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Chapter 1

MGTB04 Chapter 1.doc


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

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MGTB04 Chapter 1
What is Marketing?
Deals with customers
Marketing is managing profitable customer relationships
Goal of marketing: attract new customers by promising superior value and to keep
and grow current customers by delivering satisfaction
Sound marketing critical to success of every organization
Marketing Defined
Satisfying customer needs in a socially responsible and ethical manner
Understand consumer needs, develop products that provide superior customer
value, prices, distributes and promotes effectively and ethically, products will sell
easily
Aim of marketing -> make selling unnecessary
Selling and advertising part of a larger marketing mix – set of marketing tools that
work together to satisfy customer needs and build lasting customer relationships
Marketing: 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.
Focus of marketing: customers and profitability, needs and rights of other groups
affected by marketing decisions – stakeholders
Marketing is 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
First four steps: companies work to understand consumers, create customer value,
build strong customer relationships
Final step: companies reap the rewards of creating superior customer value; create
value for customers, company capture value from consumers in form of sales,
profit, customer equity
FIGURE 1.1
Understanding the Marketplace and Customer Needs
Marketers need to understand customer needs and wants and marketplace within
which they operate
Customer Needs, Wants and Demands
Needs: states of felt deprivation; basic physical needs for food, clothing, warmth
and safety; social needs for belonging and affection; individual needs for
knowledge and self-expression
Wants: the form human needs take as shaped by culture and individual
personality

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Demands: human wants that are backed by buying power; given their wants and
resources, people demand products with benefits that add up to most value and
satisfaction
Conduct consumer research, analyze mountains of customer data
Market Offerings – Products, Services and Experiences
Market Offerings: some combination of products, services, information or
experiences offered to a market to satisfy a need or want
Sellers make mistake of paying attention to specific products they offer than
benefits and experiences produced by products
Marketing myopia: The mistake of paying more attention to specific products a
company offers than to the benefits and experiences produced by these products
oLose sight of underlying customer needs; focus on existing wants
Consumer have same need but want new product that serves needs better or
cheaper
Brand experiences
Customer Value and Satisfaction
Customers form expectations that various market offerings will deliver and buy
accordingly
Satisfied customers buy again-> tell others
Dissatisfied customers switch to competitors-> tell others
Marketers expectations too low-> satisfy those who buy but fail to attract buyers
Expectations too high-> buyers disappointed
Exchanges and Relationships
Marketing occurs when people decide to satisfy needs and wants through
exchange relationships
Exchange: act of obtaining a desired object from someone by offering something
in return
Marketer tries to bring response to market offering
Marketing=actions taken to build and maintain exchange relationships with target
audience
Goal: retain customers and grow their business with company
Deliver superior customer value
Markets
Market: The set of all actual and potential buyers of a product or service
Buyers share particular need or want
Manage markets to bring profitable customer relationships
Search for buyers-> identify needs-> design good market offerings -> set prices
for offerings-> promote->store and deliver
Consumers do marketing when searching for products and interacting with
companies to get info and make purchases
Serving a market of final consumers in face of competitors

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Company and competitors research market + interact with consumers-> create and
send marketing offerings and messages to consumers
Affected by demographic, economic, physical, technological, political/legal and
social/cultural
Party in system adds value for next level; represent relationships that must be
developed and managed
Company success at building relationship depends on own actions and how well
entire system serves needs of final consumers
Designing a Customer-Driven Marketing Strategy
Marketing management: art and science of choosing target markets and building
profitable relationships with them.
Marketing manager aim to find, attract, keep and grow target customers by
creating, delivering and communicating superior customer value
What customers we will serve?
How can we serve these customers best?
Selecting Customers to serve
Market segmentation -> divide market into segments of customers
Target market-> which segments it will go after
Marketing managers know they cannot serve all customers in every way
Some marketers seek fewer customers and reduced demand; demarketing to
reduce # of customers
Decide customers to target, the level, timing, nature of their demand
Choosing a Value Proposition
How it will serve targeted customers; differentiate and position itself in the
market place
Value proposition: set of benefits or values it promises to deliver to consumers to
satisfy their needs
Answer customer question: why buy your brand than competitors
Marketing Management Orientations
Design strategies to build profitable relationships with target consumers
The Production concept: 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
oLead to marketing myopia; focus too much on own operations; lose sight
of satisfying customer needs and building relationships
The Product Concept: 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
oCan lead to marketing myopia; looking for better solution, not better
product
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