Foundation of Marketing
Marketing The process by which companies create value for customers and build strong customer
relationships in order to capture value from customers in return.
Customer needs, wants and demands
Needs: Human needs are states of felt deprivation.
Physical needs: Food, clothing, warmth and safety.
Social needs: Belonging and affection.
Individual needs: Knowledge and self-expression.
Wants: Wants are the form human needs take as they are shaped by culture and individual
personality.
An American needs food but wants a Big Mac, French fries and a soft drink.
Demands: When backed by buying power, wants become demands.
Market 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.
Exchange and Relationships
The act of obtaining a desired object from someone by offering something in return.
A marketer tries to bring about a response to some market offering. The response may be more than
simply buying or trading products and services.
A political candidate, for instance, wants votes.
A church wants membership.
An orchestra wants an audience.
A social action group wants idea acceptance.
Marketing consists of actions taken to create, maintain, and grow desirable exchange relationships
with target audiences involving product, service, idea, or other object.
Market The set of all actual and potential buyers of a product or service.
Marketing management The art and science of choosing target markets and building profitable
relationships with them.
Marketing management consists of customer management and demand management.
For a winning marketing strategy, the marketing manager must answer two important questions:
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
A company must first decide whom it will serve. It does this by dividing the market into segments of
customers (market segmentation) and selecting which segments it will go after. (Target marketing)
Ultimately, marketing managers must decide which customers they want to target and on the level,
timing, an nature of their demand.
,Choosing a value proposition
The company must also decide how it will serve targeted customers – how it will differentiate and
position itself in the marketplace. A brand’s value proposition is the set of benefits or values it
promises to deliver to consumers to satisfy their needs.
A value proposition:
Is an answer to the customers question ‘’ Why should I buy your brand rather than a
competitor’s? ‘’
Companies must design strong value propositions that gives them the greatest advantage in their
target markets.
Marketing management orientations
Marketing management wants to design strategies that will
build profitable relationships with target consumers.
There are five alternative concepts under which organizations
design and carry out their marketing strategies:
The production concept
The idea that consumers will favor products that are
available and highly affordable; therefore, the
organization should focus on improving production and
distribution efficiency.
The product concept
The idea that consumers will favor products that offer the most quality, performance, and
features; therefore, the organization should devote its energy to making continuous product
improvements.
The 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.
The 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.
The societal marketing concept
The idea that a company’s marketing decisions should consider consumers’ wants, the
company’s requirements, consumers’ long-run interests, and society’s long-run interests.
Preparing an integrated marketing plan and program
The company’s marketing strategy outlines which customers it will serve and how it will create value
for these customers. Next, the marketer develops an
develops an integrated marketing program that will
actually deliver the intended value to target customers.
The marketing program builds customer relationships by
transforming the marketing strategy into action. It Society
consist of the firm’s marketing mix, the set of marketing (Human
welfare)
tools the firm uses to implement its marketing strategy.
Societal
Building customer relationships marketing
concept
Customer relationship management The overall process
of building and maintaining profitable customer Consumers
Company
relationships by delivering superior customer value and (Want
satisfaction)
(Profits)
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 of competing offers.
Customer satisfaction The extent to which a product’s perceived performance matches a buyer’s
expectations.
The changing nature of customer relationships
Companies used to focus on mass marketing to all customers, some important trends in the way
companies and customers relate to each other are:
Relating with more carefully selected customers – Target more profitable customers
Relating more deeply and interactively – New, interactive approaches to build two-way relationships
Customer-managed relationships Marketing relationships in which customers, empowered by
today’s new digital technologies, interact with companies and with each other to shape their
relationships with brands.
Consumer-generated marketing Brand exchanges that are 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.
Capturing value from customers
The last step in the marketing process involves capturing value from customers in the form of sales
and profits.
Creating customer loyalty and retention
Satisfaction is created by good customer relationships management. Then, satisfied customers stay
loyal and speak positive about the company and its products, to other people. When a company
loses a customer, it loses more than one sale. This means losing the entire stream of purchases
would make in a lifetime.
Customer lifetime value The value of the entire stream of purchases a customer makes over a
lifetime of patronage.
Share of customer The portion of the customer’s purchasing that a company gets in its product
categories.
Customer equity The total combined customer lifetime values of all of the company’s customers.
Internet A vast public web of computer networks that connects users of all types all around the
world to tell each other and to an amazingly large information repository.
Building the right relationships with the right customers
A company can classify customers according to their potential
profitability. High
Butterflies: Potentially profitable, not loyal.
Potential profitabliity
True
True friends: Profitable, loyal. Butterflies
friends
Strangers: Low potential profitability, little projected loyalty.
Barnacles: Highly loyal, not profitable.
Strangers Barnacles
Low
, Short-term Long-term
Chapter 2 Company and Marketing
Strategy – Partnering to build customer Relationships
Company-wide strategic planning: Defining marketing’s role
Strategic planning The process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing opportunities. Strategic planning
focuses on finding the game plan for long-run survival and growth that makes the most sense given
its specific situation, opportunities, objectives, and resources.
The marketing strategy must always fit with the strategy on a corporate level.
Business unit,
Steps in Strategic planning: product, and market
level
Corporate level
Planning
Setting
Defining the Designing the marketing
company
company business and other
objectives
mission portfolio functional
and goals
strategies
Value: What do we stand for? Ethics, principles, beliefs. Values
Vision: Where are we going? What do we want to
achieve? Hope, ambition Vision
Mission: What do we do? Who do we do it for?
Motivation, purpose
Mission
Strategic objectives: How are we going to progress? Plan,
goals, sequencing
Strategic Objectives
Actions & KPI’s: What do we have to do? How do we
Actions & KPI's
know? Actions, owners, timeframes, resources,
outcomes.
Mission statement A statement of the organization’s purpose – what it wants to accomplish in the
larger environment. It guides people in the organizations.
Mission statements should:
Be market oriented
Be defined in terms of satisfying basic customer needs
Be meaningful and specific yet motivating
Emphasize the company’s strengths in the marketplace
NOT be stated as making more sales or profits
