Define marketing and outline the steps in the marketing process.
Explain the importance of understanding the marketplace and customers; identify the five core marketplace concepts.
Identify key elements of a customer value-driven marketing strategy; discuss the marketing management orientations.
Discuss customer relationship management; identify strategies for creating value and capturing value from customers.
Describe major trends and forces changing the marketing landscape in the age of relationships.
Understanding Marketing
What Is Marketing?
Definition: Marketing is the set of strategies and activities by which companies acquire and engage customers, build strong customer relationships, and create superior customer value to capture value from customers in return.
Marketing's Omnipresence: Marketing is evident in various forms, from traditional methods to modern digital platforms, including websites, mobile apps, online videos, and social media.
The Marketing Process: Creating and Capturing Customer Value (Figure 1.1)
Understand the marketplace and customer needs and wants.
Create value for customers and build customer relationships.
Design a customer value-driven marketing strategy.
Construct an integrated marketing mix that delivers superior value.
Engage customers, build profitable relationships, and create customer delight.
Capture value from customers to create profits and customer equity.
Key Insight: By creating value for customers, marketers can ultimately capture value in return.
Understanding the Marketplace and Customer Needs
Core Concepts
Needs vs. Wants vs. Demands:
Needs: States of felt deprivation.
Wants: Form human needs take, shaped by culture and individual personality.
Demands: Human wants backed by purchasing power.
Market Offerings: Combination of products, services, information, or experiences offered to satisfy a need or want.
Marketing Myopia: Concept involves paying more attention to specific products than to the benefits and experiences produced.
Example: Singapore’s Land Transport Authority's #SaferRoadsForAll campaign focuses on public understanding of traffic rules.
Customer Expectations and Exchange
Customer Expectations: Customers form expectations about value and satisfaction; satisfied customers buy again, while dissatisfied customers switch to competitors.
Exchange: Act of obtaining a desired object from someone by offering something in return.
Marketing Actions: Aim to create, maintain, and grow desirable exchange relationships.
Market Definition
Market: Set of actual and potential buyers who search for products, interact with companies to obtain information, and make purchases.
Designing a Customer Value-Driven Marketing Strategy
Marketing Management
Definition: The art and science of choosing target markets and building profitable relationships with them.
Target Market: The specific group of customers to serve.
Value Proposition: The unique benefits and values a brand promises to deliver to fulfill customers' needs.
Value Propositions Examples
JetBlue: Promises “award-winning service from award-winningly nice humans.”
Contrast in Marketing Concepts (Figure 1.3)
Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept: Example: Jeni’s Splendid Ice Creams emphasizes relationships with growers and producers.
Societal Marketing
Considerations: Consumers' wants, company requirements, long-run interests of consumers, and society's long-run interests.
Marketing Mix: Comprises four tools known as the Four Ps:
Product
Price
Promotion
Place
Integrated Marketing Program: A comprehensive plan that communicates and delivers intended value to customers.
Customer Relationship Management
Definition
Customer Relationship Management (CRM): Overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction.
Relationship Building Blocks
Customer-Perceived Value: Difference between total customer perceived benefits and cost.
Customer Satisfaction: Extent to which perceived performance matches buyer expectations.
Example: A Patek Philippe watch is seen as a bargain despite high price due to perceived value.
Customer-Engagement Marketing
Definition: Fosters direct and continuous customer involvement in shaping brand conversations and experiences.
Example: Innocent Drinks uses humorous interactions rather than hard-sell tactics to engage customers.
Consumer-Generated Marketing
Definition: Brand exchanges created by consumers themselves, who increasingly shape brand experiences.
Example: Heinz invited individuals worldwide to draw ketchup, featuring their artworks in campaigns.
Partner Relationship Management
Definition: Involves working closely with partners in and outside the company to bring greater value to customers.
Example: The American Airlines AAdvantage program promotes loyalty and capitalizes on multiple revenue streams.
Customer Lifetime Value
Definition: Value of the entire stream of purchases that a customer would make over a lifetime of patronage.
Example: Stew Leonard’s customer-centric experience creates loyalty akin to a “Disneyland of dairy stores.”
Share of Customer
Definition: Portion of a customer's spending within a product category that a company captures.
Customer Equity
Definition: Total combined customer lifetime values of all the company's customers.
Example: Cadillac's strategy to appeal to younger buyers promotes brand relevance and customer equity growth.
The Changing Marketing Landscape
Key Trends Influencing Marketing
Digital Age: Everything is interconnected; traditional marketing evolves into digital contexts.
Growth of Not-for-Profit Marketing: Essential for charity and other organizations to promote their cause.
Rapid Globalization: Companies must consider both local and global environments in their strategies.
Sustainable Marketing: Focus on corporate ethics and social responsibility.
Digital and Social Media Marketing
Definition: Involves using digital tools (websites, social media, mobile ads/apps, online videos) to engage consumers.
Example: Sephora has created an online community where customers can interact and gain advice.
Real-Time Marketing Example
Zoom: Utilized real-time marketing to enhance brand identity and foster customer relationships during its rise.
Not-for-Profit Marketing
Example: Make-A-Wish® effectively markets its mission to create impactful experiences for children with critical illnesses, showcasing the positive influence of effective marketing strategies.
Sustainable Marketing Initiatives
Example: Ben & Jerry’s “linked prosperity” mission integrates product quality, sustainable growth, and social responsibility aims to better the world through its business operations.
Discussion Questions
What are the major changes taking place in the marketing arena?
What skills will you develop by studying marketing?