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Chapter 1

Chapter 1 - Create and Deliver Value.docx

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Department
Business Administration
Course
BUS 343
Professor
Jason Ho
Semester
Fall

Description
Marketing – Chapter 1: Create and Deliver Value 1. Welcome to Brand You What Marketing Is and How Value Creation Is Central to the Marketing Concept • Customers look at value over the life of the product – from when they start looking for it, to when they have finished using it and have had it disposed of. • I have “market value” as a person – qualities that set you apart from others and abilities other people want and need. What Is Marketing? • The official definition of marketing was adopted in 2007 by the American Marketing Association. Focus on Value Creation • The basic idea of marketing is that marketing is all about creating and delivering value and doing this for all parties involved in an exchange. • Another way of defining marketing is that marketing is the process of achieving individual and organizational objectives by creating superior customer value for one or more target markets with a sustainable strategy. - Superior customer value = offers that are perceived as being more valuable to customers than any other solutions, or even more valuable than the money in their wallet. - Sustainable strategy = make a set of decisions that will allow the company to compete effectively until the objectives have been achieved, which is a long-term perspective. • Marketers need to regularly conduct research to keep up with changing consumer perspectives and preferences, figure out how much value to offer to the customer and how much value to keep in their company. Marketing is About Creating Customer Value • One important part of marketing is that it is about creating value for diverse stakeholders. - Any person or organization that has a “stake” in the outcome of an economic exchange. - One important stakeholder is the consumer. o The ultimate user of a good or service. • Similar to 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. • Needs are related to physical conditions and the specific way a need is satisfied depends on an individual’s history, learning experiences and cultural environment. - Example of a need: Two classmates’ stomachs rumble during a noon-hour class and both need food. - Example of a want: One person craves a salad or a bag of trail mix to go while the other buys a cheeseburger and fries. • The challenge of marketing 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 competitor’s product. Marketing and Exchange Relationships • At the heart of every marketing act, big or small, is an “exchange relationship.” - 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. • Firms now regard consumers as partners in the transaction rather than as passive “victims” and recognize that it is more expensive to attract new customers than it is to retain current ones. - In the long run, firms may decide to “fire” customers whose life-time value is negative. What Can We Market? • Marketing’s influence extends from “serious” goods to “fun” things. • Products do not always take a physical form. Consumer Goods and Services • Marketers influence what is popular but products and the communication of those products also reflect the key social beliefs and values of the times. Business-to Business Goods and Services • Business-to-business marketing is the marketing of goods and services from one organization to another. - Example of industrial goods: Automakers buy tons of steel to use in the manufacturing process and they buy computer systems to track manufacturing costs and other information essential to operations. - Just like in the off-line world, much of the real online action is in the area of business- to-business marketing. Not-for-Profit Marketing • Example of not-for-profit organizations: Museums, zoos and churches. Idea, Place and People Marketing • Marketing principles also encourage people to endorse ideas or change their behaviours in positive ways. • In addition to ideas, places and people are also marketable. 2. Marketing as a Decision-Making Process • Marketing is fundamentally a decision-making process that allows individuals and organizations to achieve objectives by creating value that satisfies stakeholder needs and wants. • The decision-making process: - (1) Understand the opportunity. - (2) Marketing strategy: specify the value. - (3) Marketing mix: create the value. - (4) Implementation and evaluation: realize the value. o These decisions are usually summarized and justified in a marketing plan which describes the marketing environment, outlines the marketing objectives and strategy and identifies who will be responsible for carrying out each part of the marketing strategy. Understand the Opportunity • Situational analysis involves identifying opportunities to create value for the organization by creating value for customers: - First, understand factors relating to markets in which an organization competes, such as understanding general trends in the market, consumer or organizational buying behaviour, industry dynamics and the strategies and likely reactions of competitors. - Second, marketing decision makers need to assess factors relating to their own organization and their ability to create value and compete effectively in those markets. Marketing Strategy: Specify the Value • Strategy is the set of decisions that explain what an organization is going to do in order to achieve its objectives. - Strategy = why the strategies will be implemented. - Tactic = how the strategies will be implemented. Segmentation • The challenge for marketers is to identify groups with real differences in underlying needs, wants, preferences, value sought and behaviour so products can be designed to uniquely appeal to a particular group. Targeting • Marketers need to decide how many market segments to focus on when creating their products. - The decision is made by evaluating each of the segments in terms of profitability potential against a number of factors. • A mass marketing strategy is not tenable in the long run. - Usually, competitors of mass marketers, bring alternative products to market that have greater appeal to a subset of the people in the mass market, eroding the market share of the mass market product. • Modern marketers are busy meeting the needs of people all around the world, especially when the demand for products at home flattens. Positioning the Offering • Positioning involves specifying a competitive advantage that enables an offering to be differentiated from others in the marketplace. - (1) For the organization to identify what it does really well. - (2) Turn a distinctive competency into a differential benefit. o Effective product benefits must be both different from the competition and things that customers want. - (3) Develop a brand personality. Marketing Mix: Create the Value • Once the desired positioning is established, marketers need to create the value proposition reflected in the offer. • Marketing mix decisions = product, price, promotion and place. - The bundle of marketing mix elements represents an offer of value to the consumer. - Some marketers consider “people” or relationships, as a distinct consideration. Product • The product is a good, service, idea, place, person – whatever is offered for exchange. - Product strategy decisions begin with objectives. - Next, marketers make decisions about the products they are going to offer their customer. o These decisions include how many versions of a product they will offer. o Product decisions include what level of service will be provided and branding strategy. o Finally, product decisions include packaging and labelling decisions. Price • The price is an agreement between a buyer and seller on a product’s economic value. - Pricing strategy decisions start with pricing objectives. o Different pricing objectives suggest different pricing policies. o Marketers also have to come up with the actual price. o Price point decisions need to take into consideration the cost of creating and delivering the product, competitors’ prices and what the customer is willing to pay, among other factors. o Finally, marketers need to decide on pricing terms and conditions. Distribution • Channels of distribution involve firms that work together to get a product from a producer to a consumer. - Distribution decisions begin with specifying the distribution objectives. o To achieve these distribution objectives, marketers decide o
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