What Is Marketing? Simple Definition: Marketing is managing profitable customer relationships. Goals: Attract new customers by promising superior value. Keep and grow current customers by delivering satisfaction. Prentice Hall, Inc. Copyright 2007

Marketing Defined A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. OLD View of Marketing: Making a Sale – “Telling & Selling” New View of Marketing: Satisfying customer needs NEW View of Marketing: Satisfying Customer Needs Prentice Hall, Inc. Copyright 2007

The Marketing Process A simple model of the marketing process: Understand the marketplace and customer needs and wants. Design a customer-driven marketing strategy. Construct a marketing program that delivers superior value. Build profitable relationships and create customer delight. Capture value from customers to create profits and customer quality. Prentice Hall, Inc. Copyright 2007

Needs, Wants, & Demands Need: State of felt deprivation including physical, social, and individual needs. Physical needs: Food, clothing, shelter, safety Social needs: Belonging, affection Individual needs: Learning, knowledge, self-expression Prentice Hall, Inc. Copyright 2007

Needs, Wants, & Demands Wants: Form that a human need takes, as shaped by culture and individual personality. Wants + Buying Power = Demand Prentice Hall, Inc. Copyright 2007

Need / Want Fulfillment Needs and wants are fulfilled through a Marketing Offer: Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Prentice Hall, Inc. Copyright 2007

Need / Want Satisfiers Products: Services Brand Experiences: Persons Places Organizations Information Ideas Services Activity or benefit offered for sale that is essentially intangible and does not result in ownership. Brand Experiences: “. . . dazzle their senses, touch their hearts, stimulate their minds.” Prentice Hall, Inc. Copyright 2007

Marketing Myopia Marketing myopia occurs when sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. They focus on the “wants” and lose sight of the “needs.” Prentice Hall, Inc. Copyright 2007

Value & Satisfaction Care must be taken when setting expectations: If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Prentice Hall, Inc. Copyright 2007

Exchange vs. Transaction Act of obtaining a desired object from someone by offering something in return. Transaction: A trade of values between two parties. One party gives X to another party and gets Y in return. Can include cash, credit, or check. Prentice Hall, Inc. Copyright 2007

What Is a Market? The set of actual and potential buyers of a product. These people share a need or want that can be satisfied through exchange relationships. Prentice Hall, Inc. Copyright 2007

Modern Marketing Systems Main elements in a modern marketing system include: Suppliers Company (marketer) Competitors Marketing intermediaries Final users Prentice Hall, Inc. Copyright 2007

Marketing Management The art and science of choosing target markets and building profitable relationships with them. Requires that consumers and the marketplace be fully understood Prentice Hall, Inc. Copyright 2007

Marketing Management Designing a winning marketing strategy requires answers to the following questions: 1. What customers will we serve? What is our target market? 2. How can we best serve these customers? What is our value proposition? Prentice Hall, Inc. Copyright 2007

Segmentation & Target Marketing Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate Prentice Hall, Inc. Copyright 2007

Marketing Management Demand Management Demarketing Finding and increasing demand, also changing or reducing demand, as in demarketing. Demarketing Temporarily or permanently reducing the number of customers or shifting their demand. Prentice Hall, Inc. Copyright 2007

Value Proposition The set of benefits or values a company promises to deliver to consumers to satisfy their needs. Value propositions dictate how firms will differentiate and position their brands in the marketplace. Prentice Hall, Inc. Copyright 2007

Marketing Management Philosophies Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept Prentice Hall, Inc. Copyright 2007

The Marketing Plan Transforms the marketing strategy into action Includes the marketing mix and 4 P’s of marketing: Product Price Place (Distribution) Promotion Prentice Hall, Inc. Copyright 2007

Customer Relationship Management The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Acquiring customers Keeping customers Growing customers Prentice Hall, Inc. Copyright 2007

Customer Perceived Value Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers.

Customer Satisfaction 11/15/2018 Customer Satisfaction Dependent on the product’s perceived performance relative to a buyer’s expectations. Customer satisfaction often leads to consumer loyalty. Some firms seek to DELIGHT customers by exceeding expectations. Copyright 2005 Brainy Betty, Inc.

Customer Relationships Loyalty and retention programs build relationships and may feature: Financial Benefits EX: Frequency marketing programs Social Benefits EX: Club marketing programs Structural Ties Focus is on relating directly to profitable customers, for the longterm.

Partner Relationship Marketing Marketing partners help create customer value and assist in building customer relationships. Partners inside the firm: All employees customer focused Teams coordinate efforts toward customers Partners outside the firm: Supply chain management Strategic alliances Prentice Hall, Inc. Copyright 2007

Customer Loyalty & Retention Customer Lifetime Value The entire stream of purchases that the customer would make over a lifetime of patronage. Share of Customer The share a company gets of the customers purchasing in their product categories. Prentice Hall, Inc. Copyright 2007

Customer Equity The combined discounted customer lifetime values of all the company’s current and potential customers. Classify customers by loyalty and potential profitability Manage accordingly Prentice Hall, Inc. Copyright 2007

The New Digital Age Technology impacts the ways firms bring value to their customers. Greater connectivity means greater access to information, faster travel and communication. The Internet allows anytime, anywhere connections between firms and customers. “Click-and-mortar” companies “Click-only” companies Business-to-business e-commerce Prentice Hall, Inc. Copyright 2007

New Marketing Landscape Rapid Globalization Ethics and Social Responsibility Not-for-Profit Marketing New World of Marketing Relationships Prentice Hall, Inc. Copyright 2007

Define marketing and the marketing process. Explain the importance of understanding customers and identify the five core marketplace concepts. Identify 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 customers. Describe the major trends and forces changing the marketing landscape. Prentice Hall, Inc. Copyright 2007