First Week Marketing PDF - University of Basra

University of Basra College of Computer Science and Information Technology MARKETING first week What Is Marketing? Reem qasim What Is Marketing? Marketing Defined What is marketing? Many people think of marketing as only selling and advertising. We are bombarded every d...

University of Basra College of Computer Science and Information Technology MARKETING first week What Is Marketing? Reem qasim What Is Marketing? Marketing Defined What is marketing? Many people think of marketing as only selling and advertising. We are bombarded every day with TV commercials, catalogs, sales calls, and e-mail pitches. However ,selling and advertising are only the tip of the marketing iceberg. Today, marketing must be understood not in the old sense of making a sale—“telling and selling”—but in the new sense of satisfying customer needs. If the marketer understands consumer needs; develops products that provide superior customer value; and prices, distributes, and promotes them effectively, these products will sell easily. In fact, according to management guru Peter Drucker, “The aim of marketing is to make selling unnecessary. Selling and advertising are only part of a larger “marketing mix”—a set of marketing tools that work together to satisfy customer needs and build customer relationships. The Marketing Process U Figure below presents a simple, five-step model of the marketing process. In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value. 1-Understanding the Marketplace and Customer Needs As a first step, marketers need to understand customer needs and wants and the marketplace in which they operate. We examine five core customer and marketplace concepts: (1) needs, wants, and demands; (2) market offerings (products, services, and experiences) (3) value and satisfaction(4) exchanges and relationships; and (5) markets.   Customer Needs, Wants, and Demands The most basic concept underlying marketing is that of human needs. Human needs are states of felt deprivation. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. Marketers did not create these needs; they are a basic part of the human makeup. Wants are the form human needs take as they are shaped by culture and individual personality.  Market Offerings—Products, Services, and Experiences Consumers’ needs and wants are fulfilled through market offerings—some combination of products, services, information, or experiences offered to a market to satisfy a need or a want. Market offerings are not limited to physical products. They also include services—activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, airline, hotel, tax preparation, and home repair services.  Customer Value and Satisfaction Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many market offerings? Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others.  Exchanges and Relationships Marketing occurs when people decide to satisfy needs and wants through exchange relationships.Exchange is the act of obtaining a desired object from someone by offering something in return. In the broadest sense, the marketer tries to bring about a response to some market offering. The response may be more than simply buying or trading products and services.  Markets The concepts of exchange and relationships lead to the concept of a market. A market is the set of actual and potential buyers of a product or service. These buyers share a particular need or want that can be satisfied through exchange relationships.  A Modern Marketing System 2- Designing a Customer-Driven Marketing Strategy Once it fully understands consumers and the marketplace, marketing management can design a customer-driven marketing strategy. We define marketing management as the art and science of choosing target markets and building profitable relationships with them. The marketing manager’s aim is to find, attract, keep, and grow target customers by creating, delivering, and communicating superior customer value.  Selecting Customers to Serve The company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing). Some people think of marketing management as finding as many customers as possible and increasing demand. But marketing managers know that they cannot serve all customers in every way. By trying to serve all customers, they may not serve any customers well. Instead, the company wants to select only customers that it can serve well  Choosing a Value Proposition The company must also decide how it will serve targeted customers—how it will differentiate and position itself in the marketplace. A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. At AT&T, it’s “Your World. Delivered.” whereas with T-Mobile, family and friends can “Stick together.   Marketing Management Orientations Marketing management wants to design strategies that will build profitable relationships with target consumers. But what philosophy should guide these marketing strategies? What weight should be given to the interests of customers, the organization, and society? Very often, these interests conflict. There are five alternative concepts under which organizations design and carry out their marketing strategies: the production, product, selling, marketing, and societal marketing concepts.  The Production Concept The production concept holds that consumers will favor products that are available and highly affordable. Therefore, management should focus on improving production and distribution efficiency. This concept is one of the oldest orientations that guides sellers. The production concept is still a useful philosophy in some situations. For example, computer maker Lenovo dominates the highly competitive, price- sensitive Chinese PC market through low labor costs, high production efficiency, and mass distribution. However, although useful in some situations, the production concept can lead to marketing myopia. Companies adopting this orientation run a major risk of focusing too narrowly on their own operations and losing sight of the real objective— satisfying customer needs and building customer relationships  The Product Concept The product concept holds that consumers will favor products that offer the most in quality, performance, and innovative features. Under this concept, marketing strategy focuses on making continuous product improvements. Product quality and improvement are important parts of most marketing strategies. However, focusing only on the company’s products can also lead to marketing myopia. For example, some manufacturers believe that if they can “build a better mousetrap, the world will beat a path to their doors.” But they are often rudely shocked. Buyers may be looking for a better solution to a mouse problem but not necessarily for a better mousetrap. The better solution might be a chemical spray, an exterminating service, a house cat, or something else that works even better than a mousetrap. Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages, and prices it attractively; places  it in convenient distribution channels; brings it to the attention of people who need it; and convinces buyers that it is a better product..  The Selling Concept Many companies follow the selling concept, which holds that consumers will not buy enough of the firm’s products unless it undertakes a large- scale selling and promotion effort. The selling concept is typically practiced with unsought goods—those that buyers do not normally think of buying, such as insurance or blood donations. These industries must be good at tracking down prospects and selling them on a product’s benefit Such aggressive selling, however, carries high risks. It focuses on creating sales transactions rather than on building long-term, profitable customer relationships. The aim often is to sell what the company makes rather than making what the market wants. It assumes that customers who are coaxed into buying the product will like it. Or, if they don’t like it ,they will possibly forget their disappointment and buy it again later. These are usually poor assumptions.  The Marketing Concept The marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. Under the marketing concept, customer focus and value are the paths to sales and profits. Instead of a product-centered “make and sell” philosophy, the marketing concept is a customer-centered “sense and respond” philosophy. The job is not to find the right customers for your product but to find the right products for your customers. Selling and Marketing Concepts Contrasted   The Societal Marketing Concept The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare. Is a firm that satisfies the immediate needs and wants of target markets always doing what’s best for its consumers in the long run? The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and society’s well-being. It calls for sustainable marketing, socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. As Figure below shows, companies should balance three considerations in setting their marketing strategies: company profits, consumer wants, and society’s interests. 3- Preparing an Integrated Marketing Plan and Program The company’s marketing strategy outlines which customers it will serve and how it will create value for these customers. Next, the marketer develops an integrated marketing program that will actually deliver the intended value to target customers. The marketing program builds customer relationships by transforming the marketing strategy into action. It consists of the firm’s The major marketing mix tools are classified into four broad groups, called the four Ps of marketing: product, price, place, and promotion. To deliver on its value proposition, the firm must first create a need-satisfying market offering (product). It must decide how  much it will charge for the offering (price) and how it will make the offering available to target consumers (place). Finally, it must communicate with target customers about the offering and persuade them of its merits (promotion). The firm must blend each marketing mix tool into a comprehensive integrated marketing program that communicates and delivers the intended value to chosen customers 4-Building Customer Relationships The first three steps in the marketing process—understanding the marketplace and customer needs, designing a customer-driven marketing strategy, and constructing a marketing program—all lead up to the fourth and most important step: building profitable customer relationships. Customer Relationship Management Customer relationship management is perhaps the most important concept of modern marketing. Some marketers define it narrowly as a customer data management activity (a practice called CRM). By this definition, it involves managing detailed information about individual customers and carefully managing customer “touch points” to maximize customer loyalty. We will discuss this narrower CRM activity in Chapter 4 when dealing with marketing information.  Customer Value. Attracting and retaining customers can be a difficult task. Customers often face a bewildering array of products and services from which to choose. A customer buys from the firm that offers the highest customer-perceived value—the customer’s evaluation of the difference between all the benefits and all the costs of a market offering  Customer Satisfaction. Customer satisfaction depends on the product’s perceived performance relative to a buyer’s expectations. If the product’s performance falls short of expectations, the customer is dissatisfied. If performance matches expectations, the customer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted.  Customer Relationship Levels and Tools. Companies can build customer relationships at many levels, depending on the nature of the target market. At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. The Changing Nature of Customer Relationships Significant changes are occurring in the ways in which companies are relating to their customers. Yesterday’s big companies focused on mass marketing to all customers at arm’s length Today’s companies are building deeper, more direct, and lasting relationships with more carefully selected customers. Here are some important trends in the way companies and customers are relating to one another  Relating with More Carefully Selected Customers Few firms today still practice true mass marketing—selling in a standardized way to any customer who comes along. Today, most marketers realize that they don’t want relationships with every customer. Instead, they target fewer, more profitable customers. “Not all customers are worth your marketing efforts,” states one analyst. “Some are more costly to serve than to lose.” Adds another marketing expert, “If you can’t say who your customers aren’t, you probably can’t say who your customers are.”  Relating More Deeply and Interactively Beyond choosing customers more selectively, companies are now relating with chosen customers in deeper, more meaningful ways. Rather than relying on one-way, mass-media messages only, today’s marketers are incorporating new, more interactive approaches that help build targeted,  Two-Way Customer Relationships. New technologies have profoundly changed the ways in which people relate to one another. New tools for relating include everything from e-mail, Web sites, blogs, cell phones, and video sharing to online communities and social net works, such as Facebook, YouTube, and Twitter.  Customer-managed relationships. Marketing relationships in which customers, empowered by today’s new digital technologies, interact with companies and with each other to shape their relationships with brands.  Consumer-generated marketing. by which consumers themselves are playing a bigger role in shaping their own brand experiences and those of others. This might happen through uninvited consumer-to-consumer exchanges in blogs, video-sharing sites, and other digital forums. But increasingly, companies are inviting consumers to play a more active role in shaping products and brand messages. Partner Relationship Management When it comes to creating customer value and building strong customer relationships, today’s marketers know that they can’t go it alone. They must work closely with a variety of marketing partners. In addition to being good at customer relationship management, marketers must also be good at partner relationship management. Major changes are occurring in how marketers partner with others inside and outside the company to jointly bring more value to customers.   Partners Inside the Company Traditionally, marketers have been charged with understanding customers and representing customer needs to different company departments. The old thinking was that marketing is done only by marketing, sales, and customer-support people. However, in today’s more connected world, every functional area can interact with customers, especially electronically. The new thinking is that—no matter what your job is in a company— you must understand marketing and be customer focused. David Packard, the late cofounder of HP, wisely said, “Marketing is far too important to be left only to the marketing department.  Marketing Partners Outside the Firm Changes are also occurring in how marketers connect with their suppliers, channel partners, and even competitors. Most companies today are networked companies, relying heavily on partnerships with other firms. 5- Capturing Value from Customers The first four steps in the marketing process involve building customer relationships by creating and delivering superior customer value. The final step involves capturing value in return in the form of current and future sales, market share, and profits. By creating superior customer value, the firm creates highly satisfied customers who stay loyal and buy more. This, in turn, means greater long-run returns for the firm. Here, we discuss the outcomes of creating customer value: customer loyalty and retention, share of market and share of customer, and customer equity.  Creating Customer Loyalty and Retention Good customer relationship management creates customer delight. In turn, delighted customers remain loyal and talk favorably to others about the company and its products. Studies show big differences in the loyalty of customers who are less satisfied, somewhat satisfied, and completely satisfied. Even a slight drop from complete satisfaction can create an enormous drop in loyalty. Thus, the aim of customer relationship management is to create not only customer satisfaction but also customer delight  Growing Share of Customer Beyond simply retaining good customers to capture customer lifetime value, good customer relationship management can help marketers increase their share of customer—the share they get of the customer’s purchasing in their product categories.  Building Customer Equity We can now see the importance of not only acquiring customers but also keeping and growing them. One marketing consultant puts it this way: “The only value your company will ever create is the value that comes from customers—the ones you have now and the ones you will have in the future. Without customers, you don’t have a business. The Changing Marketing Landscape Every day, dramatic changes are occurring in the marketplace. Richard Love of HP observed, “The pace of change is so rapid that the ability to change has now become a competitive advantage.” Yogi Berra, the legendary New York Yankees catcher and manager, summed it up more simply when he said, “The future isn't what it used to be.” As the marketplace changes, so must those who serve it. the major trends and forces that are changing the marketing landscape and challenging marketing strategy. We look at five major developments: the uncertain economic environment, the digital age, rapid globalization, the call for more ethics and social responsibility, and the growth of not-for- profit marketing..