Marketing Chapters 1 5 Exam Review CHAPTER 1 Marketing the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return attract new customers and keep current customers Traditional Marketing marketing is seen in abundance at shopping malls and in media advertisements marketing in the old sense telling and selling Contemporary Marketing marketers have assembled new marketing approaches imaginative web sites apps online social media etc satisfying customer needs The Marketing Process Creating and Capturing Customer Value In the first four steps companies work to understand consumers create customer value and build strong customer relationships In the final step companies reap the rewards of creating superior customer value The rewards are in the form of sales profits and long term customer equity Customer Needs Physical food clothing warmth safety social belonging and affection and individual knowledge and self expression Customer Wants form taken by human needs when shaped by culture and individual personality Customer Demands human wants that are backed by buying power Market offerings a combo of products services info or experiences offered to a market to satisfy a need want Marketing myopia paying more attention to the specific products a company offers than to the benefits and experiences produced by these products sellers will have trouble if a new product comes along that serves the customer s need better or less expensively The customer will have the same need but will want the new product Exchange 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 Main elements in a modern marketing system Each party in the system adds value for the next level The arrows represent relationships that must be developed and managed Thus a company s success at building profitable relationships depends not only on its own actions but also on how well the entire system serves the needs of final consumers Marketing management choosing target markets and building profitable relationships with them target market and value proposition Designing a Customer Driven Marketing Strategy 1 Market segmentation select customers to serve 2 Decide how company will differentiate itself in marketplace value proposition set of benefits or values promised to deliver to consumers Production concept idea that consumers will favor products that are available and highly affordable Product concept idea that consumers will favor products that offer the most quality performance and features Selling concept idea that consumers will not buy enough of the firm s products unless the firm undertakes a large scale selling and promotion effort inside out view that focuses on existing products and heavy selling focus on selling what is made not what the customer wants Marketing concept a philosophy in which achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do outside in view that focuses on customer needs starts with a well defined market focuses on customer needs and integrates all the marketing activities that affect customers Societal marketing concept idea that a company s marketing decisions should consider consumers wants the company s requirements consumers long run interests and society s long run interests Social Marketing Concept companies should balance three considerations in setting their marketing strategies company profits consumer wants and society s interests Marketing Mix the set of marketing tools the firm uses to implement its marketing strategy The major marketing mix tools are product price place how product will be made available and promotion Customer Relationship Management process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction Customer perceived value the customer s evaluation of the difference between all the benefits and all the 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 Customer Engagement Marketing fostering direct and continuous customer involvement in shaping brand conversations experiences and community to make the brand a meaningful part of consumer s lives conversations Marketing by attraction creating market offerings messages that engage consumers rather than interrupt them Consumer generated marketing brand exchanges created by consumers by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers digital forums example Lay s create your own potato chip flavor Partner relationship management working with partners inside and outside the company to jointly bring more value to customers Customer lifetime value value of the entire stream of purchases a customer makes over a lifetime of patronage Share of customer the portion of the customer s purchasing that a company gets in its product categories offer greater variety to current customers Customer equity the total combined customer lifetime values of all of the company s customers It s a measure of the future value of the company s customer base Customer equity increases when the loyalty of the firm s profitable customers increases measures the future value of customer base Four relationship groups Strangers company will not gain anything by investing time and resources Butterflies company should create satisfying and profitable transactions capturing as much of their business as possible in the short time during which they buy from the company Efforts to convert butterflies into loyal customers are rarely successful True Friends have potential to generate good profit should make relationship investments Barnacles highly loyal but not very profitable Digital and social media marketing engaging consumers via their digital devices using marketing tools social media Mobile marketing using mobile channels to stimulate immediate buying make shopping easier and enrich the brand experience company apps Map of Entire Marketing Process Chapter 1 Learning Objectives Define marketing and outline the steps in the marketing process Explain the importance of understanding the