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Chapter 1

131 Chapter 1.docx

11 Pages
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Department
Commerce
Course Code
COMM 131
Professor
Jacob Brower

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WHAT IS MARKETING?  It deals with customers  It is managing profitable customer relationships  2 goals of marketing: o Attract new customers by promising superior value o Grow current customers by delivering satisfaction  Everyone uses marketing – including large companies and not for profit organizations MARKETING DEFINED  Marketing isn’t only selling and advertisements o This is only the tip of the iceberg  It is satisfying customer needs  If the marketer understands the customer, then they are able to develop products that provide superior customer value than the competition  The aim of marketing is to make selling unnecessary o You just have the build customer relationships and they will come to you on their own  It is a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others  Business context: marketing involves building profitable, value-laden exchange relationships with customers  HENCE, we define marketing a 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  In the first 4 steps, the company works to understand consumers, create customer value, and build strong relationships  In the final step, companies reap the rewards of creating this customer value  By creating value FOR consumers, they in turn capture value FROM consumers in the form of sales, profits, and long-term customer equity STEP 1: CUSTOMER NEEDS, WANTS, AND DEMANDS  The most basic concept underlying marketing is that of human needs  Human needs are state of felt deprivation. They include: o Basic physical needs for food, clothing, warmth, and safety o Social needs for belonging and affection o Individual needs for knowledge and self-expression o Note: these needs weren’t created by marketers; they are a basic part of the human makeup  Wants: the form human needs take as they are shaped by culture and individual personality o A person needs food, but wants a breakfast sandwich from Subway o Wants are shaped by one’s society as well as by marketing programs o They are described in terms of objects that will satisfy needs o When backed by buying power, they become demands  Given their wants and resources (money), people demand products with benefits that add up to the most value and satisfaction  Outstanding marketing companies: conduct consumer research and analyze large amounts of customer data o Their people at all levels stay close to customers STEP 2: MARKET OFFERINGS  Customers’ needs and wants are fulfilled through market offerings  Market offerings: some combination of products, services, information, or experiences offered to a market to satisfy a need or want  They are not limited to physical products  They also include services – actives or benefits offered for sale that are essentially intangible and do not result in the ownership of anything  Market offerings also include entities – such as persons, places, organizations, information and ideas  Many sellers make the mistake of paying more attention to the specific product they have to offer rather than focusing on the benefits and experiences produced by these products o These selling’s suffer from “marketing myopia” o They are so taken with their products that they focus only on existing wants and lose the sigh of underlying customer needs o They forget that a product is only a TOOL to solve a consumer problem o EX: a customer might want an inch drill BUT what they really want is an inch sized hole in their wall o These sellers will have a problem if a new product comes along that serves their need cheer and more easily  They customer will have the same need, but will want a different product  Smart marketers look beyond the attributes of the product  By showing how the product or service will benefit the customer, they create brand experience o EX: you don’t just watch a NASCAR race, you immerse yourself in the thrilling experience STEP 3: CUSTOMER VALUE AND SATISFACTION  Many products can satisfy a customer’s needs  So how do they choose which one to buy? o Customers form expectations about the value and satisfaction that various market offerings will deliver…and then they buy according to that o Dissatisfied customers often switch to competitors and tell others about bad product  Marketers need to be careful to set the right level of expectations o If they set expectations too low, they may satisfy those who buy, but fail to attract enough buyers o If expectations are too high, they will attract a lot of customers but won’t satisfy them  Customer value and satisfaction are key building blocked for developing managing customer relationship STEP 4: EXCHANES AND RELATIONSHIPS  Marketing occurs when people decide to satisfy needs and wants through exchange relationships  Exchange: is the act of obtaining a desired object from someone by offering something in return  The marketer tries to bring about a response to some market offering o The response may be more than simply buying or trading products o Ex: a political candidate may want votes – not necessarily a product  Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences o Beyond just attracting new customers, the company wants to retain customers and grow its business o Marketers want to build strong relationships by consistently delivering superior customer value MARKETS:  The concept of exchange and relationships lead to the concept of a market  Market: a set of all actual and potential buyers of a product o 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 o Making these relationships takes time o Sellers need to search for buyers, identify their needs, design good market offerings, set prices, promote them, store and deliver them  Core marketing activities: consumer research, product development, communication, distribution, pricing, and service  Buyers also market – they do marketing when they search for products and interact with companies to obtain information about products o Technology has now made marketing an interactive affair o It’s no longer “how should we reach customers”, the question is now “how can customers reason us”  These are the main elements of the marketing system  Marketing involves serving a market of final consumers in the face of competition  The company and competitors research the market and interact with consumers to understand needs  THEN, the create and send their market offering and messages to customers  All parties in the system are effected by major environment forces – demographic, economic, physical, technological, political/legal, and social/cultural  Each party in the system adds value for the next level  Arrows: represent relationships that must be developed and managed  THUS, a company’s success at building profitable relationships depends on its own actions AND on how well the entire system serves the needs to the final consumer CUSTOMER DRIVER MARKETING STRATEGY  Marketing management – the art and science of choosing target markets and building profitable relationships with them  The marketing manager’s aim is to find, attract, keep, and grow target customers o This can be done by creating, delivering, and communicating superior customer value  The marketing manager must answer 2 questions: o What customers will we serve (what is our target market) o How can we serve these customers best (what’s our value proposition) SELECTING CUSTOMERS TO SERVE  They have to decide who they will serve  Divide the market into segments – market segmentation o Then, select which segment you will target – target marketing  You can't serve every customer, so just focus on serving the targeted customers the best  Marketing management = customer management + demand management CHOOSING A VALUE PROPOSITION  How will the company target its customers?  How will they differentiate and position itself in the marketplace  Value prop = the set of benefits or values it promises to deliver to customers to satisfy needs o It answers the question: “why should I buy your brand instead of someone else’s” MARKETING MANAGEMENT ORIENTATION  Managers want to design strategies that will build profitable relationships with target customers  What philosophies guide these marketing strategies? o What weight should be given to the interests of customers, the organizations, and society?  There are 5 concepts under which originations design and carry out their marketing strategies: o Production, product, selling, marketing, and societal marketing 1. Production Concept  Hold that’s consumers will favour products that are available and highly affordable  You should just focus on improving production and distribution efficiency  One of the oldest guides  CONS: you can become too narrow and forget what customers actually want and how to build the relationship 2. Product concept  Consumers will favour products that offer the most quality, performance, innovative features  Just keep making your product better  If you focus only on the product, you can run into marketing myopia  EX: you can build the best mouse trap, BUT people aren't looking for a mouse trap, they are looking for a different way to get rid of mice  ALSO, the mouse trap won’t sell if there isn’t also good pricing, marketing and convenience 3. Selling concept  Says that consumers won’t buy enough of the firm’s product unless the company undertakes a large scale selling and promotion effort  It is typically practised with unsought goods – those that buyers do not normally think of buying, such as insurance or blood donations  These industries have to be good at tracking down prospects and selling them on the product benefits  Aggressive selling has high risks o It only focuses on making a transaction rather than building long-term relationships o The aim is to sell rather than meet the needs of consumers o It assumes that customers who are coaxed into buying will automatically like the product – NOT TRUE! 4. Marketing concept  Holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors  Customer focus and vale are the paths to sales and profits  Instead of a product-centred “make and sell” philosophy, the marketing concept is customer – centred “sense and respond” philosophy  The job isn’t to find the right customer for your product, BUT to find the right products for your customers  Selling concept vs. marketing concept  Selling: takes an inside-out approach o It starts with the factory, focuses on the company’s existing products, and calls for heavy selling and promotion to obtain sales o Focuses primarily on customer conquest – getting short-term sales with little concern about who buys or why  Marketing: takes an outside-in approach o Starts with well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers o Result: profits by creating lasting relationship with right customers based on customer value/satisfaction o This means more than simply responding to the customers’ stated desires and obvious needs o You need to research current customers deeply to learn about their desires, gather new product and service ideas 5. Societal marketing concept  Questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-term welfare.  Is a firm that satisfies the immediate needs and wants of target market always doing what’s best for consumers in the long-run?  This concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and societies well-being  It calls for “sustainable” marketing, socially and environmentally responsible that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs  Ex: water bottles offer convenient, tasty, healthy product o BUT the plastic isn’t the best way to go o In the long-run, it will harm society and the consumers using it  3 things should be balanced: company profits, consumer wants, AND society’s interests o EX: Johnson and Johnson do this well – they have a document called “Our Credo” that says they are sensitive to all these needs – if they didn’t follow this then their company would be put at a bad name because they committed to doing well PREPARING AN INTERATED MARKETING PLAN AND PROGRAM  The company’s marketing strategy outlines which customers to serve and how it will create value for them  Next, the market develops an integrated marketing program that will actually deliver the intended value to the customers  The marketing program builds customer relationships by transforming the marketing strategy into action  It consists of the firms marketing mix, the set of marketing tools the firm uses to implement its marketing strategy  Marketing mix = 4Ps o Product, price, place, promotion CUSTOMER RELATIONSHIP MANAGEMENT (CRM)  Th
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