Marketing Management Notes

MARKETING MANAGEMENT NOTES
CHAPTER ONE
AN OVERVIEW OF MARKETING
What is marketing?
Marketing has two facets
1. It is a philosophy, an attitude, a perspective and a management orientation that

stresses consumer satisfaction
2. It as also a set of activities used to implement this philosophy. The American
Marketing associations definition is, “Marketing is the activity, set of institutions and
processes for creating, communicating, delivery and exchanging offerings that have
value for customers, clients, partners and society at large.”
Marketing therefore means satisfying and anticipating consumer needs by means of mutually
beneficial exchange processes, and doing so profitably and more effectively than competitors
by means of efficient managerial processes. Consumer satisfaction is marketing’s primary
goal as an organisation cannot survive without doing this in the long run.
Maximising consumer satisfaction is the goal, the firm needs to know how well they are
meeting customer’s expectations. Customer satisfaction is the feeling that a product has met
or exceeded expectations. Can happen if a products or employees performance falls short.
The Disconfirmation Paradigm

Dissatisfaction results if performance either product or employee performance falls short of
expectations. Consumer satisfaction is therefore a consumer response (Judgement).
Consumer satisfaction is a key performance area, more important than profitability, market
share and turnover. Firms need to provide goods consumers want, at a price most will regard
as fair value, in a packaging they desire and in retail outlets that are convenient with easy
access.
Measuring consumer satisfaction

A programme to measure consumer satisfaction should be a permanent, ongoing process that
translates consumer’s needs and expectations into information that can be used in decision
making.
 What consumers want
 Their expectations in respect of products and services
 In terms of product attributes and quality level
Sanparks sends customers an online survey after their visit.

Current, lost and potential customers should be included in measurement programmes.
Consumer satisfaction measurement should provide insight into factors that are
important to customers or specific to a certain industry or firm.
 Price perceptions
 Reliability
 Image of brand
Ways of collecting information can be formal or informal
 Formal research surveys, data collected by means of online surveys, telephone,

personal interviews and focus groups
 Analysis of customer-complaint data, consumer-complaint boxes, letters of
complaints, monitoring internet discussions, interviewing staff especially those who
interact with customers
 Collecting information about consumer needs and expectations from intermediaries
such as retailers, sales agents and wholesalers
In order to improve customer satisfaction a firm needs to identify the attributes that of the
product or service that convey value to customers. It needs to measure customer expectations
and perceptions of performance, as well as perceptions of importance for each value
component like, product features, service and price
A good customer satisfaction programme also captures qualitative inputs that do not typically
result from traditional market research. The customer becomes an integral part of learning
and decision making. For example, a small focus group may provide valuable insights to a
firm on how they can improve product features, delivery times and enhance customer service.
Dissatisfied customers may not return and tarnish the reputation of the company, therefore
not creating a loyal customer base.
Consumer satisfaction or consumer dissatisfaction?

Herzberg’s two-factor model of customer service
Hygiene factors and satisfiers.
When designing consumer satisfaction measurement programmes, firms need to understand
that there are two-factor models of consumer satisfaction.
This suggests that some factors that contribute to satisfaction may not contribute to
dissatisfaction.
Hygiene factors – dissatisfaction (prerequisites)
Satisfiers – satisfaction
Consumers can tell firms why they are satisfied or dissatisfied with a product but the reasons
they offer may impact differently on their perceptions of satisfaction and dissatisfaction. The
absence or poor performance of some product attributes may quickly lead to dissatisfaction,
even though high performance on those same attributes would cause may contribute very
little to high levels or customer satisfaction. These product features (hygiene factors) are thus
what to be expected. “minimum requirements” but their existence will not make a consumer
exceptionally happy.
Conversely the factors that cause customer satisfaction may not be identified as factors whose
absence results in customer dissatisfaction. Poor performance on attributes leading to leading
to high satisfaction does not lead to dissatisfaction.
Hygiene and satisfier factors may vary from person to person.
If a firm performs at a very high level in delivering the hygiene factors, customers will rate
their product or service as acceptable but not exceptional. Hygiene factors constitute a
minimum level of satisfaction and a failure to meet these factors will cause dissatisfaction.
E.g. a clean hotel room, therefore cleanliness does not have a strong effect on satisfaction but
rather a stronger effect on dissatisfaction. The hygiene factors must be delivered at an
acceptable level before satisfiers become important.
Benefits of customer satisfaction and loyalty
Many firms lose their customers in five years, keeping customers satisfied by offering them
superior value increases the chances that they will become loyal customers, ensuring the
firms long survival and growth. Loyal customers are more profitable. Other benefits include:
 Lower acquisition costs

This includes the costs of recruiting new customers, like advertising costs, sales calls, public
relations and promotional expenditure. The overall costs will be lower for a firm with a large
loyal customer base, because they need to generate fewer new customers to sustain its
profitability.
 Base profit
This profit of basic purchases unaffected by time, loyalty, efficiency or other considerations
is called the base profit. The longer the firms keeps a loyal customer, the longer it will earn
this base profit.
 Revenue growth
Revenue grows per customer if the firm can retain a loyal customer. Loyalty cards, returning
business, shopping at a shop and using other products from their range.
 Cost savings
If you learn customer’s needs, firms can be more efficient. Informed customers do not rely as
much on employees, or waste time requesting products or services that are not provided.
Collaborative learning between customers and firms create productivity advantages that
directly translate into lower costs.
 Referrals
Satisfied customers refer a firm to others, this is called word of mouth. Positive word of
mouth is very powerful which is sometimes seen as more credible than controversial
advertising.
 Price premium
Loyal customers who feel like they are getting superior value tend to be less price-sensitive
than non-loyal customers. Loyal customers are less likely to respond to a competitor’s lower
prices, special offers or discounts and be more prepared to pay a price premium to continue to
enjoy the superiority offered by the firm.
Customer satisfaction may not ensure customer loyalty at all times, nor ensure profitability
but is necessary for building loyalty. There-fore the initial exchange between buyer seller
must be a satisfactory one as a starting point to build long-term loyalty.
THE CONCEPT OF EXCHANGE
A buyer gives up something of value to a seller to receive something in return that they
would rather have.

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MARKETING MANAGEMENT NOTES

1. It is a philosophy, an attitude, a perspective and a management orientation that

The Disconfirmation Paradigm

Measuring consumer satisfaction

Sanparks sends customers an online survey after their visit.

Ways of collecting information can be formal or informal

 Formal research surveys, data collected by means of online surveys, telephone,

Consumer satisfaction or consumer dissatisfaction?

Benefits of customer satisfaction and loyalty

 Lower acquisition costs

THE CONCEPT OF EXCHANGE

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