Learning ObjectivesAfter studying this chapter, you should be able to:Define marketing and outline the steps in the marketing processExplain the importance of understanding customers and the marketplace, and identify the five core marketplace conceptsIdentify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategyDiscuss customer relationship management, and identify strategies for creating value for customers and capturing value from customers in returnDescribe the major trends and forces that are changing the marketing landscape in this age of relationships

Chapter OutlineWhat Is Marketing?Understanding the Marketplace and Customer NeedsDesigning a Customer-Driven Marketing StrategyPreparing an Integrated Marketing Plan and ProgramBuilding Customer RelationshipsCapturing Value from CustomersThe New Marketing LandscapeSo, What Is Marketing? Pulling It All Together

What Is Marketing?Marketing Defined

Marketing is the process by which companies create value for customers and build strong customer relationships to capture value from customers in return.

What Is Marketing?The Marketing Process

Understand the marketplace and customer wants and needsDesign a customer-driven marketing strategyConstruct a marketing plan that delivers superior valueBuild profitable relationships and create customer satisfactionCapture value from customers to create profit and customer equity

Create customer driven marketing strategyConstruct a marketing program that delivers superior valueBuild profitable relationships & create customer delightCapture value from customers to create profits & customer qualityUnderstand the marketplace and customers needs/wants

Understanding the Marketplaceand Customer NeedsCustomer Needs, Wants, and DemandsNeeds are states of deprivation:Physicalfood, clothing, warmth, safetySocialbelonging and affectionIndividualknowledge and self-expression

Customer Needs, Wants, and Demands Wants are the form that needs take as they are shaped by culture and individual personality.Demands are wants backed by buying power.

Understanding the Marketplaceand Customer Needs

Market OfferingsProducts, Services, and Experiences Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs.

Understanding the Marketplaceand Customer Needs

Customer Value and SatisfactionSatisfaction is derived from comparing performance with expectations

ExpectationsCustomers make choices according to Values and satisfaction of various market offeringsMarketersSet the right level of expectationsNot too high or too low

Understanding the Marketplaceand Customer Needs

Exchanges and Relationships Exchange is the act of obtaining a desired object from someone by offering something in return.

Marketing consists of actions to build and maintain desirable exchange relationships.

Understanding the Marketplaceand Customer Needs

Markets are the set of actual and potential buyers of a product.Marketing system consists of all of the actors (suppliers, company, competitors, intermediaries, and end users) in the system who are affected by major environmental forces: Demographic; Economic; Physical; Technological; Political-legal; Socio-cultural

Understanding the Marketplaceand Customer Needs

Elements of a Modern Marketing System

Designing a Customer-Driven Marketing StrategyMarketing Management Marketing management is the art and science of choosing target markets and building profitable relationships with them.What customers will we serve?How can we best serve these customers?

Selecting Customers to Serve Market segmentation: Dividing the markets into segments of customersTarget marketing: Which segments to go afterDesigning a Customer-Driven Marketing Strategy

Selecting Customers to Serve De-marketing Marketing to reduce demand temporarily or permanently The aim is not to destroy demand but to reduce or shift it.Designing a Customer-Driven Marketing Strategy

Selecting Customers to Serve Marketing management is:Customer managementDemand managementDesigning a Customer-Driven Marketing Strategy

Choosing a Value Proposition

The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs.Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations

Production conceptProduct conceptSelling conceptMarketing conceptSocietal conceptDesigning a Customer-Driven Marketing Strategy

Marketing Management Orientations

The production concept is the idea that consumers will favor products that are available or highly affordable.

Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations

Product concept is the idea that consumers will favor products that offer the most quality, performance, and features for which the organization should therefore devote its energy to making continuous improvements.Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations

Selling concept is the idea that consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort.Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations

Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do.Designing a Customer-Driven Marketing Strategy

Customer Driven vs. Customer Driving Marketing

Marketing Management Orientations

Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers wants, the companys requirements, consumers long-term interests, and societys long-run interests.Designing a Customer-Driven Marketing Strategy

Preparing an Integrated Marketing Plan and ProgramMarketing MixThe marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy:Product create a need-satisfying market offeringPrice decide how much it will charge for the offerPromotion communicate with target customers about the offer and persuade them of its meritsPlace decide how it will make the offer available to target consumers

Integrated Marketing Program

An integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers.Preparing an Integrated Marketing Plan and Program

Customer Relationship Management (CRM)

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction.Building Customer Relationships

Customer Relationship Management (CRM)

Customer perceived value is the difference between total customer value and total customer cost of a market offering relative to those of competing offers.

Customer satisfaction is the extent to which a products perceived performance matches a buyers expectations.Building Customer Relationships

A Customers Perception of Value

Customer Relationship Management (CRM)

Customer Relationship Levels and ToolsBasic relationship (with low-margin customers)Full relationships (with high-margin/key customers)Developing strong bonds with customers throughFrequency marketing programsClub marketing programsBuilding Customer Relationships

The Changing Nature of Customer RelationshipsRelating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers.Relating for the long term uses customer relationship management to retain current customers and build profitable, long-term relationships.Relating directly uses direct marketing tools (telephone, mail order, kiosks, Internet) to make direct connections with customers.Building Customer Relationships

Partner Relationship Management

Partner relationship management refers to working closely with partners in other company departments and outside the company to jointly bring greater value to customers.

Building Customer Relationships

Partner Relationship Management

Partners inside the company is every function area interacting with customers.ElectronicallyCross-functional teams

Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships.Building Customer Relationships

Partner Relationship Management

The supply chain is a channel that stretches from raw materials to components to final products to final buyers.Supply managementStrategic partnersStrategic alliances

Building Customer Relationships

Creating Customer Loyalty and Retention

Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage.Capturing Value from Customers

Growing Share of Customer

Share of customer is the portion of the customers purchasing that a company gets in its product categories.Capturing Value from Customers

Building Customer Equity

Customer equity is the total combined customer lifetime values of all of the companys customers.Capturing Value from Customers

Building Customer Equity

Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized.Different types of customers require different relationship management strategiesBuild the right relationship with the right customersCapturing Value from Customers

Major DevelopmentsDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingThe new world of marketing relationshipsThe New Marketing Landscape

The New Digital AgeRecent technology has had a major impact on the ways marketers connect with and bring value to their customersMarket research Learning about and tracking customersCreate new customized productsDistributionCommunicationVideo conferencingOnline data servicesThe New Marketing Landscape

The New Digital Age

Internetcreates marketplaces and MarketspacesInformationEntertainmentCommunicationThe New Marketing Landscape

Rapid Globalization

The world is smallerThink globally, act locallyThe New Marketing Landscape

The Call for More Ethics and Social Responsibility

Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions in a global economy.The New Marketing Landscape

The Call for More Ethics and Social Responsibility

Social marketing campaigns encourage energy conservation and concern for the environment or discourage smoking, excessive drinking, and drug use.The New Marketing Landscape

The Growth for Not-for-Profit MarketingCollegesHospitalsMuseumsZoosOrchestrasReligious groupsThe New Marketing Landscape

Pulling it All Together