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Marketing Summary BY cednc812 Summary Chapter 1, Marketing: Creating and Capturing costumer value Understanding the marketplace and customer needs What is Marketing? Marketing is managing profitable customer relationships. Main goals: attract new customers, keep and grow current customers by delivering satisfaction. Today’s marketers want to become a part of your life and enrich your experiences with their brands. Marketing defined Selling and advertising are only a tip of the marketing iceberg. Nowadays marketing mean’s satisfying customer needs.
It is a process by which companNeesies create alue for customers and build strong customer relationships to capture value from customers in return. The marketing process Customer and marketplace concepts 1. Needs, wants and demands 2. Marketing offerings 3. Value and satisfaction 4. Exchanges and relationships 5. Markets 1 . Customer needs, wants and demands Needs: Basic physical needs for food, warmth, clothes and safety. Wants: An American needs food but wants Mac Donald’s. It is a choice. What you prefer. Demands: Buying power, wants become demands. 2.
Marketing offerings – products services and experiences Some combination of products, services, information, or experiences offered to a market to satisfy a need or a want. Include entities, persons, places, organisations and ideas. Marketing myopia is the mistake of paying more attention to the specific products than to the benefits and experiences produced by these products. Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers buy again and tell others about their good experiences.
Dissatisfied customers often switch to competitors and disparage the product to others. That is the reason that marketers ust be careful to set the right level of expectations. The key for building customer relationships. Marketing occurs when people decide to satisfy needs and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return. Marketers want to build strong relationships by consistently delivering superior customer value. The concepts of exchange and relationships lead to the concept of a market.
A market is the set of actual and potential buyers of a product or service. Building a relationship takes time. The marketers have to do a lot of research. Major environmental forces Designing a customer-driven marketing strategy Marketing management is the art of science of choosing target markets and building profitable relationships with them. To design a winning marketing strategy, the marketing manager must answer two important questions: What customers will we serve? (What’s our target market? ) How can we serve these customers best? What’s our value proposition? ) Selecting customers to serve Who will the company serve? First steps, market segmentation and target marketing. The company wants to select only customers that it can serve well and profitably. Marketing management is customer management and demand management. Choosing a value proposition How will the company differentiate and position itself in the marketplace? Value propositions differentiate one brand from another. (Redbull, gives you wings) Design strategies that will build profitable relationships with target consumers.
There are five concepts of marketing strategies: 1 . Production 2. Product 3. Selling 4. Marketing 5. Societal marketing 1 . The production concept The idea that consumers will favour products that are available and highly affordable and that the organisation should therefore focus on improving production and istribution efficiency. (lenovo) 2. The product concept The idea that consumers will favour products that offer the most quality, performance, and features and that the organisation should therefore devote its energy to making continuous product improvements. . The selling concept The idea that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort. 4. The marketing concept A philosophy that holds that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better han competitors do. 5. The societal marketing concept The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-term interest, and society long-term interests.
Society (Human welfare) Consumers (Want satisfaction) Company (profits) The major marketing mix tools are classified into four broad groups. The four Ps. Product Price Place Promotion The firm must first create a need-satisfying market offering (product). It must decide how much it will charge for the offering (price) and how it will make the offering available to target consumers (place). Finally, it must communicate with target customers about the offering and persuade them of its merits (promotion).
Building customer relationships The first three steps: Understanding the market place and customer needs, designing a customer-driven marketing strategy and constructing a marketing programme leads to the fourth and most important step: building profitable customer Customer relationship management (CRM) CRM is the most important concept of modern marketing. CRM: the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
Relationships building blocks: customer value and satisfaction The key to building lasting customer relationships is to create superior customer value and satisfaction. Satisfied customers are more likely to be loyal customers and give the company a larger share of their business. Customer value: Customer-perceived value: The customer’s evaluation of the difference between all the benefits and all the costs of a marketing relative to chose of competing offers. Customer satisfaction: The extent to which a product’s perceived performance matches a buyer’s expectations.
Customer relationship level and tools Basic relationship: Only through advertising, public relation, newsletter etc. Full partnership: Working close together. Frequency marketing programmes: Rewarding customers who buy frequently or in large amounts. Club marketing programmes: Special benefits for members. The changing nature of customer relationships Some important trends in the way that companies and customers are relating to one another. Relating with more carefully selected customers Marketers dont want a relationship with every customer.
They are selecting there customers. Relating more deeply and interactively Beyond choosing customers more selectively, companies are now relating with chosen customers in deeper, more meaningful ways. Rather than relying on one-way, interactive approaches that help build targeted, two-way customer relationships. Two way customer relationships: Customer-managed relationships: Marketing relationships in which customers, empowered by today’s new digital technologies, interact with companies and with each other to shape their relationships with brands.
Consumer-generated marketing: Brand exchanges created by consumers themselves – both invited and uninvited – by which consumers are playing increasing ole in shaping their own brand experiences and those of other consumers. (video sharing sites etc. ) Partner relationship management Working closely with partners in other company departments and outside the company to Jointly bring greater value to customers. Partners inside the company New thinking mean’s that no matter what your Job is in a company, you must understand marketing and be customer focused.
Firms are linking all departments in the cause of creating customer value. Marketing partners outside the firm Most companies today are networked companies, relying heavily on partnerships ith other firms. The supply chain: describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers. Through supply chain management, many companies today are strengthening their connections with partners all along the supply chain. Capturing value from customers Figure 1. shows the first four steps. The final step involves capturing value in return in the form of current and future sales, market share and profits. Creating customer loyalty and retention A slight drop from complete satisfaction can create an enormous drop in loyalty. Customer lifetime value: The value of entire stream of purchases that the customer would make over a lifetime of patronage. Customer delight creates an emotional relationship with a brand, not Just a rational preference. And that relationship keeps customers coming back.
Growing share of customer Good CRM can help marketers increase their share of customer: The portion of customer’s purchasing that a company gets in its product categories. To increase share of customer, firms can offer greater variety to current customers. Or they can create programmes to cross-sell and up-sell. Building customer equity customers. You have to build the right relationship with the right customer. Chapter 2, Company and marketing strategy, partnering to build customer relationships Company-wide strategic planning: defining marketing’s role 1.
Defining the company mission 2. Setting company objectives and goals 3. Designing the business portfolio 4. Planning marketing and other functional strategies Strategic planning: The process of developing and maintaining a strategic fit between the organisation’s goals and capabilities and its changing marketing opportunities. Mission statement: A statement of the organisation’s purpose – what it wants to ccomplish in the larger environment. Designing the business portfolio Business portfolio: The collection of businesses and products that make up the company.
Analysing the current business portfolio Portfolio analysis: The process by which management evaluates the products and businesses that make up the company. The Boston Consulting Group approach Growth-share matrix: A portfolio-planning method that evaluates a company’s SBUs in terms of its market growth rate and relative market share. Stars: High growth, high-share business or products. They often need heavy investments to finance their apid growth. Eventually their growth will slow down, and they will turn into cash cows.
Cash cows: Low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay its bills and support other SBUs that need investment. Question marks: Low-share businesses in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question mark it should try to build into stars and which should be passed out. Dogs: Low-growth, low-share businesses and products.
They may generate enough cash to maintain themselves but do not promise to be large sources of cash. Developing strategies for growth and downsizing Partnering with other company departments Value chain: The series of internal departments that carry out value-creating activities to design, produce, market, deliver and support a firm’s products. Partnering with others in the marketing system Value delivery network: The network composed of the company, its suppliers, its distributors, and ultimately, its customers who partner with each other to improve he performance of the entire system.
Marketing strategy and marketing mix Marketing strategy: The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships. Customer-driven marketing strategy Market segmentation Market targeting Market differentiation and positioning Market segmentation: Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviours, and who might require separate products or marketing programmes. Market segment: A group of consumers who respond in a similar way to a given set of marketing efforts.
Market targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Positioning: Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers. Differentiation: Actually differentiating the market offering to create superior customer value. Developing an integrated marketing mix Marketing mix: The set of controllable tactical marketing tools – product, price, place and promotion – that the firm blends to produce the response it wants in the target market.
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, organisations and ideas. Price: The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service. Place: All the company activities that make the product or service available to target customers. Promotion: and persuade them to buy.
Managing the marketing effort SWOT- Analysis: Planning begins with a complete analysis of the company’s situation. The company has to analyse its environment to find attractive opportunities and to avoid environmental threats. It has to analyse company strengths and weaknesses. Analysis feeds information and other inputs to each of the other stages. Planning: Through strategic planning, the company decides what it wants to do with each business unit. Marketing planning involves deciding marketing strategies that will help the company attain its overall strategic objectives.
Marketing, product or brand plans are at the centre of this. Implementation: Implementation turns strategic plans into actions that will achieve the company’s objectives. People in the organization who work with others, both inside and outside the company, implement marketing plans. Control: Control consists of measuring and evaluating the results of plans and activities, and taking corrective action to make sure objectives are being achieved. Analysis provides information and evaluations needed for all the others activities.
Chapter 3, Analysing the marketing environment The microenvironment The company Marketers must work in harmony with other company departments to create customer value and relationships. Suppliers Firms and individuals that provide the resources needed by the company and its ompetitors to produce goods and services. Marketing intermediaries Marketing intermediaries: Firms that help the company to promote, sell and distribute its goods to final buyers. They include physical distribution firms, marketing-service agencies, and financial intermediaries.
Physical distribution firms: Are warehouse, transportation, and other firms that help a company to stock and move goods from their points of origin to their destinations (must determine the best way to store and ship goods, balancing such factors as cost, delivery, speed and safety) Marketing-service agencies: Are marketing research firms, advertising gencies, media firms, marketing consulting firms, and other services providers that help a company target and promote its products to the right markets Financial intermediaries: Include banks, credit companies, insurance companies, and other buying and selling goods.
Resellers: The individuals and organisations that buy goods and services to resell at a profit. Competitors The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Publics Any group that has an actual or potential interest in or impact on an organisation’s ability to achieve its objectives. Financial publics: Influence the company’s ability to obtain funds. Banks, investment houses and stockholders are the principal financial publics.
Media publics: Include newspaper, magazines and radio and televisions stations that carry news, features and editorial opinion. Government publics: Management must take government development into account. Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising and other matters. Citizen action publics: A company’s marketing decisions may be questioned by consumer organisations, environmental groups, minority groups and ther pressure groups. Its public relations department can help it stay in touch with consumer and citizen groups.
Local publics: Every company has local publics, such as neighbourhood residents and community organisations. Large companies usually appoint a community-relations officer to deal with the community, attend meetings, answer questions and contribute to worthwhile causes. General public: A company needs to be concerned about the general public’s attitude towards its products and activities. The public’s image of the company affects its buying. Thus, many large orporations invest huge sums of money to promote and build a healthy corporate image. Internal public: These include its workers, managers, volunteers and the board of directors.
Large companies use newsletter and other means to inform and motivate their internal publics. When employees feel good about their company, this positive attitude spills over to their external publics. Customers Consuer markets: Consist of individuals and households that buy goods and services for personal conumption. Business markets: Buy goods and services for further processing or for use in their production process. Reseller markets: Buy goods and services to resell at a profit. Institutional markets: Are made up of schools, hospitals, nursing homes, prisons and other institutions that provides goods and services to people in their care.
Government markets: Are made up of government agencies that buy goods and services in order to produce public services or transfer the goods and services to other who need them. International markets: Consist of buyers in other countries, including consumers, producers, resellers and governments The macro environment Demography is the study of human populations in terms of size, density, location, ge, gender, and race occupation. Demographic trends include population growth changing age and household structure, pressures for migration and population diversity.
Changing demographics mean changes in markets, which in turn require changes in marketing strategies. World population growth Changing age structure of world population Generational differences in the developed world The changing family structure Geographic shifts in population and market diversity Baby boomers: The 78 million people born during the years following the Second World war and lasting until 1964. Generation X: The 45 million people born between 965 and 1976 in the ‘birth dearth’ following the baby boom.
Millennials: The 83 million children of the baby boomers, born between 1977 and 2000 New household formats Working woman The youth market Older workers Migration Ethnic diversity in markets Recognising other aspects of diversity in markets Urbanisation The economic environment The factors that affect consumer purchasing power and spending patterns. The changing world order Changes in consumer spending Income distribution The natural environment (ecological) Natural resources that are needed as inputs by markets or that are affected by marketing activities.