Marketing Midterm Chapter 1 – Flashcards
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Marketing (Definition)
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the process by which companies create value for customers & build strong relationships in order to capture value from customers in return
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Markets= people
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market are not a physical structure!
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Marketing process (5 steps)
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1. understand the marketplace & customer needs/wants 2. design a customer driven market strategy 3. construct a marketing program that delivers superior value 4. Build profitable relationships & create customer delight 5. Capture value from customers to create profits & customer equity (this is where the company reaps rewards)
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Marketer's 4 tools
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Product Price Place Promotion
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Customer Needs (definition)
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states of felt deprivation
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Customer Needs (examples)
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physical: food, clothing, warmth, safety social: belonging, affection individual: knowledge, expression
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Customer Wants (definition)
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the form human needs take as they are shaped by culture & individual personality
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Wants (example)
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An American needs food but wants a big mac, fries, & soft drink. A new Guinean needs food but wants tacos & rice
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needs become wants which are influenced by culture
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example: Muslim cultures can't drink alcohol so maybe they need & want juice?
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Demands (definition)
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human wants that are backed by buying power (demand= generates traffic)
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What do marketing companies do with customers wants, needs, & demands?
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they go to great lengths to understand them. They analyze consumer research & data and try to see the stores through the customer's eyes (i.e.-amazon)
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Marketing uses all these terms interchangeably so when they say needs or wants they are referring to:
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"market demand"
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Market Offering (definition)
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some combination of products, services, information, or experiences offering to a market to satisfy a need or want
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Market Offerings (examples)
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banking airline hotel retailing persons places organization "Pure Michigan"- tourism "Let's Move"- public service campaign to reduce obesity
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Marketing Myopia
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the mistake of paying more attention to the specific product a company offers that to the benefits and experiences produced by these products
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marketing myopia (example)
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if Disneyland were to sell just tickets (focusing on product instead of experience) instead of the "brand experience" of immersing yourself and family in a world of wonder.
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Exchange (definition)
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the act of obtaining a desired object from someone by offering something in return (doesn't include just $ in return); marketers want to maintain exchange relationships
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exchange (example)
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political candidate wants a vote church wants new membership
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Market (definition)
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the set of all actual or potential buyers of a product or service
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Customer needs:
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value & satisfaction
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Marketers need to:
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set the right level of expectation; not too high & not too low
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Major environmental forces
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A company & it's competitors research the market to understand customer needs, they then create & send their market offerings & messages through intermediaries, as long as they find a supplier that meets the requirements.
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Marketing Management (definition)
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the art and science of choosing target markets and building profitable relationships with them.
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marketing management (example)
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What customers will we serve? (target market) How can we best serve them? (value proposition)
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Market segmentation
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categorizing markets into segments of customers
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target marketing
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choosing which segments of customers to go after
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market segmentation example
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Amex ID'd several groups as potential customers such as elderly & business professionals
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target marketing example
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choosing to serve the elderly
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value proposition (definition)
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benefits/values a company offers the customers in order to satisfy their needs
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value proposition (example)
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Facebook helps you "connect & share with people in your life"
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5 concepts which companies design & carry out their marketing strategies:
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production product selling marketing social marketing
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Production Concept
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consumers will favor products that are available and highly affordable (therefore, management should focus on production/distribution efficiency which could eventually lead to marketing myopia)
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Product Concept
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consumers favor product that offers the most quality, performance, and features focus: continuous product improvement; which could also lead to marketing myopia ex: mouse trap
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Selling concept (most companies follow this)
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consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort start with: factory focus: existing products Means: selling & promoting ends: profits through sales volume
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Marketing concept
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knowing the wants/needs of current target market & delivering desired satisfaction better than competitors do (ex: frank purdue and his chicken sales) start with: market focus: customer needs Means: integrated marketing ends: profits through satisfaction
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customer-driven marketing
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understanding customer needs better than customers do themselves ex: henry ford " if i asked them what they wanted they would've said faster horses"
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social marketing concept
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making good marketing decisions by considering: consumer's wants and long-term interests, company's requirements, and society's long-run interests; does it help social welfare? corporate social responsibility i.e.- sustainable marketing
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societal marketing concept triangle
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society (human welfare) consumers company (want satisfaction) (profits)
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what does a marketing strategy do?
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outlines which customers it will serve and how it will create value for them
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Integrated marketing program
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comprehensive plan that communicates and delivers intended value to chosen customers
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marketing mix
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set of tools the firm uses to implement it's marketing strategy: product price promotion place
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4th step of marketing process (also most important)
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building and managing profitable customer relationships
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Customer relationship management
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the overall process of building and maintaining profitable customer relationships by delivering superior customer value & satisfaction (deals with: acquiring, keeping, & growing customers)
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relationship building blocks:
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customer value & satisfaction
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customer-perceived value
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the difference between total customer value and total customer cost (comparing competing offers based on benefits & costs)
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examples of customer-perceived values
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"you get what you pay for" "sensible products at affordable prices"
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Customer satisfaction
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the extent to which a product's perceived performance matches a buyers expectations (if happy, these delighted customers not only come back but also recruit new customers) example: Jet blue- you above all
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basic relationships
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Nike does not get to know the customers personally, but builds relationships through websites, apps, public relations, and brand-building advertising
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full partnerships
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nike sales reps work closely with dicks, sports authority, etc
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frequency marketing programs
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for repeat customers (airline miles, bonus cards)
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Changing nature of customer relationships
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companies might want to fire those customers that cost more than they're worth, so they can coddle the ones who provide the money. Instead, they are better to form deeper relationships with certain profitable customers by weeding out the others.
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Customer managed relationships
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customers, empowered by today's technologies, interact with companies and each other to shape their relationships with brands
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consumer generated marketing
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consumers are playing a bigger role in shaping their own brand experience ex: what's your starbucks idea?
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Partner relationship management
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working closely with partners in other company departments and outside the company to jointly bring greater value to customers ex: IBM guy at professors bank
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partner relationship management (cont'd)
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Partners inside the company is every functional area interacting with customers -electronically -cross-functional teams
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partner relationship management (cont'd)
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Marketers connect with their suppliers, channel partners, and competitors by developing partnerships Supply chain is a channel that stretches from raw materials to components to final products to final buyers
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Customer Lifetime value
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the value of an entire stream of purchases that the customer would make over a lifetime of patronage (ex: stew leonard- disneyland of dairy store; each customer spends about $100 per week, 50 weeks a year over 10 years= $50,000/ customer)
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Share of customer
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the portion of a customers purchasing that a company gets in its product categories ex: companies want to increase "share of wallet" "share of stomach"
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customer equity
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the total combined customer lifetime value of all the company's customers
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How to build customer equity:
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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 strategies
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the changing economic environment
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new consumer frugality; marketers focus on the value for the customer
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the changing marketing landscape
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the digital age: internet, digital technologies growth of: not for profit marketing sustainable marketing: CSR
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pulling it all together
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review figure 1.6 on page 28
