Principles Of Marketing Seventeenth Edition PDF

Principles of Marketing Seventeenth Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2018, 2016, 2014 Pears...

Principles of Marketing Seventeenth Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. 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-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 1.4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. 1.5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Learning Objective 1 1.1 Define marketing and outline the steps in the marketing process. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. What is Marketing? 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. Marketing is all around you, in good old traditional forms and in a host of new forms, from websites and mobile phone apps to videos and online social media. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Learning Objective 2 Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. There are several basic concepts of marketing.  Needs, Wants & Demand  Product  Value & Satisfaction  Exchange, Transaction & Relationship  Market Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.  6 Maslow Hierarchy Needs Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Understanding the Marketplace and Customer Needs (1 of 5) Needs Wants (culture)* Demands Ackerman + Gruber Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my a) Needs, Wants & Demand Wants – Wants are people’s needs that are moulded by culture & individual personality. – For example: a hungry person in UK may want to a plate of fish & chips & a glass of apple juice for lunch, – but hungry person in Malaysia may feel satisfied if they can have a plate of chicken rice & a glass of ‘teh tarik’. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 8 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my a) Needs, Wants & Demand Demand (DD) – DD created when buying power backs a person’s want. – Example: – Many young adults would love to own a car but it remains a want if the person could not afford to have one. Only those who have the money to purchase the product would considered as part of the demand. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 9 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my b) Product A need – satisfying offering of a firm to the market for attention, acquisition, use or consumption. physical form or non – physical form. The marketers should focus more at the benefits of the product offering to the consumer rather than just the product itself. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 10 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my c) Value & Satisfaction Value – Value is the difference between the benefits a person gained from a product & the costs incurred in obtaining the product. – Example: – In order to go to work, you may have several modes of transportation like travelling by cars, motorcycle, bus or LRT. – Besides just reaching your workplace, you may have others needs like getting to your office on time, economically, safely & comfortably that you need to weigh against the costs that you have incurred. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 11 EMAIL : [email protected] 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. Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs. Reprinted with permission of Buffalo Wild Wings, Inc. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.  13 c) Value & Satisfaction Satisfaction difference between a product’s perceived performance in delivering value relative to a buyer’s expectation before a product is purchased. A satisfied customer tends to buy more of one’s product, remains loyal for a long time & pay little interest to competitive brands. i. If perceived performance < buyer expectations  dissatisfied buyer ii. If perceived performance = buyer expectations  satisfied buyer iii. If perceived performance > buyer expectations  delighted buyer Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.  14 Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Understanding the Marketplace and Customer Needs (3 of 5) 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. Flour Retailer Consumer Money Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. 15 Understanding the Marketplace and Customer Needs (4 of 5) A market is set of actual and potential buyers. Consumers market when they: search for products interact with companies to obtain information make purchases Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Understanding the Marketplace and Customer Needs (5 of 5) Figure 1.2 A Modern Marketing System Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Learning Objective 3 Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. 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 customers will we serve (target market)? How can we best serve these customers (value proposition)? Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy (2 of 6) A brand’s value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs. Value propositions: The Hyatt Regency brand declares that sometimes “It’s good not to be home.” Its ads highlight the joys of business travel and staying at a Hyatt Regency hotel. Courtesy Hyatt Corporation. Photograph ©Richard Schultz-2015. Talent: Dean West. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy (3 of 6) Selling Concept Product (1920 – 1950) Marketing Concept Concept (1869 – 1920) (1950 – 1980) Production 5 Societal Concept Marketing Marketing (1869 – 1920) Concepts (1980) Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy (4 of 6) Figure 1.3 Selling and Marketing Concepts Contrasted Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. 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 © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Learning Objective 4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.  Managing Customer Relationships and Capturing Customer Value (1 of 9) Customer relationship management—the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (2 of 9) Relationship Building Blocks Customer-perceived value – The difference between total customer perceived benefits and customer cost Customer satisfaction – The extent to which perceived performance matches a buyer’s expectations Customer satisfaction: Customer service champion L.L.Bean was founded on a philosophy of complete customer satisfaction. As founder Leon Leonwood Bean put it, “I do not consider a sale complete until [the] goods are worn out and the customer [is] still satisfied.” L.L.Bean Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (3 of 9) Customer-Engagement Marketing fosters direct and continuous customer involvement in shaping brand conversations, experiences, and community. Engaging customers: Life is good starts with a deeply felt, engagementworthy sense of purpose: spreading the power of optimism. Then it creates online and social media tools that let people engage and help co-author the brand’s story. © W WPhotography/Alamy Stock Photo Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (4 of 9) Consumer-Generated Marketing Brand exchanges created by consumers themselves. Consumers are playing an increasing role in shaping brand experiences. Consumer-generated marketing: Mountain Dew stirred up user-generated content to create buzz around a limited-time reintroduction of its iconic Baja Blast drink, boosting online chatter by 170 percent. PepsiCo Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (5 of 9) Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (6 of 9) Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage. Customer lifetime value: To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Rule #1—The customer is always right. Rule #2—If the customer is ever wrong, reread Rule #1. Courtesy of Stew Leonard’s Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (7 of 9) Share of customer is the portion of the customer’s purchasing that a company gets in its product categories. Customer equity is the total combined customer lifetime values of all of the company’s customers. Managing customer equity: To increase customer equity, Cadillac is making the classic car cool again among younger buyers, encouraging consumers to “Dare Greatly.” Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (9 of 9) Figure 1.5 Customer Relationship Groups Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Learning Objective 5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Digital and social media marketing involves using digital marketing tools such as web sites, social media, mobile ads and apps, online videos, e-mail, and blogs that engage consumers anywhere, at any time, via their digital devices. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. The Changing Marketing Landscape Not-for-profit marketing growth Rapid globalization Sustainable marketing Sustainable marketing: Ben & Jerry’s three-part “linked prosperity” mission drives it to make fantastic ice cream (product mission), manage the company for sustainable financial growth (economic mission), and use the company “in innovative ways to make the world a better place” (social mission). Both Ben & Jerry’s and its products are “Made of Something Better.” Clark Brennan / Alamy Stock Photo Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. So, What Is Marketing? Pulling It All Together Figure 1.6 An Expanded Model of the Marketing Process Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my Marketing’s Tools : Marketing Mix SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 36 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my Marketing’s Tools : Marketing Mix of the tools the marketing mix which consists organization uses to create a desired response among a set of predefined consumers. Commonly refers to elements of marketing mix as the 7 Ps Totally interdependent  decisions about either one of the 7Ps affects every other marketing mix decision. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 37 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 Marketing’s Tools : Marketing www.ipk.edu.my Mix PRODUCT The product is a good, a service, an idea, a place or whatever is offered for sale in the exchange. This aspect of marketing mix includes the design & packaging of a good, as well as its physical features & any associated services such as free delivery. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 38 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my Marketing’s Tools : Marketing Mix PRICE Price is the assignment of value or the amount the consumer must exchange to receive the offering. Marketers often turn to price to increase consumers’ interest in a product. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 39 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my Marketing’s Tools : Marketing Mix PROMOTION Promotion includes all the activities marketers undertake to inform consumer about their products & to encourage potential customers to buy these products. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 40 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my Marketing’s Tools : Marketing Mix PLACE Place refers to the availability of the product to the consumer at the desired time & location. This is related to a supply chain which is the set of firms that work together to get a product from a producer to a consumer. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 41 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 42 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my PEOPLE They are the target consumers of the company. They are the ones who are the consumers SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 43 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my PHYSICAL APPEARANCE Physical appearance is the first distinction of a product. A product could be easily recognized by it’s appearance. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 44 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my PROCESS The process of the product is essential in marketing. This determines the capability of the product to supply the demand of the consumers. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 45 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my Contribution of Marketing to Individuals & Society a) Maximizing consumption. - Marketers seek to stimulate maximum satisfaction as the more customer spend, buy & consume, the happier the customer & the marketers are. - Maximizing consumption also means that production, employment & wealth are maximized. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 46 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my b) Maximizing customer satisfaction. - The goal of marketing is to fulfill the needs & wants of a customer. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 47 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my c) Maximizing choice. - When a marketing system maximizes the product variety, it will also maximize consumer satisfaction. - But, maximizing the choices comes with higher production & inventory cost. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 48 EMAIL : [email protected]  IPK COLLEGE 1664, JALAN KULIM, 14020 BUKIT MERTAJAM, PENANG TEL : 012-5203212 / 0125113212 / 04-5512588 www.ipk.edu.my Contribution of Marketing to Individuals & Society d) Maximizing quality of life. - A marketing system could improve life quality not only by increasing quality, quantity & availability of product but also by increasing the quality of physical & cultural environment. SUBJECT : Principles of Marketing (MKT 1123) PREPARED BY : Gayathri Balakrishnan Chapter 1: Introduction to Marketing 49 EMAIL : [email protected]