Marketing Principles: An Introduction

• An introduction to Marketing Principles is discussed

Marketing definition

• Marketing involves commercial activities that direct product flow from producers to consumers
• Marketing is how companies create customer value, build strong relationships, and capture value in return

MKT (Marketing)

• MKT is a system of business activities designed to plan, price, promote, and distribute products

MKT Mix (4 P's)

• Product
• Price
• Promotion
• Place (Distribution)

Promotion Mix

• Advertising
• Personal selling
• Sales promotion
• Public relations (or publicity)

Marketing Creates Utility

• Form utility: offering the correct product to customers
• Time utility: offering the product to customers in the correct moments
• Place utility: offering the product to customers in the correct locations
• Possession utility: giving the customer the right to possess the product by buying
• Information utility: providing enough product information to customers

Market definition

• Markets are people and organizations with both wants to satisfy, money to spend, and the willingness to satisfy their wants
• Three conditions include wants/needs, affordability/ability, and willingness/readiness
• Products can be goods, services, persons, ideas, or places.

Marketing Process: Phase 1

• Understanding of the marketplace and customer needs
• This involves 5 core concepts:
• Needs, wants, and demands
• Market offerings and MKT myopia
• Customer value and satisfaction
• Exchanges and relationships
• Markets

Needs, wants, & demands

• Needs are states of deprivation, like food, warmth, safety, and belonging
• Wants are how human needs are shaped by culture, personality, age, education, and gender
• Demand is the want backed by buying power, such as buying expensive clothes for a feast

Market offerings & MKT myopia

• Market offerings combine goods and services to satisfy a need or want
• MKT myopia focuses too much on specific products over their benefits

Customer value and satisfaction

• Customers buy from firms offering the highest perceived value
• Customer-perceived value is the difference between all benefits and costs relative to competing offers
• Higher benefits than costs leads to higher perceived value
• Customer satisfaction arises when a product meets expectations
• Customer delight occurs when the product exceeds expectations

Exchanges & relationships

• Exchanges are the process of obtaining a desired object by offering something in return

Markets

• A market comprises all potential and actual buyers of a product or service

Marketing Process: Phase 2- Selecting Customers

• Focuses on designing a customer-driven marketing strategy
• Step 1: Market segmentation, dividing the market into maximally similar segments
• Step 2: Target marketing, selecting one or more segments and offering a different marketing mix for each
• Value proposition includes the set of benefits or values that differentiate one brand from another to satisfy customer needs
• Differentiation & positioning means determining how the company will serve its target customers and position itself in the market

Alternative Concepts for Marketing Strategy

• Production concept favors affordable and available products -Focusing on production and distribution efficiency
• Selling concepts say consumers won't buy enough without great selling and promotion efforts
• Marketing concept focuses on meeting target market needs/wants effectively

Marketing Process: Phase 3

• Preparing an integrated marketing plan and program
• Involves the marketing mix elements (4Ps): product, pricing, promotion, and place (distribution)

Marketing Process: Phase 4

• Building customer relationships
• This involves applying customer relationship management (CRM), creating customer-perceived value, and achieving customer satisfaction
• Customer relationship management builds and maintains these profitable relationships by delivering customer value and satisfaction
• Customer-perceived value is a customer's evaluation of difference between the benefits and costs of a marketing offer
• Customer satisfaction is the degree to which a products perceived performance meets expectations

Marketing Process: Phase 5

• Capturing value from customers depends customer loyalty and retention
• CRM leads to customer delight, which leads to loyalty

Building Customer Equity

• Growing share of customers means increasing the portion of a customer's purchasing that the company gets in its product category
• Building customer equity means increasing the total combined customer lifetime values of all company's customers
• Higher loyalty of a firm's profitable customers means higher customer equity

Customer relationship groups

• A company can classify customers into four relationship groups based on profitability and loyalty
• Each group requires different managemen

Customer Relationship groups

• Butterflies are profitable but not loyal, short-term profits and the company should not invest in trying to turn these customers into loyal customers
• Strangers are neither profitable nor loyal, so don't invest in them
• True friends are profitable and loyal, so strengthen the relationships and grow them
• Barnacles are very loyal but not profitable and are the most problematic customers - try to get rid of them

"Customer is the King"

• In marketing, the company must begin and end with the customer
• First understanding the market and identifying customer needs/wants through market research, then producing products to satisfy needs/wants through a marketing program using the 4Ps
• At the end, the company must conduct market research again to ensure customer satisfaction, if not developing a new marketing program with an enhanced mix of the 4Ps