CHAPTER 1

1.1 What Is Marketing?

• Marketing: A process of engaging customers, building strong relationships, and creating value in order to capture value in return.

• Traditionally viewed as “telling and selling,” modern marketing is more about understanding customer needs and delivering satisfaction.

• The marketing process involves five key steps (see below).

Marketing Myopia

• The mistake of focusing only on existing products rather than the underlying customer needs they satisfy.

• Leads to missed opportunities and being overtaken by competitors who better meet evolving needs.

Five-Step Marketing Process

1. Understand the marketplace and customer needs and wants.

2. Design a customer value-driven marketing strategy.

3. Construct an integrated marketing program that delivers value.

4. Engage customers and build strong relationships.

5. Capture value from customers to create profits and customer equity.

1.2 Understanding the Marketplace and Customer Needs

• Needs: Basic human requirements (e.g., food, shelter).

• Wants: Needs shaped by culture and personality.

• Demands: Wants backed by buying power.

• Market Offerings: Products, services, and experiences offered to satisfy needs and wants.

• Customer Value and Satisfaction: Key to attracting and retaining customers—performance must meet or exceed expectations.

• Exchange: The act of obtaining a desired object by offering something in return.

• Market: Set of actual and potential buyers of a product/service.

1.3 Designing a Customer Value-Driven Marketing Strategy and Plan

• Marketing Management: The art and science of choosing target markets and building profitable relationships.

• Must answer two questions:

  1. What customers will we serve? (Target market)

  2. How can we serve them best? (Value proposition)

Marketing Management Orientations:

1. Production Concept – Focus on production efficiency and affordability.

2. Product Concept – Focus on product quality, performance, and features.

3. Selling Concept – Emphasis on aggressive promotion and selling.

4. Marketing Concept – Achieving goals by knowing and satisfying the target market better than competitors.

5. Societal Marketing Concept – Balancing company profits, customer wants, and societal well-being.

1.4 Managing Customer Relationships and Capturing Customer Value

• Customer Relationship Management (CRM): Delivering superior customer value and satisfaction to build and maintain profitable relationships.

Consumer-Generated Marketing

• Consumers themselves play a role in shaping brand experiences via reviews, content, and social media engagement.

• Often used to crowdsource ideas, increase engagement, and co-create value.

Customer Engagement Marketing

• Involves fostering direct and continuous involvement in shaping brand conversations and experiences.

Partner Relationship Management

• Involves working closely with internal departments and external partners to create a unified system that delivers customer value.

• Part of building a value delivery network.

Customer Lifetime Value (CLV)

• The total value a customer contributes over their entire relationship with the brand.

• Losing a loyal customer can mean losing substantial future revenue.

Share of Customer

• The portion of a customer’s total spending in a product category that a company captures.

• Companies aim to increase share through loyalty programs, up-selling, and cross-selling.

Customer Equity

• The total combined lifetime values of all current and potential customers.

• A key measure of a company's long-term health and future profitability.

1.5 The Changing Marketing Landscape

• Digital Age: Rise of online, mobile, and social media marketing.

• Big Data and AI: Allow for deeper personalization and insights.

• Growth of Not-for-Profit Marketing: Used by schools, hospitals, NGOs, and government.

• Rapid Globalization: Businesses and consumers are more connected than ever before.

• Sustainability: A growing demand for businesses to act with social and environmental responsibility.