Marketing for Engineers Ch 1

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M a r k e t i n g f o r E n g i n e e r s

Dr. Karim


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Chapter 1: Creating Customer Value and Engagement


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Keywords Process: a series of actions or steps taken in order to

achieve a particular end.

Stakeholders: A party that has an interest in an enterprise

or project. The primary stakeholders in a typical

corporation are its investors, employees, customers and

suppliers.


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Value: The worth that a product has in the mind of the consumer.

The consumer's perceived value of a good or service affects the price

that he or she is willing to pay for it. For the most part, consumers are

unaware of the true cost of production for the products they uy. !nstead,

they simply have an internal feelin" for how much certain products are

worth to them. Thus, in order to otain a hi"her price for their products,

producers may pursue marketin" strate"ies to create a hi"her perceived

value for their products. Value, a central marketin" concept, is primarily

a comination of #uality, service, and price $#sp%, called the customer

value triad. Value perceptions increase with quality and service but

decrease with price.

Keywords


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W ha t i s M a r k e t i ng ?

One of the good denitions of marketing is: &Theprocess by which companies create value for

customers and build strong customer relationships in

order to capture value from customers in returnKotler!

"nother denition: # Marketing is an organi$ational

function and a set of processes for creating%

communicating% and delivering value to customers

and for managing customer relationships in ways


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" &implied Model of The Marketing 'rocess


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Goals of Marketing

To satisfy customers( needs

To attract new customers by promisingsuperior value!

To keep ) grow current customers bydelivering satisfaction!


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What *s Marketed?


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+T,--!!


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Who Markets?

" marketer is someone who seeks a

response.attention% a purchase% a

vote% a donation.from another

party% called the prospect!


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Market: The set of actual and

potential buyers of a product! These

people share a need or want that

can be satised through e/change

relationships!

Exchange: 'rocess of obtaining a

desired product from someone by

o0ering something in return!

Core Denitions


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Core Denitions 1 2eed

2eeds1 basic human

re3uirements


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Types of 2eeds

'hysical:

4ood% clothing% shelter% safety

&ocial:

5elonging% a0ection

*ndividual:

6earning% knowledge% self1e/pression

i i


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Core Denitions ! "ant

Wants 1 needs become wants when

they are directed to specic

ob7ects that might satisfy the

need! Wants are shaped by the

society!

" 8!&! consumer needs food but may

want a 'hilly cheesesteak and an

iced tea! " person in "fghanistan

needs food but may want rice%

C D i i D d


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9emandsare wants for

specic products

backed by an abilityto pay!

Many people want a

4errari only a few

are able to buy one!

Core Denitions ! Demands


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Core Denitions # Market$%ering

4or each target market% the

rm develops a tangible

market o%ering ! a

combination of products,

information, and

experiences - that it

positions in the minds of

the target buyers!

Core Denitions &rand


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Core Denitions# &rand

' brand is a name( term( sign( s)mbol( design( or

a combination of these( that identies the

products or ser*ices of one seller or group of

sellers and di%erentiates them from those of

competitors!

" brand name such as Mc9onald(s carries many

associations in people(s minds that make up its image:

hamburgers% cleanliness% convenience% courteous

service% and golden arches! "ll companies strive to build

a brand image with as many strong% favorable% and

uni3ue brand associations as possible!


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Core Denitions ! Competition

,ompetition includes all the actual and potential ri*al o%erings

and substitutesa buyer might consider!

"n automobile manufacturer can buy steel from 8!&! &teel in the

8nited &tates% from a foreign rm in ;apan or Korea% or it can buy

aluminium for certain parts from "lcoa to reduce the car(s weight%

or engineered plastics from &audi 5asic *ndustries ,orporation


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Core Denitions# Customer +atisfaction

,ustomer satisfaction

depends on the

product(s perceived

performance relative

to a buyer(s

e/pectations!


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& a t i s f a c t i o n

+/pectation

'erformance

>@

*f performance is lower than e/pectations% satisfaction islow!

*f performance is higher than e/pectations% satisfaction ishigh!

+/pectation

'erformance

@>


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Core De nitions Marketing


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Core De nitions ! MarketingEn*ironment

- The Marketing +nvironment refers to the actors and forces

outside of the marketing department that a0ectmarketing management ability to build and maintain

successful relationships with target customers!

-

The Marketing +nvironment is made up of:

! The microenvironment consists of the actors close to the

company that a0ect its ability to serve its customers!

These forces are partially controllable by the company!

A! The macroenvironment consists of the larger societal

forces that a0ect the microenvironment! These forces

are uncontrollable by the company!


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M a r k e t i n g E n * i r o n m e n t

Core Denitions Marketing M)opia


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Core Denitions ! Marketing M)opia

Marketing M)opia: The mistake of

paying more attention to the specic

products a company o0ers than to the

benets ) e/periences produced by

these products!

The fundamental concept to take away

from marketing myopia is that

marketers should look towards the

market and modify the company andproducts accordingly rather than

looking towards the company% its

potential and then catering the market!

'n Example ofMarketing M)opia:

Kodak ,olaroid

*


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* Concepts

There are ve alternative concepts under

which organi$ations design and carry outtheir marketing strategies:

! 'roduction ,oncept

A! 'roduct ,oncept

C! &elling ,oncept

D! Marketing ,oncept

E! &ocietal Marketing ,oncept

,roduction Concept


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,roduction Concept

/he production concept holds that consumers

0ill fa*or products that are a*ailable and highl)a%ordable. /herefore( management should

focus on impro*ing production and distribution

ecienc).

This concept is one of the oldest orientations that

guides sellers and it is still a useful philosophy in

some situations! 4or e/ample% computer maker

6enovo dominates the highly competitive% price1

sensitive ,hinese ', market through low labor costs%

,roduct Concept


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,roduct Concept The product concept holds that consumers 0ill fa*or

products that o%er the most in 2ualit)( performance%

and innovative features! 8nder this concept% marketingstrategy focuses on making continuous productimprovements!

'roduct 3uality and improvement are important parts ofmost marketing strategies! Gowever% focusing only on thecompanys products can also lead to marketing myopia. Fore/ample% some manufacturers believe that if they can#build a better mousetrap% the world will beat a path to

their doors! 5ut they are often rudely shocked! 5uyersmay be looking for a better solution to a mouse problembut not necessarily for a better mousetrap! The bettersolution might be a chemical spray% an e/terminatingservice% a house cat% or something else that works even

better than a mousetrap!

+elling Concept


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+elling Concept /he selling concept holds that consumers 0ill not bu)

enough of the rm3s products unless it undertakes a

large!scale selling and promotion e%ort.

The selling concept is typically practiced with unsought goods.

those that buyers do not normally think of buying% such as

insurance! These industries must be good at tracking down

prospects and selling them on a product(s benets! &uch

aggressive selling% however% carries high risks! *t focuses on

creating sales transactions rather than on building long1term%

protable customer relationships! /he aim often is to sell 0hat

the compan) makes rather than making 0hat the market

0ants. *t assumes that customers who are coa/ed into buying

the product will like it!


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Marketing Concept

The marketing concept holds that

achieving organi$ational goals depends on

knowing the needs and wants of target

markets and delivering the desired

satisfactions better than competitors do!

8nder the marketing concept% customer focus

and value are thepaths to sales and prots!


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+ocietal Marketing Concept


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+ocietal Marketing Concept The societal marketing concept 2uestions

0hether the pure marketing concept overlooks

possible conHicts between consumer short-run wants

and consumer long-run welfare.

/he societal marketing concept holds thatmarketing strateg) should deli*er *alue to

customers in a 0a) that maintains or impro*es

both the consumer3s and societys well-being.

+ocietalmarketi

ng

+ociet)


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oc e a ar e ng oncep n'pplied Example:

&ottled "ater


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Customer 4elationshipManagement

C4M is the process of building )maintaining protable customerrelationships by delivering superiorcustomer value ) satisfaction!

Customer ,ercei*ed Value: Thecustomers evaluation of thedi0erence between all the benets )all the costs of a market o0eringrelative to those of competing

products!


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Changing 5ature of Customer4elationships

4elating 0ith More Carefull) selectedCustomers:

1 +electi*e 4elationship Management

Weeding out losing customers )targeting ) pampering winning ones

4elating for the 6ong term:

8sing CRM to retaincurrent customers )

building protable long1term relationshipswiththem!

4elating Directl): 8sing direct marketing

tools such as telephone% mail order catalogs )kiosks! E Dell & ma!on.


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Creating Customer 6o)alt) 74etention

# losing customers does not meanlosing a single sale but in fact losing

the entire stream of purchases thatthe customer would make o"er alifetime#.

Customer lifetime *alue: Thevalue of the entire stream of

purchases that a customer would


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Customer E2uit)

,ompanies should not 7ust ac3uire customers% butkeep ) grow them as well!

The ultimate aim of customer relationshipmanagement is to produce high customer e3uity!

Customer Equityis the combined discountedcustomer lifetime values of all the company(scurrent ) potential customers!

*t is a better measure of a rms performance than

current sales or market share!

More 6oyal rm(s I Gigher rm(s

Proftable customers Customer Equity

Marketing for Engineers Ch 1

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