Chapter 1 Marketing in a Changing World: Creating Customer Value and Satisfaction

What is Marketing? Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Simply put: Marketing is the delivery of customer satisfaction at a profit.

Core Marketing Concepts (Fig. 1-1) Needs, wants, and demands Markets Products and services Exchange, transactions, and relationships Value, satisfaction, and quality

What are Consumer’s Needs, Wants and Demands? Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am hungry. Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a hamburger, French fries, and a soft drink. Demands - human wants backed by buying power. i.e. I have money to buy this meal.

What Will Satisfy Consumer’s Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want Experiences Persons Places Organizations Ideas Information Services Activities or Benefits Offered for Sale That Are Essentially Intangible and Don’t Result in the Ownership of Anything

How Do Consumers Choose Choose Among Products and Services? Value Gained From Owning a Product and Costs of Obtaining the Product is Customer Value Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is Customer Satisfaction Total Quality Management Involves Improving the Quality of Products, Services, and Marketing Processes

How Do Consumers Obtain Products and Services? Exchanges Transactions Relationships Building a Marketing Network Consisting of The Company and All Its Supporting Stakeholders

Who Purchases Products and Services? People Who Exhibit Need Factors Situational Unexpected Attitudes of Others Ethical Potential Buyers Market – Buyers who share a particular need or want that can be satisfied through exchange or relationships. Actual Buyers Resources to Exchange Willingness to Exchange

Modern Marketing System (Fig. 1-3) Suppliers Modern Marketing System (Fig. 1-3) Competitors Company (Marketer) Marketing Intermediaries Environment End User Market Environment

Marketing Management Demand Profitable Marketing Management Management Implementing programs to create exchanges with target buyers to achieve organizational goals Demand Management Finding and increasing demand, also changing or reducing demand such as in Demarketing Profitable Customer Relationships Attracting new customers and retaining and building relationships with current customers

Marketing Management Practice Stage 1. Entrepreneurial Marketing Stage 2. Formulated Marketing Stage 3. Intrepreneurial Marketing

Marketing Management Philosophies Consumers favor products that are available and highly affordable. Improve production and distribution. Consumers favor products that offer the most quality, performance, and innovative features. Consumers will buy products only if the company promotes/ sells these products. Focuses on needs/ wants of target markets & delivering satisfaction better than competitors. markets & society’s welfare. Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept

Marketing and Sales Concepts Contrasted Factory Existing Products Selling and Promoting Profits through Volume The Selling Concept Starting Point Focus Means Ends Market Customer Needs Integrated Marketing Profits through Satisfaction The Marketing Concept

Societal Marketing Concept Society (Human Welfare) Societal Marketing Concept Consumers (Want Satisfaction) Company (Profits)

Marketing Challenges in the New “Connected” Millennium Connections with Customers Connecting more selectively Connecting for life Connecting Directly Connecting Technologies Computer Information Communication Transportation Connections with the world around us Global Connections Connections with values and responsibilities Broadened connections Connections with Marketing Partners Connecting with other company departments Connecting with suppliers and distributors Connecting through strategic alliances Text page 23

Technologies for Connecting Learn About & Track Customers With Databases Create Products & Services Tailored to Meet Customer Needs Connecting Technologies in Computers, Telecommunications, Information, & Transportation Help To: Communicate With Customers in Groups Or One-on-One Distribute Products More Efficiently & Effectively

The Internet The Internet has been hailed as the technology behind a new model for doing business. New applications include: Internet – connecting with customers, Intranets – connecting with others in the company, and Extranets – connecting with strategic partners, suppliers, and dealers. Purchasing will be over $1.4 trillion in 2003. 400,000 companies are now using the Internet to do business.

Connections With Customers Most marketers are targeting fewer, potentially more profitable customers. Asking: What value does the customer bring to the organization? Are they worth pursuing? Focus has shifted to: keeping current customers, and building lasting relationships based on superior satisfaction and value.

Direct Connections With Customers Many companies use technologies to let them connect more directly with their customers. Products available via telephone, mail-order catalogs, kiosks and e-commerce. Some firms sell only via direct channels (i.e. Dell Computer, www.Amazon.com), others use a combination. Direct marketing is redefining the buyer’s role in connecting with sellers. Buyers are active participants in shaping the marketing offer and process; some buyers design their own products online.

Connections With Marketing’s Partners Connecting Inside the Company Every employee must be customer-focused Teams coordinate efforts toward customers Connecting With Outside Partners Supply Chain Management Strategic Alliances

Connections With the World Around Us Global Connections Broadening Connections Values Connections Social Responsibility Connections

Review of Concept Connections Define what marketing is and discuss its core concepts. Explain the relationships between customer value, satisfaction, and quality. Define marketing management and examine how marketers manage demand and build profitable customer relationships. Compare the five marketing management philosophies. Analyze the major challenges facing marketers heading into the next millennium.