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. Do you know?? Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Do You Know? 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 Define marketing and outline the steps in the marketing process. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. What is Marketing? (1 of 2) 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 engaging customers and managing profitable customer relationships. Goals of Marketing – Attract new customers by promising superior value – Keep and grow current customers by delivering satisfaction Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. 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 phone apps to videos and online social media. Westend61/Getty Images Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Forms of Marketing Traditional Making a sale Abundance of products in the nearby shopping centers Television, magazine, and direct-mail ads Contemporary Satisfying customer needs Imaginative Web sites and mobile phone apps, blogs, online videos, and social media Reach customers directly, personally, and interactively Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Figure 1.1 - The Marketing Process: Creating and Capturing Customer Value Copyright © 2020 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. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. 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. Staying close to customers: Energetic Target CE O Brian Cornell makes regular unannounced visits to Target stores, accompanied by local moms and loyal Target shoppers. Ackerman + Gruber Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Understanding the Marketplace and Customer Needs (2 of 5) Market offerings are some Customer-focused mission: The combination of products, Buffalo Wild Wings mission is to services, information, or provide a total eating and social experiences offered to a market environment that “fuels the sports to satisfy a need or want. fan experience” through in-store and Marketing myopia is focusing online engagement. 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. 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. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Customer Value and Satisfaction Customers form expectations about the value and satisfaction of market offerings. – Satisfied customers buy again – Dissatisfied customers switch to competitors Setting the right level of expectations – Low expectations may fail to attract buyers – High expectations may disappoint buyers Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Understanding the Marketplace and Customer Needs (4 of 5) A market is set of actual and potential buyers. Consumers engage in marketing when they: search for products interact with companies to obtain information make purchases Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Figure 1.2 - A Modern Marketing System (5 of 5) Copyright © 2020 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 Market segmentation refers to dividing the markets into segments of customers. Target marketing refers to which segments to go after. 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) Production concept Product concept Selling concept Marketing concept Societal Marketing concept Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Marketing Management Orientations Production concept: Consumers will favour products that are available and highly affordable. Copyright © 2016 Pearson Education, Inc. 1-22 Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Marketing Management Orientations Product concept: Consumers favour products that offer the most quality, performance, and features. The focus is on continuous product improvements. Copyright © 2016 Pearson 1-23 Education, Inc. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Marketing Management Orientations Selling concept: Consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort. Copyright © 2016 Pearson Education, Inc. 1-24 Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Marketing Management Orientations Marketing concept: Know the needs and wants of the target markets and deliver the desired satisfactions better than competitors. Copyright © 2016 Pearson Education, Inc. 1-25 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 (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 © 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. Customer Relationship Levels and Tools (1 of 2) Levels Basic relationships – Low-margin customers Full partnerships – High-margin customers Tools Frequency marketing programs Loyalty rewards programs Club marketing programs 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. Greater consumer empowerment means that companies must practice marketing by attraction. Marketers must find ways to enter consumers’ conversations with engaging and relevant brand messages. © 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 %. 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. – Partners inside the firm—cross-functional teams – Partners outside the firm—suppliers, channel partners 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. Keeping customers loyal makes good economic sense. 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. Customer defections can be costly – Can lose that customer’s lifetime value – May cause other customers to defect 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. To increase share of customer, firms can offer greater variety to current customers or they can create programs to cross- sell and up-sell to market more products and services to existing customers. For example, Amazon is highly skilled at leveraging relationships with its 237 million customers to increase its share of each customer’s spending budget. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (8 of 9) 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.” General Motors 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.  Types of Loyal Customers True Friends are the loyalist of loyal customers. They are the customers that not only bring in profit, but also speak highly of your products and promote your business to others. An example of “True Friends” would be the so called “Apple Fanboys” that buy whatever product Apple releases simply because they think so highly of the company. Butterflies are not particularly loyal, but have spent money on your products and brought in good revenue. An example of a butterfly would be someone that supports Microsoft in general, but buys the iPhone since it happened to be the best available phone on the market. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.  Types of Loyal Customers Barnacles are loyal customers, but they are loyal customers that rarely make a purchase, and may not bring in much of a profit. A great example would be a customer that buys one cup of coffee at your coffee shop, and then comes in every day for the next month to use your free WiFi without making a purchase. Strangers are those that barely bring in any revenue and are not necessarily loyal to your company. An example would be an individual that occasionally stops into a drug store to buy a stick of gum, but otherwise never uses the store. 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. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. The Changing Marketing Landscape 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 Digital Age Changing Economic Environment Growth of Not-for-Profit Marketing Rapid Globalization Sustainable Marketing Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. The Digital Age: Online, Mobile, and Social Media Marketing Digital and social media marketing: Engaging consumers via their digital devices using digital marketing tools Mobile marketing: Using mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience Blending the new digital approaches with traditional marketing creates a smoothly integrated marketing strategy and mix. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. First Stop: Nike The Nike swoosh—it’s everywhere. Nike has mastered social networking, both online and off, creating deep engagement and community, with and among customers. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Changing Economic Environment The Great Recession undermined consumer confidence. Post-recession era – Consumers have become more frugal. – New consumer spending values emphasize simpler living. – Marketers are focusing on value, practicality and durability in their product offerings. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Growth of Not-for-Profit Marketing Sound marketing can help not-for-profits attract membership, funds, and support. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Rapid Globalization and Sustainable Marketing Managers around the world are taking both local and global views of the company’s: – Industry – Competitors – Opportunities Corporate ethics and social responsibility have become important for every business. 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. Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.