Marketing fundamentals

Marketing

• Involves engaging customers
• Involves managing profitable customer relationships
• Companies create value for customers, building strong customer relationships
• Companies capture value from customers in return

Goals of Marketing

• Attract new customers with superior value propositions
• Retain and expand the existing customer base with satisfaction

Forms of Marketing

• Traditional methods focus on telling and selling:
  • Making individual sales is key
  • Advertising is abundant in shopping centers
  • Utilizes television, magazines, and direct-mail ads
• Contemporary methods focus on customer satisfaction:
  • Meeting customer needs is key
  • Imaginative websites and mobile apps, and social media are key for reaching customers
  • Interaction is direct, personal, and interactive

Key Steps to Capture Value from Customers

• Understand 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
• Reap the rewards through sales, profits, and long-term customer equity

Core Customer and Marketplace Concepts

• Needs, wants, and demands define customer desires
• Market offerings provide solutions to those desires
• Value and satisfaction create customer loyalty
• Exchange and relationships are built through positive interactions
• Markets form where buyers and sellers meet

Value in Marketing Systems

• Each party in the system adds value for the next level
• Relationships must be developed and managed to create customer value and profitable relationships
• Company success depends on the entire system serving final consumers' needs

Marketing Management Orientations

• Production concept: consumers favor affordable, available products.
• Product concept: consumers favor quality, performance, and innovative features.
• Selling concept: large-scale selling and promotion are essential for enough sales.
• Marketing concept: achieving organizational goals depends on knowing needs/wants of target markets and delivering satisfaction better than competitors.
• Societal marketing concept: marketing decisions should consider consumer wants, company requirements, and long-run interests of consumers and society.

Three Considerations for Companies

• Companies should balance profits, consumer wants, and society's interests

The 4 P's of Marketing

• Product: Need-satisfying market offer
• Price
• Place: Target consumers
• Promotion: Communication to target consumers
• Marketing mix tools should be blended into a comprehensive program

Customer Relationship Management (CRM)

• Focuses on delivering superior customer value and satisfaction
• Builds and maintains profitable customer relationships

Customer-Perceived Value

• Customers evaluate the difference between all the benefits and all the costs of a marketing offer relative to competing offers

Customer Satisfaction

• Extent to which a product's perceived performance matches a buyer's expectations
• Higher customer satisfaction leads to greater customer loyalty

Customer Loyalty and Retention

• Keeping customers loyal is economically sound
• Customer lifetime value represents the total purchase value over a lifetime
• Customer defections can be costly due to lost lifetime value

Growing Share of Customer

• Increasing the portion of a customer's purchasing in a company's product categories

Methods to Increase Customer Share

• Good customer relationship management
• Offering greater variety to current customers
• Creating programs to cross-sell and up-sell to existing customers

Digital and Mobile Marketing

• Digital and Social Media Marketing: engaging consumers via their devices using digital marketing tools.
• Mobile Marketing: using mobile channels to stimulate buying, ease shopping, and enrich brand experience.
• Both offer huge potential when smoothly integrated with traditional approaches

Big Data and AI

• Marketers can now amass mountains of data
• Brands use it to gain insights, personalize offers, and improve engagements

Microsoft's Adaptation

• Transitioned from a device-centric mission to focusing on customer outcomes
• Aims to lead in productivity tools, adapting to the fast-changing environment

Marketing Environment

• Factors impacting management's ability to build relationships with target consumers

Two Environmental Categories

• Macroenvironment: societal forces affecting the microenvironment.
• Microenvironment: actors close to the company impacting its ability to serve customers

The Marketer's Microenvironment

• Involves working in harmony with departments to create relationships.
• Requires partnering with other firms for customer value.
• Prioritizes customers and a strong value delivery system.

Demographic Environment

• Study of human populations: size, density, location, age, gender, race, occupation, etc.
• Marketers analyze changing age/family structures and population shifts

Economic Environment

• Factors affecting consumer purchasing power and spending:
  • Changes in spending patterns
  • Income distribution
  • Value marketing due to changed consumer behavior

Natural Environment

• Physical environment and needed natural resources
• Trends: shortages, pollution, government intervention, and sustainable practices

Other Key Environments

• Technological, Political, and Cultural Environments

Marketer's Responsibility

• Marketers should be socially responsible citizens within their markets

Changing Demographics

• Changing demographics cause shifts in markets and resulting marketing strategies

Marketing Intermediaries

• Entities assisting the company in promoting, selling, and distributing to final buyers:
  • Resellers are distribution channel firms, including wholesalers and retailers
  • Physical distribution firms handle logistics
  • Marketing services agencies provide expertise
  • Financial intermediaries handle financial aspects

Publics

• Any group with an actual or potential interest in or impact on an organization's ability to achieve its objectives:
  • Financial publics influence funding
  • Media carries news and opinions
  • Government involvement may be required
  • Citizen-action groups may voice concerns
  • Local entities include residents and community orgs
  • Internal groups are workers, managers, and volunteers
  • General public perception affects buying behavior

Customer Markets

• Consumer markets include individuals and households for personal consumption
• Business markets buy goods and services to use in production
• Reseller markets purchase to resell for profit
• Government markets buy to produce public services
• International markets span various countries

Socially Responsible Behavior

• Involves actively protecting consumers' and the environment's long-run interests

Actions of Socially Responsible Companies

• Developing policies/guidelines addressing social responsibility issues
• Practicing brand activism
• Encouraging ethical behavior

Cause-Related Marketing

• Used to demonstrate social responsibility and build positive image
• Can be viewed as corporate giving
• Can raise controversy as more of a selling strategy

Trends in the Cultural Environment

• Catering to natural, organic, and ethical products

Marketing Environment Response

• Reactive firms accept the environment
• Proactive firms develop strategies to change the environment by affecting related forces
• Using a balanced approach is often smartest

Building Customer Relationships at Lenovo

• Involves listening, communicating, and considering customer input

Buyer Behavior Definitions

• Consumer Buyer Behavior: Buying behavior of final consumers (individuals and households)
• Consumer Market: Individuals and households buying goods and services

Four Types of Consumer Buying Behavior

• Complex
• Dissonance-reducing
• Habitual
• Variety-seeking

Influences on Consumer Purchases

• Strongly influenced by cultural, social, personal, and psychological characteristics
• Marketers need to account for consumer factors

Cultural Factors

• Culture
• Subculture
• Social class

Social Factors

• Reference groups
• Family
• Roles and status

Personal Factors

• Age and life-cycle stage
• Occupation
• Economic situation
• Lifestyle
• Personality and self-concept

Psychological Factors

• Motivation
• Perception
• Learning
• Beliefs and attitudes

Buying Decisions

• Buying decisions are affected by complex internal and external factors

Maslow's Hierarchy of Needs

• Explains people's motivations at particular times:
  • Self-actualization needs (self-development and realization)
  • Esteem needs (self-esteem, recognition, status)
  • Social needs (sense of belonging, love)
  • Safety needs (security, protection)
  • Physiological needs (hunger, thirst)

The Buyer Decision Process

• Consists of 5 stages: Need Recognition, Information Search, Evaluation of Alternatives, Purchase Decision, Post-Purchase Evaluation
• Marketers must consider the entire process

Stages in the Adoption Process

• Awareness: consumer becomes aware of a new product but lacks information.
• Interest: seeking information about the new product.
• Evaluation: considering whether trying the new product makes sense.
• Trial: trying the product on a small scale.
• Adoption: making full and regular use of the product.

Adopter Categories

• Innovators (2.5%) try new ideas
• Early Adopters (13.5%) are opinion leaders
• Early Mainstream (34%) adopts ideas before average
• Late Mainstream (34%) adopts after a majority
• Lagging Adopters (16%) adopt when innovation is a tradition

Business Markets

• Involve more money/items than consumer markets.
• Differ in market structure/demand, nature of buying unit, and types of decisions

Types of Buying Situations

• Straight rebuy: routine reordering with no modifications.
• Modified rebuy: requires changes to product specs, prices, terms, or suppliers.
• New task: the first-time purchase requiring extensive research and decisions.

Systems Selling

• Involves packaged solutions from a single seller

Value-Driven Strategy

• Henkel's Persil's success due to understanding customer needs

Designing a Customer-Driven Marketing Strategy

• Consists of: Selecting customers to serve and Creating value for targeted customers

Steps in Customer-Driven Marketing

• Market Segmentation: Divide the market into smaller segments
• Market Targeting: Select segment(s) to enter.
• Differentiation: Differentiate market offering to create customer value.
• Positioning: Position market offering in the minds of target customers.

Goal of 1st two steps

• Select the customers that it will serve

Goal of final 2 steps

• Decide on a value proposition

Major Segmentation Variables for Consumer Markets

• Geographic
• Demographic
• Psychographic
• Behavioral

Market Targeting

• Must evaluate various segments
• This will dictate how many segments it can serve best

Segment Evaluations are Based on:

• segment size and growth
• segment structural attractiveness influenced by competitors, ease of new entrants, substitute products, and buyer/supplier power.
• company objectives and resources: attractive segments must align with objectives.

Target Market

• Set of buyers with shared needs/characteristics that determine which to serve

Market Targeting Strategies

• Companies can target broadly, narrowly, or somewhere in between

Undifferentiated Marketing

• Mass marketing where differences ignored in order to target whole market with one offer.

Differentiated Marketing

• Targeting multiple segments, designing separate offers for each to increase sales/position

Concentrated Marketing

• Niche marketing to pursue a large share of one+ niches. Niches can give an advantage against larger competitors.

Micromarketing

• Tailoring products/marketing to specific individuals/locations. Seeing individual as customer

Local Marketing

• Local Marketing: tailoring brands and marketing to local segments such as cities/neighborhoods

Individual Marketing

• tailoring products and marketing to the needs and wants of individual customers.

Mass Customization

• Where firms customize products and marketing tailor-made to individuals.

Responsible Target Marketing

• Avoids targeting vulnerable with harmful products.
• Benefits both companies and the targeted.

Product Position

• The way a product is defined by consumers versus competitors.

Competitive Advantage

• Offering greater customer value through lower prices or more benefits.

Value Proposition

• Provides full positioning of a brand and refers to full mix of benefits on which a brand is differentiated and positioned

Types of Value Propositions

• dark green = winning value propositions
• red = losing value propositions
• center = a marginal position