Chapter 1.docx

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2320A/B
Professor
Gail Robertson
Semester
Summer

Description
Chapter 1: Marketing - Creating & Capturing Customer Value Marketing Defined:  managing and building profitable customer relationships by: o Promising superior value o Delivering satisfaction  Satisfying customer needs in a socially responsible and ethical manner  American Marketing Association: “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” o also needs to recognize the needs and rights of the firm’s stakeholders  a process by which companies create value for customers and build strong customer relationships to capture value from customer in return Marketing Process: Design a Understand the customer- Construct a Build profitable Capture value from marketplace and driven marketing relationships customers and customer needs program that and create create profits and and wants marketing delivers customer customer equity strategy superior value delight 1. UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS  Needs: states of felt deprivation which are basic parts of human makeup, not created by marketers o Physical – need for food, clothing, safety etc. o Social – need for belonging and affection o Individual – need for knowledge and self-expression  Wants: form that needs take when shaped by culture, society, marketing & individual personality o Described in terms of objects that will satisfy needs  Demands: human wants that are backed by buying power  Marketing Offerings: combination of o Products o Services o information o experiences o places o ideas o people o organizations Offered to a market to satisfy a need or want **services – activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything  Marketing Myopia: mistake of focusing only on existing wants and lose sight of underlying customer needs (i.e. Kodak)  Smart marketers create brand experiences for consumers (i.e. NASCAR) Customer Value and Satisfaction:  Customer value and customer satisfaction are key building blocks for developing and managing customer relationships  Companies must manage the right level of customer expectations on value and satisfaction: o Too low – satisfy those who buy but fail to attract new customers o Too high – buyers will be disappointed Exchange and Relationships:  Exchange: the act of obtaining a desired object from someone by offering something in return  A marketer’s goal is to: o retain customers and grow their business with the company o build strong exchange relationships by consistently delivering superior customer value Markets:  Market: set of actual and potential buyers of a product of service  Core marketing activities: o Consumer research o communication o pricing o Product development o distribution  Buyers also carry on marketing duties through searching for products, making purchases etc.  Marketers are increasingly focusing on the interaction between the brand and the customers  Main elements in a marketing system: o Marketing involves serving a market of final consumers in the face of competitors by  researching the market  interacting with consumers to understand their needs  creating & sending their market offering to consumers directly or through intermediaries o All parties in the system are affected by major environmental forces: demographic, economic, technological, political, social etc. o Each party in the system adds value for the next level o Arrows represent relationships that must be developed and managed o Company’s success at building profitably relationships depends not only on its own actions but also on how well the entire system serves the needs of final consumers 2. DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY:  Marketing Management: the art and science of choosing target markets and building profitable relationships with them o Aims to attract, keep and grow target customers by creating, delivering and communicating superior customer value o customer management & demand management o Marketers must answer two important questions: target market & value preposition Selecting Customers to Serve:  Companies decides who it will serve through market segmentation and target marketing o Market Segmentation: dividing the market in to segments of customers o Target Marketing: selecting which segments it will go after o Companies cannot serve all customers in every way  Companies may seek fewer customers & reduced demand in cases of excess demand by demarketing  Demarketing: reducing the number of customers or shifting their demand temporarily/permanently o Aim is not to destroy demand but shift/reduce Value Preposition:  Companies decide the best strategy to serve their target market by choosing a value preposition  Value Preposition: set of benefits or values it promises to deliver to consumers to satisfy their needs o Differentiates and positions the brand in the marketplace Marketing Management Orientations:  marketers designs strategies that will build profitable relationships with target consumers through 5 alternative concepts which holds differing assumptions: a) The Production Concept: consumers will favour products that are available and highly affordable  Focus on improving production and distribution efficiency (i.e. Lenovo)  Oldest orientation  Risks marketing myopia: focus too narrowly on own operations and lose sight of real objective b) The Product Concept: consumers will favour products that offer the most in quality, performance, and innovative features  Focuses on making continuous product improvement  Risks marketing myopia c) Selling Concept: consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort  Typically practised with unsought goods – those that buyers do not normally think of buying  Assumes:  Customers coaxed into buying the product will like it  Customers will forget product disappointment and buy it again later  focuses on creating sales transactions  does not build long-term profitable customer relationships d) Marketing Concept: achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do  A customer “sense and respond” philosophy:  assumes customer focus and value are paths to sales and profits  aims to find the right products for target market  customer-driven marketing: companies research current customers to learn about their desires, gather new product/service ideas and test proposed product improvements  works well when a clear need exists and when customers know what they want  customer-driving marketing: creating products and services that meet existing and latent needs, now and in the future  understands customer needs even better than customers themselves do  Selling concept vs. Marketing concept:  Selling Concept “inside-out perspective”: focuses primarily on short-term sales with little regard of who buys or why  Marketing Concept “outside-in perspective”:  Starts with a well-defined market  Focuses on customer needs  Integrates all marketing activities that affect customers  profits by creating lasting relationships with the right customers based on customer value and satisfaction e) Societal Marketing Concept: the idea that a company’s marketing decisions should consider consumer’s wants, the company’s requirements and society’s long-run interests  Asserts pure marketing concept overlook possible conflicts between consumer short-run wants vs. long-run welfare (i.e. bottled water industry)  Companies should balance three considerations in setting their marketing strategies:  Company profits  Consumer wants  Society’s interests 3. PREPARING AND INTEGRATED MARKETING PLAN AND PROGRAM  Marketing Mix: set of tools (four Ps) the firm uses to implement its marketing strategy = product, price, promotion, and place  Marketing strategy: outlines which customers t
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