MKTG 301 MKTG 301 Principles of Marketing DEVELOPING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING 1 1 C HAPTER.

MKTG 301MKTG 301Principles of Principles of

MarketingMarketing

DEVELOPING CUSTOMER

RELATIONSHIPS AND VALUE THROUGH

MARKETING

11CHAPTER

• Define marketing and explain the importance of (1) discovering and (2) satisfying consumer needs and wants.

• Distinguish between marketing mix elements and environmental factors.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

• Understand how organizations build strong customer relationships using current thinking about customer value and relationship marketing.

• Describe how today’s market orientation differs from prior eras oriented to production and selling.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

• Understand the meaning of ethics and social responsibility and how they relate to the individual, organizations, and society.

• Know what is required for marketing to occur and how it creates customer value and utilities for customers.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

Would you sell more 43-inch Hitachi Big Screen HDTV

monitors for $ 1799 or $499 each?

• Being a Marketing Expert: Good News-Bad News• The Good News: You Already Have

Marketing Experience

• The Bad News: Surprises About the Obvious

WHAT IS MARKETING?

How would you define

marketing ?

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Marketing

Products and

Services

Value, satisfaction,and quality

Needs, wants,and demands

Exchange, transactions,and relationships

Markets

CoreMarketingConcepts

CoreMarketingConcepts

• Marketing: Using Exchanges to Satisfy Needs

• The Diverse Factors Influencing Marketing Activities

WHAT IS MARKETING?

EXCHANGE EXCHANGE

Exchange is the trade of things of value between buyer and seller so that each is better off after the trade.

Exchange is the trade of things of value between buyer and seller so that each is better off after the trade.

Exchange

Customers

Relationships

Environmental Forces

Shareholders(owners)

The OrganizationSociety Society

Suppliers

Social RegulatoryTechnologicalEconomic Competitive

OtherOrganizations

Alliances

Partnerships

OwnershipHuman

Resources

Researchand

Development

InformationSystems

Manufacturing

Finance Marketing

Management

FIGURE 1-3FIGURE 1-3 An organization’s marketing department relates to many people, groups, and forces

• Two or More Parties with Unsatisfied Needs

• Desire and Ability to Satisfy These Needs

• A Way for the Parties to Communicate

• Something to Exchange

Requirement for Marketing to Occur

• Discovering Consumer Needs• The Challenge of Launching Winning

New Products

• Consumer Needs and Consumer Wants

• What a Market Is

HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

How many new products are

launched each year in US?

What percentage succeed in the long

run ?

1. Make sure to focus on what the customer benefit is?

2. Learn key lessons from the past

Organization’smarketing department

Discover consumer needs and wants

Marketing’s first task:discovering consumer needs and wants

What Motivates a Consumerto Take Action?

• NeedsNeeds - states of felt deprivation including physicalphysical needs for food, socialsocial needs for belonging and individualindividual needs for self-expression. i.e. I am thirsty.

What Motivates a Consumerto Take Action?

• WantsWants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Cola.

Wants- Is it enough?

Popularity is NOT the objective

Don’t want virtual consumption- the phenomenon that occurs when consumer love your products but don’t feel a need to buy it…..

What Motivates a Consumerto Take Action?

• DemandsDemands - human wants backed by buying power. i.e. I have money to buy a Coca-Cola.

What is Market ?

What is a Market?

Potential consumers make up a market, which is:

1.people

2.with the desire and

3.with the ability to buy a specific product.

One or more specific groups of potential customers toward which an organization directs its marketing program.

One or more specific groups of potential customers toward which an organization directs its marketing program.

Target Market

Organization’smarketing department

Discover consumer needs and wants

Information about needs and wants

Potential consumers: The market

Marketing’s first task:discovering consumer needs

and wants

Do you know too much about your consumer?

Marketers have always watch consumersasked questions, but what most marketerdon’t do is watch consumer CLOSELY enough

If you ignore a single bit of potentially valuable information about consumers you are wasting money.

• Who buys our product or service?

• Who initiates and makes the decision to purchase and who influences the process?

• How is the purchase decision made?

• What attributes or criteria are important to customers?

• What are customers’ perceptions of and attitudes

toward our company, product/service or brands?

• What factors influence the decision making process?

• Contact points where customers can be reached?

What should you know about your customers.

Organization’s marketing department

Discover consumer needs

Information about needs

Potential consumers: The market

Satisfy consumer needsFind the right combination of:

• Product• Price• Promotion• Place

Goods, services, ideas

Marketing’s second task: Satisfying consumer needs

Marketing Mix

Product Place

Price Promotion

C

Environmental Factors

Prom

otion

Competitiv

e force

s

Regulatory forces

Soci

al f

orce

s

Economic forces

PlacePrice

Pro

duct

Consumer

Marketingprogram

Technological forces

Concept Check

1. What is marketing?

A: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

2. Marketing focuses on __________ and ___________ consumer needs

Concept Check

discoveringsatisfying

Concept Check

3. What four factors are needed for marketing to occur?

A: (1) Two or more parties with unsatisfied needs, (2) a desire and ability on their part be satisfied, (3) a way for the parties to communicate, and (4) something to exchange.

Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-timer delivery and both before-sale and after-sale service.

Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-timer delivery and both before-sale and after-sale service.

Customer Value

• Global Competition, Customer Value, and Customer Relationships

• Relationship Marketing and the Marketing Program• Relationship Marketing: Easy to

Understand

• Relationship Marketing: Difficult to Implement

• The Marketing Program

THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

The hallmark of developing and maintaining effective customer relationships is today called relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their long term benefit.

The hallmark of developing and maintaining effective customer relationships is today called relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their long term benefit.

Relationship Marketing

The marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers.

The marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers.

Marketing Program

• A Marketing Program for Rollerblade• Expanding the Market for Rollerblade

Skates

• Exploiting Strengths in Technology

THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

1. An organization can’t satisfy the needs of all consumers, so it must focus on one or more subgroups, which are its ____________.target markets

Concept Check

Concept Check

2. What are the four marketing mix elements that make up the organization’s marketing program?

A: product, price, promotion, place

Concept Check

3. What are uncontrollable variables?

A: Environmental factors the organization’s marketing department can’t control. These include social, economic, technological, competitive, and regulatory forces.

FIGURE 1-7FIGURE 1-7 Four different orientations in the history of American business

Production EraProduction Era Get out production, cut the price.

If we can built a better product , the world will

beat a path to our door.

Company Orientations Towards Company Orientations Towards the Marketplacethe Marketplace

Marketing Myopia

Marketers should NEVER sell products to consumers!

• People buy holes, not drills!

• Fashion, status, reference groups approval, and warmth, but not coats!

The Marketing Myopia

Selling Concept EraSelling Concept Era

Get the customers to the fit the company’s

offering.

Company Orientations Company Orientations Towards the MarketplaceTowards the Marketplace

The marketing concept is the idea that an organization should strive to satisfy the needs of consumers, while also trying to achieve the organization’s goals.

The marketing concept is the idea that an organization should strive to satisfy the needs of consumers, while also trying to achieve the organization’s goals.

Marketing Concept

Marketing Concept EraMarketing Concept Era

Find wants and feel them

Company Orientations Company Orientations Towards the MarketplaceTowards the Marketplace

WE MAKE IT HAPPEN FOR YOU

HAVE IT YOUR WAY

TO FLY, TO SERVE

Marketing Concept

WE ARE NOT SATISFIED UNTIL YOU

ARE

MarketIntegratedmarketing

Profits throughcustomer

satisfactionCustomer

needs

(b) The marketing concept

FactoryExistingproducts

Selling andpromotion

Profits throughsales volume

Startingpoint Focus Means Ends

(a) The selling concept

An organization that has a market orientation focuses its efforts on continuously collecting information about customers’ needs and competitors capabilities, sharing this information across departments, and using the information to create customer value.

An organization that has a market orientation focuses its efforts on continuously collecting information about customers’ needs and competitors capabilities, sharing this information across departments, and using the information to create customer value.

Market Orientation

Market OrientationMarket Orientation

Company Orientations Company Orientations Towards the MarketplaceTowards the Marketplace

CompetitionCustomer

Balancing Customer and Competitor Orientation

Competitor DrivenCompetitor Driven

Customer DrivenCustomer Driven

Market OrientationMarket Orientation

Focuses on customer developments in designing its

marketing strategy and on delivering superior value to its

target customers.

Pays balanced attention both customers and competitors in

designing its marketing strategies

Moves mainly based on competitors’ actions and reactions

Customer relationship management is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace.

Customer relationship management is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace.

Customer Relationship Management (CRM)

• Ethics and Social Responsibility:Balancing the Interests of Different Groups• Ethics

• Social Responsibility Societal marketing concept Macromarketing Micromarketing

HOW MARKETING BECAME SO IMPORTANT

The societal marketing concept is the view that an organization should discover and satisfy the needs of its consumer in a way that also provides for society’s well-being.

The societal marketing concept is the view that an organization should discover and satisfy the needs of its consumer in a way that also provides for society’s well-being.

Societal Marketing Concept

Macromarketing looks at how the aggregate flow of a nation’s goods and services benefits society.

Macromarketing looks at how the aggregate flow of a nation’s goods and services benefits society.

Macromarketing

Micromarketing is how an individual organization directs its marketing activities and allocates its resources to benefit its customers.

Micromarketing is how an individual organization directs its marketing activities and allocates its resources to benefit its customers.

Micromarketing

• The Breadth and Depth of Marketing• Who Markets?

• What is Marketed?

HOW MARKETING BECAME SO IMPORTANT

Let’s watch some commercials

(Almost) Anything Can be Marketed

ConsumerGoods

andServices

ConsumerGoods

andServices

Business-to-

BusinessMarketing

Business-to-

BusinessMarketing

Idea,Place,People

Marketing

Idea,Place,People

Marketing

Not-For-Profit

Marketing

Not-For-Profit

Marketing

• The Breadth and Depth of Marketing (cont)• Who Buys and Uses What is Marketed?

Ultimate consumers Organizational buyers

• Who Benefits?

• How Do Consumers Benefit? Utility

HOW MARKETING BECAME SO IMPORTANT

Ultimate consumers are the people who use the goods and services purchased for a household.

Ultimate consumers are the people who use the goods and services purchased for a household.

Ultimate Consumer

Organizational buyers are units such as manufacturers, retailers, or government agencies that buy goods and services for their own use of for resale.

Organizational buyers are units such as manufacturers, retailers, or government agencies that buy goods and services for their own use of for resale.

Organizational Buyers

Who Benefits?

ConsumersConsumers CompanyCompany

SocietySociety

Utility is the benefit or customer value received by uses of a product.

Utility is the benefit or customer value received by uses of a product.

Utility

UtilityUtility

Form

Place

Time

Possession

Form

Place

Time

Possession

Examples of Marketing Actionsthat Create Utility

Examples of Marketing Actionsthat Create Utility

benefit provided by transforming raw materials into the finished (PRODUCTION)

benefit provided by making the products available where consumers want them

benefit provided by storing products until they need

benefit provided by allowing the consumer to own, use and enjoy the product

benefit provided by transforming raw materials into the finished (PRODUCTION)

benefit provided by making the products available where consumers want them

benefit provided by storing products until they need

benefit provided by allowing the consumer to own, use and enjoy the product

UTILITIES PROVIDING by MARKETING

1. Like Pillsbury and General Electric, many firms have gone through four distinct orientations for their businesses: starting with the __________ era and ending with today’s ________________ era.

Concept Check

productionmarket orientation

Concept Check

2. What are the two key characteristics of the marketing concept?

A: An organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization’s goals.

Concept Check

3. In this book the term product refers to what three things?

A: Goods (physical products), services, and ideas