Principles of Marketing

Principles of Marketing: Creating Customer Value and Engagement

1. Defining Marketing

• Marketing is a process by which companies create value for customers.

• It involves building strong customer relationships to capture value from customers in return.

2. The Five-Step Marketing Model

1. Understand Marketplace and Customer Needs

2. Design a Customer Value-Driven Marketing Strategy

3. Develop a Marketing Program

4. Implement Customer Relationship Management (CRM)

5. Capturing Customer Value

3. Understanding the Marketplace and Customer Needs

• Needs: States of felt deprivation.

• Wants: The forms that human needs take as shaped by culture and individual personality.

• Demands: Human wants that are backed by buying power.

Market Offerings

• Combinations of products, services, information, or experiences offered to a market to satisfy a need or want.

Marketing Myopia

• A mistake of focusing more on specific products rather than the benefits and experiences produced by these products.

4. Designing a Customer Value-Driven Marketing Strategy

Marketing Management

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

  • Key Questions:

  • What customers will we serve (target market)?

  • How can we best serve these customers (value proposition)?

Value Proposition

• A brand's value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs.

Marketing Concepts

1. The Production Concept:

   • Consumers prefer products that are available and affordable.

   • Management should focus on improving production and distribution efficiency.

   • One of the oldest orientations guiding sellers.

2. The Product Concept:

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

   • Marketing strategy focuses on continuous product improvements.

3. The Selling Concept:

   • Consumers will not buy enough of a firm's products unless large-scale selling and promotion efforts are undertaken.

   • Typically used for unsought goods (e.g., life insurance, blood donations).

   • Focuses on creating sales transactions rather than building long-term customer relationships.

   • Carries the risk of aggressive selling.

4. The Marketing Concept:

   • Achieving organizational goals depends on understanding and delivering customer needs better than competitors.

   • Emphasizes customer focus and value as paths to sales and profits.

   • Shifts from a product-centered philosophy to a customer-centered philosophy.

5. The Societal Marketing Concept:

   • Marketing decisions should consider:

     • Consumers’ wants

     • Company’s requirements

     • Consumers’ long-run interests

     • Society’s long-run interests

5. Marketing Program (Mix)

• Marketing Mix: A set of tools known as the four Ps:

  1. Product

  2. Price

  3. Promotion

  4. Place

• Integrated Marketing Program: A comprehensive plan that communicates and delivers intended value.

6. Managing Customer Relationships

• Customer Relationship Management (CRM):

  • Overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Consumer-Generated Marketing

• Brand exchanges created by consumers themselves. Increasing role of consumers in shaping brand experiences.

Partner Relationship Management

• Involves working closely with partners in company departments and outside the company to jointly deliver greater value to customers.

7. Capturing Customer Value

Customer Profitability Analysis

• Identifies different groups of customers based on profitability and loyalty:

  • Butterflies: High potential profitability but short-term.

  • True Friends: High potential profitability and long-term.

  • Strangers: Low potential profitability and short-term.

  • Barnacles: Low potential profitability but long-term.