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MGMA01H3 (200)
Chapter 1

Chapter 1 Notes


Department
Management (MGM)
Course Code
MGMA01H3
Professor
Alison Jing Xu
Chapter
1

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Chapter 1 Marketing: Creating and Capturing Customer Value Notes
What is Marketing?
marketing is managing profitable customer relationships
goal is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction
sound marketing is critical to the success of every organization
Marketing Defined
today, marketing must be understood not in the old sense of making a sale—“telling and selling”—but in the new sense of
satisfying customer needs in a socially responsible and ethical manner
if the marketer understands consumer needs; develops products that provide superior customer value; and prices, distributes, and
promotes them effectively and ethically, these products will sell easily
marketing marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large
stakeholder groups include employees, unions, customers, members of the distribution channel, competitors, activists,
government, and the press; thus, broadly defined, marketing is a social and managerial process by which individuals and groups
obtain what they need and want through creating and exchanging value with others
The Marketing Process
in the first 4 steps, companies work to understand consumers, create customer value, and build strong customer relationships
in the final step, companies reap the rewards of creating superior customer value
by creating value for consumers, companies capture value in return in the form of sales, profit, and long-term customer equity
Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands
the most basic concept underlying marketing is that of human needs
needs states of felt deprivation; they include basic physical needs for food, clothing, warmth, and safety; social needs for
belonging and affection; and individual needs for knowledge and self-expression
wants the form human needs take as shaped by culture and individual personality
wants are shaped by one’s society as well as by marketing programs and are described in terms of objects that will satisfy needs
demands human wants that are backed by buying power
given their wants and resources, people demand products with benefits that add up to the most value and satisfaction
Market OfferingsProducts, Services and Experiences
market offerings some combination of products, services, info, or experiences offered to a market to satisfy a need or want
more broadly, market offerings also include other entities, such as people, places, organizations, information, and ideas
marketing myopia the mistake of paying more attention to the specific products a company offers than to the benefits and
experiences produced by these products; they focus only on existing wants and lose sight of underlying customer needs
Customer Value and Satisfaction
customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly
satisfied customers buy again and tell others about their good experiences
dissatisfied customers often switch to competitors and disparage the product to others
customer value and customer satisfaction are key building blocks for developing and managing customer relationships
Exchanges and Relationships
marketing occurs when people decide to satisfy needs and wants through exchange relationships
exchange the act of obtaining a desired object from someone by offering something in return
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marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a
product, service, idea, or other object; as the goal is to retain customers and grow their business with the company
Markets
market the set of all actual and potential buyers of a product or service
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; however, creating them takes work
Designing a Customer-Driven Marketing Strategy
marketing management the art and science of choosing target markets and building profitable relationships with them
manager’s aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior customer value
Selecting Customers to Serve
the company decides who it will serve by dividing the market into segments of customers (market segmentation) and selecting
which segments it will go after (target marketing) as managers cannot serve all customers in every way
marketing managers must decide which customers they want to target and on the level, timing, and nature of their demand
Choosing a Value Proposition
company must also decide how it will serve targeted customers—how it will differentiate and position itself in the marketplace
a company’s value position is the set of benefits or values it promises to deliver to consumers to satisfy their needs
Marketing Management Orientations
The Production Concept
production concept the idea that consumers will favour products that are available and highly affordable and that the
organization should therefore focus on improving production and distribution efficiency
however, although useful in some situations, the production concept can lead to marketing myopia
companies adopting this orientation run a major risk of focusing too narrowly on their own operations and losing sight of the real
objective—satisfying customer needs and building customer relationships
The Product Concept
product concept the idea that consumers will favour products that offer the most quality, performance, and features and that
the organization should therefore devote its energy to making continuous product improvements
product quality and improvement are important parts of most marketing strategies
however, focusing only on the company’s products can also lead to marketing myopia
The Selling Concept
selling concept consumers will not buy enough of the products unless it undertakes a large-scale selling and promotion effort
the selling concept is typically practised with unsought goods—those that buyers do not normally think of buying, like insurance,
or things they don’t normally think of doing, like giving blood
The Marketing Concept
marketing concept the marketing management philosophy that achieving organizational goals depends on knowing the needs
and wants of target markets and delivering the desired satisfactions better than competitors do
the job is not to find the right customers for your product, but to find the right products for your customers
implementing the marketing concept often means more than simply responding to customers’ stated desires and obvious needs
customer-driven companies research current customers deeply to learn about their desires, gather new product and service ideas,
and test proposed product improvements; which works well when a clear need exists and when customers know what they want
The Societal Marketing Concept
societal marketing concept the idea that a company’s marketing decisions should consider consumers’ wants, the company’s
requirements, consumers’ long-run interests, and society’s long-run interests
firms should balance 3 considerations in setting their marketing strategies: company profits, consumer wants, society’s interests
Preparing an Integrated Marketing Plan and Program
company’s marketing strategy outlines which customers the company will serve and how it will create value for these customers
next, the marketer develops an integrated marketing program that will actually deliver the intended value to target customers
the marketing program builds customer relationships by transforming the marketing strategy into action
major marketing mix tool are classified into 4 broad groups, called the 4 Ps of marketing: product, price, place, and promotion
to deliver on its value proposition, the firm must first create a need-satisfying market offering (product)
it must decide how much it will charge (price) and how it make it available to target consumers (place)
finally, it must communicate with target customers about it and persuade them of its merits (promotion)
Building Customer Relationships
first 3 steps in marketing process—understanding marketplace & customer needs, designing customer-driven marketing strategy,
and constructing marketing programs—all lead up to fourth and most important step: building profitable customer relationships
Customer Relationship Management
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