MKTG 181 Chapter 1: Creating Customer Relationships and Value Through Marketing – Flashcards

Marketing is the activity for creating, communicating, delivering, and exchanging offerings that benefit its customers, the organization, its stakeholders, and society at large Far more than simply advertising or personal selling. Stresses the need to deliver genuine benefits in the offerings of goods, services, and ideas marketed to customers. Also, note that the organization doing the marketing, the stakeholders affected (such as customers, employees, suppliers, and shareholders), and society should all benefit. To serve both buyers and sellers, marketing seeks: 1) To discover the needs and wants of prospective customers and 2) To satisfy them These prospective customers include both individuals, buying for themselves and their households, and organizations, buying for their own use (such as manufacturers) or for resale (such as wholesalers and retailers) The key to achieving these two objectives is the idea of EXCHANGE, which is the trade of things of value between a buyer and a seller so that each is better off after the trade Marketing affects all individuals, all organizations, all industries, and all countries

1) Two or more parties (individuals or organizations) with unsatisfied needs, 2) A desire and ability on their part to have their needs satisfied, 3) A way for the parties to communicate, and 4) Something to exchange

Important to discover and satisfy consumer needs in order to develop and offer successful products... 1) Discovering Consumer Needs: The first objective in marketing is discovering the needs of prospective customers, but these prospective customers may not always know or be able to describe what they need and want...This is where effective marketing research, the topic of Chapter 8, can help Most new products fail...First, find out what consumers need and want. Second, produce what they need and want, and don't produce what they don't need and want. Firms spend billions of dollars annually on marketing and technical research that significantly reduces, but doesn't eliminate, new-product failure. So meeting the changing needs of consumers is a continuing challenge for firms around the world

Marketing should try to satisfy both consumer needs and consumer wants A NEED occurs when a person feels deprived of basic necessities such as food, clothing, and shelter A WANT is a need that is shaped by a person's knowledge, culture, and personality Effective marketing, in the form of creating an awareness of good products at convenient locations, can clearly shape a person's wants... Because even psychologists and economists still debate the exact meanings of NEED and WANT, we shall use the terms interchangeably throughout this book Discovering needs involves looking carefully at prospective customers, whether individuals or organizations...A principal activity of a firm's marketing department is to scrutinize its consumers to understand what they need and want and the forces that shape those needs and wants

Potential consumers make up a MARKET, which is people with both the desire and ability to buy a specific offering All markets ultimately are people...even when a firm buys something, we mean one or several people in the firm decides to buy it Not just the desire, but also the ability, such as authority, time, and money People may even "buy" an idea that results in an action, such as having their blood pressure checked annually or turning down their thermostat to save energy

Marketing doesn't stop with the discovery of consumer needs. Because the organization obviously can't satisfy all consumer needs, it must concentrate its efforts on certain needs of a specific group of potential consumers...the TARGET MARKET

One or more specific groups of potential consumers towards which an organization directs its marketing program

Having selected its target market consumers, the firm must takes steps to satisfy their needs...Someone in the organization's marketing department, often the marketing manager, must develop a complete marketing program to reach consumers by using a combination of four elements, often called "the four Ps": PRODUCT: A good, service, or idea to satisfy the consumers needs PRICE: What is exchanged for the product PROMOTION: A means of communication between the seller and buyer PLACE: A means of getting the product to the consumer We'll define each of the four Ps more carefully later in the book, but for now it's important to remember that they are the elements of the MARKETING MIX. These four elements are the CONTROLLABLE FACTORS (not bold) that can be used by the marketing manager to solve a marketing problem. The marketing mix elements are called CONTROLLABLE FACTORS (not bold) because they are under the control of the marketing department in an organization.

Designing an effective marketing mix also conveys to potential buyers a clear CUSTOMER VALUE PROPOSITION. CUSTOMER VALUE PROPOSITION: A cluster of benefits that an organization promises customers to satisfy their needs...eg Walmart and Michelin's general customer value propositions

While marketers can control their marketing mix factors, there are forces that are mostly beyond their control. These are the ENVIRONMENTAL FORCES that affect a marketing decision, which consist of SOCIAL, ECONOMIC, TECHNOLOGICAL, COMPETITIVE, AND REGULATORY forces Examples are what consumers themselves want and need, changing technology, the state of the economy, actions that competitors take, and government restrictions...covered more in Chapter 3 These five forces may serve as accelerators or brakes on marketing, sometimes expanding an organization's marketing opportunities and at other times restricting them Traditionally, many marketing executives have treated these environmental forces as rigid, absolute constraints that are entirely outside their influence. However, recent studies and marketing successes have shown that a forward-looking, action-oriented firm can often affect some environmental forces by achieving technological or competitive breakthroughs

An organization's marketing program connects it with its customers. To clarify this link, we discuss the critically important concepts of customer value, customer relationships, and relationship marketing

Intense competition has prompted many successful US firms to focus on "customer value"...gaining loyal customers by providing unique value is the essence of successful marketing. What is new is a more careful attempt at understanding how a firm's customers perceive value and then actually creating and delivering that value to them Customer Value: The unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price Research suggests that firms cannot succeed by being all things to all people. Instead, firms seek to build long-term relationships with customers by providing unique value to them. Many successful firms deliver outstanding customer value with one of three value strategies: best price, best product, or best service...remaining among the best is a challenge

A firm achieves meaningful customer relationships by creating connections with its customers through careful coordination of the product, its price, the way it's promoted, and how its placed (the four Ps) The hallmark of developing and maintaining effective customer relationships is today called RELATIONSHIP MARKETING, which links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit. Relationship marketing involves a personal, ongoing relationship between the organization and its individual customers that begins before and continues after the sales

Effective relationship marketing strategies help marketing managers discover what prospective customers need and convert these ideas into marketable products. These concepts must then be converted into a tangible MARKETING PROGRAM MARKETING PROGRAM: A plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers Ideally, they can be formed into MARKET SEGMENTS MARKET SEGMENTS: Relatively homogeneous groups of prospective buyers that (1) have common needs and (2) will respond similarly to a marketing action. This action might be a product feature, a promotion, or a price In an effective organization this process is continuous: consumer needs trigger product concepts that are translated into actual products that stimulate further discovery of consumer needs

Many American manufacturers have experienced four distinct stages in the life of their firms: 1)PRODUCTION ERA: The first stage...covers the early years of the US up until the 1920s...Goods were scarce and buyers were willing to accept virtually an goods that were available and make do with them 2) SALES ERA: From the 1920s to the 1960s, manufacturers found they could produce more goods than buyers could consume. Competition grew. Firms hired more salespeople to find new buyers. This sales era continued into the 1960s for many American firms 3) MARKETING CONCEPT ERA: Starting in the late 1950s, marketing became the motivating force among many American firms and the marketing concept era dawned MARKETING CONCEPT: the idea that an organization should (1) strive to satisfy the needs of consumers while also (2) trying to achieve the organization's goals...marketing at the beginning rather than the end of the production cycle and integrating marketing into each phase of the business Some firms have achieved great success by putting huge effort into implementing the marketing concept, giving their firms what has been called a MARKET ORIENTATION MARKET ORIENTATION: an organization that has a market orientation focuses its efforts on (1) continuously collecting information about customers' needs, (2) sharing this information across departments, and (3) using it to create customer value 4) CUSTOMER RELATIONSHIP ERA: Today's customer relationship era started in the 1980s (still going on) and occurs as firms continuously seek to satisfy the high expectations of customers Social networking important...allows organizations to understand and market to current and prospective customers in ways that are still evolving An important outgrowth of this focus on the customer is the recent attention placed on CUSTOMER RELATIONSHIP MANAGEMENT (CRM) CUSTOMER RELATIONSHIP MANAGEMENT (CRM): the process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace. This process requires the involvement and commitment of managers and employees throughout the organization and a growing application of information, communication, and Internet technology... The foundation of customer relationship management is really CUSTOMER EXPERIENCE CUSTOMER EXPERIENCE: the internal response that customers have to all aspects of an organization and its offering. This internal response includes both direct and indirect contacts of the customer with the company...direct and indirect in book...Direct include customer's contacts with seller through buying, using, and obtaining service...Indirect contacts most often involve unplanned "touches" with the company through word-of-mouth comments from other customers, reviewers, and new reports

Ethics: Many marketing issues are not specifically addressed by existing laws and regulations...difficult ethical issues...professional associations' codes of ethics Social Responsibility: the idea that organizations are accountable to a larger society SOCIETAL MARKETING CONCEPT (KNOW THE TRIANGLE): the view that organizations should satisfy the needs of consumers in a way that provides for society's well-being...(IMPORTANT PUT ON THE WRITTEN SHEET)

Who markets? Every organization, both for profit and nonprofit, and even individuals (eg politicians)

Goods, services, and ideas are marketed. Goods: physical objecrts Services: intangible items Ideas: thoughts about concepts, actions, or causes In this book, goods, services, and ideas are all considered "products" that are marketed, so... PRODUCT: a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value Ideas often marketed by nonprofit organizations and the government...

Both individuals and organizations buy and se products that are marketed ULTIMATE CONSUMERS: the people who use the products and services purchased for a household (any age, 8 months, 80 years old, etc) ORGANIZATIONAL BUYERS: Those manufacturers, wholesalers, retailers, and government agencies that buy products and services for their own use or for resale

In our free enterprise society, there are three specific groups that benefit from effective marketing: consumers who buy, organizations that sell, and society as a whole...society because it enhances competition, which improves the quality of products and services and lowers their prices...makes countries more competitive in world markets and provides jobs and a higher standard of living for citizens How Do Consumers Benefit? Marketing creates UTILITY UTILITY: The benefits or customer value received by users of the product. This utility is the result of the marketing exchange process and the way society benefits from marketing. There are four different utilities: FORM UTILITY: The production of the product or service constitutes form utility PLACE UTILITY: Means having the offering available where consumers need it TIME UTILITY: Means having the offering available when needed POSSESSION UTILITY: The value of making an item easy to purchase through the provision of credit cards or financial arrangements Marketing creates its utilities by bridging space (place utility) and hours (time utility) to provide products (form utility) for consumers to own and use (possession utility)

Hamdi Ulukaya...Chobani Greek yogurt The new product launch focused on the classic "4Ps" elements of marketing mix actions: product, price, place, and promotion Product Strategy: Focused on the product itself and the packaging...authentic Greek yogurt higher in protein, made with real fruit and natural ingredients, preservative free...no artificial flavors/sweeteners, five live and active cultures, including three probiotics Price Strategy: Approached retailers directly rather tahn going through distributors...prices set high enough to recover Chobani's costs and give reasonable margins to retailers but not so high that future rivals could undercut its price....about $1.29 for a single serve cup today... Place Strategy: Decided to get the product into the conventional yogurt aisle of traditional supermarkets, not on specialty shelves or in health food stores...widely distributed in both conventional and mass supermarkets, club stores, and natural food stores...on the horizon, growing distribution in convenience and drug stores as well as schools...when demand surpassed supply leading to unhappy retailers, they decided to get on a plane and communicate with them within 24 hours about the problem and what they proposed to do about it...transparent and open with communication...Operation Bear Hug Promotion Strategy: In the early years no money for traditional advertising, so relied on word of mouth...harnessed passion on social media channels...CHOmobile tour...vehicle sampling Chobani at events across the country...As Chobani grew, it began to launch new promotional activities tied to traditional advertising, social media, and direct communication with customers...returns phone calls and emails, emphasis on social media, and chobanikitchen.com... Chobani gives 10% of all profits to its Shepherd's Gift Foundation to support people and organizations working for positive, long lasting change Where to Now? Expanding internatonally, new store in New York City