Principles of Marketing Chapter 1 PDF

Principles of Marketing Eighteenth Edition, Global Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2021 Pear...

Principles of Marketing Eighteenth Edition, Global Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2021 Pearson Education Ltd. Learning Objectives 1.1 Define marketing and outline the steps in the marketing process. 1.2 Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. 1.3 Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 1.4 Brief of the marketing environment concept 1.5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Copyright © 2021 Pearson Education Ltd. Learning Objective 1 Define marketing and outline the steps in the marketing process. What is Marketing? Copyright © 2021 Pearson Education Ltd. What Is Marketing? the simplest definition of marketing is engaging customers and managing profitable customer relationships Marketing is a process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The twofold goal of marketing is to: attract new customers by promising superior value grow current customers by delivering satisfaction Copyright © 2021 Pearson Education Ltd. “Find and discover anything you might want to buy online” “Creating a Culture of warmth and belonging, where everyone is welcome” What Is Marketing? (2 of 2) Marketing is all around you, in good old traditional forms and in a host of new forms, from websites and mobile apps to online videos and social media. Copyright © 2021 Pearson Education Ltd. Figure 1.1 The Marketing Process: Creating and Capturing Customer Value How is marketing different from selling and advertising? Copyright © 2021 Pearson Education Ltd. Understanding the Marketplace and Customer Needs (1 of 5) Needs are states of felt deprivation. Wants are the form human needs take as they are shaped by culture and individual personality. Demands are human wants that are backed by buying power. If you were a manager for a business, what would you do to understand customers, needs, wants, and demands? Copyright © 2021 Pearson Education Ltd. Understanding the Marketplace and Customer Needs (2 of 5) Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. – What else could be considered an offering? Persons? Places? Organizations? Ideas? Copyright © 2021 Pearson Education Ltd.  Don’t Just Sell Stuff…Satisfy Needs Copyright © 2021 Pearson Education Ltd. Understanding the Marketplace and Customer Needs (2 of 5 cont’) Marketing myopia—paying more attention to the specific products than to the benefits and experiences produced. They focus on existing wants and lose sight of underlying customer needs. In other words businesses miss opportunities for growth – Can you give examples? Copyright © 2021 Pearson Education Ltd. Understanding the Marketplace and Customer Needs (2 of 5 cont’) Smart Marketers look beyond the attributes of products and services. By orchestrating several services and products, they create brand experiences for customers. Apple’s successful retails stores don’t just sell products. They create an engaging brand experience. Understanding the Marketplace and Customer Needs (3 of 5) Customers form expectations about the value and satisfaction of market offerings. – Satisfied customers buy again & tell others. – Dissatisfied customers switch to competitors & also tell others. - For you as a manager, what is the right level of expectations? Copyright © 2021 Pearson Education Ltd. Understanding the Marketplace and Customer Needs (3 of 5 cont’) Exchange is the act of obtaining a desired object from someone by offering something in return. Marketing actions try to create, maintain, and grow desirable exchange relationships. Copyright © 2021 Pearson Education Ltd. Understanding the Marketplace and Customer Needs (4 of 5) A market is the set of actual and potential buyers of a product or service. These buyers share a particular need or want and can be satisfied through exchange relationships. Sellers must search for buyers, identify their needs, design good marketing offerings, set prices for them, promote them, and store and deliver them. Copyright © 2021 Pearson Education Ltd. Understanding the Marketplace and Customer Needs (5 of 5) Figure 1.2 A Modern Marketing System Environmental forces (demographic, economic, natural, technological, political, and social/cultural). Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (1 of 6) Marketing management is the art and science of choosing target markets and building profitable relationships with them. What are target markets? Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (1 of 6) Marketing management is conducted in order: To design a winning marketing strategy: 1. What customers will we serve (target market)? 2. How can we best serve these customers (value proposition)? 1. How to select Customers to Serve: – Market Segmentation: dividing the market into segments of consumers. – Target Marketing: selecting which segments it will go after. - Do you think we can serve all segments? Why? Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (2 of 6) 2. A brand’s value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs (how it will differentiate and position itself). - Qatar Airways promises to be “synonymous with excellence and best airlines.” - Baladna promises you “Good taste and highest quality of products“ VP answers the question “Why should I buy your brand rather than the competitor’s?” Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (3 of 6) Marketing Management Orientations: Production concept Product concept Selling concept Marketing concept Societal Marketing concept Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (3 of 6) The Production Concept: It holds the philosophy that consumers will favor products that are available and highly affordable. Management should focus on improving production and distribution efficiency. The oldest orientation that guides sellers. Still useful in some situations BUT can lead to marketing myopia. Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (3 of 6) The Product Concept: It holds the philosophy that consumers will favor products that offer the most in quality, performance, and innovative features. Management should focus on continuous product improvements. Focusing on product quality and improvement is important, however, it can also lead to marketing myopia. Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (3 of 6) The Selling Concept: It holds the philosophy that consumers will not buy enough products unless the company undertakes a large-scale selling and promotion effort. Typically practiced with unsought products – those that buyers do not think of buying (life insurance; blood donations). However, it carries the risk of focusing on creating sales transactions rather than building long-term, profitable customer relationships. Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (3 of 6) The Marketing Concept: It holds the philosophy that achieving organizational goals depends on knowing the needs and wants of target markets and delivering satisfaction better than competitors. Customer focus and value are paths to sales and profits. The job is not to find the right customers for your product but to find the right products for your customers. It yields profits by creating relationships with customers based on value and satisfaction. Works well when a clear need exists and when customers know what they want. However, in many cases customers do not know what they want. Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (4 of 6) Figure 1.3 Selling and Marketing Concepts Contrasted The SC: takes an inside-out perspective. The MC: takes and outside-in perspective. Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (5 of 6) Societal marketing: The company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. Figure 1.4 Three Considerations Underlying the Societal Marketing Concept Copyright © 2021 Pearson Education Ltd. Marketing Management Orientations: The Marketing Management Orientation Summarize d Copyright © 2021 Pearson Education Ltd. Designing a Customer Value-Driven Marketing Strategy (6 of 6) The marketing mix is comprised of a set of tools known a the four Ps: product price promotion place Integrated marketing program—a comprehensive plan that communicates and delivers intended value Copyright © 2021 Pearson Education Ltd. A Company’s Marketing Environment (Chapter 3) The marketing environment includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. Copyright © 2021 Pearson Education Ltd. A Company’s Marketing Environment (Chapter 3) The Marketing Environment consists of: - The Microenvironment: actors close to the company that affect its ability to engage and serve its customers—the company, suppliers, marketing intermediaries, customer markets, competitors, and publics. - - The Macroenvironment: the larger societal forces that affect the microenvironment—demographic, economic, natural, technological, political, and cultural forces Copyright © 2021 Pearson Education Ltd. The Microenvironment Figure 3.1 Actors in the Microenvironment Copyright © 2021 Pearson Education Ltd. The Microenvironment (2 of 8) The Company In designing marketing plans, marketing management takes other company groups into account. Top management Finance Research and development (R&D) Information technology Purchasing Operations Human resources Accounting Copyright © 2021 Pearson Education Ltd. The Microenvironment (3 of 8) Suppliers Provide the resources to produce goods and services Treat as partners to provide customer value Suppliers: Giant furniture retailer IKEA doesn’t just buy from its suppliers. It involves them deeply in the process of delivering the trendy but simple and affordable home furnishings to create a better everyday life for its customers. Copyright © 2021 Pearson Education Ltd. The Microenvironment (4 of 8) Marketing Intermediaries Partnering with intermediaries: Apple Marketing intermediaries provides its retail partners are firms that help the with much more than phones company to promote, sell, and and smartwatches. It also distribute its goods to final pledges technical support. buyers. Copyright © 2021 Pearson Education Ltd. The Microenvironment (5 of 8) Marketing Intermediaries Resellers Physical distribution firms Marketing services agencies Financial intermediaries Copyright © 2021 Pearson Education Ltd. The Microenvironment (6 of 8) Competitors Firms must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. Copyright © 2021 Pearson Education Ltd. The Microenvironment (7 of 8) Publics Publics: NatWest shows its Any group that has an actual or potential commitment to its local community by interest in or impact on an organization’s giving generously to local charities, ability to achieve its objectives community groups, and social enterprises. Financial publics Media publics Government publics Citizen-action publics Local publics General public Internal publics Copyright © 2021 Pearson Education Ltd. The Microenvironment (8 of 8) Customers Consumer markets Business markets Reseller markets Government markets International markets Copyright © 2021 Pearson Education Ltd. The Microenvironment The Microenvironment Summarized Copyright © 2021 Pearson Education Ltd. The Macroenvironment Figure 3.2 Major Forces in the Company’s Macroenvironment Copyright © 2021 Pearson Education Ltd. The Demographic and Economic Environments (1 of 6) The Demographic Environment Demography is the study of human populations—size, density, location, age, gender, race, occupation, and other statistics. Demographic environment involves people, and people make up markets. Demographic trends include changing age and family structures, geographic population shifts, educational characteristics, and population diversity. Copyright © 2021 Pearson Education Ltd. The Demographic and Economic Environments (4 of 6) The Demographic Environment The changing American family Working remotely: Apps like Slack let Geographic shifts in population people working remotely collaborate anywhere and everywhere through the A better-educated, more white-collar, internet and mobile devices. more professional population Increasing diversity Copyright © 2021 Pearson Education Ltd. The Demographic and Economic Environments (5 of 6) The Demographic Environment Targeting consumers with disabilities: Toyota’s “Start Your Impossible” campaign included ads highlighting inspirational real-life stories of athletes who overcame mobility challenges, such Paralympic gold medalist alpine skier Lauren Woolstencroft. Copyright © 2021 Pearson Education Ltd. The Demographic and Economic Environments (6 of 6) The Economic Environment Economic environment: Consumers adopted a new back-to- basics sensibility in their lifestyles and spending patterns. To serve the tastes of these more financially frugal buyers, companies like Target are emphasizing the “pay less” side of their value propositions. Copyright © 2021 Pearson Education Ltd. The Natural and Technological Environments (1 of 4) The Natural Environment The natural environment is the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Trends in the Natural Environment Growing shortages of raw materials Increased pollution Increased government intervention Developing strategies that support environmental sustainability Copyright © 2021 Pearson Education Ltd. The Natural and Technological Environments (4 of 4) The Technological Marketing technology: Disney Environment takes full advantage of digital Most dramatic force in technology in creating magical customer experiences at its changing the marketplace Walt Disney World Resort. New products, opportunities Concern for the safety of new products Copyright © 2021 Pearson Education Ltd. The Political-Social and Cultural Environments (1 of 5) The Political and Social Environment Legislation regulating business is intended to protect companies from each other consumers from unfair business practices the interests of society against unrestrained business behavior Copyright © 2021 Pearson Education Ltd. The Political-Social and Cultural Environments (3 of 5) The Cultural Environment The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors. Copyright © 2021 Pearson Education Ltd. The Macroenvironment The Macroenvironment Summarized Copyright © 2021 Pearson Education Ltd.