Marketing Ch 1 & 2

Marketing is

Managing profitable customer relationships

The aim of marketing is

Create value for customers, capture value in return

Jeff Bezos success mantra

“Obsess over customers”

What makes the Amazon shopping experience special?

The “discovery”

Marketing definition

engaging customers and managing profitable customer relationships

We define marketing as the process by which

companies engage customers, build strong
customer relationships, and create customer value in order to capture value from customers in
return

Five step marketing process

1. Understand the marketplace and customer needs and wants.
2. Design a customer-driven marketing strategy.
3. Construct a marketing program that delivers superior value.
4. Build profitable relationships and create customer delight.
5. Capture value from customers to create profits and customer quality.

Human needs are

states of felt deprivation

Wants are

the form human needs take as they are shaped by culture and individual personality.

When backed by buying power, wants become

demands

Needs and wants are fulfilled through

market offerings

Marketing myopia occurs when

a company becomes so taken with their own products that they lose sight of underlying customer needs.

Exchange is the act of

obtaining a desired object from someone by offering something in return

A market is the

set of actual and potential buyers of a product.

Marketing management is defined as the

art and science of choosing target markets and
building profitable relationships with them

The marketing manager must answer two important questions:

1. What customers will we serve (what’s our target market)?
2. How can we serve these customers best (what’s our value proposition)?

Marketing managers must use

Segmentation

A company’s value proposition is the

set of benefits or values it promises to deliver to
consumers to satisfy their need

The production concept holds that

consumers will favor products that are available and highly affordable.

The product concept holds that

consumers will favor products that offer the most in quality, performance, and innovative features.

The selling concept holds that

consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort.

The marketing concept holds that

achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do

(customer focus and value are the paths to sales and profits)

Difference between selling and marketing concepts

The selling concept takes an inside-out approach, whereas the marketing concept uses an
outside-in perspective.

The societal marketing concept

questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare.

companies should balance three considerations in
setting their marketing strategies:

company profits, consumer wants, and society’s interests.

The marketing mix tools are classified into the four Ps of marketing:

product, price, place, and
promotion.

Customer relationship management

is the overall process of building and maintaining
profitable customer relationships by delivering superior customer value and satisfaction

The purpose of marketing is to generate

customer value profitably

The new marketing is

customer-engagement marketing.

Strategic planning

is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities

A mission statement

is a statement of the organization’s purpose—what it wants to accomplish in the larger environment.

A business portfolio

is the collection of businesses and products that make up the company

Business portfolio planning involves two steps:

1. The company must analyze its current business portfolio and decide which businesses
should receive more, less, or no investment.
2. It must shape the future portfolio by developing strategies for growth and downsizing.

The major activity in strategic planning is

business portfolio analysis.

The steps in portfolio analysis are:

1. To identify the strategic business units (SBU). An SBU is a separately managed unit of
the company with its own missions and objectives.
2. To assess the attractiveness of its various SBUs and decide how much support each
deserves. Most companies are well advised to “stick to their knitting” when designing
their business portfolios.

Most standard portfolio-analysis methods evaluate SBUs on two dimensions:

1. The attractiveness of the market or industry, and
2. The strength of the position in that market or industry.

The growth-share matrix defines four types of SBUs:

Stars. High-growth, high-share businesses or products. They will turn into cash cows.
Cash cows. Low-growth, high-share businesses or products. They produce a lot of cash
that the company uses to pay its bills and support other SBUs that need investment.
Question marks. Low-share business units in high-growth markets. They require a lot of
cash to hold their position.
Dogs. Low-growth, low-share businesses and products.

One of four strategies can be pursued for each SBU:

1. The company can invest to build its share.
2. It can invest just enough to hold its share.
3. It can milk its short-term cash flow, or harvest.
4. It can divest by selling it or phasing out.

Many companies have dropped matrix methods in favor of

customized approaches better suited
to their specific situations.

A company’s objective must be

“profitable growth.”

_________ has the main responsibility for achieving profitable growth for the company.

Marketing

Market penetration

making more sales to current customers without changing its products.

Market development

identifying and developing new markets for its current products.

Product development

offering modified or new products to current markets.

Diversification

starting up or buying businesses outside of its current products and markets.

Companies must also develop strategies for

downsizing.

In addition to customer relationship management, marketers must also practice

partner relationship management.

Each company department can be thought of as a link in the company’s internal

value chain.

Companies today are partnering with the other members of the supply chain to improve the
performance of the

customer value delivery network.