HMK001 LO1. Marketing: Creating & Capturing market value

Marketing (simple definition)

Managing profitable customer relationships.

extra definition of marketing

The process by which companies create value for customers & build strong customer relos to capture value from customers in return

how many steps are in the marketing process (simple)

5

The Marketing Process

Simple model of the 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.

5 core customer & marketplace concepts

1. Needs, Wants & Demands

2. Marketing Offerings

3. Value & Satisfaction

4. Exchange & Relationships

5. Markets

Needs

State of felt deprivation including physical, social & individual needs.

Wants

Form that a human need takes, as shaped by culture & individual personality.

Demand

Wants + Buying Power = Demand.

Marketing Offerings

Needs & wants are fulfilled thru a Marketing Offer (product, services & experiences)

Some combination of products, services, information/experiences offered to a market to satisfy a need/want.

Marketing Myopia

Occurs when sellers pay more attention to the specific products they offer than to the benefits & experiences produced by the products.

They focus on the "wants" & lose sight of the "needs."

Customer Value & Satisfaction

Care must be taken when setting expectations:

*If performance is lower than expectations, satisfaction is low.

*If performance is higher than expectations, satisfaction is high.

Exchange

The act of obtaining a desired object from someone by offering something in return.

Market

The set of all actual and potential buyers of a product.

(These people share a need/want that can be satisfied thru exchange relationships.)

Main elements in a Modern Marketing System include:

Suppliers, Company (marketer), Competitors, Marketing intermediaries, Final users.

Marketing Management

The art & science of choosing target markets & building profitable relationships w them.

(Requires that consumers & the marketplace be fully understood)

Qs to design a winning marketing strategy

1. "What customers will we serve?"

(What is our target market)

2. "How can we best serve these customers?"

(What's our value proposition)

Market Segmentation

Dividing the market into segments of customers.

Target Marketing

Select the segment to cultivate.

Value Proposition

The set of benefits/values a company promises to deliver to consumers to satisfy their needs.

(Value propositions dictate how firms will diff & position their brands in the marketplace)

5 marketing management philosophies/orientations

production concept, product concept, selling concept, marketing concept, societal marketing concept

(prod, product, selling, marketing, societal marketing)

Production Concept

The idea that consumers will favor products that are available and highly affordable.

Product Concept

Consumers will favor products that offer the most quality, performance and features.

Selling Concept

Consumers will not buy enough of the firm's product unless it undertakes a large scale selling and promotion effort.

Marketing Concept

Achieving organizational goals depends on knowing the needs and wants of the target markets, and delivering the desired satisfaction better than competitors.

Societal Marketing Concept

A company's marketing decision should consider consumers wants, company profits and society's long run interests.

Marketing Plan

Transforms the marketing strategy into action.

Includes the marketing mix & 4 P's of marketing:

4 P's of Marketing

Product, Price, Place (Distribution), Promotion.

Customer Relationship Management

The overall process of building & maintaining profitable customer relos by delivering superior customer value & satisfaction.

(acquiring, keeping, growing customers)

Customer Perceived Value

Customer's evaluation of the diff betw all of the benefits & costs of a marketing offer relative to those of competing offers.

Customer Satisfaction

Dependent on the product's perceived performance relative to a buyer's expectations.

*(Customer satisfaction often leads to cons loyalty)

**(Some firms seek to DELIGHT customers by exceeding expectations)

Creating Customer Loyalty and Retention

Loyalty and retention programs build relationships and may feature financial benefits, social benefits, and structural ties.

Financial Benefits (ex)

e.g: Frequency marketing programs.

Social Benefits (ex)

e.g: Club marketing programs.

Structural Ties (ex)

Focus is on relating directly to profitable customers, for the long-term.

Partner Relationship Marketing

Marketing partners help create customer value and assist in building customer relationships.

Partners inside the firm

All employees are customer focused

(Teams coordinate efforts toward customers)

Partners outside the firm

Supply chain management

(Strategic alliances)

Customer Lifetime Value

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

Share of Customer

The share a company gets of the customers purchasing in their product categories.

Customer Equity

The combined customer lifetime values of all the company's current & potential customers.

(Classify customers by loyalty & potential profitability)

(Manage accordingly)

The New Digital Age and firms

Technology impacts the ways firms bring value to their customers. Greater connectivity means greater access to information, faster travel and communication.

• The Internet allows anytime, anywhere connections betw firms & customers.

firms in the digital age

"Click-and-mortar" companies

"Click-only" companies

Business-to-business e-commerce

New Marketing Landscape includes:

Rapid globalization, ethics &nsocial responsibility, not-for-profit marketing & new world of marketing relationships.