Marketing Chapter 1 PDF

Slide 1.8 it’s good and good for you What is marketing? Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.9 Marketing is a process by which companies create value for customers...

Slide 1.8 it’s good and good for you What is marketing? Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.9 Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return. Marketing must focus on satisfying customer needs. Marketing is managing profitable customer relationships. Marketing must both attract new customers and grow the current customers. Every organization must perform marketing functions, not just for-profit companies. Nonprofits (colleges, hospitals, churches, etc.) also must perform marketing. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.10 Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.11 it’s good and good for you Understanding the marketplace and customer needs – Needs, wants, demands – Market offerings – Markets – Exchanges, transactions, and relationships – Value, satisfaction, and expectations Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.12 Customer needs, wants and demands States of deprivation Needs Physical—food, clothing, warmth and safety Social—belonging and affection Individual—knowledge and self-expression Wants Form that needs take as they are shaped by culture and individual personality Demands Wants backed by buying power Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.13 Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.14 Market offerings Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Market offerings include products and services—activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs. The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013  Market offerings Products are marketed Goods Services Ideas Places People These are physical These are activities, These are Such as; Such as; politicians, objects such as: deeds, or other basic thoughts countries, cities, celebrities, and toothpaste, intangibles offered for about or towns are prospective cameras, sale to consumers in certain often marketed employees are also computers, …that exchange for money or actions or as tourist marketed satisfy consumer something else of value. causes. destinations or as Celebrities: Celine needs EX; airline trips, EX; suitable sites to Dion concerns. financial advice, elections. establish and dry cleaning. businesses. EX; sharm el sheikh as a vacation spot. Slide 1.16 The Market Market is the set of actual and potential buyers of a product. potential buyers with the desire and the ability to buy the product. desire only is not sufficient & ability alone is not sufficient EX: (Buying car): Desire: buying car & Ability: money Potential buyers: These are ultimate consumers or organizational buyers.  Ultimate consumers: These are people who use the goods and services purchased for themselves.  Organizational buyers: These are units such as industrial firms, wholesalers, retailers, or either entities that buy goods and services for their own use or for resale. Market – Place (virtual or physical) where buyers and sellers meet – The sellers of a product are labeled as the “industry” Industry – Marketer's definition – The sellers of a product Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.17 Modern Marketing System Marketing means managing markets to bring about profitable customer relationships. Main elements of a modern marketing system – value added in steps – Suppliers – Company (marketer) + competitors – Marketing intermediaries – End user market Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.18 Exchanges, transactions, and relationships Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object. Beyond simply attracting new customers and creating transactions, the goal is to retain customers and grow their business with the company. Exchange – Obtaining a desired object from someone by offering something in return – Offerings could be money, product, service,... Transaction – A trade of values between two parties; marketing's unit of measurement! – Monetary transactions and barter transactions Relationship (Marketing) – Going beyong short term transactions – Long-term relationships with valued customers, partners, etc – Marketing network – company and all its supporting stakeholders Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013  Customer value, satisfaction, and expectations (Customer) Value – Difference between “value gained by owning and using a product” and “cost of obtaining the product” – Value gained not necessarily monetary – Customers act on perceived value [and perceived cost] Slide 1.20 Form Utility Time Utility Possession Utility Place Utility Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 (Customer) Satisfaction – Perceived performance relative to expectations Marketing creates value by providing consumers with the right goods and services, at the right place, at the right price, and at the right time. Customers Value and satisfaction Marketers Set the right level of expectations Not too high or low Slide 1.22 it’s good and good for you Designing a customer-driven marketing strategy Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 1.23 Marketing management is the art and science of choosing target markets and building profitable relationships with them. The marketing manager must answer two important questions: – What customers will we serve (what’s our target market)? – How can we serve these customers best (what’s our value proposition)? Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013  Selecting customers to serve By trying to serve all customers, marketers may not serve any customers well. Instead, the company wants to select only customers that it can serve well and profitably. Market segmentation refers to dividing the markets into segments of customers. Target marketing refers to which segments to go after. For Example:  Choosing a value proposition Value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs. For Example: Volvo develops its cars for buyers to whom safety is a major concern. Volvo, therefore, positions its car as the safest a customer can buy.  Choosing a value proposition For example, the Smart car is positioned as compact, yet comfortable; agile, yet economical; and safe, yet ecological. It’s “sheer automotive genius in a totally fun, efficient package. Smart thinking, indeed.” Marketing management orientations Marketing concept is the idea that achieving organisational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do. Societal marketing concept is the idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-term interests and society’s long-run interests. Slide 1.30 it’s good and good for you Preparing an integrated marketing plan and program that delivers superior value Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013  The marketing mix Marketing Mix : set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion and place. the four Ps concept takes the seller’s view of the market, not the buyer’s view. From the buyer’s viewpoint, in this age of customer value and relationships, the four Ps might be better described as the four Cs. Marketers would do well to think through the four Cs first and then build the four Ps on that platform.  Integrated marketing program comprehensive plan that communicates and delivers the intended value to chosen customers. Slide 1.33 it’s good and good for you Build profitable relationships and Create customer delight Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013  Slide 1.34 Customer relationship management (CRM) The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping, and growing customers. Copyright © 2012 Pearson Education Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013  Relationship building blocks: customer value and satisfaction Customer- perceived value Customer satisfaction The difference between total The extent to which a product’s customer value and total perceived performance customer cost matches a buyer’s expectations A customer buys from the firm that offers the highest customer- perceived value. Slide 1.36 Customer relationship levels and tools Companies can build customer relationships at many levels, depending on the nature of the target market. company with many low-margin customers may seek to develop basic relationships with them. Basic For example, Nike does not phone or call on all of its consumers relationships to get to know them personally. Instead, Nike creates relationships through brand-building advertising, public relations, and its Web site (www.Nike.com). in markets with few customers and high margins, sellers want to create full partnerships with key customers. For example, Nike sales representatives work closely with the Full partnerships Sports Authority and other large retailers. Beyond offering consistently high value and satisfaction, marketers can use specific marketing tools to develop stronger bonds with customers. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Many companies offer frequency marketing programs that reward customers who buy frequently or in large amounts. Airlines offer frequent-flyer programs, hotels give room upgrades to frequent guests, and supermarkets give patronage discounts to “very important customers.” These days almost every brand has a loyalty rewards program. For example, JetBlue Airways offers its TrueBlue members frequent- flyer points they can use on any seat on any JetBlue flight with no blackout dates. JetBlue promises its members “More award flights. More points. More to love.” The airline’s “Be True” marketing campaign even highlights real TrueBlue members who are nominated by JetBlue crewmembers for their TrueBlue dedication to inspiring causes. Other companies sponsor club marketing programs that offer members special benefits and create member communities. For example, Apple encourages customers to form local Apple user groups. More than 800 registered Apple user groups worldwide offer monthly meetings, a newsletter, advice on technical issues, training classes, product discounts, and a forum for swapping ideas and stories with like-minded Apple fans. Slide 1.38 Partner relationship management Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. is every functional area interacting with customers – Electronically – Cross-functional teams. no matter what your job is in a company—you must understand marketing and be customer focused. David Packard, the late cofounder of HP, wisely said, “Marketing is far too important to be left only to the marketing department.” is how marketers connect with their suppliers, channel partners and competitors by developing partnerships. The supply chain is a channel that stretches from raw materials to components to final products to final buyers. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Today, rather than letting each department go its own way, firms are linking all departments in the cause of creating customer value. Rather than assigning only sales and marketing people to customers, they are forming cross-functional customer teams. For example, P&G assigns customer development teams to each of its major retailer accounts. These teams—consisting of sales and marketing people, operations specialists, market and financial analysts, and others—coordinate the efforts of many P&G departments toward helping the retailer be more successful. Most companies today are networked companies, relying heavily on partnerships with other firms. Marketing channels consist of distributors, retailers, and others who connect the company to its buyers. Supply chain describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers. For example, the supply chain for PCs consists of suppliers of computer chips and other components, the computer manufacturer, and the distributors, retailers, and others who sell the computers. Success at building customer relationships also rests on how well their entire supply chain performs against competitors’ supply chains. These companies don’t just treat suppliers as vendors and distributors as customers. They treat both as partners in delivering customer value. For example, Toyota works closely with carefully selected suppliers to improve quality and operations efficiency. On the other hand, it works with its franchise dealers to provide top-grade sales and service support that will bring customers in the door and keep them coming back. Slide 1.41 Four Examples of Basic Channels of Distribution for Consumer Products Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Through supply chain management, many companies today are strengthening their connections with partners all along the supply chain. Success at building customer relationships also rests on how well their entire supply chain performs against competitors’ supply chains. These companies don’t just treat suppliers as vendors and distributors as customers. They treat both as partners in delivering customer value. Slide 1.43 it’s good and good for you Capturing value from customers The final step involves capturing value in return in the form of sales, market share, and profits. By creating superior customer value, the firm creates highly satisfied customers who stay loyal and buy more. This, in turn, means greater long-run returns for the firm. The outcomes of creating customer value: customer loyalty and retention, share of market and share of customer, and customer equity. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Creating customer loyalty and retention Good customer relationship management creates customer satisfaction. In turn, satisfied customers remain loyal and talk favorably to others about the company and its products. Studies show big differences in the loyalty of customers who are less satisfied, somewhat satisfied, and completely satisfied. Even a slight drop from complete satisfaction can create an huge drop in loyalty. Thus, the aim of customer relationship management is to create not only customer satisfaction but also customer delight. Creating customer loyalty and retention Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage. Losing a customer means losing more than a single sale. It means losing the entire stream of purchases that the customer would make over a lifetime of patronage.  Share of customer is the portion of the customer’s purchasing that a company gets in its product categories. Banks want to increase “share of wallet.”Car companies want to increase “share of garage,” and airlines want greater “share of travel.” Customer equity is the total combined customer lifetime values of all of the company’s customers. The more loyal the firm’s profitable customers, the higher the firm’s customer equity. The goal is to build the right relationships with the right customers. Sales and market share reflect the past, customer equity suggests the future.  Building the Right Relationships with the Right Customers The company can classify customers according to their potential profitability and projected loyalty to four relationship groups: strangers, butterflies, true friends, and barnacles. Each group requires a different relationship management strategy. The goal is to build the right relationships with the right customers. “strangers” show low potential profitability and little projected loyalty. There is little fit between the company’s offerings and their needs. The relationship management strategy for these customers is simple: Don’t invest anything in them. “Butterflies” are potentially profitable but not loyal. There is a good fit between the company’s offerings and their needs. However, like real butterflies, we can enjoy them for only a short while and then they’re gone. “Barnacles” are highly loyal but not very profitable. There is a limited fit between their needs and the company’s offerings. An example is smaller bank customers who bank regularly but do not generate enough returns to cover the costs of maintaining their accounts. “True friends” are both profitable and loyal. There is a strong fit between their needs and the company’s offerings. The firm wants to make continuous relationship investments to delight these customers and nurture, retain, and grow them. It wants to turn true friends into “true believers,” those who come back regularly and tell others about their good experiences with the company.