BUAD 307—MARKETING FUNDAMENTALS

MARKETING OVERVIEW

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Learning Objectives

• Understanding– The scope and basic objectives of

the marketing function

– Customer value

– Relationship marketing

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2007 American Marketing Association (AMA) Definition

Marketing: “The (1) activity, (2) set of institutions, and (3) processes for (4) creating, (5) capturing, (6) communicating, (7) delivering, (8) and exchanging (9) offerings that have (10) value for (11) customers, (12) clients, (13) partners, and (14) society at large.” (Numbering added.)

Definition

not needed

for the

exam!

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MARKETING

ACTIVITY PROCESSESINSTITUTIONS

CREATION COMMUNICATION DELIVERY EXCHANGE

OFFERINGS VALUE

CUSTOMERS

CLIENTS

PARTNERS

SOCIETY

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Marketing As an Exchange

• Each side receives something more valuable than what it gave up “win-win” deal

• Part of the value may be assurance of continued quality over time (value of the brand)

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Usage and Reach of Marketing

• Who markets?– Businesses

– Government units

– Non-profit organizations

– Cause related organizations

• What is marketed?– Goods

– Services

– Ideas

• Who buys?– Ultimate consumers

– Organizational buyers

• For internal use• For resale

(wholesalers, retailers)

• Manufacturers (components)

• Customer benefits?– Utility

• Consumption

• Convenience

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Value

• Benefits—examples– Convenience

• In delivery

• In usage

– Reliability– Durability– Performance– Style/aesthetics– Prestige– Service component

• Costs—examples– Money

– Time

– Risk

COSTRECEIVED BENEFITS

VALUE

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Customer Value, Part I

• Value is the ratio of the benefits received (usually goods or services) to what is given up (usually money)

• For a transaction to take place, the benefits received must usually be greater than the sacrifice

• Note that a high price product may be a good value to the customer even if a high price is paid if the perceived benefits received are higher

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Customer Value, Part II

• A low priced product may not represent value to a customer if the benefits received are perceived to be low, too.

• Different customer segments will have different value perceptions

• A product which is adapted to the needs of a particular segment can be very valuable to that segment even if the overall “quality” is not seen as superior by most other consumers

• Cost may be in terms of money or other sacrifice

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Example of Customer Value: Tivo

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Customer Value: Ziploc Bags

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Customer Value: iPad

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Customer Value: Shellac

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Customer Value: Soda Vending

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Customer Value: Starbucks

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Value: Implications

• A low quality, low price product represents poor value for many customers

• A very high benefit product at a high price can represent value for some segments

• Customer segments differ in what they find valuable

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Relationship Marketing

• Selling (selling existing products with whatever methods are necessary) vs. marketing orientation (serving customer needs whether in current or new forms)

• Maintaining a relationship with the customer over time rather than just focusing on immediate sales

– Anticipating customer needs– Providing solutions – Investing in products and services

optimized for the customer