Defining Marketing and the Marketing Process

Marketing: Managing Profitable Customer Relationships Chapter 1

You Will Learn

Definition of marketing and its core concepts Relationship between customer value, satisfaction and quality Definition of marketing management and understand how marketers manage demand and build profitable customer relationships Comparison of the 5 marketing management philosophies Analysis of the major challenges facing marketers.
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What is Marketing?
Marketing is the delivery of customer satisfaction at a profit
Sound marketing critical to the success of every organization Marketing promises reliability, memorable experiences, good taste, durability, convenience, time saving etc. Marketing is all around you It is a massive network of people and activities competing for your attention and purchasing power.

Marketing Defined
It is not just selling and advertising these are two functions of marketing It is not making a sale but it is satisfying customer needs It is the homework that managers undertake to assess needs, measure their extent and intensity and determines whether a profitable opportunity exists It continues through the products life cycle, trying to find new customers and keep current customers by improving product appeal and performance A marketer thus, understands customer needs, develops products that provide superior value and prices and distributes and promotes them effectively Hence the marketing mix is a set of marketing tools that work together to affect the market place.
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Marketing Defined
A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others

A simple model of the marketing process

1. Understand the marketplace an customer needs and wants 2. Design a customer driven market 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
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Core Concepts
Need A state of self deprivation Want The form taken by a human need as shaped by culture and individual personality Demand Human want that is backed by buying power

Products and Services

Product Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations and ideas. Service Any activity or benefits that one party can offer to another that is essentially intangible and does not result in the ownership of anything. The essence is to concentrate on the benefit or solution offered by the product or service rather than the physical good. Avoid a marketing myopia i.e. focus not only on existing wants but also on underlying needs of the customer.

Value, Satisfaction and Quality

Customer value the difference b/w the values the customer gains from owning and using a product and the cost of obtaining the product. Customer satisfaction the extent to which the product perceived performance matches a buyers expectations.

Performance<expectations=dissatisfaction Performance=expectations=satisfaction Performance>expectation=delight

TQM programs designed to constantly improve the quality of products, services and marketing processes i.e freedom from defects
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Exchange, Transactions and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange the act of obtaining a desired object from someone by offering something in return Marketings unit of measurement is a transaction A trade b/w two parties that involves at least two things of value, agreed upon condition, a time and place of agreement Transaction marketing is part of a larger idea of relationship marketing The process of creating, maintaining and enhancing strong value laden relationships with customers and stake holders. A marketing network consists of and all its supporting stake holders: customers, employees, suppliers, distributors, retailer, ad agencies and others with whom it has built a mutually profitable business relationship
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What Are Markets?

A simple marketing system

Industry
(sellers)

Products/ Services
Money

Markets
(buyers)

Information
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Main Actors and Forces in a Modern Marketing System

Company (marketer) Suppliers Marketing Intermediaries Competitors Environment
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End user market

Marketing Management
The analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives. It seeks to affect the level, timing and nature of demand in away that helps the organization achieve its objectives
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Marketing Management
Demand management:
Increasing demand Changing sales Demarketing

Building profitable customer relationships:

Attract new customers Create transactions with them Retain current customers Build lasting customer relationships
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Marketing Management Practice

Entrepreneurial marketing: Businesses started by individuals Creativity, drive, and perseverance are keys to success The origins of guerilla marketing Formulated marketing: Professional, disciplined approach Achieving a market orientation Intrepreneurial marketing: Encouraging initiative at the local level Putting creativity and passion back into the marketing effort
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Marketing Management Philosophies

1. 2. 3. Production: consumers will favor products that are available and highly affordable Product: consumers favor products that offer the most in quality, performance, and innovative features Selling: consumers will not buy unless it undertakes a large-scale selling and promotional effort Marketing: determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently then the competitors Societal marketing: generating customer satisfaction and long-run societal well-being are the keys to both achieving the companys goals and fulfilling its responsibilities
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4.

5.

Selling versus Marketing Concept

Starting Point Focus Means Ends THE SELLING CONCEPT Existing products Selling & promoting Profits through sales volume Profits through cust.satisfaction

Factory

THE MARKETING CONCEPT Market Customer needs Integrated marketing

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Marketing in the Connected World

Connections with customers Connecting Technologies Computer Information Communication Transportation
More selectively For life Directly

Connections with Marketing Partners

With other company departments With suppliers and distributors Through strategic alliances

Connections with the World Around Us

Global connections With values and responsibilities Broadened connections
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The Changing Nature of Customer Relationships

Relating with more carefully selected customers Relating for the long term Relating directly

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Capturing Value from Customers

Creating customer loyalty and retention
Customer lifetime value: the value of the entire stream of purchases that customer would make over a lifetime of patronage

Growing share of customer

Share of customer: the portion of the customers purchasing that a company gets in its product categories

Building customer equity

Customer equity: The total combined customer lifetime values of all of the companys customers
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Building the Right Relationships with the Right Customer

Pg 22. Fig 1.5

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An expanded model of the marketig process

Pg 29, Fig1.6

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