Chapter One Marketing: Creating and Capturing Customer Value With Duane Weaver © 2010

OUTLINE Marketing – defined Marketing Mix – defined Market - defined Marketing Process – discussed Needs vs. Wants and Buyer Motivation P for Product – deeper analysis OOPS – Marketing Myopia Value Marketing Concepts Not for Profit Marketing

What is Marketing? Chapter 1 pages 6 and 7

What is Marketing? “…a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others.” Armstrong, et. al., p. 7 Chapter 1 pages 6 and 7

What is a Market?

What is a Market? The set of actual and potential buyers of a product, service or experience. Also seen traditionally as a marketplace where the business transaction (or trade) is enacted between buyers and sellers. For example: A bizarre Flea market Farmer’s market Retail Store Wholesale Outlet Online Internet Store Cell Phone’s digital radio waves In Marketing when we talk about potential markets we usually are referring to a set of buyers. These people share a need or want that can be satisfied through exchange relationships. Chapter 1, Page 10 Chapter 1, page 10 - 12

What is successful Marketing? Attracting new customers by promising and delivering superior value. Building long-term relationships with customers by delivering continued customer satisfaction. Creating, building and managing these relationships profitably over time. Chapter 1 pages 6 and 7

Core Marketplace Concepts 3. Value & Satisfaction Marketer Customer Market Offerings Product Service Ideas Experiences Customers Needs Wants Demand 4. Exchange, & Relationship 5. Market

What is the Marketing Mix? P Chapter 1 pages 6 and 7

The Four Ps (marketing mix) Product Price Place Promotion

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 equity. Chapter 1 page 7

Needs vs. Wants and Buyer Motivation - needs Needs are states of felt deprivation. Physical: Food, clothing, shelter, safety. Social: Belonging, affection. Individual: Learning, knowledge, self-expression. Chapter 1 page 8

Abraham Maslow’s Hiearchy of Needs Solomon, Zaichowsky, Polegato, 2008

Needs vs. Wants and Buyer Motivation - wants SO then, …what is a “WANT”?

Needs vs. Wants and Buyer Motivation - Motivational Strength Biological vs. Learned Needs (innate instinct vs. learned behaviour) Drive Theory (achieving homeostasis by satiating tension caused by the arousal of unpleasant states) Expectancy Theory pulled by positive incentives (goals) rather than pushed from within

Needs vs. Wants and Buyer Motivation - Motivational Direction MOTIVES tend to be directional Needs vs. Wants Need = unsatisfied requirement (hunger) Want = the way a person satisfies a need which ultimately is dependent on “their historical reality” (cheeseburger vs. trail mix) Types of Needs Biogenic or psychogenic Motivational Conflicts Fig. 4-1 Solomon, Zaichowsky, Polegato, 2008

P for product = Deeper Analysis Products Anything that can be offered for: acquisition, attention, use or consumption That might satisfy a need or want. Services Activities or benefits offered. Essentially intangible. Do not result in ownership of anything. Experiences Create, stage and market brand experiences. Attending live theatre, music concert. Ideas Solutions, consultation, patents, innovations. Chapter 1, pages 8-10

Marketing Myopia 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.” The great railroads lost out to the exploding trucking industry. They forgot that their business was solving transportation problems, not running railroads. Chapter 1, page 9

Value and Satisfaction If the performance and the customer’s experience is lower than expectations, then customer satisfaction is low. If the performance and the customer’s experience meets expectations, then the customer is satisfied. If the performance and the customer’s experience exceeds expectations, then the customer is delighted. How can we do this?

Core Marketplace Concepts Customers have needs, wants and demands. Marketers offer products or services. Customers seek value and satisfaction from offers. Demands and offers result in transactions and relationships. Markets are all potential customers with a similar demand. Chapter 1, page 12

Customer-Driven Marketing Divide markets into segments. Choose the right segment to target. Offer a unique value proposition. Differentiate your offer from competitor offers. Build customer value and satisfaction. Nurture long-term customer relationships. Chapter 1, 13-14

Segmentation and Targeting Segmentation divides the market into groups of customers with varying needs and wants. Targeting selects the right segment to nurture. Types of Market Segmentation (see Chp. 2): Demographic variables Geographic location Behavioural variables Psychographic variables Chapter 1, page 13-14

Demand Management Marketing management seeks to control demand. Increasing demand is the norm. Demarketing seeks to reduce demand in certain circumstances. DEMAND = Wants + $Buying Power Chapter 1, page 13

Value Proposition The set of benefits or values the company promises to deliver to its target markets to satisfy their needs. Chapter 1, 13-14

Capturing Value In Return Customer lifetime value Share of customer Building Customer Equity The total combined customer lifetime value of all of the company’s customers Combination of market share, share of customer and lifetime customer value Often a more accurate measure of a company’s value than sales or market share Chapter 1, page 25

Marketing Concepts Production – affordability and availability. Product -- quality and innovation. Selling -- promotion and hard selling. Marketing -- customer satisfaction and relationships. Societal – long-term value to both customer and society. Chapter 1, pages 14-18

Not-For-Profit Marketing Marketing of ideas, values and institutions. Increasing awareness that these organizations must build relationships with constituents and stakeholders. Challenge of using new marketing techniques for not-for-profit initiatives. Chapter 1, pages 33-34

Thanks! Do Happy Customers = Successful Companies? Expectation Management is Key