Chapter 1

Marketing in a Changing World: Creating Customer Value and Satisfaction

Road Map: Previewing the Concepts

Define what marketing is and discuss its core concepts. Explain the relationships between customer value, satisfaction, and quality. Define marketing management and understand how marketers manage demand and build profitable customer relationships. Compare the five marketing management philosophies. Analyze the major challenges facing marketers heading into the new connected millennium. 2

What is Marketing?
Simply put: Marketing is the delivery of customer satisfaction at a profit. Goals: Attract new customers by promising superior value and keep and grow current customers by delivering satisfaction.
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Core Marketing Concepts (Fig. 1-1)

Marketing Defined
Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

What are Consumers Needs, Wants, and Demands?

Needs - state of felt deprivation including physical, social, and individual needs i.e hunger Wants - form that a human need takes as shaped by culture and individual personality i.e. bread Demands - human wants backed by buying power i.e. money
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What Will Satisfy Consumers Needs and Wants?

Anything that can be Offered to a Market to Satisfy a Need or Want

Products

Experiences Organizations

Persons Activities
Services

Places Ideas

Activity or Benefit Offered for Sale That is Essentially Intangible and Doesnt Result in the Ownership of Anything
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How Do Consumers Choose Among Products and Services?

Value Gained From Owning a Product and Costs of Obtaining the Product is Customer Value
Products Perceived Performance in Delivering Value Relative to Buyers Expectations is Customer Satisfaction Total Quality Management Involves Improving the Quality of Products, Services, and Business Processes
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How Do Consumers Obtain Products and Services?

Exchanges Transactions Relationships
Building a Marketing Network by Adding: Financial Benefits Social Benefits Structural Ties Profitable Customers
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Consider the following thought questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from your instructor.
When was the last time you were completely satisfied with something you purchased? What was it? Why were you satisfied? What did a marketer have to do with this?
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Modern Marketing System (Fig. 1-2)

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Marketing Management
Marketing Management Demand Management Profitable Customer Relationships
Involves managing demand, which involves managing customer relationships Finding and increasing demand, also changing or reducing demand such as in Demarketing Attracting new customers and retaining and building relationships with current customers
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Marketing Management Practice

Stage 1. Entrepreneurial Marketing

Stage 2. Formulated Marketing

Stage 3. Intrepreneurial Marketing

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Marketing Management Philosophies

Production Concept Product Concept Selling Concept

Marketing Concept Societal Marketing Concept

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Marketing and Sales Concepts Contrasted (Fig. 1-3)

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Societal Marketing Concept (Fig. 1-4)

http://www.johnsonandjohnson.com/
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What are the major differences between the Marketing Concept and the Societal Marketing Concept?

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Marketing Challenges in the New Connected Millennium (Fig. 1-5)

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Technologies for Connecting

Learn About & Track Customers With Databases Create Products & Services Tailored to Meet Customer Needs

Connecting Technologies in Computers, Telecommunications, Information, & Transportation Help To:

Communicate With Customers in Groups Or One-on-One

Distribute Products More Efficiently & Effectively

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The Internet
The Internet has been hailed as the technology behind a New Economy. New applications include:
click-and-mortar companies click-only companies Business-to-business e-commerce

Business-to-business transactions online are expected to reach $3.6 trillion in 2003. By 2005, 500,000 companies will use the Internet to do business.
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Connections With Customers

Most marketers are targeting fewer, potentially more profitable customers. Asking:
What value does the customer bring to the organization? Are they worth pursuing?

Connecting for a customers lifetime.

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BankOne (Marketing at Work 1-3)

BankOne focuses on connecting with customers they can serve profitably. Premier One customers know that they are special, exclusive, privileged, valued. http://www.bankone.com/

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Direct Connections With Customers

Many companies use technologies to let them connect more directly with their customers.
Products available via telephone, mail-order catalogs, kiosks and e-commerce. Some firms sell only via direct channels (i.e. Dell Computer, http://www.amazon.com/), others use a combination.

Direct marketing is redefining the buyers role in connecting with sellers.

Buyers are active participants in shaping the marketing offer and process; some buyers design their own products online such as at http://www.landsend.com/.
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Connections With Marketings Partners

Connecting Inside the Company
Every employee must be customer-focused Teams coordinate efforts toward customers

Connecting With Outside Partners

Supply Chain Management Strategic Alliances

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Connections With the World Around Us

Global Connections

Broadening Connections

Value Connections

Social Responsibility Connections

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Rest Stop: Reviewing the Concepts

Define what marketing is and discuss its core concepts. Explain the relationships between customer value, satisfaction, and quality. Define marketing management and examine how marketers manage demand and build profitable customer relationships. Compare the five marketing management philosophies. Analyze the major challenges facing marketers heading into the next millennium. 26