RSM250H1 Study Guide - Final Guide: Fixed Cost, Toothpaste, Brand Valuation

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Published on 27 Jan 2013
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RSM250 Marketing Exam Notes
CHAPTER 1
Marketing is managing profitable customer relationships
2-fold goal: attract new customers by promising superior value and to keep and grow current
customers by delivering satisfaction
Must take care of customer , market share, and profits will follow
Satisfying customer needs in a socially responsible and ethical manner
Peter Tucker ‘ aim of marketing is to make selling unnecessary’
o Selling and advertising only part of marketing mix
Marketing Mix = a set of tools used to satisfy customer needs and build lasting customer relationships
Marketing Process Diagram
Core Customer & Marketplace Concepts
1. Customer Needs, Wants & Demands
Needs = states of felt deprivation
Wants = form human needs take as shaped by culture and individual personality
Demands = human wants that are back by buying power
2. Market Offering = some combination of products, services, info, entities, places, organizations,
ideas or experience offered to a market to satisfy a need or want
Marketing Myopia = mistake of paying more attention to the specific products a
company offers than to the benefits and experience produced by these products
o Forget that product is only a tool to solve a consumer problem
3. Customer Value and Satisfaction
Customers from expectation about the value and satisfaction that various marketing
offerings will deliver and buy accordingly
Satisfied customer tell other and buy again
Dissatisfied customer switch to competitors
Must set the right expectations as value & customer satisfaction is key building block for
developing & managing relationships
4. Exchanges & Relationships
Exchange = the act of obtaining a desired object from someone by offering something in
return (this is the ‘response’ marketers are looking for with their target audience)
Understand
the market
place &
customer
needs and
wants
Design a
customer-
driven
market
strategy
Construct a
marketing
program that
delivers
superior
value
Build
profiatble
relationships
and create
customer
delight
Capture
value from
customers to
create profts
& customer
equity
Create value for customers &
build customer relationships
Capture value from
customers in return
-Needs
-Wants
-Demands
-Who will we
serve?
-How will we
be different?
-Price
-Product
-Place -
Promotion
-CRM
-Are we creating
value?
-Are our
customers
satisfied?
-Customer
lifetime value
-Share of
customers
-Customer
equity
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Goals: retain customers (maintain desirable exchange relationships), grow business,
attract new customers
5. Markets
Market = set of all actual and potential buyers of a product or service
Managing markets to bring profitable relationships
Seller search for buyers identify needs design good set price promote
store & deliver
Core marketing activities: consumer research, product development, communication,
distribution, pricing, service
Designing a Customer Driven Marketing Strategy
Market management = as the art and science of choosing target markets and building profitable
relationships with them => customer management and demand management
o Aims to find, attract, keep and grow target customers by creating, delivering, and
communication superior customer value
Must answer 2 questions: what customers will we serve? How can we serve these customers
best?
Selecting Customers to Serve
Use market segmentation, then selecting a target market
Some companies like electricity companies actually want to reduce the demand not increase it
Choosing a Value Proposition
Value proposition = is the set of benefits or values it promises to deliver to consumers to satisfy
their needs, these differentiate one brand from another
Market Management Orientations
Design strategies that will build profitable relationships
5 alternative concepts under which organizations design and carry out marketing strategies
1. The Production Concept = idea that consumers will favour products that are available
and highly affordable and that the organization should therefore focus on improving
production and distribution efficiency (oldest orientation that guides sellers)
Ex. Lenovo dominates Chinese market with low labour costs, high production
efficiency, mass distribution
Risk: focusing too narrowly on operations lose sign of real objectives -> satisfy
customer need & build customer relationships
2. The Product Concept = idea that consumers will favour products that offer the most
quality, performance, and features that the organization should therefore devote its
energy to making continuous product improvement
Risk: lead to marketing myopia, building a better product for a problem is not
always the ‘best’ solution to that problem (ex. Mouse trap)
Suppliers
Company
Competitors
Consumers
Major Environmental
Forces
Marketing System
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3. The Selling Concept = idea that consumers will not buy enough of the firm’s products
unless it undertakes a large-scale selling and promotions effort
For un-sought goods (things they don’t really think of, ex giving blood)
Risk: aggressive selling focuses on creating sales transactions rather than
building profitable relationships
Often selling what company makes rather than creating what consumers want
Assumes customers will eventually buy it
4. The Marketing Concept = marketing management philosophy that achieving
organizational goals depends on knowing the needs and wants of target market and
delivering the desired satisfactions better than competitors do
Uses concept that customer focus and value are the paths to sales and profits.
Customer centered “sense and respond”
Find right product of customer (not right customer for product)
Works well when clear need exists and customers know what they want
Selling Concept Vs. Marketing Concept
5. The Societal Marketing Concept = 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
Concept: marketing strategy should deliver value to customers in a way that
maintains or improves both the consumer’s and society’s well-being
Ex. Water bottles satisfy short-term consumer needs but bad for long-term
Need to balance 3 considerations: company profits, consumer wants, society
interest
Customer Relationships
3 marketing steps (understanding marketplace and customer needs, designing a customer-
driven marketing strategy, constructing marketing programs) lead to building profitable
customer relationships
Customer Relationship Management (CRM) = overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction
Deals with aspects of acquiring, keeping, growing customers
Building blocks:
1) Customer value
o Customer-Perceived Value = customer’s evaluation of the difference between all the
benefits and all the costs of a market offering relative to those of competing offers
Factor
Starting
Point
Existing
Products
Focus Selling &
promoting
Means
Profits
through
sales
volume
Ends
Market
Starting
Poing
Consumer
needs
Focus Intergrated
marketing
Means
Profits
through
Cusotmer
Statisfaction
Ends
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