Marketing Principles and Strategies PDF

MARKETING PRINCIPLES AND STRATEGIES JOSIAH GO  Marketing is the process of continuously and profitably satisfying target customer’s needs, wants and expectations superior to competition PHILIP KOTLER  Marketing is the process by which companies create value for cus...

MARKETING PRINCIPLES AND STRATEGIES JOSIAH GO  Marketing is the process of continuously and profitably satisfying target customer’s needs, wants and expectations superior to competition PHILIP KOTLER  Marketing is the process by which companies create value for customer relationships in order to capture value from customers in return Explanation of Marketing: 1. Josiah Go’s Perspective: o Marketing is a continuous process aimed at profitably satisfying the target customer’s needs, wants, and expectations in a manner superior to the competition. o Key elements: Continuity, Profitability, Customer Satisfaction, Superiority to Competition. 2. Philip Kotler’s Perspective: o Marketing is the process of creating value for customers and building strong customer relationships, with the end goal of capturing value from them in return. o Key elements: Value Creation, Customer Relationships, Exchange of Value. International Marketing Example (Coca-Cola): Coca-Cola is an iconic brand recognized worldwide. They create value by adapting their product offerings to different regional tastes and preferences, continuously evolving marketing campaigns that resonate with local cultures. For example, in Japan, Coca-Cola offers exclusive products like "Coca-Cola Peach" to satisfy the local market’s preference for fruit-flavored drinks. The company builds relationships through consistent branding and localized content, ensuring that the brand is more desirable than competitors. How it aligns with Josiah Go’s definition: Coca-Cola consistently satisfies customer needs and wants (localized product offerings) better than competitors in each region (e.g., Japan). How it aligns with Kotler’s definition: Coca-Cola creates customer value (by providing unique flavors) and captures value in return (strong market share in multiple regions). Local Philippines Marketing Example (Jollibee): Jollibee, a beloved Filipino fast-food chain, successfully satisfies local tastes and preferences, such as its signature "Chickenjoy" and sweet-style spaghetti. By understanding Filipino culture and preferences, Jollibee offers products tailored to the market, outperforming international competitors like McDonald’s. Their customer-centric approach ensures continued loyalty and brand strength in the country. How it aligns with Josiah Go’s definition: Jollibee continuously satisfies the needs and wants of Filipino customers (e.g., affordable, culturally appealing food) while outdoing competitors. How it aligns with Kotler’s definition: Jollibee creates value for its customers through local food offerings and strong emotional ties with Filipino identity, and in return, captures value through brand loyalty and high sales. Both examples show how brands strategically create and deliver value to their customers, whether on a global or local level, aligning with the theories of both Josiah Go and Philip Kotler. PETER DRUCKER Explanation: 1. Understanding Consumer Needs: o The first step in effective marketing is to understand what the customer needs and wants. This insight helps marketers develop products that provide superior customer value by directly addressing those needs. 2. Product Development & Value Creation: o Once the needs are understood, the marketer develops products that deliver more value than competitors. This value could be in the form of better quality, convenience, or innovative features. 3. Effective Pricing, Distribution, and Promotion: o Even the best product needs to be properly priced, easily accessible through good distribution, and promoted in a way that resonates with customers. When these elements work together, the product sells easily without the need for hard-selling tactics. 4. Peter Drucker’s Perspective: o Peter Drucker suggests that the aim of marketing is to make selling unnecessary. In other words, if marketing is done well—understanding needs, creating value, pricing correctly, and promoting effectively—customers will naturally be drawn to the product. Thus, selling or aggressive advertising becomes secondary. 5. Marketing Mix: o Selling and advertising are just part of a broader "marketing mix" (often referred to as the 4 Ps: Product, Price, Place, and Promotion). The entire mix must work together to satisfy the customer, creating a relationship that leads to loyalty and repeat business. 6. Social and Managerial Process: o Broadly, marketing is both a social and managerial process where individuals and organizations create and exchange value to fulfill needs and wants. It involves relationship-building, where the focus is on profitable exchanges that benefit both the customer and the company. Example of Marketing Done Right (Apple): Understanding Consumer Needs: Apple understands that customers want a seamless user experience, high-quality products, and cutting-edge technology. Product Development & Value Creation: Apple creates products like the iPhone, which offer superior value in terms of performance, ease of use, and design compared to competitors. Features like the iOS ecosystem integrate all devices, giving customers a smooth and connected experience. Effective Pricing, Distribution, and Promotion: Apple's pricing strategy is premium but justified by the brand's value. Their products are distributed globally and promoted through minimalist yet impactful marketing campaigns like “Shot on iPhone.” The value proposition is so clear and attractive that many customers seek out Apple products without needing to be sold aggressively. How this relates to Drucker’s idea: Apple’s marketing approach often makes selling unnecessary. The brand is so strong that customer’s line up for new releases without needing traditional hard-selling tactics. Advertising plays a supporting role, but it is the superior customer value and brand experience that drive sales. In this case, the entire marketing mix works in harmony to ensure customer satisfaction and build long-term loyalty, aligning with both the broader and narrower definitions of marketing. MARKETING PROCESS 1. Understand the marketplace and customer needs and wants 2. Design a customer-driven marketing strategy 3. Construct an integrated marketing program that delivers superior value 4. Build profitable relationships and create customer delight 5. Capture value from customers to create profits and customer UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS AND WANTS  This step involves researching the market to identify who your customers are, what they need, and what they desire. Understanding demographic data, consumer behaviour, and market trends is crucial.  Example: A company launching a new snack product might conduct surveys and focus groups to learn about consumers’ preferences for flavours, ingredients, and packaging. DESIGN A CUSTOMER-DRIVEN MARKETING STRATEGY  After understanding customer needs, the next step is to create a marketing strategy that targets specific segments of the market. This involves choosing a value proposition and deciding how to position the product.  Example: Based on the insights from the previous step, the snack company may decide to target health-conscious consumers by positioning their product as a low-calorie, organic option. CONSTRUCT AN INTEGRATED MARKETING PROGRAM THAT DELIVERS SUPERIOR VALUE  This involves developing a marketing mix (product, price, place, promotion) that aligns with the chosen strategy. All elements must work together to create a cohesive message and deliver value to customers.  Example: The snack company might launch the product at health food stores, set a competitive price, use social media marketing to promote it, and ensure the packaging highlights the organic ingredients. BUILD PROFITABLE RELATIONSHIPS AND CREATE CUSTOMER DELIGHT  The focus here is on fostering long-term relationships with customers by exceeding their expectations and ensuring satisfaction. This can lead to repeat purchases and customer loyalty.  Example: The snack company could implement a loyalty program, offer discounts for repeat purchases, or engage customers through social media to create a community around their brand. CAPTURE VALUE FROM CUSTOMERS TO CREATE PROFITS AND CUSTOMER EQUITY  Finally, the business needs to focus on generating profits and maximizing the lifetime value of customers. This involves understanding how to convert customer satisfaction into financial returns.  Example: The snack company could analyse sales data to refine their marketing strategy, increase product offerings, or expand into new markets based on loyal customer feedback, ultimately driving profitability. UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS To effectively market products and services, the first and most crucial step for marketers is to understand both customer needs and wants as well as the marketplace in which they operate. This understanding is built on five core concepts: 1. Needs, Wants, and Demands:  Needs: These are basic human requirements, such as food, water, shelter, and safety. In marketing, needs can also include more abstract concepts like belonging and self- expression.  Wants: Wants are shaped by culture, individual personality, and societal influences. For example, someone may need food but want sushi or a gourmet meal.  Demands: When needs and wants are backed by purchasing power, they become demands. Customers may want a luxurious car, but they will only demand it if they have the resources to buy it. Example: A customer may need transportation, but want an electric vehicle like a Tesla due to environmental concerns. They will demand a Tesla only if they can afford it. 2. Market Offerings (Products, Services, and Experiences):  Market offerings are the products, services, or experiences that a company provides to meet customer needs and wants. These offerings are more than just physical products; they can also be intangible, such as services or memorable experiences. Example: Disneyland offers not just entertainment (product) but also a family-friendly vacation experience that delivers lasting memories. Another example is Spotify, which offers a service of music streaming tailored to individual tastes. 3. Value and Satisfaction:  Value is the customer’s perception of the benefits of a product versus its cost. Customers choose market offerings that provide the most value to them.  Satisfaction is determined by how well the product meets or exceeds customer expectations. When a product delivers high value and matches or exceeds expectations, customer satisfaction is achieved. Example: A smartphone buyer may perceive great value in a new iPhone if it provides seamless integration with other Apple products. If the phone meets or exceeds their expectations in performance and design, they will experience satisfaction. 4. Exchanges and Relationships:  Marketing occurs when people decide to satisfy their needs and wants through exchange. In the exchange process, the customer offers something of value (usually money) in return for a product or service.  Companies aim to build relationships with customers, not just through one-off transactions, but by creating loyalty and trust over time. This results in repeat purchases and long-term customer loyalty. Example: Starbucks builds relationships with customers by offering a rewards program. Through each exchange (buying a coffee), customers earn points, creating loyalty and encouraging repeat purchases. 5. Markets:  A market consists of all actual and potential buyers of a product or service. It’s the space where demand and supply come together, and companies compete to meet the needs and wants of customers. Marketers work to identify, segment, and target specific markets to ensure they serve the right customers. Example: The market for luxury watches includes customers who value prestige, quality, and design. Brands like Rolex and Omega target this specific market through their high-end offerings. Full Example: Nike's Understanding of Customer and Marketplace Needs Nike excels in understanding needs, wants, and demands by offering athletic gear that meets the functional needs of athletes. Beyond this, they cater to customers’ wants for style and personal expression, with products like limited-edition sneakers. These sneakers are high in demand among those who both want and can afford premium footwear. Nike’s market offerings go beyond physical products. They also offer experiences like running clubs and the Nike Run Club app, enhancing customer engagement. By delivering value through high-quality, innovative products and creating satisfaction with their performance, Nike builds strong exchanges and relationships. Customers return for new products, participate in brand activities, and form emotional connections with the brand. Lastly, Nike targets various markets, from elite athletes to casual fitness enthusiasts, customizing its approach to different segments, ensuring it maintains a strong presence across diverse customer groups. This holistic approach to understanding customer needs and the marketplace allows Nike to maintain its position as a market leader. TWO INTERACTING COMPONENTS OF MARKETING Two Interacting Components of Marketing: Company and Market In marketing, two critical components work together: the company (or seller) and the market (or buyers). These two entities interact in a dynamic exchange, where the company seeks to fulfill the needs and wants of the market, and the market provides value in return through purchasing products or services. 1. The Company (Seller):  The company is the entity that provides products, services, or experiences to satisfy the needs and wants of the market. It plays a critical role in identifying opportunities within the market, developing offerings, and strategically positioning itself to meet customer demands.  The company’s responsibility is to understand its target market, design products that offer superior value, and manage the marketing mix (product, price, place, promotion) effectively. Example: Apple as a company continually innovates by offering high-quality products like iPhones, MacBooks, and Apple Watches. It understands that its market values design, innovation, and seamless integration of devices. Apple delivers on these expectations by constantly evolving its technology and focusing on user experience. 2. The Market (Buyers):  The market consists of people or organizations who meet four criteria:  1. Need: They have a need for a specific product or service. 2. Ability: They have the financial resources or capability to purchase the product. 3. Willingness: They are willing to spend money to fulfill their need or want. 4. Authority: They have the legal or organizational authority to make the purchase decision.  A market could be composed of individual consumers (B2C) or businesses and organizations (B2B). In either case, companies must understand the nature of the market and create offerings that align with the buyers' specific needs and capacities. Example: The Tesla market consists of individuals (B2C) and organizations (B2B) that: - Have a need for transportation. - Possess the ability to afford an electric vehicle, which tends to be priced at a premium level. - Are willing to invest in sustainable and innovative technology. - Have the authority to make significant purchasing decisions (such as companies looking to electrify their fleets). How Company and Market Interact: The company and market interact through exchanges, where the company offers something of value (products, services, or experiences), and the market responds by purchasing these offerings. Successful interactions depend on the company’s ability to:  Identify the needs of the market.  Develop products that provide superior value to the target customers.  Price, distribute, and promote these products effectively to meet the demands of the market. The market, in turn, provides feedback by making purchases, expressing preferences, and showing loyalty, which helps the company refine its offerings. Example of Interaction: Coca-Cola and Its Market: Coca-Cola (Company):  Coca-Cola identifies that its market needs refreshing beverages, and it has positioned itself as a leader in soft drinks globally. The company innovates by offering new flavors, packaging sizes, and even healthier options like sugar-free drinks. The Market (Buyers):  Coca-Cola’s market consists of individuals (B2C) who have a need for refreshment, the ability to afford a soft drink, the willingness to buy based on taste preferences and brand loyalty, and the authority to make the purchase decision (whether at a retail store or online).  On the B2B side, Coca-Cola also sells to restaurants, convenience stores, and large retailers, who need beverages to offer to their customers. These organizations also have the ability, willingness, and authority to make bulk purchases. The interaction between Coca-Cola and its market is what drives the company’s success. By constantly adapting to customer preferences, Coca-Cola ensures it continues to meet the needs of its market, fostering long-term loyalty and consistent demand. TWO INTERACTING COMPONENTS OF A MARKET Two Interacting Components of a Market: Customer and Competition In any market, two crucial interacting components are the customer and the competition. These components shape the strategies and decisions of companies as they strive to meet customer needs and stay ahead of competitors. A successful marketing strategy must account for both elements to effectively deliver value and maintain a competitive advantage. 1. Customer:  Customers are the people or organizations that purchase products or services to satisfy their needs or wants. They are the central focus of any marketing effort. A company's success largely depends on how well it understands its customers, identifies their needs, and delivers superior value compared to alternatives.  Customers have preferences, buying power, and loyalty, all of which influence their purchasing decisions. Companies must constantly adapt to changes in customer behavior, preferences, and expectations. Example: Amazon has a deep understanding of its customers. Through personalized recommendations, fast delivery options, and excellent customer service, Amazon satisfies the needs of its customers for convenience and variety. By focusing on customer satisfaction, Amazon maintains high customer loyalty and frequent purchases. 2. Competition:  Competition refers to other companies or brands offering similar products or services in the same market. Competitors are constantly vying for the attention and loyalty of the same customers, making it essential for companies to differentiate themselves.  A company must monitor its competitors' strategies, pricing, product offerings, and market positioning to ensure it can offer a unique or better value proposition. Competitors can also influence customer expectations, pushing companies to innovate and improve their offerings. Example: In the fast-food industry, McDonald’s and Burger King are direct competitors. Both offer similar products (e.g., burgers, fries), but they differentiate themselves through branding, menu options, and pricing strategies. McDonald’s often focuses on affordability and consistency, while Burger King markets its flame-grilled burgers as a distinctive feature. Both companies must keep a close watch on each other’s marketing campaigns, product launches, and promotions to stay competitive. How Customers and Competition Interact in the Market:   Customer Behavior and Competition: Customers make choices based on the value they perceive in competing products or services. The presence of multiple options gives customers the power to compare, which drives competition. Companies are constantly improving their offerings, pricing, and service to win over customers, which intensifies competition.  Competition Drives Innovation: In a competitive market, companies need to innovate to attract and retain customers. If one competitor introduces a popular new feature or service, others often follow suit to avoid losing market share.  Customers Drive Market Dynamics: The preferences and demands of customers dictate the direction of competition. If customers shift toward healthier food options, for example, fast-food chains will compete to introduce healthier menu items to meet this new demand. Example of Interaction: Apple, Samsung, and Smartphone Customers:  Customer: Smartphone customers have varying needs, such as advanced technology, ease of use, camera quality, and design. Some customers may prioritize brand loyalty, while others focus on price or specific features. These preferences shape their purchasing decisions.  Competition: In the smartphone market, Apple and Samsung are fierce competitors. Both brands compete for a similar customer base by offering premium devices with cutting-edge technology. Apple emphasizes the user experience and brand ecosystem, while Samsung highlights innovation in hardware (e.g., foldable phones) and customization. Each company watches the other closely to see how they can outdo each other in features, design, or price. The competition between Apple and Samsung benefits customers by constantly pushing both companies to offer better products. Meanwhile, customers influence the competition by choosing the brand that offers the most value, whether that be in the form of innovation, price, or loyalty programs. Conclusion: The customer and competition are two intertwined components of any market. Companies need to understand their customers’ needs and preferences while also staying aware of what competitors are doing to gain a competitive edge. Success in the market depends on the ability to balance these two forces effectively, offering superior value to customers while standing out in a competitive landscape. THE STRATEGIC 3CS OF MARKETING The Strategic 3Cs of Marketing: Customers, Company, and Competition The 3Cs of Marketing is a strategic framework that helps businesses focus on three critical factors: Customers, Company, and Competition. Each component interacts to drive business outcomes, guiding companies in their marketing strategies and overall operations. 1. Customers: Sales  Customers are the central focus of any marketing strategy. Businesses exist to meet customer needs and wants, and the key outcome of a strong customer-centric approach is sales.  Sales occur when a company successfully convinces customers that their product or service provides the best value, solving the customers’ problems or fulfilling their desires.  By understanding customer needs, preferences, and behavior, companies can tailor their offerings to drive sales growth. The more satisfied the customer, the more likely they are to make repeat purchases and recommend the product, increasing the company's revenue. Example: Nike is a brand that understands its customers deeply. It caters to athletes and fitness enthusiasts by offering a range of high-performance products. Through effective branding and innovative products, Nike has built strong relationships with its customers, driving significant sales. Their targeted marketing campaigns, such as the "Just Do It" slogan, resonate with customer values, leading to both short-term and long-term sales growth. 2. Company: Profit  The company’s goal is to maximize profit. This involves balancing revenue generated from sales with the cost of producing and marketing products.  Profitability is a key measure of a company's success and sustainability. To increase profit, companies need to optimize their product offerings, manage operational costs, and price products competitively.  A successful marketing strategy ensures that the company’s resources are used efficiently to deliver products that not only sell but also generate a profit after accounting for costs. Example: Apple is a company that has perfected the art of generating high profits through its marketing strategy. By offering premium products, such as the iPhone, at higher prices and maintaining a loyal customer base, Apple consistently achieves high profit margins. The brand’s ability to deliver innovative products with a strong brand identity enables the company to command premium pricing while keeping production costs relatively controlled. 3. Competition: Market Share  Competition is the external force in the market that businesses must navigate. Companies compete for the same customers, aiming to capture a larger market share than their rivals.  Market share represents the percentage of an industry’s total sales that a particular company holds. Gaining market share means attracting more customers or taking customers away from competitors, which leads to dominance in the market.   To succeed against competition, companies must differentiate their products, create strong value propositions, and build brand loyalty. Understanding competitor strategies and adjusting offerings accordingly helps in maintaining or increasing market share. Example: In the smartphone industry, Samsung and Apple are direct competitors. Both companies are constantly competing for global market share. Samsung has a diverse range of smartphones across various price points, helping it capture a broader segment of the market. Apple, on the other hand, focuses on the premium segment. By analyzing each other’s strategies, both companies make adjustments in product innovation, pricing, and marketing to either defend or grow their respective market shares. How the 3Cs Interact:  Customers (Sales): Understanding and meeting customer needs leads to increased sales, which drives business revenue.  Company (Profit): The Company must convert these sales into profits by managing costs, pricing strategically, and maximizing efficiency.  Competition (Market Share): Gaining more market share often involves outpacing competitors through better marketing, superior products, and strong customer relationships. The company that captures more market share often sees increased sales and profit. Example: Coca-Cola and the Strategic 3Cs of Marketing 1. Customers (Sales): Coca-Cola deeply understands its customers' need for refreshment and taste preferences across the globe. It offers a variety of beverages that cater to different consumer segments (e.g., Coca-Cola Classic, Diet Coke, and Coca-Cola Zero Sugar). By meeting customer needs, Coca-Cola generates sales through consistent product availability and strong branding. 2. Company (Profit): Coca-Cola is a highly profitable company because it has streamlined production, distribution, and marketing. It sells its products at scale, and by controlling costs and maintaining strong brand loyalty, Coca-Cola maximizes its profit. Additionally, they leverage economies of scale and distribution networks to keep operational costs low while maintaining product quality. 3. Competition (Market Share): Coca-Cola competes with other beverage companies like PepsiCo for market share in the global soft drink market. Through effective marketing, distribution, and product innovation (e.g., new flavors or healthier alternatives), Coca- Cola strives to maintain and grow its market share by differentiating itself from competitors. Conclusion: The Strategic 3Cs of Marketing—Customers, Company, and Competition—are interdependent. Customers drive sales, which helps the company generate profit. To maintain and grow that profitability, the company must constantly keep an eye on the competition and work to increase or defend its market share. By managing these three components effectively, businesses can create sustainable growth and success in the marketplace. KEY RESULT AREAS (KRAS) Key Result Areas (KRAs) in Marketing: Sales, Market Share, and Profit Key Result Areas (KRAs) are the critical areas where businesses need to achieve success to meet their objectives. In marketing, Sales, Market Share, and Profit are essential KRAs, representing the outcomes of effectively meeting customer needs, competing in the marketplace, and ensuring the business remains sustainable and profitable. 1. Sales:  Sales are the outcome of fulfilling customer needs and wants, involving the exchange of goods or services for money or other assets. A strong focus on customer satisfaction drives sales, as the more a company can meet its target audience’s needs, the more transactions occur.  Sales can be increased by targeting different types of customers or finding new occasions or ways to use the product. Examples of Sales Growth Strategies:  New Users: Companies target new customer groups who have not yet used the product or service. o Example: Cobra Energy Drink was originally formulated for blue-collar workers and people working night shifts. By identifying this specific user group, Asia Brewery was able to leverage unused beer production capacity to produce and sell Cobra, increasing its sales by meeting a unique demand.  Extended Users: Companies explore new segments of existing customer groups who could benefit from the product. o Example: Wyeth Infant Milk targets not just infants but extends its range to older children by offering follow-on milk products. Each product is specifically formulated for children of different age groups, fulfilling their unique nutritional needs. By expanding their market to older children, Wyeth increases its sales among this extended user base.  New Usage: Companies reposition their products to find new uses for them, often beyond the original intent. o Example: Arm & Hammer Baking Soda was repositioned from a baking ingredient to a refrigerator deodorizer. By marketing it as a multi-purpose product, Arm & Hammer was able to reach new customers and increase sales.  More Usage: Companies encourage existing customers to use the product more frequently or in new contexts. o Example: Del Monte releases recipes that incorporate their products, encouraging customers to use Del Monte products more often in cooking. This strategy boosts sales by increasing the frequency of product usage in everyday meals. 2. Market Share:  Market share is the percentage of total sales in an industry or market that is captured by a particular brand. Gaining market share means attracting more customers or winning over competitors' customers, and it is a key indicator of a company's competitive position.  A higher market share reflects dominance in the market, and companies strive to increase their market share through innovation, better value propositions, and marketing efforts. Example: In the smartphone market, Apple and Samsung are constantly competing to increase their market share. Apple’s strategy focuses on premium devices and a loyal customer base, while Samsung offers a variety of models across different price points. Both companies monitor their market share carefully, adjusting strategies to capture a larger portion of the smartphone market. 3. Profit:  Profit is crucial for a business to sustain its operations, reinvest in growth, and continue satisfying customers. It is the difference between revenue (sales) and costs. A profitable company can continue to innovate, market, and improve its offerings.  Profitability allows companies to invest in customer service, product improvements, and expansion efforts, which in turn leads to increased customer satisfaction and loyalty. Example: Apple generates significant profits by pricing its products at a premium. Their high profit margins allow the company to reinvest in research and development, marketing, and customer service, thereby maintaining their ability to continuously satisfy customers with innovative products. Conclusion: The Key Result Areas of Sales, Market Share, and Profit are interdependent. A company must focus on increasing sales by satisfying customer needs, gaining market share by outcompeting rivals, and ensuring that all of this results in profit. By balancing these KRAs, a company can achieve long-term success and growth. MARKETING PHILOSOPHY  Marketing philosophy provides a framework for evaluating how well marketing strategies meet customer needs and drive business success. Effective marketing should not only promote products but also foster relationships, enhance customer satisfaction, and ultimately lead to profitability.   Provide a standard for judging marketing effectiveness. APPROACHES TO MARKETING Traditional Marketing: : Traditional marketing encompasses non-digital channels. It includes print media (newspapers, magazines), broadcast media (TV, radio), direct mail, telemarketing, and outdoor advertising (billboards). istics:  Broad reach: Can target a wide audience.  Established credibility: Many consumers trust traditional media.  Tangibility: Print materials can leave a lasting impression. : A local restaurant might use newspaper ads and radio spots to promote a new menu. By placing ads in popular local publications and during peak listening hours, they can effectively reach potential customers who may not be active online. Contemporary: : Contemporary marketing emphasizes a customer-oriented approach, prioritizing customer needs and preferences over traditional product-focused strategies. It seeks to build long-term relationships with customers by offering tailored solutions. :  Customer-centric: Focuses on understanding and meeting customer desires.  Dynamic: Adapts to changing consumer behaviours and market trends.  Relationship-building: Prioritizes loyalty and engagement over one-time sales. : A clothing brand might use customer feedback to design a new collection. They might survey their target audience on social media about preferred styles, colours, and sizes, then create a line that reflects those preferences. This approach not only increases the likelihood of sales but also strengthens customer loyalty by making consumers feel valued. MARKET OFFERINGS – PRODUCTS, SERVICES, AND EXPERIENCES Market Offerings: Products, Services, and Experiences Market offerings are the various combinations of products, services, information, or experiences that businesses provide to satisfy customer needs and wants. These offerings can include tangible items, intangible services, or even memorable experiences. In addition, market offerings can also include ideas, organizations, places, or people that fulfill a customer’s desires. 1. Products:  A product is a tangible item that can be offered to a market to satisfy a need or want. It has physical properties, and ownership is transferred to the buyer upon purchase.  Products are often the core offering in many markets, and their features, quality, and design play a key role in attracting customers. Example: Toyota Cars are physical products offered to meet the transportation needs of consumers. When a customer purchases a Toyota vehicle, they receive a tangible product that fulfills their need for reliable transportation, comfort, and style. Toyota also differentiates its product with various models to meet the specific needs of different customers, from economy cars to luxury vehicles. 2. Services:  Services are intangible activities or benefits that are provided for sale and do not result in the ownership of anything. While the customer may receive a benefit, they cannot physically possess the service.  Services often focus on customer satisfaction and experience. They are consumed as they are provided and usually require human or technological interaction to deliver. Example: Netflix is a service that provides streaming entertainment. Customers do not own the movies or shows they watch, but they pay for the benefit of accessing content. The service satisfies customers' needs for entertainment and convenience, as they can stream content anytime without physically owning DVDs or Blu-rays. 3. Experiences:  Experiences are unique and memorable interactions between a customer and a business that create emotional value. Experiences are often a combination of products and services that immerse the customer in a particular setting or activity.  Companies that sell experiences often focus on creating a deeper connection with the customer, going beyond just the functional benefit to deliver emotional satisfaction or a sense of adventure. Example: Disneyland offers a combination of products (souvenirs, food) and services (rides, shows) to create a magical, immersive experience for visitors. People visit Disneyland not just to buy products or enjoy services, but to experience the joy and excitement of a themed amusement park. The emotional experience is what draws families and visitors from around the world. Additional Market Offerings:  1. Persons: o Individuals can be marketed as part of a product offering, especially in fields like entertainment or personal branding. o Example: Celebrities like Taylor Swift are marketed as personal brands. Fans “buy” the experience of attending concerts, merchandise, or streaming music, but what is ultimately being marketed is the artist herself. 2. Places: o Locations can be marketed to attract tourists, residents, or businesses. o Example: Paris is marketed as “The City of Love” to attract tourists. The combination of culture, architecture, and romance forms part of the overall experience offered to visitors. 3. Organizations: o Non-profits, educational institutions, or businesses can market themselves to attract customers, volunteers, or donors. o Example: The Red Cross markets itself as a humanitarian organization, encouraging donations and volunteer work by offering the experience of contributing to a larger cause. 4. Information: o Information is an offering that provides knowledge or data to consumers. o Example: The Economist sells information in the form of articles, analysis, and reports, providing customers with valuable insights into global events, business, and politics. 5. Ideas: o Ideas can be marketed to encourage support for causes, values, or movements. o Example: Environmental conservation campaigns promote the idea of protecting the planet. Organizations like Greenpeace advocate for sustainability by marketing the idea of environmental responsibility. Conclusion: Market offerings go beyond just products. They can also include services and experiences, and even non-tangible entities like persons, places, and ideas. Successful market offerings are designed to satisfy the specific needs and wants of consumers by providing value in various forms—whether through tangible goods, intangible services, or memorable experiences. Companies must align their offerings with what their target market values most to build strong customer relationships and business success. CUSTOMER VALUE AND SATISFACTION Customer Value and Satisfaction: Customer value is the customer's perception of what a product or service is worth relative to alternatives available in the market. This perception is based on the benefits the customer receives compared to the cost they incur. In simple terms, customer value can be expressed as: Customer Value (CV) = Benefits - Cost If the perceived benefits are greater than the cost, the customer feels they received good value, leading to customer satisfaction. Satisfaction occurs when customer expectations are met or exceeded by the product or service. Key Elements of Customer Value and Satisfaction: 1. Benefits: o These are the positive aspects of a product or service that fulfill the customer's needs and wants. Benefits can be functional (e.g., how well the product works), emotional (e.g., how the product makes the customer feel), or social (e.g., how the product is perceived by others). 2. Cost: o Cost refers to the total expenses incurred by the customer when purchasing and using a product or service. This includes the price, time, effort, and any additional resources required to obtain and use the product. The goal of businesses is to maximize benefits while minimizing costs to provide high customer value and satisfaction. Example 1: Apple iPhone  Benefits: o Apple provides high-quality products with cutting-edge technology, a user- friendly interface, seamless integration with other Apple devices (e.g., MacBooks, iPads), and strong brand prestige. These functional, emotional, and social benefits create a strong value proposition.  Cost: o While the iPhone is more expensive than many competing smartphones, customers are often willing to pay the higher price because they believe the benefits (e.g., innovation, design, and brand experience) outweigh the cost.  Customer Value and Satisfaction: o Many iPhone users are satisfied because they feel that the device offers significant value in terms of functionality, status, and ease of use compared to alternatives. The combination of high-quality benefits and perceived worth justifies the cost, leading to high customer satisfaction and loyalty. Example 2: Walmart (Retail)  Benefits: o Walmart offers a wide variety of products at low prices, making it convenient for customers to buy everything they need in one place. Customers benefit from affordability, convenience, and the ability to save time and money.  Cost: o The cost to customers is lower compared to higher-end stores, but they may also incur non-monetary costs like longer wait times or lower-quality shopping experiences compared to more premium retailers.   Customer Value and Satisfaction: o Customers who prioritize savings and convenience perceive Walmart as offering high value because the benefits (low prices and a wide selection) far outweigh the cost. For value-conscious shoppers, this results in satisfaction. Example 3: Amazon Prime  Benefits: o Amazon Prime offers fast shipping, access to a large selection of products, streaming services (movies, music), and exclusive deals. The wide array of services enhances the convenience and entertainment value for customers.  Cost: o Customers pay an annual or monthly subscription fee for Prime membership. While this is an added expense, the perceived benefits (fast shipping, content access, etc.) often outweigh the cost.  Customer Value and Satisfaction: o Prime members who frequently shop on Amazon or use its streaming services feel they receive good value for the cost. The combination of multiple benefits in one package justifies the price, leading to high satisfaction and loyalty. Conclusion: Customer value is about the balance between the benefits a product or service offers and the costs incurred by the customer. When customers perceive that the benefits outweigh the costs, they experience satisfaction and are more likely to remain loyal to the brand. Companies that consistently provide high customer value by optimizing benefits and controlling costs are more likely to build strong customer relationships and long-term success. ADDITIONAL QUESTION: You are shopping for food at the supermarket and go to the fruit section. While there, you are looking at both apples and oranges. You notice that each apple that you would purchase would be "worth" ₱50.00 to you while each orange would be worth ₱65.50 to you (Note that what something is "worth" to you is synonymous with the value you receive from it for purposes of this question). You then look at the prices and see that the prices of apples and oranges are ₱25.00 and ₱30.00 each, respectively. Given this information, would you be more likely to purchase apples or oranges? Your answer should discuss the "customer value" that you would get from each apple and orange. Scenario Breakdown: In this scenario, you are evaluating two fruits: apples and oranges, based on their worth to you and their actual price. Here's the comparison: 1. Apples: o Perceived worth (benefit): ₱50.00 o Price (cost): ₱25.00  oCustomer Value = ₱50.00 (benefit) - ₱25.00 (cost) = ₱25.00 2. Oranges: o Perceived worth (benefit): ₱65.50 o Price (cost): ₱30.00 o Customer Value = ₱65.50 (benefit) - ₱30.00 (cost) = ₱35.50 Which Fruit Would You Buy? The customer value for apples is ₱25.00, while for oranges, it is ₱35.50. Since oranges provide a higher customer value (₱35.50) compared to apples (₱25.00), you would be more likely to purchase oranges. Why? The customer value equation is based on how much benefit (or worth) you derive from a product compared to the cost of obtaining it. In this case, while both apples and oranges are priced similarly (₱25.00 vs. ₱30.00), the additional benefit you perceive from an orange (₱65.50 vs. ₱50.00 for an apple) is greater. Thus, you would likely choose oranges because they offer more value for the money you spend. Even though oranges are slightly more expensive, the extra benefits you get (like taste, satisfaction, or nutrition) outweigh the extra cost, leading to a better overall deal. Conclusion: In this scenario, you would likely choose to buy oranges because they offer higher customer value (₱35.50) compared to apples (₱25.00). This example highlights how customer value plays a significant role in decision-making: you aim to maximize the benefits you receive relative to the price you pay. EXCHANGES AND RELATIONSHIPS Exchanges and Relationships in Marketing Exchanges and relationships are fundamental concepts in marketing. They involve interactions between buyers and sellers where something of value is traded for another. Understanding these concepts helps businesses build strong connections with their customers and drive successful transactions. 1. Exchanges Exchanges refer to the process of obtaining something desired by offering something in return. It is the basic transaction in a market where both parties give something to receive something of value. Example 1: International Product - Apple iPhone  Exchange: When you purchase an Apple iPhone, you provide money (the cost of the iPhone) to Apple. In return, Apple provides you with a smartphone (the product).  Details: The exchange involves not just the physical product but also the perceived benefits like brand prestige, advanced technology, and user experience. The value you receive from the iPhone is the result of this exchange. Example 2: Philippine Product - Jollibee's Chickenjoy  Exchange: At a Jollibee restaurant, you pay money for a serving of Chickenjoy. In return, you receive the food (Chickenjoy) along with the dining experience.  Details: The exchange is straightforward: you offer money, and you get a meal. However, Jollibee also adds value through customer service, a family-friendly environment, and the unique taste of their food, making the exchange more attractive. 2. Markets Markets are the set of actual and potential buyers of a product or service. They represent the collective demand for a product and are defined by those who have the need, willingness, and purchasing power to buy. Example 1: International Market - Global Luxury Car Market  Market: This market consists of buyers interested in high-end vehicles, such as luxury brands like Mercedes-Benz and BMW. These buyers have the financial means and desire for premium automobiles.  Details: The global luxury car market includes potential buyers from various countries who seek status, quality, and advanced features. The market includes existing customers of luxury vehicles and those who may become buyers in the future. Example 2: Philippine Market - Local Handicrafts Market  Market: This market comprises consumers interested in traditional Filipino handicrafts, such as woven textiles and handmade jewelry. It includes local buyers who appreciate artisanal products and international buyers interested in cultural items.  Details: The local handicrafts market includes actual buyers who regularly purchase these products, as well as potential buyers who may be attracted to the unique, culturally rich offerings. The market is shaped by both local appreciation and growing interest from international tourists and collectors. Relationship between Exchanges and Markets Exchanges occur within markets. Understanding the market helps businesses tailor their offerings to meet the specific needs and preferences of buyers. Successful exchanges build relationships, where buyers and sellers engage in repeated transactions, leading to stronger loyalty and long-term customer relationships. Example of Relationship:  International Example - Starbucks o Exchange: Starbucks customers pay for coffee and snacks in exchange for high- quality beverages and a pleasant café experience. o Relationship: Over time, customers develop loyalty to Starbucks due to the consistent quality and experience. This relationship is reinforced by Starbucks’ loyalty programs and personalized customer service.  Philippine Example - SM Supermalls o Exchange: Customers shop at SM Supermalls, offering money in exchange for various goods and services. o Relationship: SM builds relationships with customers by offering a wide range of stores, amenities, and events. Their loyalty programs and frequent shopper promotions help strengthen customer ties to the brand. Conclusion Exchanges are the fundamental transactions where value is traded between buyers and sellers. Markets encompass all potential and actual buyers of a product or service. Understanding these concepts helps businesses effectively meet customer needs, create value, and build lasting relationships. MODERN MARKETING SYSTEM Modern Marketing System A modern marketing system involves a network of interconnected elements that influence how businesses engage with their customers and the market. Understanding the key environmental factors—suppliers, consumers, competitors, the company itself, and marketing intermediaries—is essential for crafting effective marketing strategies. Major Environmental Factors 1. Suppliers  Definition: Suppliers provide the raw materials, components, or services needed for a company to create its products. They play a critical role in the supply chain and can affect pricing, quality, and production timelines.  Example: A smartphone manufacturer relies on various suppliers for components like chips, screens, and batteries. If a key supplier faces delays or quality issues, it can impact the manufacturer’s ability to meet customer demand and maintain product quality. 2. Consumers  Definition: Consumers are the end-users of a product or service. Understanding consumer behavior, preferences, and needs is crucial for any marketing strategy.  Example: A coffee shop might conduct surveys to understand customer preferences for beverages and food items. If they discover that customers are increasingly interested in plant-based options, they can adjust their menu accordingly to meet this demand. 3. Company  Definition: This refers to the organization itself, including its resources, capabilities, culture, and marketing strategies. A company must align its internal strengths with external opportunities and threats.  Example: A tech startup might leverage its agile development team to quickly adapt to market changes, allowing it to launch new features that competitors may take longer to implement. 4. Competitors  Definition: Competitors are other businesses offering similar products or services. Understanding competitors’ strengths, weaknesses, and strategies is vital for differentiation and positioning.  Example: A fitness brand monitors its competitors’ pricing, marketing campaigns, and product offerings. By identifying gaps in the market (e.g., eco-friendly workout gear), they can position their products to attract environmentally conscious consumers. 5. Marketing Intermediaries  Definition: Marketing intermediaries include distributors, wholesalers, retailers, and agents that help companies promote, sell, and distribute their products to consumers. They facilitate the movement of goods and can enhance market reach.  Example: A cosmetic company may partner with beauty retailers to enhance product visibility and accessibility. By using intermediaries, they can reach a broader audience and improve sales compared to selling exclusively online. DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY Designing a Customer-Driven Marketing Strategy Designing a customer-driven marketing strategy involves creating a plan that effectively meets the needs and preferences of target customers while building profitable relationships. This process is essential for businesses to connect with their audience, differentiate themselves from competitors, and achieve long-term success. Marketing management is the art and science of selecting target markets and developing strategies to build profitable relationships with them. It requires a deep understanding of consumer behavior, market dynamics, and competitive landscape. Steps in Designing a Customer-Driven Marketing Strategy 1. Market Segmentation: o Definition: Dividing a broad market into smaller, more homogenous groups of consumers who have similar needs and characteristics. o Objective: To identify distinct segments that can be targeted with tailored marketing efforts. o Example: Nike segments the market into groups such as professional athletes, casual joggers, and fashion-conscious individuals. Each segment receives customized marketing messages and products. 2. Target Market Selection: o Definition: Choosing one or more segments to focus on based on their attractiveness and the company’s ability to serve them effectively. o Objective: To concentrate resources on segments that are most likely to respond positively to the company’s offerings. o Example: Apple targets premium customers who value high-quality, innovative technology. It focuses on this segment with high-end products like the iPhone and MacBook. 3. Differentiation: o Definition: Developing a unique offering that stands out from competitors and meets the specific needs of the target market. o Objective: To create a distinctive position in the minds of consumers that highlights the product’s unique benefits. o Example: Tesla differentiates itself with its cutting-edge electric vehicle technology, sustainable energy solutions, and a strong focus on innovation, setting it apart from traditional car manufacturers. 4. Positioning: o Definition: Crafting a clear, distinctive, and desirable place for the product or brand in the target market’s minds. o Objective: To ensure that the target audience perceives the product or brand in a specific way that aligns with their preferences and needs. o Example: Dove positions itself as a brand that celebrates real beauty and promotes self-esteem, differentiating itself from other beauty and personal care brands that focus on idealized beauty standards. Example of Designing a Customer-Driven Marketing Strategy: International Product - Starbucks 1. Market Segmentation: o Starbucks segments its market into categories such as coffee enthusiasts, busy professionals, and social customers who enjoy a café experience. 2. Target Market Selection:  o Starbucks targets urban professionals and young adults who appreciate premium coffee and a comfortable café atmosphere. 3. Differentiation: o Starbucks differentiates itself with high-quality coffee, a wide variety of beverages, a strong brand image, and a unique in-store experience. 4. Positioning: o Starbucks positions itself as a premium coffee brand offering a “third place” between home and work where customers can relax and enjoy high-quality coffee. Philippine Product - Jollibee 1. Market Segmentation: o Jollibee segments its market into families, young professionals, and students, focusing on those looking for affordable and enjoyable fast food. 2. Target Market Selection: o Jollibee targets middle-income families and young Filipinos who seek tasty, value-for-money meals in a family-friendly environment. 3. Differentiation: o Jollibee differentiates itself with its unique menu items like Chickenjoy and Jolly Spaghetti, which cater to local tastes, and its cheerful, friendly service. 4. Positioning: o Jollibee positions itself as a fun, family-oriented fast-food chain that offers a taste of home and joy through its distinctive Filipino-inspired menu. Sum-up: Designing a customer-driven marketing strategy involves understanding the market and customers, segmenting the market, selecting the right target segments, differentiating the offering, and positioning the product effectively. By focusing on these steps, businesses can create marketing strategies that resonate with their target audience, build strong customer relationships, and achieve their business objectives. 5 ALTERNATIVE CONCEPTS 5 Alternative Marketing Concepts Different marketing concepts guide how businesses approach the market, develop products, and connect with consumers. Each concept represents a different philosophy on achieving business success. Here’s a breakdown of each concept with examples: 1. Production Concept Definition: The production concept is based on the idea that consumers will favor products that are widely available and affordable. Therefore, organizations should focus on improving production efficiency and distribution. Objective: To maximize production efficiency and minimize costs, making products more accessible and affordable to consumers. Example: Ford Motor Company in the early 20th century:  Application: Henry Ford’s introduction of the assembly line allowed Ford to produce cars quickly and cost-effectively.  Result: The Model T became affordable for the average consumer due to mass production, leading to high sales and widespread car ownership. 2. Product Concept Definition: The product concept asserts that consumers will favor products that offer the best quality, performance, and features. Therefore, companies should focus on continuous product improvements and innovation. Objective: To create superior products with enhanced features and quality, believing that consumers will naturally gravitate towards these offerings. Example: Apple Inc.:  Application: Apple continually updates its products, like the iPhone, with the latest technology, features, and design enhancements.  Result: Consumers are attracted to the latest models because of the continuous innovation and superior product quality. 3. Marketing Concept Definition: The marketing concept is a philosophy that achieving organizational goals depends on understanding and meeting the needs and wants of target markets better than competitors. Objective: To focus on customer needs and preferences, aiming to deliver value and satisfaction in a way that differentiates the company from its competitors. Example: Amazon:  Application: Amazon’s focus on customer-centricity includes fast delivery, a vast product selection, and personalized recommendations.  Result: Amazon has built a strong market presence and customer loyalty by continually adapting to and anticipating consumer needs. 4. Selling Concept Definition: The selling concept is based on the belief that consumers will not purchase enough of a company’s products unless it engages in substantial selling and promotional efforts. Objective: To increase sales through aggressive marketing and sales tactics, often pushing products to consumers through extensive advertising and promotion. Example: Timeshare Vacation Properties:  Application: Timeshare companies often use high-pressure sales tactics and extensive promotional campaigns to persuade consumers to purchase vacation ownership.  Result: The focus is on closing sales rather than focusing on ongoing customer satisfaction or long-term relationships. 5. Societal Marketing Concept Definition: The societal marketing concept emphasizes that marketing decisions should consider not only the needs and wants of consumers and the company’s requirements but also the long-term interests of society and consumers. Objective: To balance company profits with social responsibility, ensuring that marketing practices contribute positively to society and consider the long-term impact on consumers. Example: Patagonia:  Application: Patagonia integrates environmental responsibility into its business model, using sustainable materials, promoting fair labor practices, and encouraging product repairs and recycling.  Result: Patagonia has built a strong brand reputation and customer loyalty by aligning its marketing practices with societal values and environmental sustainability. Summary 1. Production Concept: Focuses on production efficiency and affordability (e.g., Ford’s Model T). 2. Product Concept: Emphasizes quality and continuous improvement (e.g., Apple). 3. Marketing Concept: Centers on understanding and meeting customer needs (e.g., Amazon). 4. Selling Concept: Relies on aggressive sales and promotion (e.g., Timeshares). 5. Societal Marketing Concept: Balances consumer needs with societal welfare (e.g., Patagonia). Each concept represents a different approach to achieving business success, from focusing on production efficiency to integrating social responsibility into marketing strategies. SELLING AND MARKETING CONCEPTS CONTRASTED Contrasting Selling and Marketing Concepts: San Miguel Beer Examples To illustrate the difference between the Selling Concept and the Marketing Concept, let’s use products from San Miguel Corporation, specifically Kulafu (a traditional Filipino herbal wine) and San Miguel Pale Pilsen (a popular beer). Selling Concept Definition: The Selling Concept focuses on pushing existing products to consumers through aggressive selling and promotional efforts. It operates on the premise that consumers will not buy enough of a company’s products unless substantial selling and promotional activities are undertaken. Characteristics:  Starting Point: Factory (existing products)  Focus: Existing Product (what the company already makes)  Means: Selling and Promoting (heavy promotion and sales tactics)  Ends: Profits through Sales Volume (achieving high sales volumes) Example: San Miguel Kulafu  Starting Point: San Miguel Corporation has Kulafu, a traditional Filipino herbal wine that is part of their product line.  Focus: The Company focuses on selling Kulafu, which is already produced and available.  Means: San Miguel might use aggressive sales tactics such as special promotions, discounts, or widespread advertising campaigns to increase Kulafu’s sales.  Ends: The goal is to achieve high sales volumes of Kulafu by pushing the product through various sales channels and promotional activities. Concrete Example: San Miguel’s marketing campaign for Kulafu might include:  Sales Promotions: Offering discounts or bundling Kulafu with other products to encourage higher purchase volumes.  Advertising: Running TV commercials, social media ads, or outdoor ads to increase product visibility and drive immediate sales.  Retail Push: Engaging in direct sales efforts with retailers to ensure prominent shelf space and availability. In this approach, the emphasis is on selling the existing product (Kulafu) through intense promotional efforts rather than creating a product that aligns with customer preferences. Marketing Concept Definition: The Marketing Concept focuses on understanding and meeting the needs and wants of target markets. It involves adapting products to fit consumer demands and creating value for customers, leading to customer satisfaction and long-term profitability. Characteristics:  Starting Point: Market (consumer needs and wants)  Focus: Customer Needs (what consumers want)  Means: Customer Research and Tailoring (market research and product adaptation)  Ends: Profits through Customer Satisfaction (achieving long-term success through satisfied customers) Example: San Miguel Pale Pilsen  Starting Point: San Miguel Corporation conducts market research to understand consumer preferences for beer, such as taste, packaging, and branding.  Focus: The Company focuses on creating and improving San Miguel Pale Pilsen based on these insights to meet consumer expectations.  Means: San Miguel uses customer feedback to continually refine Pale Pilsen’s recipe, packaging, and marketing strategies. They also promote the beer based on its qualities that appeal to target consumers.  Ends: The goal is to achieve long-term profitability through high customer satisfaction and brand loyalty. Concrete Example: San Miguel’s approach for Pale Pilsen might include:  Market Research: Conducting surveys or focus groups to understand what beer drinker’s value most, such as flavor profile or packaging design.  Product Development: Using research insights to refine the beer’s taste, improve packaging, and ensure quality.  Marketing Strategy: Positioning Pale Pilsen as a premium, high-quality beer in advertisements, sponsorships, and promotional events that resonate with the target market. In this approach, the emphasis is on creating and promoting a product that meets customer needs and preferences, rather than simply pushing an existing product. Summary  Selling Concept: Focuses on selling and promoting existing products aggressively. For Kulafu, this means pushing the product through heavy promotion and sales tactics to achieve high sales volumes.  Marketing Concept: Focuses on understanding and addressing customer needs and preferences. For San Miguel Pale Pilsen, this involves adapting the product and  marketing strategies based on consumer feedback to ensure high satisfaction and long- term success. By contrasting these approaches, it’s clear that the Selling Concept prioritizes pushing existing products, while the Marketing Concept focuses on aligning products with customer demands and creating value. THREE CONSIDERATIONS UNDERLYING THE SOCIETAL MARKETING CONCEPT Societal Marketing Concept: Three Considerations The Societal Marketing Concept extends beyond the traditional marketing concept by emphasizing not only customer satisfaction and company profits but also the well-being of society as a whole. It addresses the potential conflicts between short-term consumer desires and long-term societal welfare. Here are the three core considerations: 1. Society (Human Welfare) Definition: This consideration focuses on the impact of marketing activities on the broader society. It questions whether marketing practices contribute positively to social welfare and address societal issues. Objective: To ensure that marketing strategies support societal goals, such as environmental sustainability, public health, and social justice. Example: Patagonia’s Environmental Initiatives  Application: Patagonia, an outdoor clothing company, integrates environmental responsibility into its marketing strategy.  Characteristics: Patagonia uses sustainable materials, promotes recycling, and engages in environmental activism.  Outcome: By prioritizing environmental protection, Patagonia contributes to the well- being of society and sets a standard for corporate responsibility. 2. Consumers (Want Satisfaction) Definition: This consideration focuses on meeting the needs and wants of consumers. It emphasizes that marketing strategies should be designed to deliver value to customers in a way that is consistent with societal well-being. Objective: To provide products and services that not only satisfy consumer desires but also align with ethical and societal standards. Example: TOMS Shoes’ One for One Program  Application: TOMS Shoes operates on a model where for every pair of shoes sold, a pair is donated to a child in need.  Characteristics: The Company meets consumer desires for fashionable footwear while simultaneously addressing the need for shoes in underserved communities.  Outcome: TOMS creates value for customers who want to make a positive impact while also contributing to social welfare through its donation program. 3. Company (Profits) Definition: This consideration involves ensuring that the marketing strategy is profitable for the company. It recognizes that achieving long-term profitability is essential for business sustainability while maintaining a focus on societal and consumer well-being. Objective: To balance profit-making with ethical practices that support societal and consumer interests. Example: Unilever’s Sustainable Living Plan  Application: Unilever’s Sustainable Living Plan includes goals for reducing environmental impact, improving health and well-being, and enhancing livelihoods.  Characteristics: The plan focuses on integrating sustainability into business operations, which helps the company maintain profitability while addressing social and environmental issues.  Outcome: By aligning its business strategy with societal goals, Unilever fosters long- term profitability and strengthens its brand reputation as a socially responsible company. Summary The Societal Marketing Concept integrates three key considerations: 1. Society (Human Welfare): Ensuring marketing strategies support societal well-being, as exemplified by Patagonia’s environmental initiatives. 2. Consumers (Want Satisfaction): Meeting consumer needs in a way that aligns with ethical standards, demonstrated by TOMS Shoes’ One for One program. 3. Company (Profits): Balancing profitability with societal and consumer interests, illustrated by Unilever’s Sustainable Living Plan. By addressing these considerations, companies can create value that not only satisfies consumer demands but also promotes the greater good, leading to sustainable business practices and positive societal impact. PREPARING AN INTEGRATED MARKETING PLAN AND PROGRAM Preparing an Integrated Marketing Plan and Program An integrated marketing plan and program is crucial for transforming a company’s marketing strategy into actionable steps that deliver value to customers. Here’s a breakdown of how this process works, along with an example: Marketing Strategy Definition: The marketing strategy defines which customers the company will target and how it will create value for these target customers. It sets the overall direction for the marketing efforts. Components: 1. Target Market: Identifying specific customer segments to serve. 2. Value Proposition: Articulating how the company’s offerings will meet the needs and desires of the target market better than competitors. Integrated Marketing Program Definition: The integrated marketing program takes the marketing strategy and develops a comprehensive plan to deliver the intended value to target customers. It involves coordinating various marketing tools and tactics to create a cohesive strategy that builds strong customer relationships. Components: 1. Marketing Mix (4Ps): The set of marketing tools used to implement the marketing strategy. The marketing mix includes: o Product: What the company offers to satisfy customer needs. o Price: The amount customers pay for the product. o Place: Distribution channels used to deliver the product to customers. o Promotion: Activities used to communicate and persuade customers to purchase the product. Example: Starbucks’ Integrated Marketing Program Marketing Strategy:  Target Market: Starbucks targets middle to upper-middle-class consumers who value premium coffee and a comfortable coffeehouse experience.   Value Proposition: Starbucks offers high-quality, ethically sourced coffee, a welcoming atmosphere, and personalized service. Integrated Marketing Program: 1. Product: o Offerings: Starbucks provides a wide range of high-quality coffee beverages, teas, pastries, and sandwiches. They also emphasize customizability (e.g., choosing milk type, flavor add-ins). o Example: Seasonal products like the Pumpkin Spice Latte create excitement and cater to customer preferences. 2. Price: o Pricing Strategy: Starbucks uses a premium pricing strategy that reflects the quality of its products and the overall customer experience. o Example: Pricing is set higher than many competitors to position Starbucks as a premium brand. 3. Place: o Distribution Channels: Starbucks locations are strategically placed in high-traffic areas such as city centers, shopping malls, and airports. They also offer drive- thru and mobile ordering options. o Example: The Company’s extensive store network ensures convenience and accessibility for its customers. 4. Promotion: o Advertising: Starbucks uses a mix of advertising channels, including social media, online ads, and in-store promotions. Their marketing campaigns often highlight new products, seasonal promotions, or community involvement. o Example: The “Meet Me at Starbucks” campaign showcased the social aspect of visiting Starbucks, reinforcing its brand image as a community hub. Customer Relationship Building:  Loyalty Programs: Starbucks Rewards program provides customers with incentives for repeat purchases, such as free drinks and personalized offers.  Community Engagement: Starbucks engages with the community through local events and social responsibility initiatives, such as supporting fair trade coffee and environmental sustainability. Summary: Starbucks effectively transforms its marketing strategy into action through an integrated marketing program. By carefully coordinating its product offerings, pricing, placement, and promotional efforts, Starbucks delivers a consistent and compelling value proposition that builds strong customer relationships and supports its overall marketing objectives. In essence, preparing an integrated marketing plan and program involves aligning all marketing activities with the company’s strategy to create and deliver value to the target market effectively. MARKETING MIX TOOLS Marketing Mix Tools: The 4Ps The Marketing Mix consists of four key elements—Product, Price, Place, and Promotion—that work together to deliver value to customers and achieve marketing objectives. Here’s a detailed explanation of each component, along with examples: 1. Product Definition: The product is the actual item or service being sold. It must meet a certain level of performance to satisfy customer needs and expectations. If the product does not deliver on its promises, no amount of work on the other elements of the marketing mix will make up for it. Key Considerations:  Quality: The standard of the product or service.  Features: Specific attributes or characteristics.  Branding: The product’s name, design, and overall identity.  Packaging: How the product is presented to consumers. Example: Apple iPhone  Product: The iPhone is a high-quality smartphone with advanced features such as a high-resolution camera, a powerful processor, and a sleek design.  Quality: Known for its reliability and performance.  Features: Includes Face ID, a Retina display, and integration with Apple's ecosystem.  Branding: Strong brand identity with a reputation for innovation and premium quality.  Packaging: Elegant and minimalist packaging that enhances the perceived value. 2. Price Definition: Price is the amount of money consumers must pay to acquire the product. It reflects the value of the product and is influenced by factors such as production costs, market demand, competition, and target customer segment. Key Considerations:  Cost of Production: The expense of making the product.  Market Segmentation: The ability of different segments to pay.  Supply and Demand: Availability and consumer demand for the product.  Pricing Strategies: Includes strategies like penetration pricing, skimming, and competitive pricing. Example: Luxury Watches (e.g., Rolex)  Price: Rolex watches are priced at a premium due to their high-quality craftsmanship and prestigious brand image.  Cost of Production: High production costs due to the use of precious materials and intricate manufacturing processes.  Market Segmentation: Targets affluent consumers willing to pay a premium for exclusivity and luxury.  Pricing Strategy: Uses a premium pricing strategy to enhance the brand’s image and perceived value. 3. Place Definition: Place refers to the distribution channels used to deliver the product to consumers. The goal is to make the product available in locations that are convenient for customers and where they are likely to make a purchase. Key Considerations:  Distribution Channels: Direct or indirect routes to market.  Location: Physical locations where the product is sold.  Accessibility: Ease with which consumers can obtain the product. Example: McDonald's  Place: McDonald’s locations are strategically placed in high-traffic areas such as city centers, malls, and highways.  Distribution Channels: Operates its own restaurants and also has drive-thru and delivery options.  Location: Locations are chosen based on high visibility and accessibility for convenience.  Accessibility: Ensures the product is readily available to a large number of consumers. 4. Promotion Definition: Promotion encompasses all activities aimed at making the product known to consumers and encouraging them to buy. This includes various forms of communication and marketing efforts. Key Considerations:  Advertising: Paid announcements through media such as TV, radio, and online platforms.  Sales Promotions: Short-term incentives like discounts and coupons.  Public Relations: Managing the company’s image and handling press releases.  Personal Selling: Direct interactions with customers to persuade them to make a purchase.  Direct Marketing: Targeted communication with specific customers through email, direct mail, etc. Example: Coca-Cola  Promotion: Coca-Cola uses a mix of advertising, sponsorships, and promotions to build brand awareness.  Advertising: Includes TV commercials, online ads, and social media campaigns.  Sales Promotions: Offers seasonal discounts and special promotions.  Public Relations: Engages in community and charitable activities to enhance brand reputation.  Personal Selling: Utilizes sales representatives to build relationships with retailers. Summary The Marketing Mix involves: 1. Product: Ensuring the item meets customer needs and expectations (e.g., Apple iPhone). 2. Price: Setting a price that reflects value and market conditions (e.g., Rolex watches). 3. Place: Choosing the right distribution channels and locations (e.g., McDonald’s). 4. Promotion: Communicating the product’s value to consumers (e.g., Coca-Cola). By effectively managing these elements, companies can create a compelling offer that resonates with their target market and achieves their marketing goals. MARKETING MIX TOOLS The 7Ps of Marketing: Expanded Marketing Mix for Service Industries In service industries, the traditional 4Ps of marketing (Product, Price, Place, and Promotion) are expanded to include three additional elements—People, Process, and Physical Evidence. This expanded mix addresses the unique characteristics of services, such as intangibility, inseparability, and variability. 1. Product Definition: In the context of services, the "Product" refers to the core service or experience being offered. It encompasses what the service delivers and how it meets the needs of customers. Example: Airline Services  Service: The core product is the flight experience, including factors such as in-flight entertainment, comfort, and reliability.  Features: Amenities like Wi-Fi, seat selection, and meal options enhance the core service. 2. Price Definition: Price is the amount customers pay for the service. It reflects the perceived value of the service and can be influenced by factors such as competition, demand, and costs. Example: Hotel Room Rates  Pricing Strategy: Hotels use dynamic pricing based on factors like seasonality, booking time, and room type.  Considerations: Price may vary for peak seasons, special events, or promotional offers. 3. Place Definition: Place refers to the locations and channels through which the service is delivered. It focuses on making the service accessible to customers. Example: Fitness Centers  Distribution: Fitness centers are located in convenient areas such as urban centers or residential neighborhoods.  Accessibility: Includes physical location, online booking systems, and membership management. 4. Promotion Definition: Promotion involves communicating the value of the service to potential customers. It includes various methods to inform and persuade. Example: Spa Services  Advertising: Use of social media ads, influencer partnerships, and local promotions.  Sales Promotions: Offers such as "Buy One, Get One Free" or seasonal discounts on treatments. 5. People Definition: People are the employees and service providers who interact with customers. Their behavior, skills, and appearance impact customer perceptions of the service. Example: Customer Service Representatives  Role: Friendly, knowledgeable, and professional representatives enhance the customer experience.  Training: Investment in staff training to ensure high-quality service delivery and customer satisfaction. 6. Process Definition: Process refers to the procedures, mechanisms, and flow of activities involved in delivering the service. It includes how the service is provided and managed. Example: Online Banking  Process: Secure login, transaction processing, customer support, and mobile app functionality.  Efficiency: Streamlined processes for quick and easy banking transactions, minimizing customer wait times. 7. Physical Evidence Definition: Physical Evidence includes the tangible aspects that support the service and help customers evaluate it. It involves the physical environment and materials that customers interact with. Example: Restaurant Ambience  Elements: Interior design, cleanliness, menu presentation, and physical comfort (seating, lighting).  Impact: A well-designed and clean restaurant creates a positive impression and contributes to the overall dining experience. Summary The 7Ps of Marketing for service industries are: 1. Product: The core service or experience provided (e.g., airline flight experience). 2. Price: The cost of the service (e.g., hotel room rates). 3. Place: Distribution channels and locations (e.g., fitness center locations). 4. Promotion: Methods used to communicate and persuade (e.g., spa service promotions). 5. People: Employees and service providers (e.g., customer service representatives). 6. Process: Procedures and flow of service delivery (e.g., online banking processes).  7. Physical Evidence: Tangible aspects that support and enhance the service (e.g., restaurant ambience). By incorporating these 7Ps, service industries can create a comprehensive marketing mix that addresses the unique challenges and opportunities in delivering high-quality services. BUILDING CUSTOMER RELATIONSHIPS Building customer relationships is the culmination of all previous marketing efforts. It focuses on creating and maintaining long-term connections with customers that lead to sustained business success. Effective customer relationship management (CRM) involves understanding customer needs, delivering consistent value, and fostering loyalty. Here’s how it works and why it's crucial: Key Steps to Building Customer Relationships 1. Understand Customer Needs and Preferences Definition: Gaining insights into what customers want, their preferences, and their pain points. This understanding is critical for tailoring products, services, and interactions to meet their expectations. Example: Amazon  Approach: Amazon uses data analytics to track customer behavior, purchase history, and browsing patterns.  Outcome: Provides personalized recommendations and a customized shopping experience based on individual preferences. 2. Deliver Consistent Value Definition: Ensuring that every interaction with the customer adds value and meets or exceeds their expectations. This includes high-quality products, reliable service, and effective communication. Example: Apple  Approach: Apple maintains high standards in product design, customer service, and post-purchase support.  Outcome: Creates a strong brand reputation and customer loyalty through consistent quality and innovation. 3. Foster Loyalty and Trust Definition: Building a sense of trust and loyalty through reliable performance, transparency, and positive experiences. Loyal customers are more likely to repeat purchases and recommend the brand to others. Example: Starbucks Rewards Program  Approach: Offers points for every purchase, personalized rewards, and exclusive offers.  Outcome: Encourages repeat business and fosters a sense of belonging among customers. 4. Engage and Communicate Effectively Definition: Maintaining regular and meaningful communication with customers through various channels. Effective engagement involves responding to feedback, addressing concerns, and keeping customers informed about new products or services. Example: Netflix  Approach: Engages customers through personalized content recommendations, regular updates about new releases, and responsive customer support.  Outcome: Keeps customers’ satisfied and engaged, leading to high retention rates. 5. Measure and Analyze Performance Definition: Continuously assessing the effectiveness of customer relationship strategies through metrics such as customer satisfaction, Net Promoter Score (NPS), and retention rates. This analysis helps in refining strategies and improving customer interactions. Example: Zappos  Approach: Uses customer feedback and satisfaction surveys to measure service performance and make improvements.  Outcome: Known for exceptional customer service and high levels of customer satisfaction. Summary Building customer relationships involves: 1. Understanding Customer Needs and Preferences: Tailoring offerings based on customer insights (e.g., Amazon’s personalized recommendations). 2. Delivering Consistent Value: Ensuring high-quality and reliable service (e.g., Apple’s product and service quality). 3. Fostering Loyalty and Trust: Creating loyalty programs and trust-building practices (e.g., Starbucks Rewards Program).  4. Engaging and Communicating Effectively: Maintaining regular and meaningful communication (e.g., Netflix’s content updates and support). 5. Measuring and Analyzing Performance: Assessing and refining strategies based on performance metrics (e.g., Zappos’ customer feedback). By focusing on these steps, companies can build strong, profitable relationships with their customers, leading to long-term success and growth. Customer Relationship Management (CRM) Definition: Customer Relationship Management (CRM) is the strategic approach to managing a company’s interactions with current and potential customers. It focuses on using data and insights to build and maintain profitable relationships by delivering superior value and satisfaction. CRM encompasses the processes, technologies, and strategies used to manage customer interactions and enhance the overall customer experience. Key Components of CRM 1. Customer-Perceived Value Definition: Customer-perceived value is the customer's evaluation of the difference between the benefits they receive from a product or service and the costs they incur, compared to competing offers. It reflects how much value customers believe they are getting relative to what they are paying and how this compares to other options available in the market. Example: Tesla Model 3  Benefits: Electric vehicle technology, high performance, innovative features, and a premium brand reputation.  Costs: Higher initial purchase price compared to conventional cars.  Customer-Perceived Value: Customers may perceive Tesla Model 3 as offering high value due to its cutting-edge technology and eco-friendliness, despite its higher price compared to traditional internal combustion engine vehicles. 2. Customer Satisfaction Definition: Customer satisfaction measures the extent to which a product or service’s perceived performance meets or exceeds the buyer’s expectations. It indicates how happy customers are with their purchase and overall experience. Example: Amazon Prime  Performance: Fast delivery, access to a wide range of products, streaming services, and other perks.  Expectations: Customers expect quick and reliable delivery, quality customer service, and value for the subscription fee.   Customer Satisfaction: Amazon Prime customers are generally very satisfied due to the consistent fulfillment of their expectations and the added convenience and benefits of the service CRM in Action: Example Company: Salesforce CRM Strategy: 1. Customer-Perceived Value: o Benefits: Salesforce offers a comprehensive suite of cloud-based CRM tools, including sales automation, customer service management, marketing automation, and analytics. o Costs: Subscription fees and potential implementation costs. o Customer-Perceived Value: Businesses perceive high value in Salesforce’s ability to streamline operations, enhance customer insights, and improve overall sales and marketing effectiveness, making the investment worthwhile despite the costs. 2. Customer Satisfaction: o Performance: Salesforce provides a robust, scalable CRM platform with extensive features and high reliability. It offers excellent customer support and regular updates. o Expectations: Customers expect the CRM system to be user-friendly, effective in managing customer data, and supportive of their business processes. o Customer Satisfaction: Salesforce consistently receives high customer satisfaction ratings due to its comprehensive features, reliable performance, and effective support services. Users appreciate the platform’s flexibility and the ability to customize it to fit their specific needs. Summary  Customer Relationship Management (CRM): A strategic approach to managing interactions with customers, aimed at building and maintaining profitable relationships through delivering superior value and satisfaction.  Customer-Perceived Value: The customer’s evaluation of the benefits versus costs of a product or service relative to competitors (e.g., Tesla Model 3’s value compared to traditional vehicles).  Customer Satisfaction: The extent to which a product or service meets or exceeds the buyer’s expectations (e.g., Amazon Prime’s delivery and service satisfaction). Effective CRM practices help businesses enhance customer relationships, drive loyalty, and achieve long-term success by focusing on delivering exceptional value and meeting customer expectations. ………………………….End…………………………