MKTG 301Principles of Marketing

DEVELOPING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING1CHAPTER

Define marketing and explain the importance of (1) discovering and (2) satisfying consumer needs and wants.

Distinguish between marketing mix elements and environmental factors.AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

Understand how organizations build strong customer relationships using current thinking about customer value and relationship marketing.

Describe how todays market orientation differs from prior eras oriented to production and selling.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

Understand the meaning of ethics and social responsibility and how they relate to the individual, organizations, and society.

Know what is required for marketing to occur and how it creates customer value and utilities for customers.AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

Would you sell more 43-inch Hitachi Big Screen HDTV monitors for $ 1799 or $499 each?

Being a Marketing Expert: Good News-Bad NewsThe Good News: You Already Have Marketing ExperienceThe Bad News: Surprises About the ObviousWHAT IS MARKETING?

How would you define marketing ?

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.Marketing

Products and ServicesValue, satisfaction,and qualityNeeds, wants,and demandsExchange, transactions,and relationshipsMarketsCoreMarketingConcepts

Marketing: Using Exchanges to Satisfy NeedsThe Diverse Factors Influencing Marketing Activities

WHAT IS MARKETING?

EXCHANGE

Exchange is the trade of things of value between buyer and seller so that each is better off after the trade.Exchange

CustomersRelationshipsEnvironmental ForcesShareholders(owners)The OrganizationSocietySocietySuppliersSocialRegulatoryTechnologicalEconomicCompetitiveOtherOrganizationsAlliancesPartnershipsOwnershipHumanResourcesResearchandDevelopmentInformationSystemsManufacturingFinanceMarketingManagementFIGURE 1-3 An organizations marketing department relates to many people, groups, and forces

Two or More Parties with Unsatisfied NeedsDesire and Ability to Satisfy These NeedsA Way for the Parties to CommunicateSomething to Exchange

Requirement for Marketing to Occur

Discovering Consumer NeedsThe Challenge of Launching Winning New ProductsConsumer Needs and Consumer WantsWhat a Market Is

HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

How many new products are launched each year in US?

What percentage succeed in the long run ?

Make sure to focus on what the customer benefit is?Learn key lessons from the past

Organizationsmarketing departmentDiscover consumer needs and wants Marketings first task:discovering consumer needs and wants

What Motivates a Consumerto Take Action?Needs - states of felt deprivation including physical needs for food, social needs for belonging and individual needs for self-expression. i.e. I am thirsty.

What Motivates a Consumerto Take Action?Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Cola.

Wants- Is it enough?Popularity is NOT the objectiveDont want virtual consumption- the phenomenon that occurs when consumer love your products but dont feel a need to buy it..

What Motivates a Consumerto Take Action?Demands - human wants backed by buying power. i.e. I have money to buy a Coca-Cola.

What is a Market? Potential consumers make up a market, which is:1.people2.with the desire and3.with the ability to buy a specific product.

One or more specific groups of potential customers toward which an organization directs its marketing program.Target Market

Organizationsmarketing departmentDiscover consumer needs and wantsInformation about needs and wantsPotential consumers:The market Marketings first task:discovering consumer needs and wants

Do you know too much about your consumer?Marketers have always watch consumersasked questions, but what most marketerdont do is watch consumer CLOSELY enoughIf you ignore a single bit of potentially valuable information about consumers you are wasting money.

Who buys our product or service?Who initiates and makes the decision to purchase and who influences the process?How is the purchase decision made? What attributes or criteria are important to customers?What are customers perceptions of and attitudes toward our company, product/service or brands?What factors influence the decision making process?Contact points where customers can be reached?

What should you know about your customers.

Organizations marketing departmentDiscover consumer needsInformation about needsPotential consumers:The marketSatisfy consumer needsFind the right combination of: Product Price Promotion PlaceGoods, services, ideasMarketings second task: Satisfying consumer needs

Marketing Mix

Environmental Factors

Satisfying Consumer NeedsTarget marketThe Four Ps: Controllable Marketing Mix FactorsThe Uncontrollable, Environmental FactorsHOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

Concept Check1. What is marketing?

A: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

2. Marketing focuses on __________ and ___________ consumer needsConcept Checkdiscoveringsatisfying

Concept Check3. What four factors are needed for marketing to occur?

A: (1) Two or more parties with unsatisfied needs, (2) a desire and ability on their part be satisfied, (3) a way for the parties to communicate, and (4) something to exchange.

Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-timer delivery and both before-sale and after-sale service.Customer Value

Global Competition, Customer Value, and Customer RelationshipsRelationship Marketing and the Marketing ProgramRelationship Marketing: Easy to UnderstandRelationship Marketing: Difficult to ImplementThe Marketing ProgramTHE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

The hallmark of developing and maintaining effective customer relationships is today called relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their long term benefit.Relationship Marketing

The marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers.Marketing Program

A Marketing Program for RollerbladeExpanding the Market for Rollerblade SkatesExploiting Strengths in TechnologyTHE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

1. An organization cant satisfy the needs of all consumers, so it must focus on one or more subgroups, which are its ____________.target markets

Concept Check

Concept Check2. What are the four marketing mix elements that make up the organizations marketing program?

A: product, price, promotion, place

Concept Check3. What are uncontrollable variables?

A: Environmental factors the organizations marketing department cant control. These include social, economic, technological, competitive, and regulatory forces.

FIGURE 1-7 Four different orientations in the history of American business

Production Era

Get out production, cut the price. If we can built a better product , the world will beat a path to our door. Company Orientations Towards the Marketplace

Marketing Myopia

Marketers should NEVER sell products to consumers!People buy holes, not drills!

Fashion, status, reference groups approval, and warmth, but not coats!The Marketing Myopia

Selling Concept EraGet the customers to the fit the companys offering. Company Orientations Towards the Marketplace

The marketing concept is the idea that an organization should strive to satisfy the needs of consumers, while also trying to achieve the organizations goals.Marketing Concept

Marketing Concept EraFind wants and feel themCompany Orientations Towards the Marketplace

WE MAKE IT HAPPEN FOR YOUHAVE IT YOUR WAYTO FLY, TO SERVE Marketing ConceptWE ARE NOT SATISFIED UNTIL YOU ARE

An organization that has a market orientation focuses its efforts on continuously collecting information about customers needs and competitors capabilities, sharing this information across departments, and using the information to create customer value.Market Orientation

Market OrientationCompany Orientations Towards the Marketplace

Balancing Customer and Competitor Orientation

Competitor Driven

Customer DrivenMarket OrientationFocuses on customer developments in designing its marketing strategy and on delivering superior value to its target customers.Pays balanced attention both customers and competitors in designing its marketing strategiesMoves mainly based on competitors actions and reactions

Customer relationship management is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace.Customer Relationship Management (CRM)

Ethics and Social Responsibility: Balancing the Interests of Different GroupsEthicsSocial ResponsibilitySocietal marketing conceptMacromarketingMicromarketing

HOW MARKETING BECAME SO IMPORTANT

The societal marketing concept is the view that an organization should discover and satisfy the needs of its consumer in a way that also provides for societys well-being.Societal Marketing Concept

Macromarketing looks at how the aggregate flow of a nations goods and services benefits society.Macromarketing

Micromarketing is how an individual organization directs its marketing activities and allocates its resources to benefit its customers.Micromarketing

The Breadth and Depth of MarketingWho Markets?What is Marketed?

HOW MARKETING BECAME SO IMPORTANTLets watch some commercials

(Almost) Anything Can be MarketedConsumerGoods andServices Business-to-BusinessMarketingIdea,Place,PeopleMarketing

Not-For-ProfitMarketing

The Breadth and Depth of Marketing (cont)Who Buys and Uses What is Marketed?Ultimate consumersOrganizational buyersWho Benefits?How Do Consumers Benefit?Utility

HOW MARKETING BECAME SO IMPORTANT

Ultimate consumers are the people who use the goods and services purchased for a household.Ultimate Consumer

Organizational buyers are units such as manufacturers, retailers, or government agencies that buy goods and services for their own use of for resale.Organizational Buyers

Who Benefits? ConsumersCompanySociety

Utility is the benefit or customer value received by uses of a product.Utility

UtilityForm

Place

Time

PossessionExamples of Marketing Actions that Create Utilitybenefit provided by transforming raw materials into the finished (PRODUCTION)

benefit provided by making the products available where consumers want them

benefit provided by storing products until they need

benefit provided by allowing the consumer to own, use and enjoy the productUTILITIES PROVIDING by MARKETING

1. Like Pillsbury and General Electric, many firms have gone through four distinct orientations for their businesses: starting with the __________ era and ending with todays ________________ era. Concept Checkproductionmarket orientation

Concept Check2. What are the two key characteristics of the marketing concept?

A: An organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organizations goals.

Concept Check3. In this book the term product refers to what three things?

A: Goods (physical products), services, and ideas

***The key to achieving these two objectives is the idea of exchange**************An organization can not satisfy every needs of every consumers, for example a company may want to satisfy the basic need such as entertainment. Than it needs a TARGET market.

WHAT IS MARKETING PROGRAM FOR ROLLERBLADE Inc. **Managers with production philosophy concentrate on achieving high production efficiency, low costs and mass distribution. They assume that consumers are primarily interested with products that are available, highly affordable and inexpensive. This orientation make sense in developing countries where consumers are more interested in obtaining the product than in its features. Texas instrument is one of the leading exponents of the get out production, cut the price philosophy that Henry Ford pioneered in the early 1900s to expend the automobile market. Texas instruments puts all of its efforts into building production volume and upgrading technology in order to bring down cost. It uses its lower costs to cut price further and expand the market size.Manager with the product philosophy concept focus on making superior products and improving them over time. They assume that buyers admire well-made products and appraise quality and performance. *However these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Many sellers make the mistake of focusing more on the physical products they offer than on the benefits produced by these products. They see themselves as selling a product rather than providing a solution to a need we call this marketing myopia.

*Web TV seemed like a couch potatos dream a TV with a set top box that allows you to surf the WEB and watch TV. Despite 50 million promotional blitz by WEBTv and partners Sony and Philips Electronics only 50,000 subscribers signed up. Nothing was wrong with the product itself which displayed Internet information on a standard TV set, it is just the original owner of WEB Tv (now owned by Microsoft) didnt know the market. The problem was the wrong marketing message. Couch potatoes want want to be better entertained whereas computer users want to surf the WEB using small PC screens. The WWW had trouble with TV. To people conditioned by the tube the WEB is slow, static and arcane at least when compared with star truck or Baywatch reruns. A revamped campaign now emphasized entertainment over education. *Having the selling philosophy managers assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. They also assume that the company has a whole battery of effective selling and promotion tools to stimulate more buying. *Having the selling philosophy managers assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. They also assume that the company has a whole battery of effective selling and promotion tools to stimulate more buying. *A manager with a marketing philosophy believes that the key to achieving company goals consist of being more effective than competitors in creating, delivering and communicating consumer value to its chosen target market.The concept has been expressed in many colorful ways:*Selling philosophy focuses on the need of the seller; marketing on the need of the buyer. Selling is preoccupied with the sellers need to convert his product into cash; marketing with the idea of satisfying needs of the customer by means of the product and the whole cluster of things associated with creating delivering and finally consuming it. *Having the selling philosophy managers assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. They also assume that the company has a whole battery of effective selling and promotion tools to stimulate more buying. *Today understanding customer is crucial, but it is not enough, companies needs to gain competitive advantage by designing their offers that satisfy target consumer needs better than competitors offer.They must continually adapt its strategies to the fast changing environment. This question now arises: Can the company spend too much time and energy tracking competitors, damaging its customer orientation ? The answer is YES. A company can become so competitive centered that it loses it loses even more important customer focus. Because so much depends on what the competitors do the company does not move in a planned direction toward a goal.Customer centered company by contrast focuses more on customer developments in designing each strategiesIn practice todays companies must be market oriented companies, watching both their customers and competitors. They must not let competitor watching blind them to customer focussing. **