MKTG 301 MKTG 301 Principles of Marketing

DEVELOPING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING 1 1 C HAPTER

Define marketing and explain the importance of (1) discovering and (2) satisfying consumer needs and wants. Distinguish between marketing mix elements and environmental factors. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:

Understand how organizations build strong customer relationships using current thinking about customer value and relationship marketing. Describe how today’s market orientation differs from prior eras oriented to production and selling. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:

Understand the meaning of ethics and social responsibility and how they relate to the individual, organizations, and society. Know what is required for marketing to occur and how it creates customer value and utilities for customers. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:

Would you sell more 43-inch Hitachi Big Screen HDTV monitors for $ 1799 or $499 each?

Being a Marketing Expert: Good News-Bad News The Good News: You Already Have Marketing Experience The Bad News: Surprises About the Obvious WHAT IS MARKETING?

How would you define marketing ?

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. Marketing

Products and Services Value, satisfaction, and quality Needs, wants, and demands Exchange, transactions, and relationships Markets Core Marketing Concepts Core Marketing Concepts

Marketing: Using Exchanges to Satisfy NeedsMarketingExchanges The Diverse Factors Influencing Marketing Activities WHAT IS MARKETING?

EXCHANGE

Exchange is the trade of things of value between buyer and seller so that each is better off after the trade. Exchange

Customers Relationships Environmental Forces Shareholders (owners) The Organization Society Suppliers SocialRegulatoryTechnologicalEconomicCompetitive Other Organizations Alliances Partnerships Ownership Human Resources Research and Development Information Systems Manufacturing FinanceMarketing Management FIGURE 1-3 FIGURE 1-3 An organization’s marketing department relates to many people, groups, and forces

Two or More Parties with Unsatisfied Needs Desire and Ability to Satisfy These Needs A Way for the Parties to Communicate Something to Exchange Requirement for Marketing to Occur

Discovering Consumer Needs The Challenge of Launching Winning New Products Consumer Needs and Consumer Wants What a Market Is HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

How many new products are launched each year in US?

What percentage succeed in the long run ?

1.Make sure to focus on what the customer benefit is? 2.Learn key lessons from the past

Organization’s marketing department Discover consumer needs and wants Marketing’s first task: discovering consumer needs and wants

What Motivates a Consumer to Take Action? Needs physical social individualNeeds - states of felt deprivation including physical needs for food, social needs for belonging and individual needs for self-expression. i.e. I am thirsty.

What Motivates a Consumer to Take Action? WantsWants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Cola.

Wants- Is it enough? Popularity is NOT the objective Don’t want virtual consumption- the phenomenon that occurs when consumer love your products but don’t feel a need to buy it…..

What Motivates a Consumer to Take Action? DemandsDemands - human wants backed by buying power. i.e. I have money to buy a Coca-Cola.

What is Market ?

What is a Market? Potential consumers make up a market, which is: 1.people 2.with the desire and 3.with the ability to buy a specific product.

One or more specific groups of potential customers toward which an organization directs its marketing program. Target Market

Organization’s marketing department Discover consumer needs and wants Information about needs and wants Potential consumers: The market Marketing’s first task: discovering consumer needs and wants

Do you know too much about your consumer? Marketers have always watch consumers asked questions, but what most marketer don’t do is watch consumer CLOSELY enough If you ignore a single bit of potentially valuable information about consumers you are wasting money.

Who buys our product or service? Who initiates and makes the decision to purchase and who influences the process? How is the purchase decision made? What attributes or criteria are important to customers? What are customers’ perceptions of and attitudes toward our company, product/service or brands? What factors influence the decision making process? Contact points where customers can be reached? What should you know about your customers.

Organization’s marketing department Discover consumer needs Information about needs Potential consumers: The market Satisfy consumer needs Find the right combination of: Product Price Promotion Place Goods, services, ideas Marketing’s second task: Satisfying consumer needs

Marketing Mix ProductPlace PricePromotion C

Environmental Factors Promotion Competitive forces Regulatory forces Social forces Economic forces Place Price Product Consumer Marketing program Technological forces

Satisfying Consumer NeedsNeeds  Target market Target market The Four Ps: Controllable Marketing Mix Factors Marketing Mix The Uncontrollable, Environmental Factors Environmental Factors HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

Concept Check 1. What is marketing? A: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

2. Marketing focuses on __________ and ___________ consumer needs Concept Check discovering satisfying

Concept Check 3. What four factors are needed for marketing to occur? A: (1) Two or more parties with unsatisfied needs, (2) a desire and ability on their part be satisfied, (3) a way for the parties to communicate, and (4) something to exchange.

Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-timer delivery and both before-sale and after-sale service. Customer Value

Global Competition, Customer Value, and Customer RelationshipsCustomer Value Relationship Marketing and the Marketing Program Relationship Marketing: Easy to UnderstandRelationship Marketing Relationship Marketing: Difficult to Implement The Marketing ProgramMarketing Program THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

The hallmark of developing and maintaining effective customer relationships is today called relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their long term benefit. Relationship Marketing

The marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. Marketing Program

A Marketing Program for Rollerblade Expanding the Market for Rollerblade Skates Exploiting Strengths in Technology THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

1. An organization can’t satisfy the needs of all consumers, so it must focus on one or more subgroups, which are its ____________. target markets Concept Check

2. What are the four marketing mix elements that make up the organization’s marketing program? A: product, price, promotion, place

Concept Check 3. What are uncontrollable variables? A: Environmental factors the organization’s marketing department can’t control. These include social, economic, technological, competitive, and regulatory forces.

FIGURE 1-7 FIGURE 1-7 Four different orientations in the history of American business

Production Era Get out production, cut the price. If we can built a better product, the world will beat a path to our door. Company Orientations Towards the Marketplace

Marketing Myopia

Marketers should NEVER sell products to consumers! People buy holes, not drills! Fashion, status, reference groups approval, and warmth, but not coats! The Marketing Myopia

Selling Concept Era Get the customers to the fit the company’s offering. Company Orientations Towards the Marketplace

The marketing concept is the idea that an organization should strive to satisfy the needs of consumers, while also trying to achieve the organization’s goals. Marketing Concept

Marketing Concept Era Find wants and feel them Company Orientations Towards the Marketplace

WE MAKE IT HAPPEN FOR YOU HAVE IT YOUR WAY TO FLY, TO SERVE Marketing Concept WE ARE NOT SATISFIED UNTIL YOU ARE

Market Integrated marketing Profits through customer satisfaction Customer needs (b) The marketing concept Factory Existing products Selling and promotion Profits through sales volume Starting point FocusMeansEnds (a) The selling concept

An organization that has a market orientation focuses its efforts on continuously collecting information about customers’ needs and competitors capabilities, sharing this information across departments, and using the information to create customer value. Market Orientation

Company Orientations Towards the Marketplace Competition Customer

Balancing Customer and Competitor Orientation Competitor Driven Customer Driven Market Orientation Focuses on customer developments in designing its marketing strategy and on delivering superior value to its target customers. Pays balanced attention both customers and competitors in designing its marketing strategies Moves mainly based on competitors’ actions and reactions

Customer relationship management is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace. Customer Relationship Management (CRM)

Ethics and Social Responsibility: Balancing the Interests of Different Groups Ethics Social Responsibility  Societal marketing concept Societal marketing concept  Macromarketing Macromarketing  Micromarketing Micromarketing HOW MARKETING BECAME SO IMPORTANT

The societal marketing concept is the view that an organization should discover and satisfy the needs of its consumer in a way that also provides for society’s well- being. Societal Marketing Concept

Macromarketing looks at how the aggregate flow of a nation’s goods and services benefits society. Macromarketing

Micromarketing is how an individual organization directs its marketing activities and allocates its resources to benefit its customers. Micromarketing

The Breadth and Depth of Marketing Who Markets? What is Marketed? HOW MARKETING BECAME SO IMPORTANT Let’s watch some commercials

(Almost) Anything Can be Marketed Consumer Goods and Services Consumer Goods and Services Business- to- Business Marketing Business- to- Business Marketing Idea, Place, People Marketing Idea, Place, People Marketing Not-For- Profit Marketing Not-For- Profit Marketing

The Breadth and Depth of Marketing (cont) Who Buys and Uses What is Marketed?  Ultimate consumers Ultimate consumers  Organizational buyers Organizational buyers Who Benefits? How Do Consumers Benefit?  Utility Utility HOW MARKETING BECAME SO IMPORTANT

Ultimate consumers are the people who use the goods and services purchased for a household. Ultimate Consumer

Organizational buyers are units such as manufacturers, retailers, or government agencies that buy goods and services for their own use of for resale. Organizational Buyers

Who Benefits? Consumers Company Society

Utility is the benefit or customer value received by uses of a product. Utility

Form Place Time Possession Form Place Time Possession Examples of Marketing Actions that Create Utility benefit provided by transforming raw materials into the finished (PRODUCTION) benefit provided by making the products available where consumers want them benefit provided by storing products until they need benefit provided by allowing the consumer to own, use and enjoy the product benefit provided by transforming raw materials into the finished (PRODUCTION) benefit provided by making the products available where consumers want them benefit provided by storing products until they need benefit provided by allowing the consumer to own, use and enjoy the product UTILITIES PROVIDING by MARKETING

1. Like Pillsbury and General Electric, many firms have gone through four distinct orientations for their businesses: starting with the __________ era and ending with today’s ________________ era. Concept Check production market orientation

Concept Check 2. What are the two key characteristics of the marketing concept? A: An organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization’s goals.

Concept Check 3. In this book the term product refers to what three things? A: Goods (physical products), services, and ideas