Chapter 11: Customer-Driven Marketing 1. The Nature of Marketing & The Exchange Relationship Marketing Definition: A systematic approach to satisfying

Marketing Definition

A systematic approach to satisfying customers that creates value as part of a firm's overall strategy.

Exchange Process

Involves giving up one thing in return for something else, requiring both participants to exchange something of value.

Customer Value

A customer's subjective evaluation of benefits relative to costs.

Customer Value Formula

Customer Value = Customer Benefits - Customer Costs.

Functions of Marketing

Includes buying, selling, transporting, storing, grading, financing, marketing research, and risk-taking.

Production Orientation

Phase focused on manufacturing efficiencies during the Industrial Revolution.

Sales Orientation

Phase where supply began exceeding demand, emphasizing aggressive sales activities.

Market Orientation

Phase centered on gathering customer information and building long-term relationships.

Customer Acquisition Cost (CAC)

CAC = (Cost of Sales + Cost of Marketing) / New Customers Acquired.

Target Market Strategies

Includes total-market approach, market segmentation, concentration, multisegment, and niche marketing.

Successful Segmentation Requirements

Identifiable segments, comparable profit potential, and the ability to reach them.

Demographic Segmentation

Divides market by age, gender, income, and other characteristics.

Geographic Segmentation

Divides market based on location and climate.

Psychographic Segmentation

Divides market according to personality, motives, and lifestyles.

Behavioristic Segmentation

Divides based on consumer behavior and usage patterns.

Psychological Variables

Influences such as perception, motivation, learning, and attitude.

Social Variables

Influences including social roles, groups, classes, and culture.

External Marketing Environment

Factors such as political, legal, competitive, and social influences on marketing.

Product Definition

A mix of tangible and intangible attributes that provide satisfaction and benefits.

New Product Development Steps

Steps: Idea Development, Screening, Business Analysis, Development, Test Marketing, Commercialization.

Product Classifications

Includes consumer products (convenience, shopping, specialty) and business products (raw materials, equipment, services).

Product Line

Group of closely related products treated as a single unit.

Product Mix

All products offered by an organization.

Product Life Cycle (PLC)

Includes introduction, growth, maturity, and decline stages.

Manufacturer Brands

Brands owned by the manufacturer.

Private Distributor Brands

Brands owned by a retailer or wholesaler.

Generic Products

Products without a brand name sold in basic packaging.

Pricing Objectives

Goals such as maximizing profits, boosting market share, maintaining status quo, and survival.

Price Skimming

Charging the highest possible initial price to recoup costs quickly.

Penetration Pricing

Charging a low initial price to rapidly enter and capture market share.

Intensive Distribution

Available in as many retail outlets as possible.

Selective Distribution

Available in a select number of outlets.

Exclusive Distribution

Sole rights given to a specific retailer in a geographic area.

Push Strategy

Motivating wholesalers and retailers to stock and sell the product.

Pull Strategy

Using direct promotion to build consumer demand for a product.

E-Business

Carrying out business goals through the internet.

Digital Marketing

Using digital media to communicate and facilitate exchanges with customers.

Addressability

Ability to identify consumers before purchase, e.g., through tracking cookies.

Interactivity

Consumers can express needs and provide direct feedback to businesses.

Accessibility

Marketers can obtain in-depth digital information about customer preferences.

Connectivity

Consumers connect with marketers and other consumers.

Control

Consumers regulate the information they view and its exposure.

Paid Media

Promotional content paid for by the business.

Owned Media

Digital channels controlled by the firm.

Earned Media

Unpaid publicity generated by outside parties.

Key Performance Indicators (KPIs)

Measures of effectiveness and ROI embedded in social media strategy.

Privacy Issues

Involving tracking cookies and data protection regulations like GDPR.

FTC Transparency Rules

Require influencers to disclose brand relationships and compensation.

Identity Theft

Includes phishing, credit card fraud, and data breaches.

Intellectual Property Theft

Unauthorized online distribution of digital content.