Chapter 1: Defining Marketing and the Marketing Process

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Marketing(simplified)
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engaging customers and managing profitable customer relationships by creating value FOR customers and capturing value in return
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Marketing( broad definition)
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a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others
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Goal (keys) of marketing
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attract new customers by promising superior value and deliver satifaction
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marketing
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create value FOR customer and build customer relationships
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Marketing process: 5 Steps creating and capturing customer value
Marketing process: 5 Steps creating and capturing customer value
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1). Understand the market place and customers’ needs, wants, and demands 2). Design a customer-driven marketing strategy 3). Construct an integrated marketing plan program that delivers superior value 4). Engage customers, build profitable relationships and create customer delight 5). Capture value from customers to create profits and customer equity
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5 Core customer and Marketplace concepts
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1). Needs, wants, and demands 2). Market offering 3). Value 4). Exchange relationship 5). Markets
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Needs
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states of felt deprivation includes physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self expression
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Wants
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shaped by ones society(culture and individual personality) and are described in terms of objects that will satisfy those needs
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Demands
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when wants are backed up by buying power
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Market offerings
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a combo of Product, services, and experiences offered to the market to satisfy a need or want
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services
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activities or benefit offered for sale that are intangible and do not result in ownership of anything (ex: banking, hotel, airline)
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marketing myopia
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sellers are taken with their products that they focus only in existing wants and lose sight of underlying customer needs
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customer value and satifaction
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key building blocks for developing and managing customer relationships
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exchange and relationships
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the act of obtaining a desired object from someone by offering something in return
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market
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the set of actual and potential buyers of a product or service
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Step 2: Designing a customer value-driven market strategy
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Who will we serve? and How will we be different? 1) selecting customers to serve through (market segmentation) and selecting which segments it will go after (target marketing) Demo Geo Psychological Behavioral
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marketing management
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the art and science of choosing target markets and building profitable relationships with them aim: engage, keep, and grow target customers by creating, delivering, and communicating superior customer value
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2 important questions marketing manager must answwer
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1). What customers will we serve (what’s our target market?) 2). How can we serve these customers best (What’s our value propositon?)
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value propositon
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set of benefits and values it promises to deliver to consumers to satisfy their needs (EX: Vine- “best way to see and share life in motion, through short looping videos”)
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5 alternate concepts which orgs design and carry out marketing strategies
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1). Production concept 2). Product concept 3). selling concept 4). marketing concept 5). societal marketing concept
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Production concept
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customers will favor products that are available and highly affordable; focus on improving production and distribution efficiency
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Product concept
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consumers will favor products that offer the most quality, performance, and innovative features; focus on making continuos product improvements
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selling concept
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customers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort; Focus on creating sales transactions rather than on building long-term, profitable relationships (Life insurance, blood donations)
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Marketing concept
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achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do; customer focus and value are the paths to sales and profits. customer centered ‘make and sell’ philosophy
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Selling concept vs marketing concept
Selling concept vs marketing concept
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Selling:Inside-Out approach Marketing: Outside-In perspective
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Customer driven companies
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research customers deeply to learn about their desires, new product ideas, and test product improvements
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customer-driving marketing
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understanding customers needs even better than customers themselves do and creating products and services that meet both existing and latent need, now and in the future
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societal marketing concept
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questions whether the pure marketing concept overlooks possible conflicts btwn consumer short run wants and long term welfare marketing strategy should deliver value to customers in a way that maintains or improves both the consumers and society well being (calls for – sustainable marketing: socially and environmentally responsible, meets needs of consumers and businesses whole preserving the ability of future gen to meet their needs) -Lush
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shared value
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focus on creating economic value in a way that also creates value for society
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Step 3: Developing An Integrated Marketing Plan and Program
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outlines which customers the company will serve and how it will create value for the customers
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integrated marketing program
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builds customer relationships by transforming the marketing strategy into action, consists of the firms marketing mix
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marketing mix
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set of marketing tools firms uses to implement the marketing strategy 4 P’s: -Product -Price -Place -Promotion
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Product
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firm must create a satisfying market offering
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Price
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decide how much it will charge for the offering
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Place
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how will it make the offering available to target consumers
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Promotion
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it must engage target consumers, communicate about the offering, and persuade consumers of the offers’ merits
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Step 4: Engage customers, build profitable relationships and create customer delight
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examines how companies go about engaging customers on a deeper level
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customer relationship management
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the overall process of building & maintaining profitable customer relationships by delivering superior customer value and satisfaction
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relationship building blocks
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Customer value & Satisfaction: key to building lasting customer relationships is to create superior customer value and satisfaction
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Customer value
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customer evaluation of the difference btwn all the benefits and all the costs of a market offering relative of those of competing offers Customers do not judge values and costs “accurately” act on perceived value
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Satisfaction
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Depends on the product’s perceived performance relative to a buyer’s expectations dissatisfied-product’s performance falls short of expectations satisfied-product performance matches expectations Highly satisfied or delighted- product performance exceeds expectations (Amazon,Zappos,Chic-fil-a)
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Customer centered firm
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seeks to deliver high customers satisfaction compared to competitors, but does not attempt to MAX satisfaction can increase customer satisfaction by lowering prices or increasing services = lower porfits
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Company w/ low margins
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customers may seek to develop basic relationshiips w/ them (proctor & gamble’s tide creates brand building ads, web site and social media presence to create engagement)
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Markets w/ few customers & high margins
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sellers want to create full partnerships with key customers (P&G sales reps work closely w/ Walmart, Kroger retailers that sell tide)
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frequency marketing programs
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rewards customers who buy frequently or in large groups (airlines-frequent fliers programs, supermarkets give discounts)
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club marketing
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offers special benefits and create member communities
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customer-engagement marketing
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fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community goal: make the brand meaningful part of consumers lives
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customer-managed relationships
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customers connect w/ companies and w/ each other to help forge their own brand experiences
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attraction
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creating marketing offerings and messages that engage consumers rather than interrupt them (post ads on social media sites)
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consumer generated marketing
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consumers themselves are playing a bigger role in shaping their own brand experiences and those of others (consumer exchanges in blogs, social media, etc)
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partner relationship management
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working closely with others inside and outside the company to jointly bring more value to customers
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supply chain
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describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers
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supply chain management
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companies are strengthening their connections with partners all along the supply chain
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Step 5: Capturing value from customers
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first 4 steps creates value FOR target customers and builds relations w/ them if done well, it can capture value FROM customers in return, in the form of loyal customers who buy and continue to buy the company’s brands
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customer lifetime value
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losing a customer means losing the entire stream of purchases the customer would have made over a lifetime of patronage
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share of customer
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the share the company gets of customers purchasing in their product categories to increase they can offer greater variety to current customers: (Amazon)
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customer equity
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the total combined customer lifetime values of all of the company’s current and potential customers -more loyal the firm’s profitable customers the higher the customer equity -measure of firms performance than current sales or market share; the futre
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4 relationship groups of customers
4 relationship groups of customers
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1). Strangers 2). Butterflies 3). True Friends 4). Barnacles
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Strangers
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low profit and little loyalty (don’t invest anything in them; make money on every transaction)
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Butterflies
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potentially profitable but not loyal (enjoy them for a while and then they’re gone)
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True Friends
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profitable and loyal (continuous relationship investments to delight these customers and nurture, retain, and grown them)
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Barnacles
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highly loyal but not profitable (selling more, raising their fees, or reducing services to them)
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5 major developments int he changing marketing landscape
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1). Uncertain Economic Environment 2). The Digital Age 3). Rapid Globalization 4). Call for more Ethics and Social Responsibility 5). Growth in Not-For-Profit marketing
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Uncertain Economic Environment
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-balance brand value proposition w/ current times while also enhancing its long term equity -rather slash prices in uncertain times, marketers hold the line on price and instead explain why their brands are worth it
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The Digital Age and marketing
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using digital marketing tools such as Web sites, social media, apps, email, blogs and other digital platforms to engage customers anywhere, anytime
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Rapid Globalization
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We are now all touched by global competition. American firms are challenged by European and Asian multinational companies Managers taking a global view of the company’s industry, competitors, and opportunities
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Call for more Ethics and Social Responsibility: sustainable marketing
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Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions Corporate Ethics and Social Responsibility are Hot Topic (pantagonia)
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Growth in Not-For-Profit marketing
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face stiff competition for support and memberships (colleges, hospitals, zoos, museums, etc)

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