W1: What is marketing?

Check list

o Define Marketing and outline the stages in the simple model of

marketing process.
o Briefly introduce each stage of the marketing process
o Explain the importance of understanding customers and the marketplace
o Identify the five core marketplace concepts
o Identify the key elements of a customer-driven marketing strategy
o Discuss the marketing management orientations that guide marketing
strategy
o Discuss customer relationship management
o Identify strategies for creating value for customers and capturing value
from customers in return

1. Marketing and simple model of marketing process

o Marketing: The process in which organisations engage customers,
then build strong customer relationships and create value for
customers in order to capture value from customers in return.
o Simple model of marketing process:

Construct an Capture value

Build
Understand inetrgrated from
Design a profitable
marketplace marketing customers to
customer- customer
and customer program that create profit
driven strategy relationship
needs delivers and customers
and delight
superior values equity
2. Each stage of the marketing process:
STAGE 1: UNDERSTAND MARKETPLACE AND CUSTOMER
NEEDS:

Needs (1)
Physical: food, clothing, warm and safety
Social: belonging and affection
Individual: knowledge and self-expression

Wants (1)
Needs that formed bu culture and personality
In terms of objects that will satisfy needs

Demands (1)
Wants but backed by purchasing power.
 o Market offerings (2): some combinations of goods or services,
expreinces or information that can satisfy customer needs or
wants.
o Marketing myopia: the mistake of paying only attention to a
specific extising product that a company is offering rather
than the value (experince, benefits) that the product can
bring to the customer.
 Company is only focusing on the exisiting wants and
losing sights of underlying needs.
o Customers form expectations about the value and expectations
that the product can bring based on the delivery of market
offerings and buy accordingly.

Customers
Value and satisfaction

Marketers
Set the right level of expectations
Not too high or low
 Creating a balance between customers’ expectations (3)
and the marketers’ ability to deliver on value.
 Exchange (4)
Act of getting from someone by offering something in return
Marketing occurs when people decide to satisfy needs and wants through exchange

Transaction (4)
A trade between 2 parties that has at least 2 things with similar values, agreed-upon conditions, time
and agreement
Marketing's unit of measurement
One party gives X and gets Y in return

Market (5)
Set of all actual and potential buyers of a product or service
Buyers share particular need/want that can be satisfied through exchanging

STAGE 2: DESIGN A CUSTOMER-DRIVEN MARKETING STRATEGY

o Marketing management: art and science of choosing target markets

and building profitable relationsips with them
 Aim: find, attract, keep and grow target customers by
creating, delivering and communicating superior
customer values (Kotler&Armstrong,2012).
o 2 key questions:
 What customers will we serve?

 How can we serve the customers best?

 o The company must decide how to serve targeted customers – how
it will differentiate and position itself in the marketplace.
o A brand’s value proposition is the set of benefits or values it
promises to consumers to satisfy their needs
(Kotler&Armstrong,2012).

o 5 marketing strategies concepts:

Consumers: affordable and available prducts

Production Management: improving production and distribution efficiency

Consumers: offer the most in quality, performance and innovative features

Product Management: continuos product improvement

Large scale selling

Selling Promotion effort

Understanding customer needs to create products satisfying needs

Marketing Deliever desired satisfactions better than competitors

Balance between: consumers' wants, profits and society's interests.

Societal

o Differences between marketing and selling concepts:

- Marketing: outside-in perspective
- Selling concepts: inside-out perspective
 o Marketing concepts: concern with the philosophy that the
company use to identify and fulfill the needs of customers,
benefiting both customers and the company.
 Different companies have different marketing concepts
 There is no right/wrong in marketing concepts
 Apply/Use what is the most suitable for the compnay to
get the best result.

STAGE 3: PREPARING AN INTERGRATED MARKETING PLAN AND

PROGRAM

o 4Ps; Product, Price, Place and Promotion

Product
Deliver on its value proposition
Create a need-satisfying market offering

Price How much it will charge for the offering

Place
How it will be available for the for target
consumers

Promotion
Communicate with target consumers about the
offering and persuade them about its merits.
 STAGE 4: BUILDING CUSTOMER RELATIONSHIP
o Customer relationship management (CRM): process of building
and maintaining profitable customer relationships by offering
superior value and satisfaction.
o Managing customer “touch points” to maximize customer loyalty
o Customer satisfaction: the extent to which a product’s perceived
performance matches a buyer’s expectations.

CUSTOMER
SATISFACTION
=
OFFER’S PERCEIVED
PERFORMANCE - BUYER’S
EXPECTATION

If:
 Buyer’s expectation > Offer’s perceived performance/ Customer
perceived value  Unsatisfied
 Buyer’s expectation = Offer’s perceived performance/ Customer
perceived value  Satisfied
 Buyer’s expectation < Offer’s perceived performance/ Customer
perceived value  Highly satisfied/ Delighted

STAGE 5: CAPTURING VALUES FROM CUSTOMERS

o Customer lifetime value: value of the entire stream of purchases that

the customer would make over a lifetime of patronage
o Customer equity is the total combined customer lifetime values of
all of the company’s customers
 The more loyal firm’s profitable customers, the higher the firm’s
customer equity!
 Firm should
invest and pay
attention to these

Firm may need to

get rid off this
group, depends
on the situation

Ignore this
group

Figure - Customer relationship Groups (Kotler & Armstrong, 2012)