Learning Objectives Define marketing and outline the steps

Learning Objectives • Define marketing and outline the steps in the marketing process. • Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. • Identify the key elements of a customerdriven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 1 -2

Learning Objectives • Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. • Describe the major trends and forces that are changing the marketing landscape in this age of relationships. 1 -3

Marketing • Marketing involves creating value for customers and building strong customer relationships in order to capture value from customers in return. P. Kotler: Marketing is the art to develop the product, produce it, deliver on market and earn • Goals: the profit • Attract new customers by promising superior value • Keep and grow current customers by delivering satisfaction 1 -4

Forms of Marketing Traditional • View - Making a sale • Abundance of products in the nearby shopping centers • Television, magazine, and direct-mail ads Limitations – technological, ethics, regulation…. . Contemporary • View - Satisfying customer needs • Imaginative Web sites and mobile phone apps, blogs, online videos, and social media • Reach customers directly, personally, and interactively 1 -5

Figure 1. 1 - The Marketing Process: Creating and Capturing Customer Value …. Not only passive approach – pro-active = form, create needs and wants = new value Profit = key target + customer equity = profitability in future 1 -6

Understanding the Marketplace and Customer Needs • Core customer and marketplace concepts • Needs, wants, and demands • Market offerings (products, services, and experiences) • Value and satisfaction • Exchanges and relationships • Markets 1 -7

Customer Needs, Wants, and Demands Needs • States of felt deprivation • Physical needs - Food, clothing, warmth, and safety • Social needs - Belonging and affection • Individual needs - Knowledge and self-expression Wants • Form taken by human needs when shaped by culture and individual personality Demands • Human wants that are backed by buying power 1 -8

Market Offerings • Combination of products, services, information, or experiences • Offered to a market to satisfy a need or want • Entities—products, services, persons, places, organizations, information, and ideas • Marketing myopia: Paying more attention to the specific products a company offers than to the benefits and experiences produced by these products 1 -9

Customer Value and Satisfaction • Customers form expectations about the value and satisfaction of market offerings. • Satisfied customers buy again and spread the word. • Dissatisfied customers switch to competitors and criticize the product to others. • Setting low expectations may satisfy those who buy but fail to attract enough buyers. • Setting high expectations may disappoint buyers. 1 -10

Exchanges and Relationships • Exchange is the act of obtaining a desired object from someone by offering something in return. • Marketing consists of creating, maintaining, and growing desirable exchange relationships with target audiences. • Marketers build strong relationships by consistently delivering superior customer value. 1 -11

Markets • Set of all actual and potential buyers of a product or service • Consumers market: • Search for products • Interact with companies to obtain information • Make purchases • Customer-managed relationships are important as customers are empowered and marketing is made a two-way affair. 1 -12

Figure 1. 2 - A Modern Marketing System 1 -13

Designing a Customer-Driven Marketing Management • Marketing management: Choosing target markets and building profitable relationships with them • Basic factors to design a winning marketing strategy: • Target market • Value proposition 1 -14

Designing a Customer-Driven Marketing Strategy • Selecting customers to serve • Choosing a value proposition • Marketing management orientations • • • Production concept Product concept Selling concept Marketing concept Societal marketing concept 1 -15

Figure 1. 3 - The Selling and Marketing Concepts Contrasted 1 -16

Figure 1. 4 - Three Considerations Underlying the Societal Marketing Concept Sustainable marketing. . ? 1 -17

Marketing Mix • Set of marketing tools the firm uses to implement its marketing strategy • • Product Price Place Promotion Customer point of view: - customer needs and wants - costs - convenience - communication • Each tool should be blended into a comprehensive integrated marketing program. 1 -18

Customer Relationship Management • Delivering superior customer value and satisfaction to build and maintain profitable customer relationships • Customer-perceived value: Customer’s evaluation of the difference between all the benefits and costs of a marketing offer relative to those of competing offers • Customer satisfaction: Extent to which a product’s perceived performance matches a buyer’s expectations 1 -19

Customer Relationship Levels and Tools Levels Tools • Basic relationships • With low-margin customers • Full partnerships • With high-margin customers • Frequency marketing programs • Loyalty rewards programs • Club marketing programs 1 -20

Customer-Engagement Marketing • Customer-engagement marketing involves fostering direct and continuous customer involvement in shaping brand conversations, experiences, and community. • Greater consumer empowerment means that companies should rely on marketing by attraction. • The key is to find ways to enter consumers’ conversations with engaging and relevant brand messages. 1 -21

Consumer-Generated Marketing • Brand exchanges created by consumers • Consumers play an increasing role in shaping their own brand experiences and those of other consumers. • Occurs through: • Uninvited consumer-to-consumer exchanges • Invitation of consumers by companies • Asking for new product and service ideas • Asking to play an active role in shaping ads 1 -22

Partner Relationship Management • Working closely with partners both inside and outside the company to jointly bring more value to customers • Partners inside the firm—cross-functional teams • Partners outside the firm—suppliers, channel partners 1 -23

Creating Customer Loyalty and Retention • Keeping customers loyal proves economical to the company. • Customer lifetime value: Value of the entire stream of purchases a customer makes over a lifetime of patronage • Customer defections can be costly • Can lose that customer’s lifetime value 1 -24

Share of Customer • Portion of the customer’s purchasing that a company gets in its product categories • Increased by: • Having good customer relationship management • Offering greater variety to current customers • Creating programs to cross-sell and up-sell to market more products and services to existing customers 1 -25

Customer Equity • Total combined customer lifetime values of all of the company’s current and potential customers • Helps to measure the future value of the company’s customer base • Increases when the loyalty of the firm’s profitable customers increases • Better measure of a firm’s performance than current sales or market share 1 -26

Figure 1. 5 - Customer Relationship Groups 1 -27

The Changing Marketing Landscape • • • Digital age Changing economic environment Growth of not-for-profit marketing Rapid globalization Call for more ethics and social responsibility 1 -28

The Digital Age: Online, Mobile, and Social Media Marketing • Digital and social media marketing: Engaging consumers via their digital devices using digital marketing tools and social media • Mobile marketing: Using mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience • Blending the new digital approaches with traditional marketing creates a smoothly integrated marketing strategy and mix. 1 -29

Changing Economic Environment • The Great Recession from 2008 to 2009 undermined consumer confidence. • Post-recession era • Consumers have become more frugal. • New consumer spending values emphasize simpler living. • Marketers are focusing on practicality and durability in their product offerings and marketing pitches. 1 -30

Growth of Not-for-Profit Marketing • Not-for-profits face stiff competition for support and membership. • Sound marketing can help them attract membership, funds, and support. 1 -31

Rapid Globalization and Societal Marketing • Managers around the world are taking both local and global views of the company’s: • Industry • Competitors • Opportunities • Corporate ethics and social responsibility have become important for every business. 1 -32

Figure 1. 6 - An Expanded Model of the Marketing Process 1 -33