Chapter 1- Marketing: Customer Value, Satisfaction,
Relationships, and Experiences Adam Sherman
Marketing is the activity for creating, communicating, delivering, and
exchanging offerings that benefit the organization, its stakeholders, and
society at large.
To serve both buyers and sellers, marketing seeks
to discover the needs and wants of prospective customers and,
to satisfy them
Requirements for Marketing to Occur
Two or more parties with unsatisfied needs
A desire and ability on their part to be satisfied
A way for the parties to communicate
Something to exchange
The Breadth and Depth of Marketing
What is a Market?
A market is people with the desire to buy a specific produce
Every organization markets! Firms, non-profit organizations, places,
What is Marketed?
Goods – physical objects
Services – activities, deeds or basic intangibles
Ideas – intangibles involving thoughts about actions or causes
Experiences – personal and memorable experiences
Social marketing is designed to influence the behaviour of individuals by
which benefits accrue to those individuals or to society in general and not to
the marketer .
Who Buys and Uses What is Marketed?
Both individuals and organizations buy and use services that are marketed.
Ultimate consumers are people who use goods and services purchased for
a household. Organizational buyers are units such as manufactures, retailers, or government agencies, that buy goods and services for their own
use or resale.
In our free-enterprise society, there are 3 types of benefactors from
Consumers – finds value from the best products, the lowest prices,
or exceptional service.
Organizations – prosperous business operations
Society – enhances competition, both in quality and better
Satisfying Consumer Needs
A company must concentrate its efforts on certain needs of a specific group
of potential consumers. This is the target market – one or more specific
groups of potential consumers toward which an organization directs its
The Four Ps: Controllable Marketing Mix Factors
Firms must develop a complete marketing program that creates,
communicates, and delivers value to a target market. This happens through
the use of four tools, first published by Professor E. Jerome McCarthy:
Product – a good, service, or idea to satisfy the consumer’s needs.
Price – What is exchanged for the product
Promotion – a means of communication between the seller and
Place – a means of getting the product into the consumer’s hands.
o This is known as the marketing mix.
The Uncontrollable, Environmental Forces
These are the environmental forces in a marketing decision, the
uncontrollable factors involving social, economic, technological, competitive,
and regulatory forces. These five forces serve as accelerators or brakes on
marketing, sometimes expanding an organization’s marketing opportunities
and other times restricting them. The Marketing Program
Concepts must be converted into a tangible marketing program – a plan
that integrates the marketing mix to provide a good, service, or idea to
Evolution of North American Businesses
Goods were scarce so buyers were willing to accept virtually any
goods that were produced and make do as best they could.
Firms discovered that they could produce more goods than their
regular buyers could consume. Competition grew. The usual
solution was to hire more salespeople to find new buyers. (circa
Marketing Concept Era
In the 1960’s marketing became the motivating force among many
firms. The marketing concept, is the idea that an organization
should strive to satisfy the needs of consumers, while also trying to
achieve the organization’s goals.
Marketing Orientation Era
Firms with a market orientation focus their efforts on
o Continuously collecting information about customers needs
and competitors capabilities
o Sharing this information throughout the organization
o Using the information to create value, ensure customer
satisfaction, and develop customer relationships.
Customer value is defined as the unique combination of benefits
received by the customer that include quality, price, convenience,
on-time delivery, and both before sale and after-sale service.
Customer satisfaction is the match between customer
expectation of the product and the product’s actual performance.
Organizations with a market orientation actually engage in
customer relationship management (CRM) – the process of
building and developing long term relationships with customers by
delivering customer value and satisfaction. Organizations engaging in CRM understand the importance of
lifetime value, not just single transactions. Customer lifetime
value (CLV) is the profit generated by the customer’s purchase of
an organization’s product or service of the customer’s lifetime.
CRM has been broadened to include eCRM – a web centric