Chapter One Lecture NotesChapter Goals• Define marketing and outline the steps in the marketing process• Explain the importance of understanding customers and the marketplace andidentify the five core marketplace concepts• Identify the key elements of a customer-driven marketing strategyRest Stop Questions• 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 relationshipsWhat is Marketing?• The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in returno Goals Attract new customers by promising superior value Keep and grow current customers by delivering satisfaction• General Idea• Marketing is managing profitable customer relationships. The twofold goal is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction.Old View of Marketing/New View of Marketing- Old View of Marketingo Marketing a sale “Selling and telling”- New View of Marketingo Satisfying customer needs- General Ideao Marketing old school is “selling and telling” such as advertising and sales. However now it is satisfying customer needs.  Now we use the marketing mix, a set of tools that work together to satisfy customer needs and builds relationshipsA Simple Model of the Marketing ProcessCreate value for customers and build customer relationships.1. Understand the market place and customer needs and wants.2. Design a customer driven marketing strategy.3. Construct an integrated marketing program that delivers superior value.4. Build profitable relationships and create customer delight.Capture value from customers to create profits and customer equity1. Capture value from customers to create profits and customer equity.General Idea All marketing activities begin with understanding the target market. o Target market is a narrowly defined homogeneous group of people of whom the firm wants to do business with. Marketers do not create NEEDUnderstanding the Marketplace and Customer Needs Marketers must understand five core customer and marketplace concepts:o Needs, wants, and demandso Market offerings (products, services, and experiences)o Value and satisfactiono Exchanges and relationshipso MarketsNeeds States of felt deprivationWants The form human needs take as they are shaped by culture and individual personalityDemands Human wants that are backed up by buying power.General Ideao People need water. They want Dasani and they fact they spend their money on means demand.Customers Needs, Wants, and Demands- Types of Needso Physical Needs Food, clothing, warmth, safetyo Social Needs Belonging and affectiono Individual Needs Learning, knowledge, and self-expressionMarket Offerings- Products, services, and experienceso Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.o Not limited to physical productso Include entities such as persons, places, organizations, information, and ideas The U.S. Forest Service markets the idea of reconnecting young people with exploring the joys of nature firsthandMarketing Myopia- The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these productso Disney used to have a problem with thisCustomer Value and Satisfaction- Customers form expectations about the value and satisfaction that various market offerings will deliver o If marketers set expectations too low, they may satisfy those who buy but fail to attract enough buyerso If marketers set expectations too high, buyers will be disappointed.- General Ideao What the consumer expects in terms of what they give for what they get. Example: The expectations of items from a Dollar General in terms of quality are lower than “like” items that come from Wal-Mart or Target. However, the price at each location is different so the expectations are different.Exchanges and Relationships- Exchange: The act of obtaining a desired object from someone by offering something in return o Relationships Marketing actions build and maintain exchange relationships with target audiences involving an idea, product, service, or other object Marketers build strong relationships by consistently delivering superior customer value- General Ideao Exchange is the backbone of marketing. Without exchange, marketing is not complete nor were marketing efforts successful.Markets- The set of all actual and potential buyers of a product or service- General Ideao The market is made of people. The “market place” are the products and the marketsModern Marketing System- Supplierso Companyo Competitors Marketing intermediaries- Final consumersMarketing Management- The art and science of choosing target markets and building profitable relationships with them- General Ideao Notice marketing is an art and a science. This is why terminology will differ between authors. Our tests will come from your book, so be sureyou know how our authors state concepts and terms.Selecting Customers to Serve- Market segmentationo Dividing the market into segments of customers- Target marketingo Selecting one or more segments to cultivateChoosing a Value Proposition- The set of benefits or values a company promises to deliver to consumers to satisfy their needs- General Ideao If you were opening a pizza restaurant how would you be different? Today every person who wanted to eat pizza did, why would they switch to your restaurant? Differentiate yourself? Where will you be positioned in the market place? Low price delivery or high end against the Mellow Mushroom?Marketing Management Orientations- Organizations design and carry out their marketing strategies under five alternate concepts:o Production concepto Product concepto Selling concepto Marketing concepto Societal Marketing concept VERY IMPORTANTThe Production Concept• Consumers will favor products that are available and highly affordable• The organization should focus on improving production and distribution efficiency• General Idea• Focus is on the product and reducing the cost of production. Henry Ford with the model TThe Product Concept-