Marketing intro

An Overview of Marketing: Managing Profitable Customer

Relationships

Chapter 1Chapter 1

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Learning Objectives:1. Define marketing 2. Outline the steps in the marketing process.3. Explain the importance of understanding customers

and the marketplace, and identify the five core marketplace concepts.

4. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

5. Discuss customer relationship management and strategies for building lasting customer relationships.

6. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships.

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What is Marketing?• Simple Definition: Marketing is Simple Definition: Marketing is

managing profitable customer managing profitable customer relationships.relationships.

Goals: Goals:

1.1. Attract new customers by Attract new customers by promising superior value. promising superior value.

2.2. Keep and grow current customers Keep and grow current customers by delivering satisfaction.by delivering satisfaction.

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Needs, wants, and demands

Productsand services

Value, satisfaction, and quality

Exchange, transactions,

and relationships

Markets

Core Marketing Concepts

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Marketing Defined

A social and managerial A social and managerial process by which process by which individuals and groups individuals and groups obtain what they need obtain what they need and want through and want through creating and exchanging creating and exchanging products and value with products and value with others.others.

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Marketing DefinedProcess by which individuals and Process by which individuals and groups obtain what they need and groups obtain what they need and want through want through creating and creating and exchanging products and value exchanging products and value with others.with others.

Simply put: Simply put:

Marketing is the delivery of Marketing is the delivery of customer satisfaction at a profit.customer satisfaction at a profit.

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Needs, Wants, & Demands

• Need:Need:

State of felt deprivation including State of felt deprivation including physical, social, and individual physical, social, and individual needs.needs. Physical need:Physical need:

Food, clothing, shelter, safetyFood, clothing, shelter, safety Social need:Social need:

Belonging, affectionBelonging, affection Individual need:Individual need:

Learning, knowledge, self-expressionLearning, knowledge, self-expression

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•Wants: Wants:

Form that a human need takes, Form that a human need takes, as shaped by culture and as shaped by culture and individual personality.individual personality.

•Wants + Buying Power = Wants + Buying Power = DemandDemand

Needs, Wants, & Demands

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Need / Want Fulfillment

•Needs and Wants Fulfilled Needs and Wants Fulfilled through a through a Marketing OfferMarketing Offer :: Some combination of Some combination of

products, services, products, services, information, or experiences information, or experiences offered to a market to satisfy a offered to a market to satisfy a need or want.need or want.

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Need / Want Satisfiers

• Products:Products: PersonsPersons PlacesPlaces OrganizationsOrganizations InformationInformation IdeasIdeas

• ServicesServices Activity or Activity or

benefit offered benefit offered for sale that is for sale that is essentially essentially intangible and intangible and does not result does not result in the ownership in the ownership of anything.of anything.

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ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

ExperiencesExperiences PersonsPersons PlacesPlaces

OrganizationsOrganizations IdeasIdeasInformationInformation

What Will Satisfy Consumer’s Needs and Wants?

ServicesActivities or Benefits Offered for Sale That Are EssentiallyIntangible and Don’t Result in the Ownership of Anything

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Marketing Myopia•Sellers pay more attention to Sellers pay more attention to

the specific products they the specific products they offer than to the benefits and offer than to the benefits and experiences produced by the experiences produced by the products.products.

•They focus on the “wants” They focus on the “wants” and lose sight of the “needs”and lose sight of the “needs”

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Value & Satisfaction

• If performance is lower than If performance is lower than expectations, satisfaction is expectations, satisfaction is lowlow

• If performance is higher than If performance is higher than expectations, satisfaction is expectations, satisfaction is highhigh

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Total Quality Management

Involves Improving the Quality of Products, Services, and Marketing Processes

Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is

Customer Satisfaction

Value Gained From Owning a Product and Costs of Obtaining the Product is

Customer Value

How Do Consumers Choose Among Products and Services?

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Exchange vs. Transaction

• Exchange:Exchange: Act of Act of

obtaining a obtaining a desired object desired object from someone from someone by offering by offering something in something in return.return.

• Transaction:Transaction: A trade of A trade of

values between values between two parties.two parties.

One party gives One party gives X to another X to another party and gets Y party and gets Y in return. Can in return. Can include cash, include cash, credit, or check.credit, or check.

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ExchangesExchanges TransactionsTransactions

Relationships Relationships Building a Marketing

Network Consisting ofThe Company and All

Its SupportingStakeholders

How Do Consumers Obtain Products and Services?

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What is a Market?

•The set of actual and The set of actual and potential buyers of a product.potential buyers of a product.

•These people share a need or These people share a need or want that can be satisfied want that can be satisfied through exchange through exchange relationships.relationships.

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UnexpectedSituational

Factors

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

Who Purchases Products and Services?

People Who Exhibit Need

Resources to Exchange

Willingness to Exchange

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Marketing Management

•The art and science of The art and science of choosing target markets choosing target markets and building profitable and building profitable relationships with them.relationships with them.

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MarketingManagement

Implementing programs to create exchangeswith target

buyers to achieve

organizational goals

DemandManagement

Finding and increasing

demand, alsochanging or

reducing demand such

as inDemarketing

ProfitableCustomer

Relationships

Attracting new customers and retaining and

building relationships with current customers


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• Demand Demand ManagementManagement Finding and Finding and

increasing increasing demand, also demand, also changing or changing or reducing reducing demand, such demand, such as in as in demarketing.demarketing.

• DemarketingDemarketing Temporarily or Temporarily or

permanently permanently reducing the reducing the number of number of customers or customers or shifting their shifting their demanddemand

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Questions to ask:Questions to ask:

1.1. What customers will we What customers will we serve?serve?

What is our target market?What is our target market?

2.2. How can we best serve How can we best serve these customers?these customers?

What is our value proposition?What is our value proposition?

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Segmentation & Target Marketing

•Market Segmentation:Market Segmentation: Divide the market into Divide the market into

segments of customerssegments of customers

•Target Marketing:Target Marketing: Select the segment to Select the segment to

cultivatecultivate

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Value Proposition

•The set of benefits or The set of benefits or values a company values a company promises to deliver to promises to deliver to consumers to satisfy their consumers to satisfy their needs.needs.

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Marketing Management Philosophies

•Production ConceptProduction Concept

•Product ConceptProduct Concept

•Selling ConceptSelling Concept

•Marketing ConceptMarketing Concept

•Societal Marketing ConceptSocietal Marketing Concept

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Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

•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.

•Focuses on needs/ wants of target markets & delivering superior value.

Marketing Management Philosophies

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The Marketing Mix

C

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The Marketing Mix

Product Place

PromotionPrice

C

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Strategic Decision Areas

Product Place Promotion Price

ObjectivesPhysical

Chars.Prod. ClassServiceFeaturesBenefitsQuality AccessoriesInstallationInstructionsWarrantyProduct

Line(s)PackagingBranding

NPD? &/orElimination?

PLC Implics.

ObjectivesChannel typeMarket ExposureKinds of

IntermediariesKinds and

locations ofOutlets

How to handletransportingand storing

Service levelsRecruiting

IntermediariesManaging

Channels

Channel Co-op(Not Conflict) isGoal – Who HasPower?

ObjectivesInitial Pricing-Penentration-Skimming-ComboP FlexibilityP SensitivityP Level over

PLCGeographic

termsDiscountsAllowancesLegal Implics.

Factors Infl. Basic P Det.

ObjectivesPromotion MixSalespeople

KindNumberSelectionTrainingMotivationEvaluation

AdvertisingTargetsKinds of adsMedia typeCopy thrustPrepared by whom

Sales promotionPR

Publicity

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Examples of Basic Channels of Distribution for Consumer Products

Manufacturer or producer

AOL NissanDel

MonteProcter &Gamble

Retailer

Consumer

Wholesaler

RetailerRetailer

Wholesaler

Wholesaler

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AdvertisingAdvertising

PublicityPublicity

Personal Selling

Personal Selling

PromotionPromotion

Personal Selling

Personal Selling AdvertisingAdvertising

Public Relations

Public Relations

Controllable Promo. Elements of the Marketing Mix

Sales Promotion

Sales Promotion

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Price Flexibility

Price Flexibility

Price Changes Over the Life

Cycle


Cycle

Pricing Objectives

Pricing Objectives

PriceSettingPrice

Setting

Price of Other Products In the

Line

Price of Other Products In the

Line

Pricing Objectives

Pricing Objectives

Discounts and

Allowances

Discounts and

Allowances

Geographic Pricing Terms

Geographic Pricing Terms

Legal Environment

Legal Environment

Cost and Demand

Cost and Demand

Competition and

Substitutes

Competition and

Substitutes

Price Sensitivity

Price Sensitivity

Price FlexibilityPrice Flexibility


Cycle


Cycle

Discounts and Allowances

Discounts and Allowances

Geog. Pricing Terms

Geog. Pricing TermsLegal Environ’tLegal Environ’t

Cost and Demand

Cost and Demand

Competition and Substitutes

Competition and Substitutes

Price SensitivityPrice Sensitivity

Price Elements of the Marketing Mix

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All Four Ps Contribute to the Whole

Selectionof TargetMarket

Selectionof TargetMarket

ProductProduct

PlacePlace

Promo-tionPromo-tion

PricePrice

Understanding the Target Market Understanding the Target Market Leads to Good Strategies!Leads to Good Strategies!

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Customer Relationship Management

•The process of building and The process of building and maintaining profitable maintaining profitable customer relationships by customer relationships by delivering superior delivering superior customer value and customer value and satisfaction.satisfaction.

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Partner Relationship Marketing

•Partners inside the firmPartners inside the firm All employees customer focusedAll employees customer focused Teams coordinate efforts toward Teams coordinate efforts toward

customerscustomers

•Partners outside the firmPartners outside the firm Supply chain managementSupply chain management Strategic alliancesStrategic alliances

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Customer Loyalty & Retention

• Customer Customer Lifetime ValueLifetime Value The entire The entire

stream of stream of purchases that purchases that the customer the customer would make would make over a lifetime over a lifetime of patronage.of patronage.

• Share of Share of CustomerCustomer The share a The share a

company gets company gets of the of the customers customers purchasing in purchasing in their product their product categories.categories.

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Customer Equity

•Customer equity is the Customer equity is the total combined total combined customer lifetime customer lifetime values of all the values of all the company’s customers.company’s customers.

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Rest Stop: Reviewing the Concepts• Define marketing and outline the steps in the Define marketing and outline the steps in the

marketing process.marketing process.• Explain the importance of understanding Explain the importance of understanding

customers and the marketplace, and identify customers and the marketplace, and identify the five core marketplace concepts.the five core marketplace concepts.

• Identify the key elements of a Identify the key elements of a customer-driven marketing customer-driven marketing strategy and discuss the strategy and discuss the marketing management marketing management orientations that guide marketing orientations that guide marketing strategy.strategy.

•Discuss customer relationship Discuss customer relationship management and strategies for management and strategies for building lasting customer building lasting customer relationships.relationships.

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TO BE CONTINUE…