CH1 350

Marketing

"engaging customers and managing profitable customer relationships"

• goal: maximize long-term profitability by creating value for customers in order to capture value from customers in return.

5 Steps in the Marketing Process

1. Understand the marketplace and customer needs and wants.

2. Design a customer value-driven marketing strategy.

3. Construct an integrated marketing mix that delivers superior value.

4. Engage customers, build profitable relationships, and create customer delight.

5. Capture value from customers in return: capture value from customers to create profits and customer equity.

Customer Equity

"the value or long-term profitability of the customer to the company".

It is the total combined customer lifetime values of all of the company’s current and potential customers.

Amazon’s Core Philosophy

Founder Jeff Bezos states: “Obsess over customers” and “The thing that drives everything is creating genuine value for customers”. The company is "flat-out customer-obsessed".

Amazon's Personalization Strategy

• Amazon strives to have “310 million stores” if it has 310 million customers

• It greets each customer with a personalized home page and AI-based recommendations based on past purchase/browsing histories.

Amazon's Omnichannel Strategy and Key Innovations

Omnichannel: Amazon purchased Whole Foods Market. It operates Amazon Go stores that feature sophisticated “just walk out” technology.

Innovations: 1-Click ordering; Voice-shop using an Echo smart speaker (e.g., “Alexa, reorder laundry detergent”); and Amazon Prime Now delivers same-day or within a few hours.

Human Needs

are states of felt deprivation. They include basic physical, social, and individual needs.

Wants

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

Demands

When backed by buying power, wants become demands

Market Offerings

some combination of products, services, solutions, and experiences offered to a market to satisfy a need or a want".

• Includes tangible products, services (intangible activities), solutions, and experiences

Marketing Myopia

Shortsighted focus on their products makes them lose sight of underlying customer needs

Myopic sellers forget that a product is only a tool to solve a consumer problem.

People don’t want to buy a quarter-inch drill. They want a quarter-inch hole

Mahali Mzuri (Marketing Experience)

• Kenyan safari camp was named the “#1 hotel in the world” 

• exemplifies Marketing Experiences by combining inspired natural surroundings, luxury accommodations (12 tented suites), unsurpassed service, and memorable adventures, including cultural visits to a local Maasai village

Market

the set of actual and potential buyers of a product or service

Value Proposition

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

• It differentiates brands and answers: “Why should I buy your brand rather than a competitor’s?”.

• Ex) JetBlue promises award-winning service from award-winningly nice humans

Production Concept

holds that consumers will favor available and highly affordable products

• management focus is on improving production and distribution efficiency

• Risk: Marketing myopia

Selling Concept

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

• Focus: Starts with the Factory; Focuses on Existing products; Aims for Profits through sales volume.

• Risk: Focuses on selling what the company makes rather than making what the market wants

The Marketing Concept

holds that achieving organizational goals depends on knowing the needs and wants of target markets, delivering the desired offerings, and creating more customer satisfaction than competitors

• Focus: Starts with the Market; Focuses on Customer needs; Aims for Profits through customer satisfaction

Customer-Driving Marketing

Applies when customers don't know what they want.

• It involves understanding customer needs even better than they do and creating products that meet both existing and latent needs, now and in the future.

The Societal Marketing Concept

holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and society’s well-being 

• calls for sustainable marketing.

• 3 Considerations Balanced: Company profits, consumer wants, and society’s interests.

  • ex) Eco Laundry Company

    • value proposition is built on its sustainability mission: uses clean-energy machines, nontoxic detergents, and partners with community programs

4 P’s of Marketing

1. Product: Creating a need-satisfying market offering (includes services, solutions, and experiences).

2. Price: Deciding how much to charge.

3. Place: How the offering is made available to target consumers (includes digital channels and brick-and-mortar).

4. Promotion: Engaging target consumers, communicating the value proposition, and persuading consumers of the offer’s merits.

Customer Relationship Management (CRM)

the overall 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 the benefits delivered by and the costs of obtaining and using a market offering, relative to those of competing offerings

• Customers act on perceived value

Customer Satisfaction

depends on the product’s perceived performance relative to a buyer’s expectations

• Marketers should underpromise and overdeliver to create delight

  • ex) Chick-fil-a

    • Excels at customer delight by training employees to go the “2nd mile” in everyday customer service (e.g., retrieving items, walking customers to cars with umbrellas)

    • ranked #1 in customer service among fast-food chains for 9 years

Customer-Engagement Marketing

fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community

• Marketers are shifting from marketing by intrusion to marketing by attraction

Customer Brand Advocacy

satisfied customers initiate favorable interactions with others about a brand

Fender Play

Fender launched this online learning platform to reduce the 90% dropout rate among new guitar players.

• The 10% who stick generate an average customer lifetime value of more than $10,000.

• Fender Play subscribers spend 43% more on average

Customer Generated Marketing

customers themselves help shape their own brand experiences and those of others

• Examples: Customers submitting product ideas (LEGO) or content (Wonderful Pistachios “Get Crackin’” campaign, Coca-Cola’s AI artwork)

Partner Relationship Management

working with others inside and outside the company to jointly engage and bring more value to their customers

• partnering with internal departments, suppliers, and channel partners (the entire supply chain)

Customer Lifetime Value

the entire stream of purchases that the customer would make over a lifetime

• 5x cheaper to keep an existing customer than acquire a new one

Share of Customer

the share they get of the customer’s purchasing in their product categories

• "share of wallet," "share of garage"

• Strategy: Cross-sell and up-sell more products and services

  • (e.g., Uber expanding to Uber Eats, Uber Scooter)

Strangers

• Low Profitability, Short-term Loyalty

• Don’t invest; make money on every transaction

Butterflies

• High Profitability, Short-term Loyalty

• Enjoy them for the moment, create satisfying transactions, cease investing until next time

Barnacles

• Low Profitability, Long-term Loyalty

• Improve profitability or “fire” them

True Friends

• High Profitability, Long-term Loyalty

• Continuous relationship investments to delight and grow them into true believers

Major Developments Changing the Marketing Landscape

1. The digital age.

2. The growth of not-for-profit marketing.

3. Rapid globalization.

4. The call for sustainable marketing practices.

Fastest Growing Platform

Mobile Marketing

Omnichannel Marketing

Requires integrating all marketing activities so customers can seamlessly navigate across brick-and-mortar, online, mobile, and social media channels

• Ex) Taco Bell's “Taco Bell Go Mobile” store concept, designed for mobile ordering and pickup

AI in Marketing (DCCC)

• Data gathering/analysis (“speed to insight”)

• Customer engagement/personalization

• Content creation

• Customer service (AI-powered chatbots)

Make-A-Wish Foundation

• Relies on moving stories, digital platforms, and corporate partners (e.g., Disney) to raise funds

Caring Capitalism; Ben and Jerry’s

Companies like Ben & Jerry's that build social and environmental responsibility into their mission, seeking to "do well by doing good"

Ben & Jerry’s 3-Part Mission; Linked Prosperity

1. Product mission (finest quality ice cream).

2. Economic mission (sustainable financial growth).

3. Social mission (improve quality of life globally/locally).