Chapter 1

Marketing introduction
Topic Outline

What Is Marketing?
Understand the Marketplace and Customer Needs
Designing a Customer-Driven Marketing Strategy
Preparing an Integrated Marketing Plan and Program
Building Customer Relationships
Capturing Value from Customers
The Changing Marketing Landscape

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 What Is Marketing?

Marketing is a process by which companies create value

for customers and build strong customer relationships
in order to capture value from customers in return.
Non-profits must also perform marketing.
Marketing must both attract new customers and build
relationships with current customers.
Most people think of marketing as selling and/or
advertising. Its focus is really on satisfying customer
needs → develops products that provides customer
value; prices, distributes, and promotes effectively →
2 easily sells.
 What Is Marketing?
The Marketing Process

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 Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

• States of deprivation

Needs • Physical—food, clothing, warmth, safety

• Social—belonging and affection
• Individual—knowledge and self-expression

Wants • The form of human needs take as they are shaped by

culture and individual personality

Demands • Human wants that are backed by buying power

* The best marketing companies go to great lengths to learn and understand

4 their customers’ needs, wants, and demands.
 Maslow's hierarchy of needs

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 Understanding the Marketplace
and Customer Needs
Market Offerings - some
combination of products,
services, information, or
experiences offered to a
market to satisfy a need or
want.
Marketing myopia is
focusing only on existing
wants and losing sight of
underlying consumer needs
6 Ex: Nokia lost market share to Apple –
smartphone
 Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction Expectations

Customers
• Value and
satisfaction

Marketers
• Set the right level of
expectations
• Not too high or low
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 Understanding the Marketplace
and Customer Needs

Exchange is the act of obtaining a desired object

from someone by offering something in return.
- Marketing consists of actions taken to build and
maintain desirable exchange relationships with
target audiences involving a product, service, idea,
or other object.
Beyond simply attracting new customers and
creating transactions, the goal is to retain
customers and grow their business with the
8 company.
 Marketing system
Markets are the set of actual and
potential buyers of a product

Company

Intermediaries Consumers
Suppliers

Competitors

ENVIRONMENTAL FORCES
©2012 Pearson Education
 Customer driven marketing
Strategy
MARKETING MANAGEMENT

SELECTING CUSTOMERS

CHOOSE VALUE PROPOSITION

©2012 Pearson Education

 Designing a Customer-Driven Marketing Strategy
Marketing management is the art
and science of choosing target
markets and building profitable
relationships with them
What customers will we serve?
How can we best serve these
customers?
 Designing a Customer-Driven
Marketing Strategy

Selecting Customers to Serve

(1) Market segmentation refers to dividing the

markets into segments of customers
(2) Target marketing refers to which segments to
go after

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 Designing a Customer-Driven Marketing Strategy
Choosing a Value Proposition
Value proposition:
The set of benefits or
values a company
promises to deliver to
customers to satisfy
their needs
Ex: Facebook - “connect and
share with ppl in your life”
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 Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations

Productio Product Selling Marketing Societal

n concept concept concept concept concept

* Over time five alternative concepts have developed under

14 which organizations design and carry out their marketing
 Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Production concept is the idea that
consumers will favor products that are
available or highly affordable.

* Management should
focus on improving
production and
distribution efficiency.

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 Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Product concept is the idea that
consumers will favor products
that offer the most in quality,
performance, and innovative
features.
→Organization should therefore
devote its energy to making
continuous product
improvements.
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 Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Selling concept is the idea that consumers
will not buy enough of the firm’s products
unless it undertakes a large scale selling and
promotion effort.
The concept is typically practiced with unsought
goods—those that buyers do not normally think of
buying, such as insurance or blood donations.
These industries must be good at tracking down
prospects and selling them on product benefits.

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 Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Customer orientation
Marketing concept is the idea that achieving
organizational goals depends on knowing the needs and Focus on customer
wants of the target markets and delivering the desired Successful companies:
satisfactions better than competitors do. Sony (cassette) Walkman
 Under the marketing concept, customer focus and value needs cassette while
are the paths to sales and profits. jogging, game of Nitendo
 The job is not to find the right customers for your - Wii
product but to find the right products for your customers. Marketing concept focus
 Customer-driven marketing is about understanding
on: target customer,
customer needs and creating products and services that
meet existing and latent needs.
demand of customer
18 => Customer-oriented
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 Designing a Customer-Driven Marketing
Strategy
Marketing Management Orientations
Societal marketing concept is the idea that a
company should make good marketing
decisions by considering consumers’ wants,
the company’s requirements, consumers’ long-
term interests, and society’s long-run interests.
The societal marketing concept questions
whether the pure marketing concept overlooks
possible conflicts between consumer short-run
wants and consumer long-run welfare.
The societal marketing concept holds that
marketing strategy should deliver value to
customers in a way that maintains or improves
both the consumer’s and the society’s well
being.
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 Designing a Customer-Driven Marketing Strategy

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 Preparing an Integrated Marketing Plan and Program
Integrated marketing program:
comprehensive plan that
communicates and delivers the
intended value to chosen
customers.
The marketing mix: set of tools
(four Ps) the firm uses to
implement its marketing strategy. It
includes product, price, promotion,
and place
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 Building Customer Relationships
Customer Relationship Management (CRM)

The overall process of

building and maintaining
profitable customer
relationships by
delivering superior
customer value and
satisfaction.

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 Building Customer Relationships
Relationship Building Blocks: Customer Value and Satisfaction

Customer Value: the customer’s

evaluation of the difference between all
the benefits and all the costs of a market
offering relative to those of competing
offers
Customers often do not judge values and
costs “accurately” or “objectively.”
Customers act on customer perceived
value.

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 Building Customer Relationships
Relationship Building Blocks: Customer Value and Satisfaction

Customer SATISFACTION
satisfaction
depends on the
product’s

Performance
Expected
perceived level
performance
relative to a
buyer’s
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expectations. DISSATISFACTION
 Building Customer Relationships
Customer Relationship Levels and Tools

Basic Relationships are often

Basic
used by a company with many
Relationshi
low-margin customers.
ps
Full Partnerships are used in
Full markets with few customers
Partnership and high margins, sellers want
s to create full partnerships with
key customers.
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 Capturing Value from Customers
Customer loyalty and retention
Share of market and share of customer
Customer equity

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 Capturing Value from Customers
Creating Customer Loyalty and Retention
Companies not only want customers to be
satisfied but also want them to retain and
To keep customers
be loyal with the companies.
coming back, Stew
Customer lifetime value is the value of
Leonard’s has created
the entire stream of purchases that the
the “Disneyland of dairy
customer would make over a lifetime of
patronage. stores.” Rule 1—the
customer is always right.
A company can lose money on a specific
Rule 2—If the customer
transaction but still benefit greatly from a
long-term relationship is ever wrong, reread
Rule 1.
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 Capturing Value from Customers
Growing Share of Customer

Share of customer is the

portion of the customer’s
purchasing that a company
Sales to
gets in its product
your firm
categories.

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 Capturing Value from Customers
Customer equity is the total
combined customer lifetime values
of all of the company’s current and
potential customers. Clearly, the
more loyal the firm’s profitable
customers, the higher the firm’s
customer equity.
Customer equity may be a better
measure of a firm’s performance
than current sales or market share..
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 The Changing Marketing Landscape
Uncertain Economic
Environment
New consumer frugality
Marketers focus on value
for the customer
 A troubled economy can
present opportunities as well
as threats

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 The Changing Marketing Landscape
Digital Age
• The recent technology boom has created a
digital age. Companies now have access to
exciting new marketspaces.
• People are connected to people and
information worldwide
• Marketers have great new tools to
communicate with customers
• Internet + mobile communication devices
creates environment for online marketing

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 The Changing Marketing Landscape
Rapid Globalization
•Almost every company,
large or small, is touched in
some way by global
competition.
•Today, companies are
buying more supplies and
components abroad and
selling more of their market
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offering abroad
 The Changing Marketing Landscape
Sustainable Marketing
Marketers are being called
upon to take greater
responsibility for the social
and environmental impact
of their actions.

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 The Changing Marketing Landscape
Not-for-Profit Marketing
The nation’s nonprofits
face stiff competition for
support and membership.
Sound marketing can help
them to attract
membership and support.

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 So, What Is Marketing? Pulling It All Together

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