Post on 13-May-2015
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Copyright 2000 Prentice Hall
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Chapter 1Chapter 1
Marketing :
Creating and Capturing Customer Value
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What is Marketing?What is Marketing?
• 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.
• More simply: Marketing is the delivery of customer satisfaction at a profit.
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What Motivates a Consumerto Take Action?What Motivates a Consumerto Take Action?
• NeedsNeeds – NOT invented by marketers. They are a basic parts of human makeup:states of felt deprivation including physicalphysical needs for food, socialsocial needs for belonging and individualindividual needs for self-expression. E.g. I am thirsty.
• WantsWants - form that a human need takes as shaped by culture and individual personality. E.g. I want a coca-cola.
• DemandsDemands - human wants backed by buying power. E.g. I have money to buy a coca-cola.
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Marketing OffersMarketing Offers
• ProductsProducts - anything that can be offered to a market to satisfy a need or want.
• Products also include: Persons, Places, Organizations, Activities, and Ideas.
• ServicesServices - activities or benefits offered for sale that are essentially intangible and don’t result in the ownership of anything.
• Examples: banking, airlines, haircuts, and hotels.
Marketing Offer: Some combination of products, services, information,Or experiences offered to a market to satisfy a need or want.
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• ExperiencesExperiences – marketers look beyond the attributes of the products and services they sell. They create brand meaning and brand experiences for customers.
• Coca-Cola
• Nike/Nike Town
• Disney World
Marketing Offers (Cont.)Marketing Offers (Cont.)
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MarketMarket
• “Market” in marketing term:A set of all actual and potential buyers of a product or service.
• “Market” in financial term:
• What is the“commodity market”?
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Marketing ManagementPhilosophies(1)Marketing ManagementPhilosophies(1)
Production ConceptProduction Concept
• Demand exceeds supply
• Consumers favor products that are available and highly affordable
• Improve production and distribution
• Run a risk of focusing too narrowly on their own operation• Texas Instrument: digital watch
• Demand exceeds supply
• Consumers favor products that are available and highly affordable
• Improve production and distribution
• Run a risk of focusing too narrowly on their own operation• Texas Instrument: digital watch
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Marketing ManagementPhilosophies(2)Marketing ManagementPhilosophies(2)
Product ConceptProduct Concept
• Increasing competition • Consumers favor products that offer the most quality, performance, and innovative features
• Continuous product improvement
• lead to Marketing Myopia• Railroad: trains vs. transportation
• Increasing competition • Consumers favor products that offer the most quality, performance, and innovative features
• Continuous product improvement
• lead to Marketing Myopia• Railroad: trains vs. transportation
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Marketing ManagementPhilosophies(3)Marketing ManagementPhilosophies(3)
Selling ConceptSelling Concept
• Over capacity • Consumers will not buy enough of the organization’s products unless the organization undertake a large-scale promotion/selling
• Track down prospects and selling them on product benefits• Sell what they make rather than what the market want• focus on transactions not long-term relationship• Unsought goods: encyclopedias, insurance
• Over capacity • Consumers will not buy enough of the organization’s products unless the organization undertake a large-scale promotion/selling
• Track down prospects and selling them on product benefits• Sell what they make rather than what the market want• focus on transactions not long-term relationship• Unsought goods: encyclopedias, insurance
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Marketing ManagementPhilosophies(4)Marketing ManagementPhilosophies(4)
Marketing ConceptMarketing Concept
• Focuses on needs/ wants of target markets & delivering satisfaction more effectively & efficiently than competitors
• Total customer satisfaction• Procter & Gamble, Marriot, Nordstrom, L.L.Bean
• Overlook conflicts between consumer short-run wants and long-run welfare
• Focuses on needs/ wants of target markets & delivering satisfaction more effectively & efficiently than competitors
• Total customer satisfaction• Procter & Gamble, Marriot, Nordstrom, L.L.Bean
• Overlook conflicts between consumer short-run wants and long-run welfare
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Selling vs. MarketingConcepts ContrastedSelling vs. MarketingConcepts Contrasted
FactoryExistingProducts
Sellingand
Promoting
Profitsthrough Sales
Volume
MarketCustomer
NeedsIntegratedMarketing
Profitsthrough Customer
Satisfaction
StartingPoint
Focus Means Ends
The Selling Concept: inside-out
The Marketing Concept: Outside-in
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Marketing Management Philosophies (5)Marketing Management Philosophies (5)
Society(Human Welfare)
Society(Human Welfare)
Consumers(Wants)
Consumers(Wants)
Company(Profits)
Company(Profits)
SocietalMarketingConcept
SocietalMarketingConcept
Fast-food industry: high in fat and salt; packages lead to waste & pollutionJohnson & Johnson: supporting many community and employee programs recalled cyanide-laced Tylenol costing $240 million
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How do Consumers ObtainProducts and Services?How do Consumers ObtainProducts and Services?
• ExchangesExchanges - act of obtaining a desired object from someone by offering something, such as money, another good, or a service, in return.
• Transactions Transactions - trade of values between parties: one party gives X to another party and gets Y in return.A transaction is marketing’s unit of measurement.
• Relationship Marketing Relationship Marketing – the process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.
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Relationship Building BlocksRelationship Building Blocks
• CustomersCustomers – refer to both end users and marketing intermediaries.
• Customer Perceived Value Customer Perceived Value - difference between the value the customer gains from owning and using a product and the cost of obtaining the product.(perceived benefits – perceived costs)
• Customer Satisfaction Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations. (perceived performance- perceived expectations)
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Customer Relationship ManagementCustomer Relationship Management
• The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
• Customer Relationship Levels
–Basic Relationships with Low –margin customers
– Full Partnership with high-margin customers
• Customer Loyalty and Retention Programs
–Adding financial benefits: frequent flier program
–Adding financial benefits + social benefits: “Swatch: the Club”
–Adding financial benefits + social benefits + Structural Ties: FedEx
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From Database Marketing to Customer Relationship Management (CRM)From Database Marketing to Customer Relationship Management (CRM)
• Customer Relationship Management has been defined narrowly as a customer data management activity.
• Attract new customers, and create transactions with them
• Retain current customers, and build profitable, long-term relationships with current customers
• Customer profitability analysis to weed out losing customers and target winning ones.
• Connecting with customers more directly.
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Customer Relationship GroupsCustomer Relationship Groups
ButterfliesGood fit between company’s
offerings and customers’ needs;
High profit potential
True FriendsGood fit between company’s
offerings and customers’ needs;
Highest profit potential
StrangersLittle fit between company’s
offerings and customers’ needs;
Lowest profit potential
BarnaclesLimited fit between company’s
offerings and customers’ needs;
Low profit potential
Short-term Customers Long-term Customers
High- Profit
Low- Profit
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Return on Marketing Investment (ROMI)from reading: “Drive ROMI by Tying Brand Equity to Consumers”
Return on Marketing Investment (ROMI)from reading: “Drive ROMI by Tying Brand Equity to Consumers”
Financial performance
•Market share
•Profits
•Sales
Customer Purchase Behavior
•New purchase
•Re-purchase
•Segmentation
Brand Equity
•Awareness
•Attitude
•Perceived quality
•Loyalty
•Associations
Marketing Activities
•Rebate
•Ad
•Promotion
•Sponsorship
•Customer Services
•New Products
Before
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Partner Relationship MarketingPartner Relationship Marketing
• Working closely with partners in other company departments and outside the company to jointly bring greater value to customers.
• Every employee must be customer focused.
• Supply chain management
• Strategic alliances
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Modern Marketing SystemModern Marketing System
SuppliersSuppliers
End UserMarket
End UserMarket
MarketingIntermediaries
MarketingIntermediaries
CompetitorsCompetitors Company(Marketer)
Company(Marketer)
En
vir
on
me
nt E
nv
iron
me
nt
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The Marketing ProcessThe Marketing Process
•Understand the marketplace and customer needs and wants
•Design a customer Driven marketing strategy
•Construct a marketing program that delivers superior value
•Build profitable relationships and create customer delight
•Capture value from customers to create profits and customer quality
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EmergingChallengesEmerging
Challenges
NonprofitMarketing
New Marketing
Landscape &InformationTechnology
EthicalConcerns
Globalization
ChangingWorld
Economy
New Marketing ChallengesNew Marketing Challenges
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Corporate Social Responsibility (CSR)Corporate Social Responsibility (CSR)
• What corporate actions can be qualified as CSR?
• What are the motivations that motivate companies to behave as good corporate citizens?
• How to evaluate the result of CSR?
–What are the two tests of CSR?
–What are the four types of CSR?
• Do you agree with the following statements?
– “Corporate philanthropy is charity with other people’s money.”
– “Multinational companies should be responsible for their foreign workers’ benefits.”
• What is the stance/position of this article?