BUS 343 Chapter Notes - Chapter 1: American Marketing Association, Customer Relationship Management, Value Proposition

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Published on 25 May 2011
School
Simon Fraser University
Department
Business Administration
Course
BUS 343
Professor
Chapter 1:What is Marketing?
Welcome to a Branded World
Welcome to Branded You
Value the benefits a customer receives from buying and using a good or service in
relation to the costs and sacrifices of buying and using it
Marketing is a fundamental part of our lives both as consumers and as business people
The Who and Where of Marketing
Marketing principles are used to get people to endorse ideas or to change their
behaviours in positive ways
What is Marketing?
Definition by American Marketing Association (AMA)
oMarketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders
Focus on Value Creation
Marketing is all about creating and delivering value, and doing this for all parties involved
in an exchange
Another definition of marketing
oMarketing is the process of achieving and organizational objectives by creating
superior customer value for one or more target markets with a sustainable
strategy
Achieve objectives by creating offers that are perceived as being more valuable to
customers than any other solutions (competing brands)
Customer value what the customer gets in the purchase, use, and ownership of a
product relative to the costs and sacrifices incurred
To create a transaction or an economic exchange value, both parties need to believe that
the exchange is fair
The challenge to the marketer is to create, price, distribute, and communicate an
attractive value proposition to the customer to get the most value in return
Alternative definition focuses on the idea of creating value for specific target markets,
groups of people that have different needs, wants, or preferences from other groups of
people and would seek a different value proposition
Develop sustainable strategy, a set of decisions that will allow us to compete effectively
until our objectives have been achieved
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Marketing is About Creating Customer Value
Important definition of marketing is that it is about creating value for diverse stakeholders
Stakeholders people or organizations who influence or are influenced by marketing
decisions
Any person or organization that has a stake in the outcome of an economic exchange
oExchange the process by which some transfer of value occurs between a
buyer and a seller
Consumer the ultimate user of a good or service
Consumers can be individuals or organizations; however it is not enough to just satisfy
customers but to satisfy all parties
Seller needs to make a profit to stay in business to be able to continue offering the goods
and services valued by the customer
Marketing Concept a business orientation that focuses on achieving organizational
objectives by understanding customer needs, and creating and delivering values in
exchange that satisfy the needs of all parties
oSuggests that organizational objectives such as long-term profitability are best
met by first understanding what customers need (value sought) and then
determining the associated costs of satisfying those needs (creating and
delivering that value) thus creating exchanges of mutual satisfaction
oCentral to the philosophy reflect in the marketing concept is an understanding
that organizations exist to create value for consumers where it is neither efficient
nor effective for consumers to attempt to satisfy their needs themselves
Need the recognition of any difference between a consumers actual state and some
ideal or desired state
oNeeds are related to physical conditions and the psychological conditions
oSpecific way a need is satisfied depends on an individuals history, learning
experiences, and cultural environment
Want the desire to satisfy needs in specific ways that are culturally and socially
influenced
oHow each of them satisfies this need may be quite different
Benefit the outcome sought by a customer that motivates buying behaviour (that
satisfies a need or want)
oMarketers must develop products that provide one or more benefits
oChallenge is to identify what benefits people look for, develop a product that
delivers those benefits, and then convince buyers that it does so better than a
competitors product
If succeed in creating a product that meets the needs of the customer, he or she will
happily buy it without any persuasion from a sales person
Salesperson may still be required to make the customer aware of the product and its
relative merits in meeting the customers need
Customers care most about benefits and typically less about the particular features or
functions that deliver those benefits
Demand customers desire for products coupled with the resources to obtain them
oA market consist of all the consumers who have the same demand
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Marketplace any location or medium used to conduct an exchange
Successful firms realize that the basic marketing concept applies to all aspects of the
firms activities
Trend toward integrating marketing with other business functions instead of setting it
apart as a separate function
Marketing is About Exchange Relationships
Exchange relationship occurs when something is obtained for something else in return
Almost anything of value can be exchanged
For an exchange to occur, at least two people or organizations must be willing to make a
trade and each must have something the other wants
All exchanges involve marketing decisions to create the value being exchanged,
communicate the value proposition and facilitate the exchange relationship
Marketing as a Decision-Making Process
Marketing decision making involves a series of steps that entail both careful though
(planning) and action (executing)
Marketing is a strategic decision-making process in which marketing managers
determine the most appropriate set of decisions for a particular organization at a
particular time will help the organization meet its long-term objectives
Understanding the Opportunity
Marketing decisions start with understanding the situation, or context, in which the
decision need to be made
Situational analysis involves identifying opportunities to create value for the organization
by creating value for customers
First involves understanding factors relating to the markets in which an organization
competes
Marketing decision makers need to assess factors relating to their own organization and
their ability to create value and compete effectively in those markets
oInternal factors include understanding the relative effectiveness of their current
market strategy, their resources, competencies, and expertise, and the values or
mission of the organization
Specify the Value: Marketing Strategy
Marketers make marketing strategy decision to achieve the objectives of their
organizations, include both financial (profit target) and marketing objectives (sales
targets or market share targets)
Organization develops a marketing strategy aimed at achieving those objectives
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Document Summary

The who and where of marketing: marketing principles are used to get people to endorse ideas or to change their behaviours in positive ways. Distribution: place the availability of the product to the customer at the desired time and location. Implementation and evaluation: realize the value: before we can evaluate the relative merits of our proposed marketing decisions, we need to plan for their implementation. If decided to implement then next step is to execute, then measuring performance against the plan. Important trend right now is for companies to think of ways to design and manufacture products with a focus on environmental sustainability. To calculate life time value, companies estimate the amount the person will spend and then subtract what it will cost the company to maintain this relationship. A firm that delivers these desired benefits provides value to its customers and other stakeholders.