Principles of Marketing Chapter 2

Marketing Process Overview

• Marketing creates value for customers and establishes strong relationships to generate profit.
• The marketing framework involves understanding the marketplace, designing a customer-driven strategy, constructing an integrated marketing program, building relationships, and capturing value from customers.

Understanding the Marketplace and Customer Needs

• Needs are states of deprivation, classified as:
  • Physical: Basic necessities such as food and safety.
  • Social: Desires for belonging and affection.
  • Individual: Pursuits of knowledge and self-expression.
• Wants are shaped by culture and individual personality while demands represent wants backed by buying power.
• Market offerings include combinations of products, services, information, or experiences to fulfill needs or wants.
• Marketing myopia occurs when companies focus only on immediate wants, neglecting underlying needs.
• Exchanges involve obtaining desired objects by offering something in return, essential for relationship building.

Designing a Customer-Driven Marketing Strategy

• Marketing management is both an art and science focused on identifying and serving target markets effectively.
• Key questions in marketing strategy:
  • Who are our customers?
  • How can we serve them best?
• Market segmentation divides consumers into segments, leading to target marketing decisions.
• De-marketing aims to reduce demand temporarily, without destroying it.
• A Value Proposition outlines the benefits promised to customers.

Marketing Management Orientations

• Production Concept: Assumes consumers prefer accessible or affordable products.
• Product Concept: Suggests a preference for high-quality, feature-rich products requiring ongoing improvement.
• Selling Concept: Focuses on aggressive selling and promotion to increase sales volume.
• Marketing Concept: Centers on understanding and satisfying customer needs better than competitors.
• Societal Marketing Concept: Considers consumer wants, company needs, and societal interests in marketing decisions.

Preparing an Integrated Marketing Plan and Program

• An Integrated Marketing Program communicates and delivers desired value to selected customers.
• The 4 Ps of Marketing Mix:
  • Product: The blend of goods and services offered to the target market.
  • Price: The monetary amount customers pay for the product.
  • Place: The distribution channels that make products accessible to consumers.
  • Promotion: Activities to inform and persuade target customers about product merits.

Building Customer Relationships

• Customer Relationship Management (CRM) is essential for establishing and maintaining profitable relationships through superior value and satisfaction.
• Customer Perceived Value: The difference between the benefits and costs of a market offering compared to competitors.
• Customer Satisfaction: The degree to which a product meets or exceeds buyer expectations.
• Approaches to building relationships include:
  • Basic relationships for general engagement.
  • Full relationships through loyalty programs and frequent marketing.

Capturing Value from Customers

• Customer Lifetime Value: Represents the total revenue from a customer throughout their purchasing life.
• Share of Customer: The company’s portion of a customer's total spending in its product categories.
• Customer Equity: The combined lifetime values of all a company's customers, indicating overall business health and profitability.

Explore the foundational concepts of marketing in Chapter 2. This quiz delves into how companies create value, build strong relationships with customers, and capture value in return. Test your understanding of the marketing process and its key components.