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What Is Marketing?
Simple definition: Marketing is managing profitable customer relationships. – Goals: 1.Attract new customers by promising superior value. Keep and grow current customers by delivering satisfaction
Marketing Defined
§Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. old view of marketing- making a sale "telling and selling" new view- satisfying customer needs
A Simple Model of the Marketing Process
1-understand the marketplace 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 5-capture values from customers to create profi…
Core Concepts
Marketers must understand five core customer and marketplace concepts: –Needs, wants, and demands. –Market offerings. –Value and satisfaction. –Exchanges and relationships. –Markets
Needs, Wants, and Demands
Need: State of felt deprivation including physical, social, and individual needs. –Physical, social, and individual needs. Wants: Form that a human need takes, as shaped by culture and individual personality. Wants + Buying Power = Demand
Needs, Wants, and Demands
Types of Needs: –Physical needs: •Food, clothing, shelter, safety. –Social needs: •Belonging, affection. –Individual needs: •Learning, knowledge, self-expression
Market Offerings
Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing offers fulfill needs and wants
Marketing in Action
Market offerings are not limited to physical products. UNCF powerfully markets the idea that “A mind is a terrible thing to waste.”
Marketing Myopia
Marketing myopia: –Occurs when sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. –They focus on the “wants” and lose sight of the “needs.”
Fuel for Thought
The music industry provides an excellent example of marketing myopia, as firms were initially very reluctant to adapt to consumers’ desires for digital music downloads.
Customer Value and Satisfaction
Care must be taken when setting expectations for market offerings: –If performance is lower than expectations, satisfaction is low. –If performance is higher than expectations, satisfaction is high.
Exchanges and Relationships
Exchange: –Act of obtaining a desired object from someone by offering something in return. What would be exchanged for a vacation?
Exchanges and Relationships
Relationships: –Marketing actions build and maintain relationships with target audiences involving an idea, product, service, or other object. –Marketers build strong relationships by consistently delivering superior customer value.
What Is a Market?
A market: –Is the set of actual and potential buyers of a product. •These people share a need or want that can be satisfied through exchange relationships.
A Modern Marketing System
-company -------------------------------------------------------------------------/ /suppliers marketing intermediaries--consumers--/ -competitors- /---------------------major environmental forces------------------------------------/…
Marketing Management
The art and science of choosing target markets and building profitable relationships with them. –Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value.
Marketing Management
Designing a winning marketing strategy requires answers to the following questions: 1. What customers will we serve? — What is our target market? 2. How can we best serve these customers? — What is our value proposition?
Selecting Customers to Serve
Market segmentation: –Dividing the market into segments of customers. Target marketing: –Selecting one or more segments to cultivate.
Choosing a Value Proposition
The set of benefits or values a company promises to deliver to consumers to satisfy their needs. –Value propositions dictate how firms will differentiate and position their brands in the marketplace.
Marketing in Action
Many firms are emphasizing the “value” in their value proposition during tough economic times. picture of walmart with big sign in store saying "expect more pay less"
Marketing Management Orientations
Organizations design and carry out their marketing strategies under five alternate concepts: –Production Concept. –Product Concept. –Selling Concept. –Marketing Concept. –Societal Marketing Concept.
The Selling and Marketing Concepts Contrasted
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The Integrated Marketing Plan
Transforms the marketing strategy into action. Includes the marketing mix and 4 Ps of marketing: –Product. –Price. –Place (Distribution). –Promotion.
Customer Relationship Management
The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
Building Customer Relationships
Customer relationship management (CRM): –Deals with all aspects of acquiring, keeping, and growing customers. –Customer value and satisfaction are key.
Customer Perceived Value
Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers.
Customer Perceived Value
Customer perceived value: –Perceptions may be subjective. –To some customers “value” might mean paying more to get more.
Customer Satisfaction
Extent to which the product’s perceived performance matches a buyer’s expectations.
Customer Satisfaction
Customer satisfaction: –High levels of customer satisfaction often leads to consumer loyalty. –Some firms seek to DELIGHT customers by exceeding expectations. –Profitability must be considered.
Customer Relationships
Firms may choose to build relationships at different levels. Loyalty and retention programs build relationships and may include: –Frequency marketing programs. –Club marketing programs.
Changing Nature of Relationships
Customer profitability analysis eliminates losing customers and selects profitable ones with whom relationships should be developed.
Changing Nature of Relationships
Firms now relate more deeply and interactively via blogs, social network Web sites, email, and video sharing. Embracing customer-managed relationships requires marketing via attraction rather than intrusion. Consumer-generated marketing has become a significant marketing force.
Partner Relationship Marketing
Marketing partners help create customer value and assist in building customer relationships. Partners inside the firm: –Cross-functional customer teams. Partners outside the firm: –Supply chain management.
Capturing Value From Customers
Value is captured from customers via current and future sales, market share and profit. –Superior customer value leads to highly satisfied loyal customers who buy more. –Key outcomes of customer value include customer loyalty and retention, share of market, share of customer, and custom…
Capturing Value From Customers
Customer lifetime value –The value of the entire stream of purchases that the customer would make over a lifetime of patronage. Share of customer –The portion of the customer’s purchasing that a company gets in their product categories.
Customer Equity
The total combined customer lifetime values of all the company’s current and potential customers. Manage equity by: –Classifying customers by projected loyalty and potential profitability. Manage each group accordingly.
Customer Relationship Groups
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Changing Marketing Landscape
The uncertain economic environment. The digital age. Rapid globalization. Sustainable marketing – call for more social responsibility. Growth of not-for-profit marketing.
An Expanded Model of the Marketing Process
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Marketing Strategy and the Marketing Mix
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Customer Driven Marketing Strategy
Market segmentation is the process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs
Customer Driven Marketing Strategy
Market targeting involves evaluating each market segment’s attractiveness and selecting one or more to enter
Customer Driven Marketing Strategy
Positioning is arranging for a product to occupy a clear distinctive, and desirable place relative to competing products in the minds of the customer.
Developing an Integrated Marketing Mix
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Managing the Marketing Effort Marketing Analysis
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Marketing Analysis
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Marketing Planning Elements of a Marketing Plan
-Executive summary -current marketing situation -threats and opportunity analysis -objectives and issues -marketing strategy -action programs -budgets -controls
Marketing Control
set marketing goals---measures performance---evaluates causes of differences------ take corrective actions
Measuring and Managing Return on Marketing Investment
Return on marketing investment (marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment.
Return on Marketing Investment
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Porter’s Five Forces Model
•Used to assess industry attractiveness •Used to assess and indentify macro-environmental threats
Porter’s Five Forces Model
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Porters 5 Forces Apply to Opportunities and Threats
Entry – What barriers to entry exist (scale and deterrence) Rivalry – How heated is the rivalry (cost, price, product differentiation, cooperation, diversification) Substitutes – Improvements & Switching Supplier – Who holds the power? What Type(s) of Power? Manufacturer W…
Barriers to Entry
•Economies of Scale •Product Differentiation •Cost Advantages Independent of Scale –Proprietary Technology –Know-how –Favorable Access to Raw Materials –Favorable Geographic Locations •Contrived Deterrence •Government Regulation of Entry
Threat of New Entrants
Do large firms have a cost or performance advantage in your segment of the industry? •Are there proprietary product differences in your industry? •Are there any established brand identities in your industry? •Do your customers encounter significant switching costs?
Indicators of the Threat of Buyers in an Industry
•The number of buyers is small •Products sold to buyers are undifferentiated and standard •Products sold to buyers are a significant proportion of buyers’ final costs •Buyers are not earning significant economic profit •Buyers threaten backward vertical integration
Bargaining Power of Buyers
•Is there a large number of buyers relative to the number of firms in the business? •Do you have a large number of customers each with relatively small purchases? •Does the customer face any significant costs in switching suppliers? •Does the buyer need a lot of important information?
Threat of Substitutes
•Substitutes have performance limitations which do not completely offset their lowest price of their performance advantage is not justified by their higher price. •The customer will incur costs in switching to a substitute. •Your customer has no real substitute. •Your customer is not l…
Indicators of the Threat of Suppliers in an Industry
•Suppliers’ industry dominated by a small number of firms •Suppliers sell unique or highly differentiated products •Suppliers are not threatened by substitutes •Suppliers threaten forward integration •Firms are not important customers for suppliers
Bargaining Power of Suppliers
•My inputs (materials, labor, supplies, services, etc.) are standard rather than unique or differentiated. •I can switch between suppliers quickly and cheaply. •My suppliers would find it difficult to enter my business or my customers would find it difficult to perform my function in-ho…
Attributes of an Industry that Increase the Threat of Rivalry
•Large number of competing firms •Competing firms are the same size and have the same influence •Slow Industry Growth •Lack of product differentiation •Productive capacity added in large increments
Threat of Rivalry
•The Industry is growing rapidly. •The industry is not cyclical with intermittent over-capacity. •The fixed costs of the business are a relatively low portion of total costs. •There are significant product differences and brand identities between the competitors. •The competitors are …
Overall Industry Rating
•Assign an assessment such as Favorable, Unfavorable or Moderate to each of the FIVE FORCES. –Threat of New Entrants. –Bargaining Power of Buyers. –Threat of Substitutes. –Bargaining Power of Suppliers. Intensity of Rivalry Among Competitors
VRIO Framework
•Resource Categories: –Assets –Capabilities –Competencies –Organizational Processes –Firm Attributes –Information and Knowledge
VRIO Framework
•Resource Categories: –Financial Capital •Retained Earnings, Assets, Liabilities, Cash –Physical Capital •Plant Equipment, Geographic Location, Access to Raw Materials, Computer Hardware & Software –Human Capital •Training, Experience, Judgment, Intelligence, Relationships
VRIO Framework
–Organizational Capital •Administrative Framework, Formal & Informal Planning, Reporting Structure, Controlling Systems, Coordinating Systems, Organizational Culture, Organizational Processes, Supply Chain Access –Market-Based •Information, Knowledge, Brand Name, Relationships, Organiz…
Assessment of Resources
1.The question of value:do firms resources and capabilities enable the firm to respond to envirnomental treats or opportunities? 2.The question of Rarity:is a resource currently controlled by only a small number of competing firms? 3.The question of Imitability:do firms w/o a resource f…
Marketing Information and Customer Insights
Fresh understandings of customers… from customer insights… That become the basis for creating customer value and relationships
Marketing Information System
The MIS begins and ends with information users—marketing managers, internal and external partners, and others who need marketing information. First, it interacts with these information users to assess information needs. Next, it interacts with the marketing environment to develop needed i…
Marketing Information System
. Finally, the MIS helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships.
Assessing Marketing Information Needs
Customer company wants needs resources ____________________________ balance scale A company must balance what the users would LIKE to have against what they really NEED and what is FEASIBLE for a firm to offer.
Developing Marketing Information
•Internal Databases •Competitive marketing intelligence •Marketing research
Marketing Research
The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
The Marketing Research Process
define the problem and research objectives-----developing the research plan for collecting information-----implementing the research plan-collecting and anaylazing the data------intrepreting and reporting the findings
Defining the Problem and Research Objectives
The objective of exploratory research is to gather preliminary information that will help define the problem and suggest hypotheses. The objective of descriptive research is to describe things, such as the market potential for a product or the demographics and attitudes of consumers wh…
Developing the Research Plan Marketer’s Questions
What information do we need? How will we get it?
Types of Data
secondary-- •Information that already exists somewhere, having been collected for another purpose Primary-- •Information collected for the specific purpose at hand
Gathering Secondary Data
Factiva Arbitron Information CNN Lexis Nexis Nielsen Resources Simmons
Primary Data Research Approaches
observational survey experimental
Primary Data--online research
internet surveys web-based experiments online focus groups tracking online behavior
Primary Research Sampling Plan
simple random sample stratified random sample Cluster(area) sample -Non probability sample convenience sample judgment sample quota sample
Research Instruments
•Questionnaires- most common flexible •Mechanical Instruments-Neilsen people meters, physical response, Neuromarketing
Implementing the Research Plan
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Collecting processing analyzing All three of these steps can be done internally or through a market research firm.
Interpreting and Reporting Findings
The research should present IMPORTANT findings that are related to decision making.
Analyzing and Using Marketing Information
Customer Relationship Management (CRM) involves managing customer “touch points” in order to maximize customer loyalty
Analyzing and Using Marketing Information
Distribution of Marketing Information through: company internet, extranets
Other Marketing Information Considerations
small business nonprofit international public policy and ethics: privacy, misuses of findings

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