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Marketing Management - lecture notes
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The document contains a summary of the lecture notes for the course Marketing Management from the minor Business Administration.
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Marketing management Lecture 1Marketing plan from a company perspective is probably the best.
“Consumption is the sole end and purpose of all production; and the interest of the producer
ought to be attended to, only so far as it may be necessary for promoting that of the
consumer.“
Adam Smith (1776). An Inquiry into the Nature and Causes of the Wealth of Nations, Book IV,
Chapter VIII, v. ii, p. 660, para. 49.
1. Marketing: creating and capturing customer value
Capturing customer value
How much of the value you create, can you extract as money for yourself?
Creating customer value without capturing customer value=> you receive no money from it.
What is marketing? (History of marketing, first 3 marginal perspectives on marketing)
• Old fashioned way: Marketing is the performance of business activities that direct the
flow of goods, and services from producers to consumers (American Marketing
Association, 1935):
1. Managerial function to coordinate demand & supply;
2. Production of goods and services;
3. Marketing is a business activity;
4. The object of investigation is the business column;
5. Increasing efficiency or reduction of costs.
• 50 years later: Marketing 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 objectives (American Marketing Association,
1985):
1. Purpose of marketing is satisfying exchanges;
- Create an exchange that would make people happy.
2. Marketing as both an individual and managerial organizational function;
- Organizational function=> role in the survival & profitability of the company.
3. Customer dissatisfaction and protecting customers;
4. Increasing efficiency (of fulfilling wants and needs).
Misleading consumers was a big thing. Example: Ford disaster. Create an exchange that
would make people happy.
,• Improvement: Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders (American
Marketing Association, 2004):
1. Marketing’s purpose is to create value;
- Marketing is all about creating value. What can we do more to create value.
- Capturing customers value on your company instead of them spending their money
on another company.
2. Importance of managing relationships with stakeholders;
- It is too costly to create transactions to NEW people.
- One person will buy your product/service again & again, gain their loyalty.
Then they will become brand loyal.
- Earn a life time value, life time transactions.
3. Marketing as an organizational function and activity;
4. From a transaction to a relationship focus.
• Latest definition of marketing: Marketing is the activity, set of institutions, and processes
for creating, communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large (American Marketing Association, 2007,
2013, 2017):
1. It’s purpose is to create value;
2. Marketing as an educational process.
3. Reflects the discipline’s broader role in society.
Marketeers realize that they have: social moral responsibility. Educate the market a bit for
long term about something new, realize people are afraid of new things.
Definition: Marketing
The process by which companies create value for customers and build strong relationships in
order to capture value from customers in return (Armstrong & Kotler, 2020, p.31).
Some think that marketing is just another word for sales. What do you think?
Sales is an element of marketing, but marketing is broader.
Literally marketing is ‘being active on markets’.
,Which process? The marketing process (entails the marketing)
What value?
In the narrowest sense a utility trade-off between benefit and sacrifice, and in the broadest
sense a combined utilitarian – hedonic response (Hedonic response: Not a rational choice,
but doing something because it’s fun), which
- Implies an interaction between a subject and an object (Holbrook, 1994, 1999; Payne &
Holt, 2001);
- Is relative by virtue of its comparative, personal, and situational nature (Holbrook, 1994,
1999);
• Value is not absolut, it is relative.
- Is preferential (Holbrook, 1994, 1999; Zeithaml, 1988), perceptual (Day & Crask, 2000),
and cognitive-affective (Babin et al., 1994; Park, 2004) in nature.
• Value is extremely complex. There are also sub-levels in value.
Benefit and sacrifice doesn’t have to be monetary, for example it can be time in the
equasation.
, Customer’s evaluation of the difference between all the benefits and all the costs of a
marketing offer relative to those of competing offers. Maximizer of utility. It is a relative
construct.
The marketing process
1. Understanding the Marketplace. To understand the market you need to research the
market.
Five core concepts:
1. Needs (fundamental), wants (temporary), demands
2. Marketing offerings (i.e., products, services, experiences)
3. Customer value and satisfaction
4. Exchanges and relationships
5. Market
… the human need is the most basic concept underlying marketing. An example of such need
is thirst. When this need is not satisfied we will try to look for an object that will satisfy our
need or try to reduce the need. When a unsatisfied need (i.e., a desire) takes a concrete
shape, we speak of wants. Thus, if thirst is the need, than water can be our want (or a beer).
A want is so the object of our desire. As soon as we are prepared to use means of exchange
to obtain the object of our desire, the want changes into demand. A means of exchange is an
object of value which, as long as it is in sufficient quantity, can be used as payment. When
two parties exchange something of value, we speak of a transaction. A collection of
transactions is called a market…
Satisfy need at a want level.
Marketing myopia
Needs
• States of deprivation
• Physical—food, clothing, warmth, safety
• Social—belonging and affection
• Individual—knowledge and self-expression
Wants
• Form that needs take as they are shaped by culture and individual personality
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