1

Chapter 1 (Plus Section of Chapter 2)

Marketing in a Changing World: Creating Customer

Value and Satisfaction

2

What is Marketing? (pp. 5-6)

The process by which individuals and groups obtain what they need and want

through creating and exchanging products and value with others. (p. 6)

Simply put:

Marketing is the delivery of customer satisfaction at a profit. (p. 5)

3

TargetCustomers

IntendedPositioning

Product (Customer Solution) Goods-and-servicecombination that a company offers a

target market

Price (Customer Cost)Amount of moneythat consumers have to pay to

obtain the product

Activities that persuade target customers to buy

the product Promotion (Communication)

Company activitiesthat make the

product available

Place (Convenience)

Marketing Strategy Marketing Mix

“The 4 Ps,” Tactical Tools

(“The 4 Cs”)

(Fig. 2.6, pp. 67-68)

AdvertisingPersonal SellingSales PromotionPublic Relations

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Core Marketing Concepts

(Fig. 1.1, pp. 6-13)

Needs, wants, and demands

Productsand services

Value, satisfaction, and quality

Exchange, transactions,

and relationships

Exchange, transactions,

and relationships

Markets

5

Needs Needs - state of felt deprivation for basic items such as food and clothing, and complex needs such as for belonging. (i.e. I am hungry.)

WantsWants - form that a human need takes as shaped by culture and individual personality. (i.e. I want a hamburger, French fries, and a soft drink.)

DemandsDemands - human wants backed by buying power. (i.e. I have money to buy this meal.)

What are Consumer’s Needs, Wants and Demands? (pp. 6-7)

6Caution: Avoid “Marketing Myopia” Caution: Avoid “Marketing Myopia” (pp. 8, 18)

ProductsAnything that can be offered to a market to satisfy a need or want

ExperiencesExperiences PersonsPersons PlacesPlaces

OrganizationsOrganizations IdeasIdeasInformationInformation

What Will Satisfy Consumer’s Needs and Wants? (pp. 7-8)

ServicesActivities or benefits offered for sale that are essentiallyintangible and don’t result in the ownership of anything

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How Do Consumers ChooseChoose Among Products & Services? (pp. 9-11)

Customer Value Customer Value – Value gained from owning a product less the costs

Customer SatisfactionCustomer Satisfaction – Perceived performance in providing value, relative to expectations

QualityQuality – Total quality management (TQM) -continuous improvement

• Caution: Avoid “Marketing Myopia”Caution: Avoid “Marketing Myopia”(pp. 8, 18)

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TransactionsTransactionsExchangesExchanges

TheThe core concept core concept of marketingof marketing

Relationships Relationships Building a marketing

network with supportingstakeholders

How Do Consumers Obtain Products and Services? (p. 11)

(p. 14)Relationship Marketing & Customer Lifetime Relationship Marketing & Customer Lifetime ValueValue

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Who Purchases Products and Services? (pp. 12-13)

Market

Actual and potential buyers who share

a particular need or want that can be

satisfied through an exchange or relationship.

Needs or wants

Resources to exchange

Willingness toexchange

Actual buyers

Potentialbuyers

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Connections With Customers(p. 14)

Most marketers are targeting fewer, potentially more profitable customers.

Asking: What value does the

customer bring to the organization?

Are they worth pursuing? Focus has shifted to:

keeping current customers, and

building lasting relationships based on superior satisfaction and value.

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MarketingManagement

Implementing programs to create exchangeswith target

buyers to achieve

organizational goals

DemandManagement

Finding and increasing

demand, alsochanging or

reducing demand such

as in“Demarketing”

ProfitableCustomer

Relationships

Attracting new customers and retaining and

building relationships with current customers

Marketing Management (p. 14)

12

Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Mktg. Concept

•Consumers favor products that are available and highly affordable.

•Consumers favor products that offer the most quality, performance, and innovative features.

•Consumers will buy products only if the company aggressively promotes/ sells these products.

•Focuses on needs & wants of target markets & delivering satisfaction better than competitors.

•Focuses on needs & wants of target markets & maintaining or improving societal and customer well-being.

Marketing Management Philosophies(pp. 15-22)

Based on different assumptions about:- what customers want- what marketers should do

Production ConceptLate 1800s & Early 1900s

Demand > Supply; High Costs(Still appropriate under these limited circumstances)

(pp. 16-17) Consumers Favor:

Widely available Highly affordable

Management’s Focus: “engineer” Improving production efficiency Improving distribution efficiency

Fails to recognize customer needs/wants

Product ConceptLate 1940s (Post World War II)

Demand < Supply

(p. 18) Consumers Favor:

Quality, performance Innovative features

Management’s Focus: “inventor” Make superior products (“build a better

mousetrap”) Make continuous improvements

Danger: “Marketing Myopia” Focus on physical products, not customer needs & wants “Fall in love” with the product, not the customer

o Customers don’t need or want (“just don’t care”)o Over-improveo New technology replaces

Selling ConceptLate 1940s (Post World War II)

Demand < Supply

(p. 18)

Consumers Favor: Not buying or not buying enough

Management’s Focus: “hard-sell salesman” Large-scale selling and promotion efforts Coaxing & pushing people to buy

Danger: “Sell what you can make”

(versus “Make what you can sell”)

Marketing Concept1950s – Present

Demand < Supply

(pp. 18-20) Consumers Favor:

Products that satisfy their needs and wants Management’s Focus: “customer oriented”

Understanding the needs and wants of consumers

Satisfying them more efficiently and more effectively than competitors

(NOTE: Efficiency & effectiveness - keeps the best of the production & product concepts)

(Focuses on the underlying and latent needs as well as the stated needs)

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Marketing and Sales Concepts Contrasted (Fig. 1.4, pp. 18-20)

FactoryExistingProducts

Sellingand

Promoting

ProfitsthroughVolume

The Selling Concept (“inside-out”)The Selling Concept (“inside-out”)

StartingPoint Focus Means Ends

MarketCustomer

NeedsIntegratedMarketing

Profitsthrough

Satisfaction

The Marketing Concept (“outside-in”)The Marketing Concept (“outside-in”)

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Societal Marketing ConceptLate 20th Century – Still emergingRecognizes potential conflict (pp. 20-22)

Societal Marketing

Concept

Company(Profits)

Consumers(Short-term wants)

Society(Societal & customer well-being)

Maintain & improvelong-term well-being

Social responsibility

EthicsEnvironmentDo good

Stop doing bad

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Chapter Review (pp. 36-37)

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.