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summary chapter 1 new product marketing
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summary of the first chapter (the nature of marketing) of the course new product marketing.
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Chapter 1 – the nature of marketing6th edition
What is marketing?
The nature of marketing
Scarcity is a technique that helps to foster demand for a product and exploits the social
phenomenon of FOMO.
Marketing is often central to the outcome if a company fails or succeeds on the market. The success
lies in getting customers and keeping them. This is done because marketing focusses on the
customers and their changing needs.
Quote by Peter Drucker:
Because the purpose of business is to create and keep customers, it has only two central
functions – marketing and innovation. The basic functions of marketing is to attract and
retrain customers at a profit.
What is marketing?
Modern marketing concept is ‘the achievement of corporate goals through meeting and exceeding
customer needs better than the competition’.
There are three conditions that must be met before the marketing concept can be applied.
Companies can be viewed as inward looking or outward looking.
Outward looking focusses on making things or providing services but with significant attention to the
efficiency with which internal operations and processes are conducted.
Outside-in focus, companies can understand what customers value and how to consistently innovate
new sources of value that keeps bringing the customer back (these companies work backwards)
, Efficiently ensures that value is created and delivered at a profit to the company (ultimate
marketing goal)
The nature of customer value
One of the most important tasks in marketing is to create and communicate value to customers, to
drive their satisfaction, loyalty and profitability.
Customer value is a dual exchange concept, meaning that the company delivers perceived value for
the customer and customers return value to the company through purchases and, indirectly,
through referrals, word-of-mouth promotion and suggestions.
So, the concept is considered on social level, individual’s and society’s point of view. But it can also
be considered in a semiotic sense, where cultural meanings are mediated through consumption.
How can a firm know if it’s creating value?
It’s the customers and not the organizations that define what represent value:
customer value= perceived benefits− perceived sacrific e
Perceived benefits can be derived from
the product = hotel room and restaurant
Associated service = how responsive the hotel is to the specific needs of customers
The image of the company = is the image/product favourable?
Perceived sacrifice is the total cost associated with buying the product, consists of
Monetary costs
Time
Energy
Example, for a hotel: time & energy
A good location can reduce the time and energy to find a suitable place to stay
In some buying situations, marketers need to be aware of: potential costs of psychological cost of
not making the right decision.
Uncertainty means that people perceive risk when purchasing. To minimize this risk, McDonald’s for
example aims for consistency. The customer knows what they’ll receive when visiting.
If a product has been purchased, the customer satisfaction depends on its perceived performance
compared with the buyer’s expectations. Customer satisfaction will be achieved when the
expectations are met or even exceeded. Expectations are formed through pre-buying experiences,
discussions with others and suppliers’ marketing activities. If the expectations are set too high, it
leads to dissatisfaction. In today’s competitive climate, matching expectations is not enough.
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