CHAPTER 1

1.1 define marketing and outline the steps in the marketing process

 Marketing: the process by which companies create value for customers and build
strong customer relationships in order to capture value from customers in return.

This is done through satisfying customer needs by understanding their needs,

developing products that provide superior customer value, and
prices/distributes/promotes them well.

 Marketing process: a five-step model for creating and capturing customer value.

In the first 4 steps, companies work to understand consumers, create customer value,
and build strong customer relationships.

In the final step, companies reap the rewards of creating superior customer value

Understand the Design a Construct an Build profitable Capture value from

marketplace customer driven integrated marketing relationships and customers to
and customer marketing program that delivers create customer create profits and
needs/wants strategy superior value delight customer equity

1.2 explain the importance of understanding customers and the marketplace, and identify the 5
core marketing concepts

It is important for marketers to understand customers and the market place in order to
understand the needs and demands of customers. This information will then help the
marketers to develop products that will satisfy the customers’ needs.

 5 core marketing concepts:

1) Needs, wants, and demands:

Needs: state of felt deprivation (physical, social, individual). Ex: food,

affection, knowledge.

Wants: form human needs take as they are shaped by culture and individual
personality.

Demands: human wants backed up by buying power.

2) Market offerings (products, services, and experiences): some combination of

products, services, information, or experiences offered to a market to satisfy a
 need or a want. Market offerings also include other entities such as persons,
places, organizations, information and ideas.

Some sellers suffer from marketing myopia – the mistake of paying more
attention to their product rather than the underlying customer needs and the
benefits/experiences produced by these products. (ex focusing only on quality)

3) Value and satisfaction: creating customer value and setting expectations that
will attract customers and make them loyal to your product when they have to
choose from various similar products from competitors.

4) Exchanges and relationships: the act of obtaining a desired object from

someone by offering something in return.

5) Markets: the set of actual and potential buyers of a product or service. These
buyers share a particular need/want that can be satisfied through exchange
relationships.

We normally thin of marketing as being carried out by sellers, but buyers also
carry out marketing. This is because buyers have various options to choose
from when they need/want a product since many competitors might be
offering it.

Therefore, marketing has become a two-way affair; marketers learn from

consumers and consumers learn from marketers.

1.3 identify the key elements of a customer driven strategy and discuss the marketing
management orientations that guide marketing strategy

Marketing management can design a customer driven strategy once it fully understands
consumers and the marketplace.

 Marketing management: the art and science of choosing target markets and building
profitable relationships with them. To design a good marketing strategy, marketing
managers must answer two questions: what customers will we serve (target market)?
And How can we serve these customers best (what’s our value proposition)?

1) Selecting customers to serve: this is done by dividing the market into segments
(market segmentation) and selecting which segments it will go after (target
marketing). The company must choose those customers who they can serve well
and profitably.

2) Choosing a value proposition: the company must deicide how it will differentiate
and position itself and the products it is selling. A brand’s value proposition is the
set of benefits or values it promises to deliver to consumers to satisfy their needs.
  Marketing management orientations: five alternative concepts under which
organizations design and carry out their marketing strategies: the productions,
product, selling, marketing, and societal marketing concepts.

1) Production concept: the idea that consumers will favour products that are
available and highly affordable. Therefore, management should focus on
improving production and distribution efficiency.

2) Product concept: The idea that consumers will favour products that offer the most
quality, performance, and features; therefore, the organization should devote its
energy to making continual product improvements.

3) Selling concept: the idea that consumers will not buy enough of the firm’s product
unless the firm undertakes a large-scale selling and promotion effort.

4) Marketing concept: a philosophy in which achieving organizational goals depends

on knowing the needs and wants of target markets and delivering desired
satisfactions better than competitors.

5) Societal marketing concept: the idea that a company’s marketing decisions should
consider consumers’ wants, the company’s requirements, consumers’ long-run
interests, and society’s long-run interests.

1.4 discuss customer relationship management (CRM) and identify strategies for creating value
for customers and capturing value from customers in return

 Customer relationship management (CRM): The overall process of building and

maintaining profitable relationships by delivering superior customer value and
satisfaction.
 Creating value for customers
a) Customer-perceived value: customer’s judgement on the difference between all
the benefits and costs of a marketing offer (product) compared to those of
competing offers.

b) Customer satisfaction: extent to which a product’s perceived performance

matches a buyer’s expectations. If the performance matches expectations,
customer is satisfied. If the performance exceeds expectations, customer is highly
satisfied or delighted.

c) Customer-engagement marketing: making the brand a meaningful part of

consumers’ conversations and lives by fostering direct and continual customer
involvement in shaping brand conversations, experiences and community. This is
done through social media pages such as twitter or Facebook.
 d) Consumer generated marketing: brand exchanges invited/uninvited by which
consumers are playing an increasing role in shaping their own brand experiences
and those of other consumers. (ex: inviting customers to propose product ideas or
ad ideas)

e) Partnership relationship management: working closely with partners in other

company departments and outside the company to jointly bring greater value to
customers. Success on delivering customer value rests on how well the company’s
supply chain performs against the competitors’ supply chain.

 Capturing value from customers:

a) Creating customer loyalty and retention: the value of the entire stream of
purchases a customer makes over a lifetime of patronage. (ex: one customer’s
value to the company can be worth $600 000 in the lifetime scales. Losing that
customer can be very costly for the company)

b) Growing share of customer: the portion of the customer’s purchasing that a

company gets in its product categories. This can be done through programs such
as cross-selling: creating complementary products that go with other products.
This will encourage customers to buy more of your products.

c) Building customer equity: the total combined customer lifetime values of all the
company customers. The more loyal the firm’s profitable customers are, the
greater the customer equity. Customer equity if a better measure of a firm’s
performance than current sales or market share.

Companies should view customers as assets that need to be managed and

maximized.

1.5 describe the major trends and forces that are changing the marketing landscape in this age of
relationships

1) the digital age: allows for marketing to be done through social media.

Digital and social media marketing: the use of digital tools such as websites, social
media, mobile apps and ads, online video, email, and blogs in order to engage consumers
anywhere/anytime via their digital devices.

2) the changing economic environment: although we live in good economic conditions,

people are being careful of how they spend their money. This pushes companies to
emphasize on the value, practicality and durability of their products to encourage
customers to buy.

3) the growth of not-for-profit marketing: these types of marketers face stiff competition for
support and membership. It can be very profitable.
4) rapid globalization: marketing is now more challenging because companies need to take
into consideration the need and wants of the global market.

5) call for more ethics and social responsibility: many organizations today are taking part in
environmental and social responsibility. Because there is a lot of emphasis today on being
environmentally conscious, consumers are a lot more likely to stay loyal to a company if
they see that the company is environmentally conscious too.