Textbook Notes (280,000)
CA (160,000)
UTSC (20,000)
MGM (200)
MGMA01H3 (200)
Chapter 1

Week 1 - Chapter 1


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

This preview shows pages 1-2. to view the full 8 pages of the document.
1 | Page/MGTB0 4 We e k 1
- 3URFWRU*DPEOH¶V7LGHPDUNHWLQJVWUDWHJ\LVWU\LQJWRQRWRQO\VHOOGHWHUJHQWEXWDOVR
building a relationship with customers
What is Marketing?
- Marketing is managing profitable customer relationships
- Twofold goal of marketing is to attract new customers by promising superior value and to
keep and grow current customers by delivering satisfaction
- Highly successful companies (e.g. Wal-Mart, Disney, Apple) understand that if they take
care of their customers, market share and profits will follow
- Marketing is all around you and they can come in traditional forms (e.g. TV
advertisements) or through internet chat rooms, social networks and cellphones
Marketing Defined
- 0DUNHWLQJVKRXOGQRWEHXQGHUVWRRGDV³WHOOLQJDQGVHOOLQJ´EXWUDWKHUVDWLVI\LQJ
customer needs in a socially responsible and ethical manner
- 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
- )RFXVRIPDUNHWLQJLVRQFXVWRPHUVDVZHOODVWKHILUP¶VVWDNHKROGHU¶VHJHPSOR\HHV
government, activists, and competitors) who are affected by DILUP¶VPDUNHWLQJGHFLVLRQV
The Marketing Process
- The first four steps of the marketing process deal with companies working to understand
consumers, creating customer value, and building strong customer relationships
- The final step is when companies create value for consumers and in turn, companies
capture value from consumers in forms of profits, sales, and long-term customer equity
Step 1: Understanding the Marketplace and Customer Needs
- Marketers need to understand customer needs and wants and the marketplace
Customer Needs, Wants, and Demands
- Basic concept underlying marketing are human needs which are states of felt deprivation
- Include basic physical needs for food, clothing, and safety; social needs for belonging
and affection; and individual needs for knowledge and self-expression
- Wants are the form human needs take as they are shaped by culture and individual
personality (objects that will satisfy needs)
o E.g. needs = food; wants = breakfast sandwich
- Demands are human wants that are backed by buying power (wants & resources)
- Outstanding marketing companies go to great lengths to learn about and understand their
FXVWRPHUV¶QHHGVZDQWVDQGGHPDQGVHJVSHQGVWLPHZLWKFRQVXPHUVLQWKHLUKRPHV
Market Offerings ± Products, Services, and Experiences
- &RQVXPHUV¶QHHGVDQGZDQWVDUHIXOILOOHGWKURXJKmarket offerings which are some
combination of products, services, information, or experiences offered to a market to
VDWLVI\DQHHGRUZDQWGRHVQ¶WKDYHWREHDSK\VLFDOSURGXFWFDQEHDVHUYLFHHJbank)
- Marketing myopia LVDVHOOHVPLVWDNHRISD\LQJPRUHDWWHQWLRQWRWKHVSHFLILFSURGXFWV
a company offers than to the benefits and experiences produced by these products (sellers
forget that a product is only a tool to solve a consumer problem)
Chapter 1 ± Marketing: Creating and Capturing Customer Value (pg. 4 ± 31)
www.notesolution.com

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

2 | Page/MGTB0 4 We e k 1
o E.g. a manufacturer of drills may think that the customer needs a drill but what
the customer really need is a hole. When a new product comes out that serves the
FXVWRPHVQHHGEHWWHURUOHVVH[SHQVLYHO\WKHPDQXIDFWXUHUPD\EHLQWURXEOH
Customer Value and Satisfaction
- Customers choose among many market offerings by forming expectations about the value
and satisfaction that various market offerings deliver and buy according
- Satisfied customers buy again and tell others about their good experiences and
dissatisfied customers switch to competitors and criticize the product to others
- Marketers must set the right level of expectations:
o If too high: buyers will be disappointed
o If too low: will satisfy those who buy but fail to attract enough buyers
Exchanges and Relationships
- Marketing occurs when people decide to satisfy needs and wants through exchange
relationships which is the act of obtaining a desired object from someone by offering
something in return
o E.g. a political candidate wants votes, a church wants membership
- Marketing consists of actions taken to build and maintain desirable exchange
relationships with target audiences involving a product, service, idea, or other object
Markets
- A market is the set of actual and potential buyers of a product who share a particular
need or want which can be satisfied through exchange relationships
- Managing markets takes work as sellers must search for buyers, identify their needs,
design good market offerings, set prices for these offerings, promote them, and store and
deliver them (consumer research, product development, communication, distribution,
pricing, and service are core marketing activities)
- We normally think of marketing being carried out by sellers but buyers also carry on
marketing when consumers search for products and interact with companies
- The marketing system:
o Company and competitors research the market and interact with consumers to
understand their needs, then send their market offerings & messages to consumers
o All parties in the system are affected by major environmental forces (e.g.
demographic, economic, physical, technological, political/legal, & social/cultural)
- &RPSDQ\¶VVXFFHVVDWEXLOGLQJSURILWDEOHUHODWLRQVKLSVGHSHQGVQRWRQO\RQWKHLURZQ
actions but also on how well the entire system serves the needs of final consumers
o E.g. Wal-Mart cannot offer low prices unless its suppliers provide it at low cost
Step 2: Designing a Customer-Driven Marketing Strategy
- Marketing management is the art and science of choosing target markets and building
profitable relationships with them
- 0DUNHWLQJPDQDJHVDLPLVWRILQGDWWUDFWNHHSDQGJURZWDUJHWFXVWRPHUVE\FUHDWLQJ
delivering, and communicating superior customer value
- To develop a winning marketing strategy, marketing management must ask:
o What FXVWRPHUVZLOOZHVHUYHZKDW¶VRXUWDUJHWPDUNHW"
o +RZFDQZHVHUYHWKHVHFXVWRPHUVEHVWZKDW¶VRXUYDOXHSURSRVLWLRQ"
Selecting Customers to Serve
- Companies select who it will serve by dividing the market (market segmentation)
- Then they go after a select segment (target marketing)
www.notesolution.com
You're Reading a Preview

Unlock to view full version

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

3 | Page/MGTB0 4 We e k 1
- Marketing management does not find as many customers as possible since by trying to
serve all customers, they may not serve any customers well
o E.g. Holt Renfrew and Harry Rosen profitability target affluent professionals
- Some marketers may seek fewer customers and demand by practising demarketing which
tries to reduce the number of customers or temporarily/permanently shift their demand
o E.g. BC Hydro launched a campaign to get BC to reduce their power usage
- Marketing is customer management and demand management
Choosing a Value Proposition
- $FRPSDQ\¶Vvalue proposition is the set of benefits or values it promises to deliver to
consumers to satisfy their needs (needed to differentiate and position itself in the market)
o E.g. %0:SURPLVHV³WKHXOWLPDWHGULYLQJPDFKLQ
- 6KRXOGDQVZHUFXVWRPHVTXHVWLRQRIZK\WKH\VKRXOGEX\\RXUEUDQGRYHUDQRWKHU
Marketing Management Orientations
- Five concepts which organizations design and carry out their marketing strategies:
- The Production Concept
o The production concept holds that consumers will favour products that are
available and highly affordable therefore management should focus on improving
production and distribution efficiency
o Companies cannot focus too narrowly in the event of marketing myopia
- The Product Concept
o The product concept holds that consumers will favour products that offer the
most in quality, performance, and innovative features so marketing strategy
should focus on making continuous product improvements
o If focusing RQO\RQWKHFRPSDQ\¶VSURGXFWVDQGQRWFRQVLGHULQJRWKHUVROXWLRQVWR
customer needs, company may suffer from marketing myopia
- The Selling Concept (inside-out perspective)
o The selling concept holds that consuPHUVZLOOQRWEX\HQRXJKRIWKHILUP¶V
products unless it undertakes a large-scale selling and promotion effort
o Typically used on goods buyers do not normally think of buying (e.g. insurance)
and it focuses on creating sales rather than on building long-term relationships
o Aim is to sell what the company makes rather than making what the market wants
- The Marketing Concept (outside-in perspective)
o The marketing concept holds that achieving organizational goals depends on
knowing the needs and wants of target markets and delivering the desired
satisfactions better than competitors do
o Job is not to find the right customers for your product, but to find the right
SURGXFWVIRU\RXUFXVWRPHUV³VHQVHDQGUHVSRQG´UDWKHUWKDQ³PDNHDQGVHOO´
o Yields profits by creating lasting relationships with the right customers
o Customer-driven companies research consumers needs and wants as well as
leading them to possible needs before they know they have a need
- The Societal Marketing Concept
o The societal marketing concept FRQVLGHUFRQVXPHUV¶ZDQWVWKHFRPSDQ\V
requirements, FRQVXPHUDQGVRFLHW\¶VORQJ-run interest
E.g. the concept of a bottled water satisfies short-term consumer wants of
being convenient and tasty but has long-run societal issues
o Companies should balance three considerations in setting their marketing
strateJLHVFRPSDQ\SURILWVFRQVXPHUZDQWVDQGVRFLHW\VLQWHUHVWV
www.notesolution.com
You're Reading a Preview

Unlock to view full version