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Summary Principle of Marketing - Chapters 1, 20, 3, 2, 5, 6 and 19

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  • Course
  • Marketing 1
  • Institution
  • Saxion Hogeschool (Saxion)
  • Book
  • Principles of Marketing

Summaries for chapters 1, 20, 3, 2, 5, 6 and 19 (Includes images from the PDF version of the book for easier studying) and is print-ready. Based on the content of the IBMS' Marketing course from Saxion Enschede (first quarter).

Last document update: 8 year ago

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Document information

  • No
  • 1, 2, 3, 5, 6, 19 & 20
  • November 22, 2016
  • November 22, 2016
  • 52
  • 2016/2017
  • Summary

Subjects

  • principles or maketing
  • marketing
  • international business
  • kotler
  • porter
  • management
  • principle
  • chapter 1
  • chapter 2
  • chapter 3
  • chapter 5
  • chapter 6
  • chapter 20
  • chapter 19
  • ibms
  • international business a
  • pearson

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Written for

  • Saxion Hogeschool (Saxion)
  • International Business and Languages
  • Marketing 1
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Chapter 1: Marketing – Creating Customer Value and Engagement

What is Marketing?
Simplest definition: Marketing is managing profitable customer relationships.
The two-fold goal: Attract new customers by promising superior value + keep and grow current.

Marketing Defined
1. Marketing is the social process by which individuals and groups obtain what they need and want through
creating and exchanging products and value with others – Kotler.
2. Marketing is the management process that identifies, anticipates and satisfies customer requirements
profitably - The Chartered Institute of Marketing (CIM).
3. The right product, in the right place, at the right time, at the right price.

Kotler defines marketing as the process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return

The Marketing Process




Five major value themes:

1. Creating Value for Marketers must be good at creating customer value and managing
customers in order to capture customer relationships. Must understand customer needs and design
value from customers in value-creating marketing strategies and deliver customer value and
return delights: Customer-value framework
2. Building and managing Marketers must position their brands powerfully and manage them well.
strong, value-creating brands They must build close brand relationship and experience with
customers.
3. Measuring and managing ‘Marketing Accountability’ – Measuring and managing return on
return on marketing marketing investments – has now become an important part of strategic
marketing decision making. Must ensure marketing money is well spent.
4. Harnessing new marketing Making use of new technologies such as social medias and customer
technologies generated marketing.
5. Sustainable marketing Marketers must be good at marketing their brands globally and in
around the globe sustainable ways.
Understanding the marketplace and customer needs: 5 core customers and marketplace concepts:
- 1. Needs, Wants, and Demands - 2. Market offerings -3 Values and Satisfaction
- 4. Exchange and Relationships -5 Markets

Customer Needs, Wants, and Demands

Needs Wants Demand
States of felt deprivation. Physical needs for The form human needs Human wants that are backed by buying
food, warmth, safety, and clothing. take as they are shaped power
Social needs for belonging and affection. by culture and individual
Individual needs for knowledge and affection personality




1

, A Person needs shelter to protect oneself A Briton needs food, but Given their wants and resources, people
from the cold. wants cucumber demand products with benefits that add
sandwiches. up the most value and satisfaction
Market Offerings – Products, Services, and Experiences
Marketing Offerings: Some combination of products, services, information, or experiences offered to a
market to satisfy a need or a want.
Some sellers suffer from marketing myopia: The mistake of paying more attention to the specific products a
company offers than to the benefits of experiences produced by these products. They only focus on existing
wants and lose sight of underlying customer needs.

Customer Value and SatisfactionCustomers from expectations about the value and satisfaction that various
market offerings will deliver and buy accordingly. Satisfied customers will buy again and tell others about their
good experiences.
Marketers must be careful to set the right level of expectations. If they set them too low, they may satisfy
those who buy but fail to attract enough buyers. If they set them too high, buyers will be disappointed.
These two are key building blocks for developing and managing customer relationships.

Exchange and Relationships
Exchange is the act of obtaining a desired object from somebody by offering something in return.
Marketing consist of actions taken to build and maintain desirable exchange relationships with target
audiences involving a product, service, idea or another object.

Market
A market is the set of actual and potential buyers of a product or service. These buyers share a particular
need or want that can be satisfied through exchange relationships.
Marketing means managing markets to bring about profitable customer relationships.

Main Elements in
a Marketing
System:

Customer Value
- Customer value is
the consumer’s
assessment of the
product’s overall
capacity to satisfy
his or her needs



Customer Satisfaction - Customer satisfaction is the extent to which a product’s perceived performance matches
expectations



Designing a Customer Value-Driven Marketing Strategy
Marketing Management = The art and sciences of choosing target markets and building profitable
relationships with them.
What customers will we serve (what’s our target market)?
How can we serve these customers best (what’s our value proposition)?

Selecting Customers to Serve

2

, - Marketing managers must decide which customers they want to target and on the level, timing, and
nature of their demand

Choosing a Value Proposition

- A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to
satisfy their needs. Such value propositions should differentiate one brand from another.

Marketing Management Orientations:

Production Concept Product Concept Societal Marketing Customer-Driven VS
Concept Customer-Driving

The idea that consumers The idea that consumers The idea that a When customers don’t
will favor products that will favor products that company’s marketing know what they want or
are available and highly offer the most quality, decisions should even what is possible;
affordable; therefore, the performance, and features; consider consumers’ understanding customer
organization should focus therefore, the organization want, the company’s needs even better than
on improving production should devote its energy to requirements, customers themselves do
and distribution efficiency making continuous product consumers’ long-run and creating products and
(but it can lead to improvements (can also interests, and society’s services that meet both
marketing myopia) lead to marketing myopia) long-run interests. existing and latent needs
- Selling Concept = The idea that consumers will not buy enough of the firm’s products unless the firm
undertakes a large-scale selling and promotion effort. Typically practice with unsought goods. Make-and-sell
philosophy. Selling Concept = INSIDE-OUT Perspective

- Marketing Concept = a philosophy in which achieving organizational goals depends on knowing the needs
and wants of target markets and delivering the desired satisfactions better than competitors do. Sense-and-
respond philosophy. Marketing Concept = OUTSIDE-IN Perspective

Sustainable Marketing Concept = socially and environmentally responsible marketing (long-term goal, 3P:
people, profit, planet)

The concept of shared value focuses on creating
economic value in a way that also creates value for
society.


Preparing an
Integrated Marketing




Plan and Program
Marketing Mix = The set of
marketing tools the firm uses
to implement its marketing
strategy. The major marketing


3

,mix tools are classified into 4 broad groups, called the four Ps of Marketing



Building Customer Relationships
Customer Relationship Management

Customer Relationship Management = The overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction.

The key to building lasting customer relationships is to create superior customer value and satisfaction.

o 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 of competing offers.
o Customer satisfaction = the extent to which a product’s perceived performance matches a
buyer’s expectations. Customer satisfaction comes not just from service heroics, but from
how well a company delivers on its basic value proposition and helps customers solve their
buying problems.
- The purpose of marketing is to generate customer value profitably (not to maximize customer
satisfaction)
- Companies can build customer relationships at many levels, depending on the nature of the target
market:
o Basic relationships: a company with many low-margin customers
o Full partnerships: in markets with few customers and high margins
o Frequency marketing programs: programs that offer members special benefits and create member
communities
o Club marketing programs: programs that offer members special benefits and create member
communities

Engaging Customers

- 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. Its goal is to make the brand a meaningful part of
consumers’ conversations and lives.
- Marketers are now (due to social media, the Internet) embracing not only customer relationships
management, but also customer-managed relationships, in which customers connect with
companies and with each other to help forge their own brand experiences.
- They must practice marketing by attraction - creating market offerings and messages that engage
consumers rather than interrupt them
- They key to engagement marketing is to find ways to enter consumers’ conversations with engaging
and relevant brand messages

- Consumer-generated marketing = brand exchanges created by consumers themselves - both invited
and uninvited - by which consumers are playing an increasing role in shaping their own brand
experiences and those of other consumers

o Because consumers have so much control over social media content, inviting their input can
sometimes backfire


4

,Partner Relationship Management

- Partner Relationship Management = working closely with partners in other company departments
and outside the company to jointly bring greater value to customers.

Capturing Customer Value
Creating Customer Loyalty and Retention

- In turn, satisfied customers remain loyal and talk favorably to others about the company and its
products. Research shows that it’s five times cheaper to keep an old customer than acquire a new
one
- Customer lifetime value = the value of the entire stream of purchases a customer makes over a
lifetime of patronage

Growing Share of Customer

- Share of customer = 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

Building Customer Equity

- Customer equity = the total combined customer lifetime values of all of the company’s customers

- Different types of customers require different engagement and relationships management
strategies. The goal is to build the right relationships with the right people (Because not all
customers, not even all loyal customers, are good investments)




- Strangers: there is little fit between the company’s offerings and their needs. The relationship
management strategy for these customers is simple: Don’t invest anything in them; make money on
every transaction
- Butterflies: good fit between the company’s offerings and their needs. Create satisfying and
profitable transactions with them, capturing as much of their business as possible in the short time
during they buy from the company
- True friends: Strong fit between the company’s offerings and their needs. To turn true friends into
true believer the company should make continuous relationship investments to delight these
customers and nurture, retain, and grow them

5

,- Barnacles: There is limited fit between their needs and company’s offerings. The company might be able
to improve their profitability by selling them more, raising fees, or reducing service to them. However, if
they cannot be made profitable, they should be “fired”

The Changing Marketing Landscape
The Digital Age: Online, Mobile, and Social Media Marketing

- Digital and social media marketing = using digital marketing tools such as Web sites, social media,
mobile apps, and ads, online video, e-mail, and blogs that engage consumers anywhere, at any time,
via their digital devices.
- At the most basic level, marketers set up company and brand Web sites that provide information
and promote the company’s products
- Social media provide exciting opportunities to extend customer engagement and get people talking
about a brand - Marketers use mobile channels to stimulate immediate buying, make shopping
easier, enrich the brand experience, or all of these
- They key is to blend the new digital approaches with traditional marketing to create a smoothly
integrated marketing strategy and mix
- In recent years, marketing has also become a major part of the strategies of many not-for-profit
organizations such as colleges, hospitals, museums, zoos, symphony orchestras, foundations, and
even churches
- Rapid Globalization

Sustainable Marketing

- The Call of More Environmental and Social Responsibility
- As the worldwide consumerism and environmentalism movements mature, today’s marketers are
being called on to develop sustainable marketing practices. Corporate ethic and social responsibility
have become hot topics for almost every business.

So, What is Marketing? Pulling it All Together




6

,Chapter 2: Company and Marketing Strategy : Failling to plan means planning to fail!

Company-Wide Strategic Planning: Defining Marketing’s Role
1. Focus on current business: 2. Focus on Business Adaptation/Development

Short term planning: annual Strategic plan: a long-term plan that describes how a company will use
plan: 6 weeks plan < 1 year market opportunities to reach its goals

Long-term planning: > 1 year

A marketing plan helps to put the strategic plan into action! Each company must find the game plan for long-
run survival and growth that makes the most sense given its specific situation, opportunities, objectives, and
resources.

Strategic planning = the process of developing and maintaining a strategic fit between the organization’s
goals and capabilities and its changing marketing opportunities. Steps in strategic planning:




7

, Mission statement = a statement of the organization’s purpose – what it wants to accomplish in the larger
environment.

Mission statements must be market oriented and defined in terms of satisfying basis customer needs. It
should be meaningful and specific yet motivating. A company’s mission should not be stated as making more
sales or profits, the mission should focus on customers and the customer experience the company seeks to
create.

Product oriented = what they do. Market oriented = what the experience is about



A mission statement should:

1. Not be myopic in product 2. Meaningful and specific 3. Motivating
terms
4. Emphasize the company’s 5. Contain specific workable 6. Not be stated as making sales or profits
strengths guidelines




8

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