Chapter 1

Marketing in a Changing World: Creating Customer Value and Satisfaction

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Road Map: Previewing the Concepts

Define what marketing is and discuss its core concepts.Explain the relationships between customer value, satisfaction, and quality.Define marketing management and understand how marketers manage demand and build profitable customer relationships.Compare the five marketing management philosophies.Analyze the major challenges facing marketers heading into the new “connected” millennium.

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What is Marketing?

Simply put: Marketing is the delivery of customer satisfaction

at a profit.Goals: Attract new customers by

promising superior value andkeep and grow current customers

by delivering satisfaction.

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Core Marketing Concepts (Fig. 1-1)

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Marketing Defined

Process by which individuals and groups obtain what they

needneed and want want through creating and exchanging exchanging products products and value with

others.

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What are Consumers’ Needs, Wants, and Demands?

Needs Needs - state of felt deprivation including physical, social, and individual needs i.e hunger

WantsWants - form that a human need takes as shaped by culture and individual personality i.e. bread

DemandsDemands - human wants backed by buying power i.e. money

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ExperiencesExperiences PersonsPersons

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

PlacesPlaces

OrganizationsOrganizations IdeasIdeasActivitiesActivities

What Will Satisfy Consumers’ Needs and Wants?

ServicesActivity or Benefit Offered for Sale That is Essentially

Intangible and Doesn’t Result in the Ownership of Anything

ServicesActivity or Benefit Offered for Sale That is Essentially

Intangible and Doesn’t Result in the Ownership of Anything

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How Do Consumers ChooseAmong Products and Services?

Total Quality Management Involves Improving the Quality of Products, Services, and

Business Processes

Product’s Perceived Performance in Delivering Value Relative to Buyer’s

Expectations is Customer Satisfaction

Value Gained From Owning a Product and Costs of Obtaining the Product is

Customer Value

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ExchangesExchanges TransactionsTransactions

Relationships Relationships Building a MarketingNetwork by Adding:•Financial Benefits

•Social Benefits•Structural Ties

•Profitable Customers

How Do Consumers Obtain Products and Services?

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Consider the following thought questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from your instructor.

When was the last time you were completely satisfied with something you purchased? What was it? Why were you satisfied? What did a marketer have to do with this?

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Modern Marketing System (Fig. 1-2)

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Marketing Management

Attracting new customers and retaining and building relationships with current customers

ProfitableCustomer

Relationships

Finding and increasing demand, also changing or reducing demand such as in Demarketing

DemandManagement

Involves managing demand, which involves managing customer relationships

MarketingManagement

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Stage 1. Entrepreneurial MarketingStage 1. Entrepreneurial Marketing

Stage 2. Formulated MarketingStage 2. Formulated Marketing

Stage 3. Intrepreneurial MarketingStage 3. Intrepreneurial Marketing

Marketing Management Practice

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Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Societal Marketing ConceptSocietal Marketing Concept

Marketing Management Philosophies

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Marketing and Sales Concepts Contrasted (Fig. 1-3)

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Societal Marketing Concept (Fig. 1-4)

http://www.johnsonandjohnson.com/

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What are the major differences between the Marketing Concept and the Societal Marketing Concept?

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Marketing Challenges in the New “Connected” Millennium (Fig. 1-5)

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Learn About &Track CustomersWith Databases

Communicate WithCustomers in Groups

Or One-on-One

Create Products &Services Tailored to

Meet Customer Needs

Distribute Products More Efficiently &

Effectively

Connecting Technologies in Computers,

Telecommunications,Information, & Transportation

Help To:

Technologies for Connecting

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The InternetThe Internet has been hailed as the technology behind a New Economy.New applications include:

“click-and-mortar” companies“click-only” companiesBusiness-to-business e-commerce

Business-to-business transactions online are expected to reach $3.6 trillion in 2003.By 2005, 500,000 companies will use the Internet to do business.

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Connections With CustomersMost marketers are targeting fewer, potentially more profitable customers.Asking:

What value does the customer bring to the organization?Are they worth pursuing?

Connecting for a customer’s lifetime.

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BankOne (Marketing at Work 1-3)

BankOne focuses on connecting with customers they can serve profitably.Premier One customers know that they are “special, exclusive, privileged, valued.”http://www.bankone.com/

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Direct Connections With CustomersMany companies use technologies to let them connect more directly with their customers.

Products available via telephone, mail-order catalogs, kiosks and e-commerce.Some firms sell only via direct channels (i.e. Dell Computer, http://www.amazon.com/), others use a combination.

Direct marketing is redefining the buyer’s role in connecting with sellers.

Buyers are active participants in shaping the marketing offer and process; some buyers design their own products online such as at http://www.landsend.com/.

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Connections With Marketing’s Partners

Connecting Inside the Company

Every employee must be customer-focusedTeams coordinate efforts toward customers

Connecting With Outside Partners

Supply Chain ManagementStrategic Alliances

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Connections With the World Around Us

Global Connections

Value Connections

Social Responsibility Connections

Broadening Connections

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Rest Stop: Reviewing the Concepts

Define what marketing is and discuss its core concepts.Explain the relationships between customer value, satisfaction, and quality.Define marketing management and examine how marketers manage demand and build profitable customer relationships.Compare the five marketing management philosophies.Analyze the major challenges facing marketers heading into the next millennium.