What Is Marketing?

An activity, set of institutions and processes for creating, communicating,

delivering and exchanging offerings that have value for customers, clients, partners and society at large.
The Marketing Process
1. Understand the marketplace and customer needs and wants
2. Design a customer-driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Build profitable relationships and create customer delight
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
5. Capture value from customers to create profits and customer equity

Selling and Promotion are only the tip of the marketing iceberg.
Understanding the Marketplace and Customer Needs
Marketers need to understand customer needs, wants and demands and the marketplace within
which they operate

Needs, Wants and Demands
Demands are the human wants that are backed up by buying power.
Customers view products as bundles of benefits and choose the products that give
them the best bundle for their money.
Outstanding companies go to great lengths to learn about and understand their
customers needs, wants and demands.
They conduct customer research, analyse and monitor customer behaviour, complaints,
inquiry, warranty and service performance data.
Understanding customer needs, wants, and demands in detail provides important
input for designing marketing strategies.

Market Offerings: Goods, Services and Experiences
A market offering is a product that is some combination of goods, services and experiences that
can be offered to a market to satisfy a need or want.
A product includes physical objects, services, persons, places, ideas and organisations. Anything
that satisfies a need can be called a product.
Marketers often use the expression goods and services to distinguish between tangible and
intangible ones. However these should be viewed as continuum and not as a basic dichotomy.

Customer Perceived Value and Satisfaction
Customer perceived value is the difference between the values the customer gains in owning
and using a product and the costs of obtaining the product.
Customer satisfaction is the extent to which a products perceived performance matches a
buyers expectations.

Exchange, Transactions and Relationships
Exchange is the act of obtaining a desired object from someone by offering something in return.
Exchange means that people do not need to prey on others, depend on donations or possess the
skills to produce every necessity for themselves.
Exchange is the core concept of marketing. For an exchange to take place, several conditions
must be satisfied:
y At least two parties must participate and each must have something of value to the other.
y Each party must want to deal with the other and be free to accept or reject an offer.
y Each party must be able to communicate and deliver.
A transaction is marketings unit of measurement.
A transaction consists of a trade of value between two parties.
In transactions it must be possible to state that what each party is giving and gaining.
Relationship marketing is the process of creating, maintaining and enhancing strong, value-laden
relationships with customers and other stakeholders.
Market A set of all actual and potential buyers of a product.
A Simple Marketing System

Elements of a Modern Marketing System

Designing a Customer-Driven Marketing Strategy
Marketing management is:
The analysis, planning, implementation and control of programs designed to create, communicate and deliver value to customers and facilitate
managing customer relationships in ways that enable the organisation to meet its objectives and those of its stakeholders.
A winning marketing strategy asks what customers will we serve? and Who is our target market?
Selecting Customers to Serve
Marketers cannot serve all customers in every way with a single market offering.
It is necessary to select customers that can be served well and profitably.
Demarketing is marketing in which the task is to temporarily or permanently reduce demand
Managing demand means managing customers who come from two groups: new and repeat customers.
Keeping existing customers is important; the cost to attract new customers is five times as much.
Marketers retain customers by ensuring that branded goods, services and experiences offer intrinsic
value and that there is a sense of excitement or enjoyment associated with the marketing offering and
communication used.
Context is important - excitement is not always appropriate.
Suppliers
Company
(marketer)
Competitors
Marketing
intermediaries
Final
Users
Major environmental forces
Major environmental forces
Products/Services
Money
Information
Communication
Industry
(a collection of
sellers)
Market
(a collection of
buyers)
The key to offering excitement is involvement and interactivity.

Emotional management

Choosing a Value Proposition
The organisation must decide how it will serve targeted customers - how it will differentiate and position
itself in the marketplace.
A value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their
needs.
Considerations Underlying the Societal Marketing Concept

Preparing an Integrated Marketing Program
The Companys marketing strategy outlines which customers the company will serve and how it will
create value.
Program developed to actually deliver the value to target customers
The program builds relationships by transforming the strategy into action; it consists of the marketing
mix.
Societal
marketing
concept
Company
(Profits)
Consumers
(Want satisfaction)
Society
(Human Welfare)
The Extended Marketing Mix
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Froduct: Coods, servlces
and experlences
y 9arlety
y 4uallty
y 'eslgn
y )eatures
y %rand name
y Fackaglng
y 6lzes
y $dd-ons
y :arrantles
y 5eturns
Frlce
y /lst Frlce
y 'lscounts
y $llowances
y 6ettlement and credlt
terms
Feople
y Feople lnteractlng
wlth people ls how
many servlce
experlences mlght be
descrlbed.
5elatlonshlps are
lmportant ln
marketlng.
Frocess
y ,n the case of hlgh-
contact servlces,
customers are often
lnvolved ln the
process of creatlng
and en|oylng
experlences.
,ncreaslngly, so ls
technology.
Fhyslcal Evldence
y 6ervlces are mostly
lntanglble.
y 7he meanlng of other
tools and
technologles used ln
measures of
satlsfactlon ls
lmportant.
Flacement loglstlcs
y 'emand chaln
management
y /oglstlcs
management
y &hannel management
Fromotlon
y $dvertlslng
y Fersonal selllng
y 'lrect marketlng
y 2nllne marketlng

Building Customer Relationships
The first three steps in the marketing process:
Understanding the marketplace and customer needs
Designing a customer-driven strategy
Marketing programs lead to the most important step: building profitable
customer relationships.
Relationship Building Blocks: Customer Value and Satisfaction
The key to building long lasting relations is to create superior customer value and satisfaction.
Customer Perceived Value is the evaluation of the difference between the benefits
and all the costs of a market offering relative to those of competing offers.
Customer Satisfaction depends on the products perceived performance matches a
buyers expectations. If the products performance falls short of expectations, the buyer is
dissatisfied. If the performance matches or exceeds expectations, the buyer is satisfied or
delighted.
The Changing Nature of Customer Relationships
Companies are building more direct and lasting relationships with more carefully selected
customers.
Companies now use customer profitability analysis to identify losing customers
and relate to winning customers (selective relationship management).
CRM is used to retain current customers and build long term relationships with
them.
Companies aim to connect more deeply with customers and more directly.
Direct marketing is booming.
Capturing Value from Customers

Creating Customer Loyalty and Retention
Good CRM creates customer delight. Delighted customers remain loyal and
talk favourably about the company.
Growing Share of Customer
Good CRM can help marketers to increase their share of customer
Building Customer Equity
This is the combined discounted customer lifetime values of all the companys
current and potential customers.
The New Marketing Landscape
The changing world economy:
Many countries have grown poorer; around the world peoples needs are
greater but many lack the means to pay for necessary goods. The sub-prime crisis
will pass but it will take time.
The call for more ethical behavior and social responsibility:
There is an increased call for companies to take responsibility for the social
and environmental impact of their actions.
Each of the following conditions MUST be satisfied for an exchange to take place:
A. The existence of a monetary system
B. Two parties each possessing something of value to the other
C. The ability to accept or reject the offer ability to communicate and deliver
D. Each party wanting to deal with the other
**Marketing Metrics***
Define marketing, employing such key elements as value, customer relationships, needs, wants
and demands
Discuss marketing management and elaborate on the basic ideas of demand management and
building profitable customer relationships
List the marketing management philosophies and be able to distinguish between them.
Analyse the key marketing challenges of this century and reflect on the ways there might be
overcome.
Many factors contribute to making a business successful: great strategy, dedicated employees,
good information systems, and excellent implementation among them. However, todays
successful companies at all levels have one thing in common they have a strong market
orientation, which means that they are focused on their customers and their competitors, and they
have a commitment to sharing this marketing information with all parts of the organization. These
companies share an absolute dedication to understanding and satisfying customers in well-defined
target markets. They motivate everyone in the organization to produce superior value for their
customers, leading to high levels of customer satisfaction.
it is the whole business seen from the point of view of its final result: the customers point of view.
Business success is not determined by the producer but by the customer. - Peter Drucker
Sound marketing id critical to the success of every organization, whether large or small, for-profit or
not-for-profit, domestic or global. Marketing is in almost every aspect of your life.
Although advertising and selling are important, they arent the most important functions of
marketing.
1950s Consumer (goods) marketing
1960s Industrial marketing
1970s Non-profit and societal marketing
1980s Services marketing
1990s Customer satisfaction, global marketing, direct
marketing
2000s Interactive one-to-one marketing

Whatever the method used, the marketing organization
that excels in understanding consumer needs, develops products that provide superior value, and
then prices, distributes and communicates effectively and efficiently should find that its goods and
services sell very easily. Newer technologies present special challenges to marketing
organisations, as they bring hurdles to trade. On the other hand, marketing organisations face
greater challenges in trying to decide whether to standardize their offering or tailor their product to
particular deographic markets and culture groups.

The Marketing Mix: A set of marketing tools that work together to influence the marketplace in
the manner that marketing organisations set out to achieve.
Note: There is also an extended marketing mix.

We define marketing as an activity, a set of institutions and processes for creating,
communicating, delivering and exchanging offerings that have value for customers, clients,
partners and society at large.
y Customer needs, wants and demands
y Market offerings
y Value
y Satisfaction and quality
y Exchange
y Transactions and relationships
y Markets

In the first four steps of the marketing process, marketing organisations uncover knowledge about
consumers, create customer value and build strong customer relationships. In the final step
(Capturing value from customers to create profits and customer equity), companies reap the
rewards of creating superior customer value. By creating value for consumers, they in turn capture
value from consumers in the form of sales, profits and long-term customer equity.

Customer needs, wants and demands
Relationships, customer
retention and lifetime
customer value

1. Human needs are states of felt deprivation. Humans have many complex needs. These
include basic physical needs for food, clothing, warmth and safety; social needs for
belonging and affection; and individual needs for knowledge and self-expression. While
marketers may stimulate these needs, they dont create for them for they are a basic part
of human makeup.
2. Wants are described in terms of objects that satisfy needs. As a society evolves, the
wants of its members expand. As people are exposed to more objects that arouse their
interest and desire, producers try to provide more want-satisfying goods and services.
3. When backed by buying power, wants become demands. Consumers view products as
bundles of benefits and choose products that give them the best bundle for their money.
Given their wants and resources, people demand products with benefits that add up to the
most satisfaction.

Market offerings: Goods, services and experiences

People satisfy their needs and wants with products. A market offering is a product that is some
combination of goods, services and experiences that can be offered to a market to satisfy a need
or want.

Consumers also obtain benefits through experiences, people, places, organisations, activities and
ideas and so we can call these products, too. Thus, the term product covers physical goods,
services, experiences and a variety of other offerings that satisfy consumers needs and wants.
(Satisfier, resource, offer.)

Marketing myopia: The manufacturer is so taken with their products that they focus only on
existing wants and lose sight of underlying customer needs.