Marketing: Core Concepts and Process Model

• Marketing is a social and managerial process
• It helps to obtain needs and wants through values
• Successful organizations have strong market orientations
• They build profitable, value-laden exchange relationships with customers

Process Model

• Understand the marketplace, needs, and wants
• Design a customer-value driven strategy
• Construct an integrated program delivering superior value
• Engage customers to build relationships and create delight
• Capture value through profits and customer equity
• Organizations engage customers, build strong relationships, and create customer value to capture value in return

Core Concepts

• Needs are states of felt deprivation, including:
  • Physical needs like food, clothing, warmth, and safety
  • Social needs like belonging and affection
  • Individual needs like knowledge and self-expression
• Needs can be stimulated, but not created by marketers
• Wants are forms of human needs shaped by culture and personality
• As society evolves, the wants of its members expand, though resources remain limited
• Demands are wants backed by buying power
• Outstanding marketers seek customer insights
  • They train salespeople and frontline personnel
  • They observe customers, conduct research and analysis
• Qualitative research uses small focus groups to ascertain unmet needs
• Quantitative research uses large focus groups to ascertain the magnitude of unmet needs
• Market offerings combine goods, services, or experiences to satisfy needs and wants
• Market offerings include people, places, organizations, information, and ideas
• Products satisfy a need, and their importance lies in the benefits they provide
• Substitute words for product are satisfier, resource, or offer

Marketing Myopia

• It pays more attention to product attributes over benefits produced
• Creating a brand experience is important
• Value and satisfaction are key for developing and managing customer relationships
• The right level of expectations is required
• A value proposition is a statement identifying product benefits
• Attributes and benefits a firm offers are promises to deliver to consumers to satisfy needs
• Value propositions include both points of parity (POP) and points of difference (POD)
• Exchange involves obtaining a desired object by offering something in return
• Exchange is a core concept of marketing
• A transaction is marketing's unit of measurement
• Trade of values occurs between two parties under agreed conditions, time, and place

Markets

• Markets are sets of actual and potential buyers of a product
• Markets should have effective customer-managed relationships
• Each party involved in the system adds value at its respective level

Designing a Customer-Driven Marketing Strategy

• Marketing management involves choosing target markets and building profitable relationships
  • This encompasses customer management and demand management
• Market segmentation and target marketing determine the target audience
• Marketing management deals with different demand states to achieve desired levels
• Demarketing reduces demand temporarily or permanently

Value Proposition

• Value preposition differentiates one brand from another
• It answers "How will we serve?"

Marketing Management Orientations

• Production concept favors products that are available and affordable
  • Management focuses on improving production and distribution efficiency, which can lead to marketing myopia
• Product concept favors products offering the most quality, performance, and innovative features
  • Emphasis should be placed on continuous product improvements, but this may also lead to marketing myopia
• Selling concept believes consumers will not buy enough without large-scale selling and promotion
  • Typically practiced with unsought goods
  • Aims to sell what the company makes rather than what the market wants
• Marketing concept states achieving organizational goals depends on determining target market needs/wants
  • It also focuses on delivering desired satisfaction more effectively and efficiently than competitors
• Customer-driven marketing researches current customers deeply to learn their desires
  • This helps gathering ideas and test proposed product improvements
  • It also improves understanding of customers better than themselves to create matching products/services
• Selling is an inside-out perspective, while marketing is an outside-in perspective
• Societal marketing questions whether the marketing concept overlooks possible conflicts between consumer short-run wants and long-run welfare
• A marketing strategy should deliver value while maintaining/improving the welfare of consumers and businesses for future generations, also known as Marketing 3.0 and purpose-driven marketing
• Decisions should take into account consumer wants, company requirements, consumer long-run interests, and society’s long-run interests
• Shared value includes societal needs, and not just economic needs, to define markets

Marketing Plan

• A marketing mix includes various tools to implement a marketing strategy
  • Product, price, place (distribution), and promotion make up the main tools, with an extended marketing mix adding people, processes, and physical evidence

Customer Relationship Management (CRM)

• CRM manages detailed customer information to maximize customer loyalty
  • Customer value is the highest customer-perceived value, including evaluation of benefits/costs relative to competing offers
• Customer satisfaction depends on perceived product performance relative to buyer expectations
  • Exceptional service and value are important, and customer evangelists may come into action
  • Customer-centered firms provide high satisfaction relative to competitors instead of attempting to maximize profits
• Basic relationships involve many low-margin customers
• Full partnerships involve fewer, high-margin customers
• Frequency marketing programs reward customers who buy frequently or in large amounts
• Club marketing programs offer special benefits and create member communities
• Customer-managed relationships allow customers to connect with companies and each other to forge their own brand experiences
• Marketing should shift from intrusion to attraction, engaging rather than interrupting
• Find ways to enter consumer conversations with engaging and relevant brand messages
• Consumer-generated marketing encompasses brand exchanges created by consumers themselves
• Partner relationship management involves working with others inside and outside the company to jointly bring more value
  • Partners inside: Every department in a firm should understand marketing and be customer-focused
  • Partners outside: Distributors and retailers, which are considered supply chain management

Customer Loyalty and Retention

• It is five times cheaper to keep an old customer than acquire a new one
• Important factor is Customer lifetime value
• Share of customer involves securing a larger portion of the customer's purchasing in their product categories
• Offer variety and subscription services to achieve a higher share of the customer
• Customer equity is the total combined customer lifetime values of all current and potential customers
• It is important to view and therefore manage customers as assets
• Customer equity segments
  • Strangers have low potential profitability and little projected loyalty, therefore little should be invested
  • Butterflies are potentially profitable but not loyal - good fit exists between needs and offering where as much is captured before they move on
  • True friends are profitable and loyal - their fit between needs and offering is strong and are turned into believers.
  • Barnacles are highly loyal but not very profitable, as a limited fit exists between needs and offering(consider firing the customer).
• Build the right relationships with the right customers

Digital Age

• Digital and social media marketing involves digital tools, shifting from in-store to digital-first strategies
• Social media marketing is an ideal platform for real-time engagement, linking brands to important trending topics
• Mobile marketing is the fastest-growing digital marketing platform
  • It provides finely targeted and personal reach
• Big data helps gain deep consumer insights, personalize offers, and improve communication
• AI analyzes data and applies marketing insights to engage customers in real time

Measuring Effectiveness

• Not-for-profit marketing redefines target markets and competes for funds/members
• Metrics are measuring systems that enable marketers to evaluate actions
• Functional aspect marketing is that practitioners now incorporate a wide types of organisations.
• Pan-company marketing takes a market-oriented approach, viewing customer satisfaction as the primary reason for an organization's existence
• Sustainable marketing is socially and environmentally responsible, meeting present needs while preserving future generations' ability to do the same

Globalization

• Globalization has created a vastly more complex marketing environment for companies and consumers due to technical advances
• Due to recent economic uncertainty, marketers emphasize value in their value propositions
• Caring capitalism involves setting themselves apart, being civic-minded, and responsible
• Post-recession, consumer spending values simpler living and better value for the dollar
• Marketing's contribution to organisational performance can be measured through objective and subjective means, including financial and non-financial measures
• Ethical and socially responsible actions are being increasingly taken on as well as built into an organisation's value and mission statements.

Creating Customer Value

• First four steps create customer value
• The company reaps the rewards of its customer relationships in the final step
• Building relationships depends on
  • Harnessing marketing technology
  • Taking advantage of global opportunities
  • Acting in an ethical and socially responsible way