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Chapter 1

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Department
Commerce
Course
COMM 131
Professor
Ethan Pancer
Semester
Winter

Description
Chapter 1: Creating and Capturing Customer Value What is Marketing?  Marketing is managing profitable customer relationships  The twin goal of marketing is to attract new customers by promising superior value, and to keep and grow current customers by delivering satisfaction  There are new marketing approaches, such as using cell phone ads, social networking, etc., that allow firms to reach customers directly and personally o Today’s marketers want to become a part of your life and to enrich your experiences with their brands – want you to live their brands Marketing Defined  Marketing: The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return  Although people think of selling as advertising when they think of marketing, it is really only a small part of the entire marketing task  We must now think of marketing as satisfying consumer needs o If the marketer understands these needs, develops a product that provides superior customer value and prices, distributes, and promotes them effectively, it will sell  Marketing is a social and managerial process by which individuals and orgs obtain what they need and want through creating and exchanging value - building relationships The Marketing Process Expanded on page 32, Figure 1.6 Understand the Design a Construct an Build Capture value marketplace customer- intergrated profitable from customers and customer driven marketing relationships to create profits needs and marketing program that and create and customer wants strategy delivers customer equity superior value delight Create value for customers and build customer relationships Capture value from customers in return Understanding the Marketplace and Customer Needs  There are five core customer and marketplace concepts o Needs, Wants, and Demands o Market Offerings (product, services, and experiences) o Value and Satisfaction o Exchanges and relationships o Markets Customer Needs, Wants, and Demands  The most basic concept underlying marketing is that of human needs  which are states of deprivation – these needs are a basic part of the human make-up o Physical Needs for food, clothing, warmth, and safety o Social Needs for belonging and affection o Individual Needs for knowledge and self-expression  Wants are the form human needs take as they are shaped by culture and individual personality – they are shaped by one’ society as well as by marketing programs o They are described in terms of objects that will satisfy needs and when backed by buying power, these wants become demands Market Offerings – Products, Services, and Experiences  Consumer needs and wants are fulfilled by market offerings – some combination of products, services, information or experiences offered to a market to satisfy a need/want  Market offerings are not limited to physical products, it also includes services, persons, places, organizations, information, and ideas  Marketing Myopia is the mistake of paying more attention the specific products a company offers than to the benefits and experiences produced by these products o They are so focused on the product that they lose sight of consumer needs  Smart marketers look beyond the attributes of the p/s and try to create brand experiences for the consumers Customer Value and Satisfaction  There are many p/s for customers to choose from – but how to choose? o Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly – satisfied ppl = buy again + referrals  Marketers must be careful to set the right level of customer expectations o To low, they will have high satisfaction but not attract many buyers o To high, the buyers will be disappointed  Customer value and satisfaction are the key building blocks for developing and managing customer relationships Exchanges and Relationships  Marketing occurs when ppl decide to satisfy needs/wants through exchange relationships  Exchange is the act of obtaining a desired object from someone by offering them something of value in return  buy this product, vote for me, etc.  Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object  Beyond simply attracting new customers and creating transactions, the company wants to retain customers and grow its business  Want to build strong customer relationships by consistently delivering superior value Markets  A market is a set of all actual potential buyers of a product that share a particular need or want that can be satisfied through exchange relationships  Marketing means managing markets to bring about profitable customer relationships  These relationships take a lot of work to create o Sellers must search for buyers, identify their needs, design good market offerings, set prices for them, promote them, and store and deliver them  Consumers also do marketing when they search for products and interact with companies and obtain information and make their purchases o It is even more interactive today with all the digital advancements  Thus, marketers must also deal effectively with customer-managed relationships o Now ask “How can customers reach us?” not “How can we reach our customers?” Main Elements of the Marketing System  Company & competitors research market & interact w. customers to understand needs  Then they create and send their marketing offerings and messages to consumers, either directly or through marketing intermediaries  All parties in the system are affected by major environmental forces (demographic, economic, physical, technological, political/legal, and social/cultural)  Each party (Suppliers, company, competitors, intermediaries) in system add value  A company’s success at building profitable relationships depends not only on its own actions, but also on how well the entire system serves the needs of final consumers o Ex. Cannot promise low price unless suppliers provide merchandise at a low cost Designing a Customer Driven Marketing Strategy  Once they fully understand consumers and the marketplace, marketing mgmt. can design a customer driven marketing strategy  Marketing Management: Choosing target markets & building profitable relationships o Want to find, attract, keep, and grow target customers by creating, delivering, and communicating superior customer value  To create a good marketing strategy, marketers must answer two questions o What customers will we serve? And how will we serve these customers best? Selecting Customers to Serve  The company does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing)  Marketing managers know that they cannot serve every single person with one product so instead they select the customers that it can serve well and profitably o They must decide which customers to target and on the level, timing, and nature of their demand – or customer management and demand management 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 – these differentiate one brand from another  Companies must design strong value propositions that give them the greatest advantage in their target markets Marketing Management Orientations  Marketing mgmt. wants to design strategies that will build profitable relationships with target customers – what philosophy should guide these marketing strategies, what weight should be given to the interests of customers, the org, and society  these often conflict  There are five alternative concepts under which orgs design and carry out their marketing strategies: the production, product, selling, marketing and societal marketing concepts The Production Concept  The idea that consumers will favour products that are available and highly affordable and that the org should therefore focus on improving production and distribution efficiency  However, companies that adopt this concept can lead themselves into marketing myopia and may run the risk of too narrowly focussing on their objectives & not consumer needs The Product Concept  The idea that consumers favour products that offer the most quality, performance, and features & the org should devote its energy to making continuous product improvements  Product quality and improvement are important parts of most marketing strategies o But focusing only on the company’s products can lead to marketing myopia – customers may want a better solution, not a better product The Selling Concept  The idea that customers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort  This is typically practiced with unsought goods – those you normally don’t think of buying
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