First Stop: Amazon.com
• Reason for Amazon’s success —highly
customer driven
• Creates unique personal customer experience
• Personalized home pages
• Personalized product recommendations
• “Discovery” factor—users of the site are
compelled to look, learn, and discover
• Archetype for other companies focused on
delivering customer value
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Marketing
• Marketing involves creating value for
customers and building strong customer
relationships in order to capture value from
customers in return.
• Goals:
• Attract new customers by promising superior
value
• Keep and grow current customers by delivering
satisfaction
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Forms of Marketing
Traditional
• View - Making a sale
• Abundance of products
in the nearby shopping
centers
• Television, magazine,
and direct-mail ads
Contemporary
• View - Satisfying
customer needs
• Imaginative Web sites
and mobile phone apps,
blogs, online videos,
and social media
• Reach customers
directly, personally, and
interactively
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Figure 1.1 - The Marketing Process:
Creating and Capturing Customer Value
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Understanding the Marketplace
and Customer Needs
• Core customer and marketplace concepts
• Needs, wants, and demands
• Market offerings (products, services, and
experiences)
• Value and satisfaction
• Exchanges and relationships
• Markets
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Customer Needs, Wants,
and Demands
Needs
• States of felt deprivation
• Physical needs - Food, clothing, warmth, and safety
• Social needs - Belonging and affection
• Individual needs - Knowledge and self-expression
Wants
• Form taken by human needs when shaped by culture and
individual personality
Demands
• Human wants that are backed by buying power
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Market Offerings
• Combination of products, services,
information, or experiences
• Offered to a market to satisfy a need or want
• Entities—products, services, persons, places,
organizations, information, and ideas
• Marketing myopia: Paying more attention to
the specific products a company offers than to
the benefits and experiences produced by
these products
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Customer Value and Satisfaction
• Customers form expectations about the value
and satisfaction of market offerings.
• Satisfied customers buy again and spread the
word.
• Dissatisfied customers switch to competitors and
criticize the product to others.
• Setting low expectations may satisfy those
who buy but fail to attract enough buyers.
• Setting high expectations may disappoint
buyers.
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Exchanges and Relationships
• Exchange is the act of obtaining a desired
object from someone by offering something in
return.
• Marketing consists of creating, maintaining,
and growing desirable exchange relationships
with target audiences.
• Marketers build strong relationships by
consistently delivering superior customer value.
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Markets
• Set of all actual and potential buyers of a
product or service
• Consumers market:
• Search for products
• Interact with companies to obtain information
• Make purchases
• Customer-managed relationships are
important as customers are empowered and
marketing is made a two-way affair.
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Figure 1.2 - A Modern Marketing System
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Designing a Customer-Driven
Marketing Strategy
• Selecting customers to serve
• Choosing a value proposition
• Marketing management orientations
•
•
•
•
•
Production concept
Product concept
Selling concept
Marketing concept
Societal marketing concept
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Figure 1.3 - The Selling and Marketing
Concepts Contrasted
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Figure 1.4 - Three Considerations
Underlying the Societal Marketing Concept
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Customer Relationship Management
• Delivering superior customer value and
satisfaction to build and maintain profitable
customer relationships
• Customer-perceived value: Customer’s evaluation
of the difference between all the benefits and
costs of a marketing offer relative to those of
competing offers
• Customer satisfaction: Extent to which a
product’s perceived performance matches a
buyer’s expectations
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Customer Relationship Levels
and Tools
Levels
Tools
• Basic relationships
• With low-margin
customers
• Full partnerships
• With high-margin
customers
• Frequency
marketing programs
• Loyalty rewards
programs
• Club marketing
programs
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Customer-Engagement Marketing
• Customer-engagement marketing involves
fostering direct and continuous customer
involvement in shaping brand conversations,
experiences, and community.
• Greater consumer empowerment means that
companies should rely on marketing by
attraction.
• The key is to find ways to enter consumers’
conversations with engaging and relevant
brand messages.
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Consumer-Generated Marketing
• Brand exchanges created by consumers
• Consumers play an increasing role in shaping their
own brand experiences and those of other
consumers.
• Occurs through:
• Uninvited consumer-to-consumer exchanges
• Invitation of consumers by companies
• Asking for new product and service ideas
• Asking to play an active role in shaping ads
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Partner Relationship Management
• Working closely with partners both inside and
outside the company to jointly bring more
value to customers
• Partners inside the firm—cross-functional teams
• Partners outside the firm—suppliers, channel
partners
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Creating Customer Loyalty
and Retention
• Keeping customers loyal proves economical to
the company.
• Customer lifetime value: Value of the entire
stream of purchases a customer makes over a
lifetime of patronage
• Customer defections can be costly
• Can lose that customer’s lifetime value
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Customer Equity
• Total combined customer lifetime values of all
of the company’s current and potential
customers
• Helps to measure the future value of the
company’s customer base
• Increases when the loyalty of the firm’s
profitable customers increases
• Better measure of a firm’s performance than
current sales or market share
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The Changing Marketing Landscape
•
•
•
•
•
Digital age
Changing economic environment
Growth of not-for-profit marketing
Rapid globalization
Call for more ethics and social responsibility
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The Digital Age: Online, Mobile, and
Social Media Marketing
• Digital and social media marketing: Engaging
consumers via their digital devices using
digital marketing tools and social media
• Mobile marketing: Using mobile channels to
stimulate immediate buying, make shopping
easier, and enrich the brand experience
• Blending the new digital approaches with
traditional marketing creates a smoothly
integrated marketing strategy and mix.
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Rapid Globalization and
Societal Marketing
• Managers around the world are taking both
local and global views of the company’s:
• Industry
• Competitors
• Opportunities
• Corporate ethics and social responsibility have
become important for every business.
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Marketing Environment
• Outside forces that affect marketing
management’s ability to build and maintain
successful relationships with target customers
• Microenvironment: Actors close to the
company that affect its ability to serve its
customers
• Macroenvironment: Larger societal forces
that affect the microenvironment
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Figure 3.1 - Actors in
the Microenvironment
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Figure 3.2 - Major Forces in
the Company’s Macroenvironment
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Demographic Environment
• Demography: Study of human populations in
terms of size, density, location, age, gender,
race, occupation, and other statistics
• Marketers analyze:
•
•
•
•
Changing age and family structures
Geographic population shifts
Educational characteristics
Population diversity
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Economic Environment
• Economic factors that affect consumer
purchasing power and spending patterns:
• Industrial economies
• Subsistence economies
• Developing economies
• Changes in consumer spending
• Differences in income distribution
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Natural Environment
• Physical environment and natural resources
needed as inputs by marketers or affected by
marketing activities
• Environmental sustainability concerns have
grown steadily over past three decades.
• Trends:
• Shortages of raw materials
• Increased pollution
• Increased government intervention
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Technological Environment
• New technologies create new markets and
opportunities.
• Radio-frequency identification (RFID) is
technology to track products through various
points in the distribution channel.
• Government agencies investigate and ban
potentially unsafe products.
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Political Environment
• Forces that influence and limit various
organizations and individuals in a society
• Laws, government agencies, and pressure groups
• Goals of enacting business legislation:
• Protect companies from each other
• Protect consumers from unfair business practices
• Protect the interests of society against
unrestrained business behavior
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Strategic Planning
• Strategic planning involves adapting the firm
to take advantage of opportunities in its
constantly changing environment.
• Strategic planning helps a firm to maintain a
strategic fit between its goals and capabilities
and its changing marketing opportunities.
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Role of Marketing in
Strategic Planning
• Provides a guiding philosophy
• Marketing concept—company strategy should
create customer value and build profitable
relationships with the key customers
• Provides inputs to strategic planners
• Helps identify market opportunities and assess
the firm’s potential to take advantage of them
• Designs strategies for reaching the unit’s
objectives
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Marketing Strategy
• Marketing logic by which the company hopes
to create customer value and achieve
profitable customer relationships
• Marketing mix: Integration of product, price,
place, and promotion
• Activities for best marketing strategy and mix
involve:
• Marketing analysis
• Planning, implementation, and control
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Marketing Mix
• Set of marketing tools the firm uses to
implement its marketing strategy
•
•
•
•
Product
Price
Place
Promotion
• Each tool should be blended into a
comprehensive integrated marketing
program.
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The Four Ps of
the Marketing Mix
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Market Segmentation and
Market Targeting
Market segmentation
• Dividing a market into distinct groups of buyers who have
different needs, characteristics, or behaviors, and who might
require separate products or marketing programs
Market segment
• Group of consumers who respond in a similar way to a given set
of marketing efforts
Market targeting
• Evaluating each market segment’s attractiveness and selecting
one or more segments to enter
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Positioning
• Arranging for a product to occupy a clear,
distinctive, and desirable place relative to
competing products in the minds of target
consumers
• Begins with differentiation
• Differentiation: Differentiating the market
offering to create superior customer value
• The entire marketing program should support
the chosen positioning strategy.
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Figure 2.7 - SWOT Analysis: Strengths (S),
Weaknesses (W), Opportunities (O), and Threats (T)
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Contents of a Marketing Plan
Section
Purpose
Executive summary
Brief summary of the main goals and
recommendations
Current marketing
situation
Gives the market description and the
product, competition, and distribution
review
Threats and
opportunities analysis
Helps management to anticipate
important positive or negative
developments
Objectives and issues
States and discusses marketing
objectives and key issues
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Contents of a Marketing Plan
Section
Purpose
Marketing Outlines the broad marketing logic and the specifics of
strategy
target markets, positioning, marketing expenditure levels,
and strategies for each marketing mix element
Action
programs
Spells out how marketing strategies will be turned into
specific action programs
Budgets
Details a supporting marketing budget that is a projected
profit-and-loss statement
Controls
Outlines the controls that will be used to monitor
progress, allow management to review implementation
results, and spot products that are not meeting their goals
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All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
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