Marketing Basics

• Marketing is a process where companies create value for customers.
• They build strong customer relationships to in turn capture value from customers.
• The American Marketing Association (AMA) defines marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

The Marketing Process

• It works in a 5-step process that creates value for customers, marketers then capture value from customers in return.
• The 5 steps are: Understanding the marketplace and customer needs and wants, design a customer value-driven marketing strategy, construct an integrated marketing program that delivers superior value, engage customers, build profitable relationships, and create customer delight, finally capture value from customers to create profits and customer equity

Understanding the Marketplace and Customer Needs

• Needs are states of felt deprivation which can be divided into physical, social, and individual needs.
• Wants are needs shaped by culture and individual desire, specific objects that fulfill needs with hunger being a need and the type of food being a want.
• Demands are wants backed by buying power, representing the willingness and ability to purchase.
• Market offerings include products, services, information, or experiences that satisfy a need or want.

Value and Satisfaction

• Customers form expectations about the value and satisfaction that they will receive from market offerings.
• Value is the benefits that buyers receive which meet their needs, essentially what the customer gets from purchasing/consuming.
• Customer satisfaction relies on a product's performance in delivering value relative to a buyer's expectations.
• A satisfied customer is more likely to repurchase and recommend it to others.
• Dissatisfied customers will most likely switch to competitors.

Exchange

• Exchange happens any time two or more people trade goods or services.
• It refers to the act of obtaining a desired object from someone by offering something in return.
• The goal is to build relationships through satisfaction, not just a one-time exchange.
• A market is the set of both actual and potential buyers.

Modern Marketing System

• Each party within the systems adds value ie: suppliers, company, competitors, marketing intermediaries, and final customers.
• Arrows depict relationships that must be managed to facilitate the development of customer value and profitable relationships.

Customer Value-Driven Marketing Strategy

• Marketing management involves choosing target markets and building relationships with them.
• Key marketing management questions: Which customers will we serve (target market)? How can we best serve these customers (value proposition)?
• Value proposition is the set of benefits a brand promises to deliver to satisfy customer needs, i.e. Coca-Cola's value proposition includes celebrations.
• Market segmentation and target marketing identifies profitable segments of customers.
• A company can serve customers best by defining a value proposition to differentiate the brand in the marketplace, that will deliver benefits.

Marketing Management Orientations

• Production concept: Consumers favor products that are easily available and highly affordable so Improve production and distribution.
• Product concept: Consumers favor products that offer the best quality, performance, and innovative features.
• Selling concept: Consumers will only buy products that the company actively promotes/sells.
• Marketing concept: Focuses on the needs/wants of target markets while providing greater satisfaction than competitors.
• Societal marketing concept: A company's marketing decisions should factor in consumers' wants, requirements, and the long-term interests of consumers and society.
• The selling concept takes an inside-out view focusing on existing products to sell what the company makes, compared to the marketing concept where they take an outside-in view focusing on satisfying customer needs.

The Marketing Mix (4 Ps)

• A set of tools for building customer relationships by transforming marketing action.
• Product (create a need-satisfying market offering).
• Price (set the charging price for the offerings).
• Place (make it available to the target).
• Promotion (communicate and persuade on the merit).

Managing Customer Relationships

• Customer relationship management (CRM) is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
• It involves managing detailed information and customer touchpoints to maximize loyalty.
• Touchpoints are defined as all ways a consumer can interact with a business ie: in person, website, app, or communication form.

Relationship Building Blocks

• Customer-perceived value is the customer's evaluation of the difference between all the benefits and costs of a marketing offer relative to those of competing offers.
• Customers often do not judge values and costs accurately or objectively.
• Customer satisfaction depends on the extent to which perceived performance matches a buyer's expectations.

The Changing Nature of Customer Relationships

• Customer engaged marketing consists of just selling a brand.
• It goes further, fostering direct involvement and continuous customer involvement in shaping conversation, experiences, and community.
• Consumer generated marketing consists of brand exchanges created by consumers that have an increasing role in shaping brand experience, such as "My Starbucks Idea".

Partner Relationship Management

• Partner relationship management involves working with partners within other departments and outside the company to jointly bring value to the customers.
• The partners are either inside or outside of the firm such as strategic partners with supply chain management.

Creating Customer Loyalty and Retention

• When delight is delivered to customers, it results in emotional relationships and loyalty.
• Customer lifetime value indicates the true worth of a customer.
• Growing share of customer indicates the share of customer's purchase in a product category and is achieved by offering variety through cross-sell and up-sell strategies.
• Upselling encourages customers to purchase higher-end items, while cross-selling invites related/complementary item purchases.
• Customer Equity is the combined customer lifetime values of current and potential customers, measures a firm's performance, looking towards the future.