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Literature Notes Principles of MarketingChapter 1: Marketing
What is Marketing?
Marketing: The process by which companies engage customers, build strong customer relationships, and
create customer value in order to capture value from customers in return.
The goal of marketing is to attract are customers by promising superior value and to keep and grow
current customers be delivering value and satisfaction.
Model of marketing process for creating (1-4) and capturing (5) value:
1. Understand the marketplace and customer needs and wants
2. Design a customer value-driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Engage customers, build profitable relationships, and create customer delight
5. Capture value from customers to create profits and customer equity
Understanding the Marketplace and Customer Needs
Companies go to great length to learn about and understand customer needs, wants and demands.
Needs: States of felt deprivation.
Wants: The form human needs take as they are shaped by culture and individual personality.
Demands: Human wants that are backed by buying power.
Customer wants and needs are fulfilled trough market offerings
Marketing offerings: Some combination of products, services, information, or experiences offered to
a market to satisfy a need or want.
Marketing myopia: The mistake of paying more attention to the specific products a company offers
than to the benefits and experiences produced by these products. (The customer has the same need
but will want the new product.)
Customer Value and Satisfaction: be careful with the right level of expectations.
Marketing occurs when people decide to satisfy their needs and wants through exchange
relationships.
Exchange: The act to obtaining a desired object from someone by offering something in return
Market: The set of all actual and potential buyers of a product of service.
Major environmental forces
Company ← ———— →
Literature Notes Principles of Marketing 1
, →
Suppliers → Marketing
intermediaries → Final consumers
→
Competitors
← ————- →
Designing a Customer Value-Driven Marketing Strategy and Plan
Marketing management: The art and science of choosing target markets and building profitable
relationships with them.
Two important questions to design a winning marketing strategy:
1. What’s our target market?
2. What’s our value proposition?
Production concept: The idea that customers will favor products that are available and highly affordable;
therefore, the organization should focus on improving production and distribution efficiency.
Product concept: The idea that customers will favor products that offer the most quality, performance,
and features; therefore the organization should devote its energy to making continuous product
improvement.
Selling concept: The idea that customers will not buy enough of the firm’s products unless the firm
undertakes a large-scale selling and promotion effort. (no long term customer relationships)
Marketing concept: A philosophy in which achieving organizational goals depends on knowing the needs
and delivering the desired satisfactions better than competitors do.
Societal Marketing concept: The idea that a company’s marketing decisions should consider customers’
wants, the company’s requirements, customers’ long-run interests, and society’s long-run interests.
(human welfare, want satisfaction, profits)
After choosing a strategy, the marketer develops an integrated marketing program that will actually deliver
the intended value to target customers. Tool: the marketing mix (price, product, place, promotion)
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.
Customer-perceived value: The customer’s evaluation of the difference between all the benefits and all
the costs of a marketing offer relative to those competing offers. (customers judge not
accurately/objectively but perceived)
Customer satisfaction: The extent to which a product’s perceived performance matches a buyer’s
expectations.
Literature Notes Principles of Marketing 2
, Yesterdays marketing: focused mostly on mass marketing
Customer-engagement marketing: Making the brand a meaningful part of consumers’ conversations
and lives by fostering direct and continuous customer involvement in shaping brand conversations,
experiences, and community.
Customer brand advocacy: Actions by which satisfied customers initiate favorable interactions with
others about a brand.
The key to engagement marketing is to find ways to enter targeted consumers’ conversations with
engaging and relevant brand messages.
Capturing Value from Customers:
A more satisfied customer is more loyal and talks favorably to others about the company and its products.
Loyal customers spend morgue and stay longer around.
Customer lifetime value: The value of the entire stream of purchases a customer makes over lifetime of
patronage.
Share of customer: The portion of the customer’s purchasing that a company gets in its product
categories. To increase the share of customer, firms can offer greater variety to current costumers.
Customer equity: The total combined customer lifetime values of all of the company’s customers.
Butterflies (high potential profitability, high projected loyalty): good fit between the company's offerings
and their needs. Stay for a short time, capturing as much as possible in that time.
True friends (high potential profitability, low projected loyalty): strong fit between the company's offerings
and their needs. The firm wants to make continuous relationships investments to delight these customers.
Strangers (low potential profitability, low projected loyalty): little fit between the company's offerings and
their needs. Strategy: don’t invest anything in them, make money on every transaction.
Barnacles (low potential profitability, high projected loyalty): limited fit between the company's offerings
and their needs. The company might be able to improve their profitability by selling them more, raising
their fees, or reducing service to them.
Different types of customers require different engagement and relationship management strategies.
To goal: to build the right relationships with the right customers.
The Changing Marketing Landscape
Companies must consider three additional factors: marketing technologies in the new digital age, take
advantage global opportunities, sustainably in an environmentally and socially responsible way
Digitalisation
Internet of Things (IoT): A global environment where everything and everyone is digitally connected to
everything and everyone else.
The consumer love affair with digital and mobile technology makes it fertile ground for marketers trying to
engage customers. The key is to blend digital approaches with traditional marketing to create smoothly
integrated marketing strategy and mix.
Digital and social media marketing: Using digital marketing tools such as websites, social medial,
mobile apps and ads, online video, email, and blogs to engage consumers anywhere, at any time, via
Literature Notes Principles of Marketing 3
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