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Chapter 1

COMM 131 Chapter Notes - Chapter 1: Market Segmentation, Marketing Mix, Longrun


Department
Commerce
Course Code
COMM 131
Professor
Ethan Pancer
Chapter
1

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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
Create value for customers and build customer relationships
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
Understand the
marketplace
and customer
needs and
wants
Design a
customer-
driven
marketing
strategy
Construct an
intergrated
marketing
program that
delivers
superior value
Build
profitable
relationships
and create
customer
delight
Capture value
from customers
to create profits
and customer
equity
Capture value from
customers in return

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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
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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
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