Download What is Marketing?

Marketing: An Introduction
Second Canadian Edition
Armstrong, Kotler, Cunningham, Mitchell and Buchwitz
Chapter One
Marketing: Managing Profitable
Customer Relationships
1-1
Copyright © 2007 Pearson Education Canada
Looking Ahead
• Define marketing and the marketing processes.
• Explain the importance of understanding
customers and the marketplace.
• Identify the five core marketplace concepts.
• Identify the key elements of a customer-driven
marketing strategy.
• Discuss customer relationship management
and ways of creating and obtaining value.
• Describe the major trends and forces changing
today’s marketing landscape.
1-2
Copyright © 2007 Pearson Education Canada
What is Marketing?
• Attracting new customers by promising
and delivering superior value.
• Building long-term relationships with
customers by delivering continued
customer satisfaction.
• Creating, building and managing these
relationships profitably over time.
1-3
Copyright © 2007 Pearson Education Canada
The Marketing Process
• Understand the marketplace and customer
needs and wants.
• Design a customer-driven marketing strategy.
• Construct a marketing program that delivers
superior value.
• Build profitable relationships and create
customer delight.
• Capture value from customers to create
profits and customer equity.
1-4
Copyright © 2007 Pearson Education Canada
Needs, Wants and Demands
• Needs are states of felt deprivation.
– Physical:
• Food, clothing, shelter, safety.
– Social:
• Belonging, affection.
– Individual:
• Learning, knowledge, self-expression.
1-5
Copyright © 2007 Pearson Education Canada
Needs, Wants and Demands
• Wants are needs shaped by culture and
individual personality.
– Jeans vs a sari.
– Individual expression vs. collective good.
• Demands are wants combined with
buying power.
– Hilfiger vs. Giant Tiger.
– Jetta vs. Jaguar.
1-6
Copyright © 2007 Pearson Education Canada
Fulfilling Needs and Wants
• Marketers create marketing offers in
response.
– A combination of goods, services,
information or experiences offered to a
market to satisfy a need or want.
1-7
Copyright © 2007 Pearson Education Canada
Products, Services, Experiences
• Products.
– Anything that can be offered for.
– Acquisition, attention, use or consumption.
– That might satisfy a need or want.
• Services.
– Activities or benefits offered.
– Essentially intangible.
– Do not result in ownership of anything.
• Experiences.
– Create, stage and market brand experiences.
– Attending live theatre, music concert.
1-8
Copyright © 2007 Pearson Education Canada
Marketing Myopia
• Sellers pay more attention to the specific
products they offer than to the benefits and
experiences produced by the products.
• They focus on the “wants” and lose sight of the
“needs.”
– The great railroads lost out to the exploding trucking
industry.
– They forgot that their business was solving
transportation problems, not running railroads.
1-9
Copyright © 2007 Pearson Education Canada
Value and Satisfaction
• If the performance and the customer’s
experience is lower than expectations,
than customer satisfaction is low.
• If the performance and the customer’s
experience meets expectations, than the
customer is satisfied.
• If the performance and the customer’s
experience exceeds expectations, than
the customer is delighted.
1-10
Copyright © 2007 Pearson Education Canada
Exchange and Transactions
• Exchange.
– The act of obtaining a desired object from
someone by offering something in return.
• Transaction.
– A trade between two parties that involves:
• two things of value.
• agreed upon conditions.
• time of agreement.
• place of agreement.
1-11
Copyright © 2007 Pearson Education Canada
What is a Market?
• The set of actual and potential buyers of
a product.
• These people share a need or want that
can be satisfied through exchange
relationships.
1-12
Copyright © 2007 Pearson Education Canada
Core Marketplace Concepts
• Customers have needs, wants and
demands.
• Marketers offer products or services.
• Customers seek value and satisfaction
from offers.
• Demands and offers result in
transactions and relationships.
• Markets are all potential customers with a
similar demand.
1-13
Copyright © 2007 Pearson Education Canada
Customer-Driven Marketing
• Divide markets into segments.
• Choose the right segment to target.
• Offer a unique value proposition.
• Differentiate your offer from competitor
offers.
• Build customer value and satisfaction.
• Nurture long-term customer relationships.
1-14
Copyright © 2007 Pearson Education Canada
Marketing Management
The art and science of choosing target
markets and building profitable
relationships with them.
1-15
Copyright © 2007 Pearson Education Canada
Segmentation and Targeting
• Segmentation divides the market into
groups of customers with varying needs
and wants.
• Targeting selects the right segment to
nurture.
1-16
Copyright © 2007 Pearson Education Canada
Demand Management
• Marketing management seeks to control
demand.
– Increasing demand is the norm.
– Demarketing seeks to reduce demand in
certain circumstances.
1-17
Copyright © 2007 Pearson Education Canada
Value Proposition
The set of benefits or values the company
promises to deliver to its target markets
to satisfy their needs.
1-18
Copyright © 2007 Pearson Education Canada
Marketing Concepts
• Production – affordability and availability.
• Product -- quality and innovation.
• Selling -- promotion and hard selling.
• Marketing -- customer satisfaction and
relationships.
• Societal – long-term value to both
customer and society.
1-19
Copyright © 2007 Pearson Education Canada
The Selling Concepts
• The production concept.
– Consumers will favour products that are
available and highly affordable.
• The product concept.
– Consumers favour products that offer the most
in quality, performance and innovative
features.
• The selling concept.
– Consumers will not buy unless it undertakes a
large-scale selling and promotional effort.
1-20
Copyright © 2007 Pearson Education Canada
The Marketing Concepts
• The marketing concept.
– Determining the needs and wants of target
markets and delivering the desired
satisfactions more effectively and efficiently
then the competitors.
– An “outside-in” perspective.
– Customers are the paths to sales and
profits.
– See next slide for a comparison.
1-21
Copyright © 2007 Pearson Education Canada
The Marketing Concepts
• The societal marketing concept.
– Generating customer satisfaction and longrun societal well-being are the keys to both
achieving the company’s goals and fulfilling
its responsibilities.
– Balances human welfare, company profits
and consumer satisfaction.
– Addresses broader social issues.
1-22
Copyright © 2007 Pearson Education Canada
Relationship Marketing
• Customer relationship management.
The process of building and
maintaining profitable customer
relationships by delivering superior
customer value and satisfaction.
1-23
Copyright © 2007 Pearson Education Canada
The Customer’s Experience
• Customer perceived value.
– Customer’s subjective view of the offer’s value
compared to competitive offers.
• Customer satisfaction.
– Customer’s subjective view of the value received in
return for the purchase price.
• Customer delight.
– Customer’s subjective view of the increased
value received above the purchase price.
1-24
Copyright © 2007 Pearson Education Canada
Building Relationships
• Relationships span from the basic to tight
integrated relationships.
• Successful relationships are built on:
– Financial benefits.
– Social benefits.
– Structural ties.
1-25
Copyright © 2007 Pearson Education Canada
Partner Relationship Marketing
• Working with partners in other company
departments and outside the company to
jointly bring greater value to the
customers.
– Every department in an organization
contributes to customer satisfaction.
– Suppliers are carefully controlled through
supply chain management.
– Strategic alliances create new opportunities
to delight customers.
1-26
Copyright © 2007 Pearson Education Canada
Capturing Value In Return
• Customer lifetime value.
– The value of the entire stream of
purchases that the customer would make
over a lifetime of patronage.
1-27
Copyright © 2007 Pearson Education Canada
Capturing Value In Return
• Share of customer.
– Share of customer is the percentage of
customers that buy a company’s product of
all customers purchasing in that product
category.
– Companies continuously strive to grow their
share of customer.
– Creating brand extensions is a favoured
method of growing share of customer.
1-28
Copyright © 2007 Pearson Education Canada
Building Customer Equity
• The total combined customer lifetime
value of all of the company’s customers.
• Often a more accurate measure of a
company’s value than sales or market
share.
• Combination of market share, share of
customer and lifetime customer value.
1-29
Copyright © 2007 Pearson Education Canada
Customer Relationship Groups
• Targeting the right customers at the right
time.
–
–
–
–
Butterflies have high profitability with low loyalty.
True Friends have high profitability with high loyalty.
Strangers have low profitability with low loyalty.
Barnacles have low profitability with high loyalty.
• Challenge: make the Butterflies more loyal
and make the Barnacle more profitable.
• Keep the True Friends and “fire” the Strangers.
1-30
Copyright © 2007 Pearson Education Canada
New Marketing Technologies
• Technology has changed how marketers
build value.
– Internet and e-commerce/e-business.
– Fast and global communications.
– Wireless technologies.
– Relational databases.
• Instant, highly targeted communication
with customers and suppliers.
1-31
Copyright © 2007 Pearson Education Canada
New Global Markets
• International trade is the new frontier.
• Export is critical to Canada’s economic
growth.
• Difficult decision:
– Delay means risking loss of growing global
markets.
– Proceed means high risk but potentially high
reward.
1-32
Copyright © 2007 Pearson Education Canada
Ethics and Responsibility
• Worldwide consumerism and
environmentalism movements exert.
pressure for greater responsibility
• Notion of “caring capitalism” tied to
societal marketing concepts.
– Seeking ways to make a profit by serving the
best long-run interests of customers and
communities.
1-33
Copyright © 2007 Pearson Education Canada
Not-For-Profit Marketing
• Marketing of ideas, values and
institutions.
• Increasing awareness that these
organizations must build relationships
with constituents and stakeholders.
• Challenge of using new marketing
techniques for not-for-profit initiatives.
1-34
Copyright © 2007 Pearson Education Canada
Looking Back
• Define marketing and the marketing processes.
• Explain the importance of understanding
customers and the marketplace.
• Identify the five core marketplace concepts.
• Identify the key elements of a customer-driven
marketing strategy.
• Discuss customer relationship management
and ways of creating and obtaining value.
• Describe the major trends and forces changing
today’s marketing landscape.
1-35
Copyright © 2007 Pearson Education Canada