Principles of Marketing - Chapter 1 PDF

Priciples of Marketing by Philip Kotler and Gary Armstrong Chapter 1 Marketing:Creating and Capturing Customer Value PEARSON Objective Outline What Is Marketing 1 Define marketing and outline the steps in the marketing process....

Priciples of Marketing by Philip Kotler and Gary Armstrong Chapter 1 Marketing:Creating and Capturing Customer Value PEARSON Objective Outline What Is Marketing 1 Define marketing and outline the steps in the marketing process. Understanding the Marketplace and Customer Needs Explain the importance of understanding customers 2 and the marketplace and identify the five core marketplace concepts. Objective Outline Designing a Customer-Driven Marketing Strategy Preparing an Integrated Marketing Plan and 3 Program Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Objective Outline Building Customer Relationships Capturing Value from Customers 4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. The Changing Marketing Landscape 5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. What Is Marketing? Simplest definition Marketing is Attract new Keep and grow managing profitable customers by current customers customer promising superior by delivering relationships. value satisfaction. Marketing Defined Broadly defined, marketing is a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others. We define marketing as a process by which companies create value for customers and build strong customer relationships to capture value from customers in return..  Marketing Process This important figure shows marketing in a nutshell. By creating value for customers, marketers capture value from customers in return. This five-step process forms the marketing frame work for the rest of the chapter and the remainder of the text. Construct an Build profitable Capture value Understand the Design integrated relationships from marketplace customer-driven marketing and create customers to and customer marketing program that customer create profits needs and wants strategy delivers delight and customer superior value equity Create value for customers and build customer relationships Capture value from customers in return Understanding the Marketplace and Customer Needs Customer Needs, Wants, and Demands Needs States of felt deprivation Physical—food, clothing, warmth, safety Social—belonging and affection Individual—knowledge and self-expression Wants Form that needs take as they are shaped by culture and individual personality Understanding the Marketplace and Customer Needs Customer Needs, Wants, and Demands Demands Human wants backed by buying power。 Market Offerings-Products, Wants, and Demands Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or a want. Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs. Customer Value and Satisfaction Expectations Customers From expectations about the value and satisfaction that various market offerings Will deliver and buy accordingly. Marketers Set the right level of expectations Not too high or low Exchanges and Relationships Exchange the act of obtaining a desired object from someone by offering something in return Relationship Marketing actions try to create, maintain, grow exchange relationships.  Markets are the set of actual and potential Markets buyers of a product. Each party in the system adds value. Walmart cannot fulfill its promise of low prices unless its suppliers provide low costs. Ford cannot deliver a high-quality car-ownership experience unless its dealers provide outstanding service. Arrows represent relationships that must be developed and managed to create customers value and profitable customer relationships. Designing a Customer-Driven Marketing Strategy We define marketing management is the art and science of choosing target markets and building profitable relationships with them. What Twocustomers important questions: will we serve (what’s our target market)? Ch2 How can we serve these customers best (what’s our Ch7 value proposition)? Selecting Customers to Serve Market segmentation refers to dividing the markets into segments of customers. Target marketing refers to which segments to go after. Choosing a Value Proposition A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. Marketing Management Orientations The The The The The Producti Marketi Societal Product Selling Marketing on ng Concept Concept Concept Concept Concept The Product The Societal Concept Marketing Concept The The The product The Selling Marketing Production concept Concept Concept Concept holds that consumers will The societal marketing concept holds that The selling favormarketingconcept production products conceptholdsthe concept that offer that depends holds consumers most on that knowingwillthe consumers quality, not will marketing strategy should deliver value to customers buy needs favorenough products performance, ofand and wants the that firm’s offeatures. are products the available target isunless markets Focus and and itdelivering highly on continuous in a way that maintains or improves both the undertakes the desired affordable. product asatisfactions large scale selling improvements. and competitors better than promotion effort do. consumer’s and society’s well-being. Preparing an Integrated Marketing Plan and Program The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion, and place. The firm must blend each marketing mix tool into a comprehensive integrated marketing program that communicates and delivers the intended value to chosen customers. Building Customer Relationships Customer Relationship Management (CRM) In this broader sense, customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Relationship Building Blocks: Customer Value and Satisfaction 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 relative to those of competing offers. 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. Customer Relationship Levels and Tools Companies can build customer relationships at many levels, depending on the nature of the target market. Many companies offer frequency marketing programs that reward customers who buy frequently or in large amounts. Other companies sponsor club marketing programs that offer members special benefits and create member communities. The Changing Nature of Customer Relationships Today’s companies are building deeper, more direct, and lasting relationships with more carefully selected customers. Relating with More Carefully Selected Customers Today, most marketers realize that they don’t want relationships with every customers. Instead, they target fewer, more profitable customers. Relating More Deeply and Interactively Relating more deeply and interactively by incorporating more interactive two way relationships through blogs, Websites, online communities and social networks Today’s consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers. Thus, the marketing world is now embracing not only customer relationship management, but also customer-managed relationships. A growing part of the new customer dialogue is consumer-generated marketing, by which consumers themselves are playing a bigger role in shaping their own brand experiences and those of others. Partner relationship management In addition to being good at customer relationship management, marketers must also be good at partner relationship management—working closely with others inside and outside the company to jointly bring more value to customers. Partner relationship management In today’s more connected world, every functional area in the organization can interact with customers. The new thinking is that—no matter what your job is in a company—you must understand marketing and be customer focused. Partner relationship management The supply chain describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers. Through supply chain management, companies today are strengthening their connections with partners all along the supply chain. Capturing Value from Customers The final step involves capturing value in return in the form of sales, market share, and profits. By creating superior customer value, the firm creates highly satisfied customers who stay loyal and buy more. This, in return, means greater long-run returns for the firm. 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. Creating Customer Loyalty and Retention Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage Building Customer Equity Customer equity is the total combined customer lifetime values of all of the company’s current and potential customers. Building the Right Relationships with the Right Customers Right relationships with the right customers involves treating customers as assets that need to be managed and maximized. Different types of customers require different relationship management strategies. The Changing Marketing Landscape This section have five major developments: The Changing Marketing The Digital Age Landscape The Growth of Not- for-Profit Rapid Globalization Marketing Sustainable Marketing ─ The Call for More Social Responsibility The Changing Economic Environment The Great Recession caused many consumers to rethink their spending priorities and cut back on their buying. In adjusting to the new economy, companies and slash prices in an effort to coax more frugal customers into opening their wallets. The challenge is to balance the brand’s value proposition with the current times while also enhancing its long-term equity. The Digital Age The digital age has provided marketers with exciting new ways to learn about and track customers and create products and services tailored to individual customer needs. Online marketing is now the fastest-growing form of marketing. The Growth of Not-for-profit Marketing In recent years, marketing has also become a major part of the strategies of many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, and even churches. Government agencies have also shown an increased interest in marketing. Rapid Globalization Today, almost every company, large or small, is touched in some way by global competition. Managers in countries around the world are increasingly taking a global, not just local, view of the company’s industry, competitors, and opportunities. Sustainable Marketing ─ The Call for More Social Responsibility As the worldwide consumerism and environmentalism movements mature, today’s marketers are being called on to develop sustainable marketing practices. Corporate ethics and social responsibility have become hot topics for almost every business. The End Assignment - Case Study A Little Green Lie I work for Telecommunication Company as a sales consultant. The environment is very competitive and as "salespeople," we are always required to surpass our quotas and "make money." Lately the company has decided to "go green," which is good for the environment. However, the true motive behind the company's initiative is to save money on paper bills, as the managers have confessed to us. As a way of making us convert customers to paperless billing, they have factored paperless billing conversion into our metrics, which means that if we do not perform, we can be reprimanded or fired. One of the area managers suggested we tell customers that the company is no longer sending paper bills and that if they wish to still receive a paper bill, they will be charged a fee (which is completely false, paper bills are free to customers). I usually see customers fall for it and go paperless in order to save money, and the sales consultants who have accepted this method are usually our top rankers. The manager said it is not really lying especially if you are helping selfish customers to help the environment. 1. Global warning and environmental issues have become serious problems. Keeping this in mind, is it right to deceive customers if your main motive is to save the environment and help save trees? 2. Is it ethical for the area manager to demand that sales representatives lie? 3. Would it be ethical for the sales representative to follow the directions of the manager? 4. What would you do if you were in this position and what would be your motive behind it?