1 Learning Goals Define marketing and the marketing process. Explain the importance of understanding customers and identify the five core marketplace conceptsIdentify the elements of a customer-driven marketing strategy and discuss the marketing management orientations.Discuss customer relationship management and creating value for and capturing value from customersDescribe the major trends and forces changing the marketing landscape
2 Goal 1: Define marketing and the marketing process. 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 customersGoal 1: Define marketing and the marketing process.
3 Chapter 1 Marketing: Managing Profitable Customer Relationships Marketing : A process that help companies create value for customers and build strong customer relationships to get value in return from customers.Key elements of Marketing Definition:Social and managerial processNeeds and wantsCreating and exchanging value with others.
4 The Marketing Process A Five-Step Process Understand the marketplace and customer needs and wantsDesign a customer-driven marketing strategyConstruct a marketing program that delivers superior valueBuild profitable relationships and create customer delightCapture value from customers to create profits and customer qualityGoal 1: Define marketing and the marketing process.
5 profitable relationships Marketing ProcessA model of marketing processBuildprofitable relationshipsand createcustomer delightUnderstandcustomerneeds and wantsCapturecustomer valuefrom customer tocreate profitsandcustomer qualityDesign customerorientedmarketing strategyConstructmarketing programthat deliverssuperior value
6 Understanding the Marketplace Core ConceptsNeedState of felt deprivationExample: Need foodWantsThe form of needs as shaped by culture and the individualExample: Want a Big MacDemandsWants which are backed by buying powerNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfactionExchange, transactions and relationshipsMarketsGoal 2: Identify the five core marketplace concepts.
7 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 relationshipsMarketsGoal 2: Identify the five core marketplace concepts.
8 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 relationshipsMarketsGoal 2: Identify the five core marketplace concepts.
9 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 relationshipsMarketsGoal 2: Identify the five core marketplace concepts.
10 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 relationshipsMarketsGoal 2: Identify the five core marketplace concepts.
11 Modern Marketing System SuppliersModern Marketing SystemModern Marketing SystemThis CTR corresponds to Figure 1-3 on p.11 and relates to the material on p. 10.CompetitorsCompany(Marketer)MarketingIntermediariesThe Marketing SystemA modern marketing system consist of four levels of activity. In a very real sense, each level influences the other levels. Each level adds value to the system.Discussion Note: Consumers add value to the system when they buy products. Their purchase price in turn funds the efforts (as profits) of each of the other layers to create more value as the system continues the cycle.Suppliers. This level provides the inputs to the production of goods and services.Company and Competitors. Each company adds value to supplies to create the products (goods, services, or both) offered to various markets.Marketing Intermediaries. Because of specialization, one or more other firms can get products to consumers more efficiently than most producers can (though there are important exceptions).End User Market. The consumer is the “final cause” of the efforts of each level of the marketing system.Discussion Note: Ask students to comment on whether the schematic should have “dotted line” feedback connection from the end user to each level of the system. What form of communication does that feedback take? Purchase? Satisfaction level? Brand loyalty? Brand switching? You might encourage students to remember this system perspective throughout the course and relate examples back to this CTR from time to time.EnvironmentEnvironmentEnd UserMarket
12 Design a customer-driven marketing strategy Marketing management: is the art and science of choosing target markets and building profitable relationships with them.This definition must include answers to two questions:What customers will we serve?How can we serve these customers best?Goal 3: Identify elements of a customer-driven strategy.
13 Design a customer-driven marketing strategy Selecting Customers and Creating Value:Customer ManagementWhat customers will we serve?Marketers select customers that can be served profitablyValue PropositionHow can we serve these customers best?Includes the set of benefits or values a company promises to deliver to consumers to satisfy their needsGoal 3: Identify elements of a customer-driven strategy.
14 Marketing Management Design a customer-driven marketing strategy Marketing OrientationsSelling conceptMarketing conceptProduction conceptProduct conceptSocietal marketing conceptGoal 3: Identify elements of a customer-driven strategy.
15 Societal Marketing Concept Five Marketing PhilosophiesThis CTR relates to the material on ppTeaching Tip: You may find it useful to ask students to give their definitions of philosophy. How do they use philosophies for studying? dating? planning their time? Work from their examples to the idea that businesses too have philosophies about how to get things done.Design a customer-driven marketing strategy Marketing Management PhilosophiesConsumers favor products that areavailable and highly affordableImprove production and distributionConsumers favor products that offerthe most quality, performance, andinnovative featuresConsumers will buy products only ifthe company promotes/ sells theseproductFocuses on needs/ wants of targetmarkets & delivering satisfactionbetter than competitorsmarkets & delivering superior valueSociety’s well-beingProduction ConceptProduct ConceptThe Production Concept. One of the oldest concepts, it holds that consumers favor products that are available and affordable. Management emphasizes production and distribution efficiency. Examples from the text include Ford's Model T and Texas Instruments.The Product Concept . This concept focuses on the actual product in an effort to continuously improve quality, performance, and features. May lead to marketing myopia or the tendency to too narrowly define the scope of one's business. Consumers buy products for their benefits, not their features.The Selling Concept. This concept views consumers as unwillingly customers whose inherent opposition must be overcome to make a sale. It is most often used today for unsought goods. The selling concept tends to encourage sellers to misrepresent the true nature of their products or services and can lead to problems in maintaining high customer satisfaction.The Marketing Concept. This concept links the company's success with the consumer's continuing satisfaction. Its "outside-in" approach starts with a well defined target market, an analysis of their needs and wants, and then builds the company's offering around meeting those needs better than the competition (Note: the selling and marketing concepts are contrasted on the following CTR of Figure 1-4).The Societal Marketing Concept. This concept adds to the marketing concept the idea that the company should contribute to the betterment of society as a whole (Note: The societal marketing concept is developed in more detail on a following CTR of Figure 1-5 and the accompanying notes).Selling ConceptMarketing ConceptSocietal Marketing Concept
16 Marketing & Sales Concepts Contrasted Marketing and Sales Concept ContrastedThis CTR corresponds to Figure 1-4 on p. 15 and to the material on ppMarketing & Sales Concepts ContrastedThe Selling ConceptStartingPointFocusMeansEndsFactoryExistingProductsSellingandPromotingProfitsthroughVolumeThe Marketing ConceptComparisons and Contrasts:The Selling Concept takes an inside-out perspective -- looking at the company’s needs and wants in terms of existing products and ways to find customers for them. The Marketing Concept takes an outside-in perspective - identifying the needs and wants of a clearly defined market and adjusting company efforts to make products that meet the needs.Discussion Note: Promotional tone may help indicate whether a company practices the selling or the marketing concept. Selling involves persuasion -- convincing the customer of their need to buy existing products. Marketing, at its best, involves information -- bringing the developed product to the awareness of a target market that recognizes need satisfying products.As the text notes, companies can let their own success lock them into a rigid selling structure. As times change, and they always do, those companies fail to see the need for meeting new and emerging consumer needs. The marketing concept helps companies focus on customer need satisfaction, leading to long-term success by customer retention.MarketCustomerNeedsIntegratedMarketingProfitsthroughSatisfaction
17 Societal Marketing Concept This CTR corresponds to Figure 1-5 on p. 16 and relates to the material on ppSociety(Human Welfare)SocietalMarketingConceptThe Societal Marketing ConceptThe Societal Marketing Concept holds that the organization should determine the needs, wants, and interests of target markets. In delivering the desired satisfactions more effectively and efficiently than the competition, the company should also maintain or improve both the consumer’s and society’s well being.Discussion Note: You may wish to consider extra-textual class discussion identifying the pros and cons of the societal marketing concept.Pros: Reasons for adopting the societal marketing concept include:1. Public expectations. Social expectations of business have increased. 2. Long-run profits. Socially responsible marketing may lead to more secure long-run profits Ethical obligation. Business should recognize that responsible actions are right for their own sake Public image. A good public image helps firms gain more customers, better employees, access to money markets, and other benefits Better environment. Involvement by business can help solve difficult social problems, creating a better quality of life and a more desirable community in which to attract and hold skilled employees Balance of responsibility and power. Marketers have a large amount of power in society that requires an equally large amount of responsibility Stockholder interests. Socially responsible companies are considered less risky and safer investments 9. Possession of resources. Business has the financial resources, technical experts, and managerial talent to provide to support public causes.Cons: Reasons for not adopting the societal marketing concept include:1. Violation of profit maximization. 2. Dilution of purpose. The pursuit of social goals dilutes business’s primary purpose Costs. Many socially responsible activities don’t pay their way. 4. Too much power. Business is already one of the most powerful institutions in society Lack of skills. Marketers may be poorly qualified to deal with social issues Lack of accountability. There are no direct lines of social accountability from the business sector to the public Lack of broad public support. Even favorable attitudes are general and lack consensus on specific actions marketers should take on social issues.Consumers(Wants)Company(Profits)
18 Construct a marketing program that delivers superior value Transforms the marketing strategy into actionIncludes the marketing mix and the 4P’s of marketingProductPricePlacePromotionGoal 3: Identify elements of a customer-driven strategy.
19 Building Customer Relationships CRM – Customer relationship managementThe overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers.Goal 4: Discuss CRM and capturing value.
20 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.Goal 4: Discuss CRM and capturing value.
21 Not All Customers are Equal Basic RelationshipsLow-margin customersFull PartnershipsKey customersSelective relationship managementWeeding out unprofitable customersGoal 4: Discuss CRM and capturing value.
22 Capturing Value from Customers Key ConceptsCustomer delight leads to emotional relationships and loyaltyCustomer Lifetime Value shows true worth of a customerCustomer Loyalty and RetentionShare of CustomerCustomer EquityGoal 4: Discuss CRM and capturing value.
23 Capturing Value from Customers Key ConceptsShare of customer’s purchase in a product category.Achieved through offering greater variety, cross-sell and up-sell strategies.Customer Loyalty and RetentionShare of CustomerCustomer EquityGoal 4: Discuss CRM and capturing value.
24 Capturing Value from Customers Key ConceptsThe combined customer lifetime values of all current and potential customers.Measures a firm’s performance, but in a manner that looks to the future.Choosing the “best” customers is keyCustomer Loyalty and RetentionShare of CustomerCustomer EquityGoal 4: Discuss CRM and capturing value.
25 Goal 5: Discuss trends and forces. Marketing LandscapeChallengesGrowth of the InternetAdvances in telecommunications, information, transportationCustomer research and trackingProduct developmentDistributionNew advertising tools24/7 marketing through the InternetDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsGoal 5: Discuss trends and forces.
26 Goal 5: Discuss trends and forces. Marketing LandscapeChallengesGeographical and cultural distances have shrunkGreater market coverageMore options for purchasing and manufacturingIncreased competition from foreign competitorsDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsGoal 5: Discuss trends and forces.
27 Goal 5: Discuss trends and forces. Marketing LandscapeChallengesMarketers need to take great responsibility for the impact of their actionsCaring capitalism is a way to differentiate your companyDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsGoal 5: Discuss trends and forces.
28 Goal 5: Discuss trends and forces. Marketing LandscapeChallengesMany organizations are realizing the importance of strategic marketingPerforming artsGovernment agenciesCollegesHospitalsChurchesDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsGoal 5: Discuss trends and forces.
29 Goal 5: Discuss trends and forces. Marketing LandscapeChallengesProfits through managing long-term customer equityImprove customer knowledgeTarget profitable customersKeep profitable customersDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsGoal 5: Discuss trends and forces.
30 What is MarketingThe process of building profitable customer relationships by creating value for customers and capturing value in return