Marketing Chapter 1 PDF

Marketing General & Credit 1 Marketing General & Credit Chapter 1 Overview of Marketing  What is marketing? - Marketing is managing profitable...

Marketing General & Credit 1 Marketing General & Credit Chapter 1 Overview of Marketing  What is marketing? - Marketing is managing profitable customer relationships.  Goals: 1- Attract new customers by promising superior value. 2- Keep and grow current customer- base by delivering satisfaction. - Old view of marketing: making a sale “ telling and selling “ - New view of marketing: satisfying customer needs.  Marketing defined: is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.  The marketing process: - Consists of 5 steps, in the first four steps, companies work to understand customers, create customer value and build strong customer relationships, in the final step companies reap the rewards of creating superior customer value. 1- Understanding the marketplace and customer needs and wants. 2- Designing a customer-driven marketing strategy. 3- Construct an integrated marketing program that delivers superior value. 4- Build profitable relationships and create customer delight. 5- Capturing value from customers to create profits and customer equity. 2 Marketing General & Credit  The first four steps create value for customers and build customer relationships, in the final step capturing value from customers in return in the form of sales, profit and long term customer equity Step 1: understanding customers and the five core marketplace concepts.  Core concepts:  Marketers must understand five core customer and marketplace concepts: - Needs, wants, and demands - Market offerings such as products, services, and experiences - Value and satisfaction - Exchange and relationships - Markets 1- Needs, wants, and demands - Needs: states of felt deprivation physical, social, and individual needs. - Wants: from that need takes, as shaped by culture and individual personality. - Demands are human wants that are backed by buying power - Wants + buying power = demand 2- Market offerings: Consumers’ needs and wants are satisfied (fulfilled) through market offerings. - Some combination of of products, services, information, or experiences offered to a market to satisfy a need or want.  Products: Persons, places, organizations, information, and ideas.  Services: Activity or benefit offered for sale that is essentially intangible and does not result in ownership. 3 Marketing General & Credit  Brand experiences  Marketing myopia: Occurs when sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. - They focus on the “ wants” and lose sight of the “ needs.” They forget that a product is only a tool 3- Customer Value and satisfaction - Care must be taken when setting expectations for market of offerings: - If performance is lower than expectations, satisfactions is low. - If performance is higher than expectations, satisfactions is high. 4- Exchange and relationships - Exchange: Exchange is the act of obtaining a desired object from someone by offering something in return. - Relationships: marketing actions build and maintain relationships with target audiences involving an idea, product, service, or other object. Value builds relationships with customers. 5- What is market? - A market: is the set of actual and potential buyers of a product or service. - these people share a need or want that can be satisfied through exchange relationships. 4 Marketing General & Credit  Modern Marketing Systems  Main elements in a modern marketing system include: - Suppliers, Company (marketer), Competitors, Marketing intermediaries, and Consumers  Major environmental forces affect each element (demographical, economic, natural, technological, political, cultural and social ). Step 2 : Designing a Customer-Driven Marketing Strategy:  Marketing management: The art and science of choosing target markets and building profitable relationships with them. - is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. - Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value - Desining a winning marketing strategy requires answers to the following questions: 1- What customers will we serve? - What is our target market. 2- How can we best serve these customers? - What is our value proposition.  Selecting Customers to Serve - Market segmentation: dividing the market into segments of customers - Target marketing: selecting one or more segments to cultivate. 5 Marketing General & Credit  Chossing a value proposition: - The set of benefits or values a company promises to deliver to consumers to satisfy their needs. - Value proposition dictate how firms will differentiate and position their brands in the marketplace  Marketing Management Orientations: - Organization design and carry out their marketing strategies under five alternate concepts: 1. Production concept: It follows the idea that consumers will favour products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency 2. Product concept: This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features. 3. Selling concept: focuses on creating sales transactions rather than on building long- term, profitable customer relationships. that consumers will not buy enough of the firm's products unless ti undertakes a large-scale selling and promotion effort 4. Marketing/ customer concept: A marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors. 6 Marketing General & Credit 5. Societal marketing concept: The idea that a company’s marketing decisions should consider consumers’ wants, the company’s desires, consumers’ long-run interests, and society’s long-run interests. Step 3: preparing an integrated marketing plan and program  The marketing program builds customer relationships by transforming the marketing strategy into action. It consists of the firm’s marketing mix (4Ps) the set of marketing tools the firm uses to implement its marketing strategy. - To deliver on its value proposition, the firm must first create a need-satisfying market offering (product). - It must decide how much it will charge for the offering (price) - And how it will make the offering available to target consumers (place). 7 Marketing General & Credit - Finally, it must communicate with target customers about the offering and persuade them of its merits (promotion).  The firm must blend each marketing mix tool into a comprehensive integrated marketing program that communicates and delivers the intended value to chosen customers. Step 4: Building customer relationships  This is the most important step of the marketing process  Customer relationship management: The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. - CRM deals with all aspects of acquiring, keeping, and growing customers - customer value and satisfaction are key.  Customer perceived value: Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers. - Perceptions may be subjective - To some customers “value” might mean paying more to get more  Customer satisfaction: Extent to which the product’s perceived performance matches a buyer’s expectations. - High levels of customer satisfaction often leads to consumer loyalty. - Some firms seek to DELIGHT customers by exceeding expectations. - Profitability must be considered  Customer relationships - Firms may choose to build relationships at different levels. - Loyalty and retntion programs build relationships and may include: - Frequency marketing programs - Club marketing programs 8 Marketing General & Credit Step 5: Capturing Value From Customers - Customer lifetime value: The value of the entire stream of purchases that the customer would make over a lifetime of patronage. - Share of customer:The portion of the customer’s purchasing that a company gets in their product categories  Customer equity - The total combined customer lifetime values of all the company’s current and potential customers. - Managing equity by... - Classifying customers by projected loyalty and potential profitability. - Managing each group accordingly. 9