. 77, Figure 2.4.

Summary 1/2  Marketing is a (business) function.  Marketing is a process.  Marketing exchanges a firm’s output for money.  How to exchange?  Search and attract consumers to buy the output for money.  Orientations Marketing begins after production stops. (What we can produce.) Marketing precedes even production. (What the market wants.) Marketing balances the interests of consumers, the firm, and the society. (What benefits the society’s welfare.) From arm’s length transaction to relationship marketing  One-time transaction focused vs. relationship based Perceived value  perceived value + (expectation) satisfaction Group as a whole  individuals with their own nametag Sales, market share  customer share, CLV, customer equity Product  brand (summary image)  Does every firm need to adopt the relationship marketing?

Summary 2/2  How to derive right customers’ responses.  Consumers’ perceived value and satisfaction are the keys.  How to improve consumers’ perceived value? Choose the right target market(s). Provide the right market offerings. Research present and future needs, wants, and demands. Consider the competition and the value delivery network. Design STDP and marketing mix, implement, and control.  Marketing Management  The process of planning, implementing, and controlling a firm’s activities for deriving the target customers’ right responses.