Summary of Foundations of Marketing 7th edition, John Fahy & David Jobber for the course 1ZEUA0 - New Product Marketing for the Pre-Master Innovation Management of Industrial Engineering at the Eindhoven University of Technology.
Foundations of Marketing 7th edition, John Fahy & David Jobber
RFJF Van Doorslaer
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,CHAPTER 1 THE NATURE OF MARKETING
What is marketing: “Marketing is the delivery of value to customers at a profit” (Fahy & Jobber)
1. The goal of marketing is long-term customer satisfaction, not short-term deception or
gimmicks.
2. the costs of attracting new customers have been found to be up to six times higher than the
costs of retaining existing ones
Treacy & Wiersema (1995) describe 3 value propositions
(1) Product Leadership aims for the “best product”. It includes all operations, business structures and
management systems / culture. It mainly aims at R&D and creativity and product development.
Innovation focuses on products and services (e.g., ASML, Coca-Cola).
(2) Customer Intimacy aims for the “best total solution”. It includes operations, structure and culture
focused on (customer) relationships and customer orientation. The customers are closest to the
decision.
Innovation focuses on processes, products AND services.
(3) Operational Excellence aims for the “best total cost”. It includes all operations, management
systems and HRM/culture should be standardized and integrated for efficiency.
Innovation focuses on processes.
MODERN MARKETING CONCEPT
Modern Marketing Concept: “The achievement of corporate goals through meeting and exceeding
customer needs better than the competition.”
Three conditions must be met before the marketing concept can be applied:
1. Customer orientation: Activities should be focused on providing customer satisfaction.
2. Integrated effort: The achievement of customer satisfaction relies on integrated effort.
3. Goal Achievement: For integrated effort to come about, management must believe that
corporate goals can be achieved through satisfied customers.
Companies can be viewed as inward-looking or outward-looking.
1. Inward-looking companies: focus on making things or providing services, but with significant
attention to the efficiency with which internal operations and processes are conducted.
FOCUS ON PRODUCT
2. Outward-looking companies: start with the customer and work backwards from an
understanding of what customers truly value.
FOCUS ON CUSTOMER
CUSTOMER VALUE
Customer value: It is customers and not organizations who define what represents value
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,“Customer value = perceived benefits – perceived sacrifice”
1. Perceived benefits are derived from the product, associated service and the image of the
company
2. Perceived sacrifice is the total cost associated with buying the product.
Value offered should exceed that of competitors.
Expectations of perceived performance need to be
exceeded for commercial success, so that
customers are delighted with the outcome. The
concept of customer satisfaction is described by the
Kano model.
1. Must-be: expected and thus taken for
granted.
2. More is better: take satisfaction past
neutral into positive satisfaction
3. Delighters: unexpected characteristics that
surprise the customer
4 core forms of creating value:
1. Price value: one of the most powerful customer motivations to purchase is because a product
is perceived as being cheaper than those offered by competitors. These are generally basic
products/services at low prices (e.g., Ryanair, Aldi, easyCar)
2. Performance value: Some customers care more about product performance than about low
prices. They look at the latest features, attracted by functionality and perceived quality levels
(e.g., Dyson)
3. Emotional value: A big challenge for the modern firm is to find effective ways to differentiate
products based on performance elements (e.g., car industry similarity). Thus, the only real
difference between the brands is in the mind of the customer. This kind of emotional value is
created through marketing activity. (e.g., luxury brands like iPhone, Chanel, Supreme)
4. Relational value: An important motive for customer to purchase is the quality of service
received by the customer. When the customer finds a good quality service provider, the may
be willing to stay, and a high level of trust becomes established between the parties.
a. Central to this is the Customer Lifetime Value (CLV): recognition by the company of
the potential sales, profits and endorsements that come from a repeat customer who
stays with the company for several years.
b. Organizations now use Customer Relationship Management (CRM) systems to get to
know their customers better, and to interact with them on regular basis.
i. CRM measures customer retention, customer defection and customer
acquisitions.
The challenge for organizations is to try to become a value leader of one of these 4 dimensions.
Those that achieve market leadership (e.g. Ryanair, Louis Vuitton) have clearly defined Customer
Value Proposition, or Unique Selling Point (USP).
In terms of customer value, marketing can be defined as: “the delivery of value to customers at a
profit”
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, DEVELOPMENT OF MARKETING
Not all companies will adopt a marketing orientation. Many firms today have an inward-looking
product orientation (since 1920s, 1.3a). Many other firms are characterized by excessive sales
orientation (since 1950s, 1.3b). Lastly, firms realized that they should apply customer orientation
(since 1960s, 1.3c). All 3 orientations are still applied.
Newer business orientations are:
1. Societal marketing concept, or sustainable marketing: the marketing strategy should deliver
value to customers in a way that maintains or improves both the consumers’ and society’s
well-being.
2. Market-driven, or outside-in firms: anticipate as well as identify customer needs, and build the
resource profiles necessary to meet current and future demand.
THE SCOPE OF MARKETING
Social marketing: the use of marketing techniques in order to change or maintain people’s behaviour
for the benefit of the individual or society as a whole (e.g. anti-smoking, alcohol awareness
campaigns).
MARKETING, CONSUMPTION AND SOCIETY
The nature of marketing can be considered from 3 perspectives:
1. Managerial view: contains both marketing as a functional activity withing organizations, and
as a philosophy for doing business that puts customers at the center of things.
2. Consumer view: consumers are not just the recipients of value, but they co-create that value
through activities such as reviews.
a. Consumer Culture Theory (CCT)
3. Societal view: the relationship of marketing with society as a whole.
a. Shareholder value: businesses assume their primary responsibility is to their owners,
to shield themselves from the societal value conversation. (Friedman & Jensen).
b. Macromarketing: field of research within marketing that studies the role of marketing
in society (e.g., ethics, sustainable marketing).
c. Circular economy: recognizing that we increasingly need economic systems that aim
to eliminate waste and favor recycling of resources.
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