Principles of Marketing Chapter 1 PDF

Principles of Marketing Seventeenth Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Le...

Principles of Marketing Seventeenth Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objectives 1-1 Define marketing and outline the steps in the marketing process. 1-2 Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. 1-3 Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 1-4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. 1-5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objective 1 Define marketing and outline the steps in the marketing process. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. What is Marketing? Marketing is a process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. The Marketing Process Five-step model of the marketing process for creating and capturing customer value.  In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships.  In the final step, companies reap the rewards of creating superior customer value. By creating value for consumers, they in turn capture value from consumers in the form of sales, profits, and long-term customer equity. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. The Marketing Process Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objective 2 Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs As a first step, marketers need to understand customer needs and wants and the marketplace in which they operate. (1) needs, wants, and demands (2) market offerings (products, services, and experiences); (3) value and satisfaction (4) exchanges and relationships (5) markets. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs 1.Needs, Wants, Demands Needs are states of felt deprivation. Wants are the form human needs take as they are shaped by culture and individual personality. Demands are human wants that are backed by buying power. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs 2. Marketing offerings(products, services, experiences). Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs 3. Customer value and satisfaction: Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. Consumers usually face a broad array of products and services that might satisfy a given need. Dissatisfied customers often switch to competitors and disparage the product to others. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs 4. Exchanges and Relationships: Exchange is the act of obtaining a desired object from someone by offering something in return. Marketing actions try to create, maintain, and grow desirable exchange relationships. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs 5. Market A market is set of actual and potential buyers. Consumers market when they: search for products interact with companies to obtain information make purchases Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objective 3 Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Marketing management is the art and science of choosing target markets and building profitable relationships with them. What customers will we serve (target market)? How can we best serve these customers (value proposition)? Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy A brand’s value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Societal Production Product Selling Marketing Marketing concept concept concept concept concept Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy There are five alternative concepts under which organizations design and carry out their marketing strategies: the production, product, selling, marketing, and societal marketing concepts: Production concept: Consumers will favor products that are available and highly affordable. Product concept: Consumers favor products that offer the most quality, performance, and features. Selling concept: Consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Marketing concept: Know the needs and wants of the target markets and deliver the desired satisfactions better than competitors. Societal marketing concept: The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy Societal marketing: The company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy The marketing mix is comprised of a set of tools known a the four Ps: product price promotion place Integrated marketing program—a comprehensive plan that communicates and delivers intended value Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objective 4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value Customer relationship management—the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, engaging, and growing customers. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value Relationship Building Blocks Customer- Customer perceived value satisfaction The difference The extent to between total which perceived customer performance perceived matches a benefits and buyer’s customer cost expectations Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value Customer-Engagement Marketing fosters direct and continuous customer involvement in shaping brand conversations, experiences, and community. Copyright © 2018 Pearson Education Ltd. All Rights Reserved.  Managing Customer Relationships and Capturing Customer Value Consumer-Generated Marketing Brand exchanges created by consumers themselves. Consumers are playing an increasing role in shaping brand experiences. For example, Mountain Dew stirred up user- generated content to create buzz around a limited- time reintroduction of its iconic Baja Blast beverage, boosting online chatter by 170 percent. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage. Copyright © 2018 Pearson Education Ltd. All Rights Reserved.  Managing Customer Relationships and Capturing Customer Value Share of customer is the portion of the customer’s purchasing that a company gets in its product categories.  To increase share of customer, firms can offer greater variety to current customers or they can create programs to cross-sell and up-sell to market more products and services to existing customers.  For example, Amazon is highly skilled at leveraging relationships with its 237 million customers to increase its share of each customer’s spending budget. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value Customer equity is the total combined customer lifetime values of all of the company’s customers. To increase customer equity, Cadillac is making the classic car cool again among younger buyers, encouraging consumers to “Dare Greatly.” Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objective 5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. The Changing Marketing Landscape Digital and social media marketing involves using digital marketing tools such as web sites, social media, mobile ads and apps, online videos, e-mail, and blogs that engage consumers anywhere, at any time, via their digital devices. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. The Changing Marketing Landscape Not-for-profit marketing growth Rapid globalization Sustainable marketing Copyright © 2018 Pearson Education Ltd. All Rights Reserved. So, What Is Marketing? Pulling It All Together Copyright © 2018 Pearson Education Ltd. All Rights Reserved.