Principles of Marketing

What is Marketing?

MGCR 352
Professor Bruce Doré

textbook Chapter 1
By the end of this class…

1. Explain what marketing is.

2. Define what a market is.

3. Explain different marketing orientations (and why they’re

important).

4. Estimate the lifetime value of a customer

Early 2000’s Aircraft Industry
Two big aircraft manufacturers, Boeing and Airbus, announce
their “next gen” aircraft
Early 2000’s Aircraft Industry
Two big aircraft manufacturers, Boeing and Airbus, announce
their “next gen” aircraft

Airbus A380
Huge planes, hub-to-hub model
with redesigned terminals
Early 2000’s Aircraft Industry
Two big aircraft manufacturers, Boeing and Airbus, announce
their “next gen” aircraft

Airbus A380 Boeing 787 Dreamliner

Huge planes, hub-to-hub model Small, fuel efficient,
with redesigned terminals bypass hubs with direct flights
Why so different?
Why so different? Marketplace insights!
Why so different? Marketplace insights!
• Data
• Growth in direct flights
• Customer experience and preferences
• Direct vs. transfer
• Humidity levels, standing room, bathroom sizes, air quality
• Airport congestion
• Available airports and operational costs
Why so different? Marketplace insights!
• Data
• Growth in direct flights
• Customer experience and preferences
• Direct vs. transfer
• Humidity levels, standing room, bathroom sizes, air quality
• Airport congestion
• Available airports and operational costs

• So what happened?
Why so different? Marketplace insights!
• Data
• Growth in direct flights
• Customer experience and preferences
• Direct vs. transfer
• Humidity levels, standing room, bathroom sizes, air quality
• Airport congestion
• Available airports and operational costs

• So what happened?
• 2019 orders: 108 Dreamliners, 4 A380s (up from 0 in 2016)
• Cumulative orders: 1,403 Dreamliners, 321 A380s
• Airbus introduces the A350
Why so different? Marketplace insights!
• Data + Analysis
• Growth in direct flights (marketing environment trends)
• Customer experience and preferences (consumer behavior)
• Direct vs. transfer
• Humidity levels, standing room, bathroom sizes, air quality
• Airport congestion
• Available airports and operational costs (collaborators, marketing
channels, market sizing, quantitative analysis)
• So what happened? (marketing plan)
• 2019 orders: 108 Dreamliners, 4 A380s (up from 0 in 2016)
• Cumulative orders: 1,403 Dreamliners, 321 A380s
• Airbus introduces the A350
The ubiquity of marketing
The ubiquity of marketing
The ubiquity of marketing

Discuss with your neighbor (5 mins):

Identify a time when you were doing marketing
on behalf of YOURSELF
e.g. applying for a job/position, trying to get attention for some cause
you care about, asking for something you wanted, etc.

What did you do that was effective?

What could you have done better?
What do people believe about marketing?
What do people believe about marketing?

Myth 1
Marketing is just advertising
What do people believe about marketing?

Myth 1
Marketing is just advertising
Myth 2
Marketing is selfish / a scam
Marketing in Context
What is marketing?
What is marketing?

Create, communicate, deliver, and exchange an

offering.
What is marketing?

Create, communicate, deliver, and exchange an

offering.

Product, Promotion, Place, and Price

What is marketing?

Create, communicate, deliver, and exchange an

offering.

This offering satisfies customers’ wants / needs.

What is marketing?

Create, communicate, deliver, and exchange an

offering.

This offering satisfies customers’ wants / needs.

If done right, marketing creates value.

company customer
value value

value to the marketing

world should optimize this
 Communicate
Create Deliver

Firms Value Consumers

Capture Pay for

The activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have
value for customers, clients, partners and society at large.
American Marketing Association
 Empathic Design

“Empathy” – put yourself in the consumer’s shoes

1. Observe consumers
2. Identify needs and pain points
3. Brainstorm and develop solutions

Goal: Identify needs or opportunities

that consumers can’t express!
Empathy for the customer experience

‘The Apple Marketing Philosophy’ stressed three

points. The first was empathy, an intimate
connection with the feelings of the customer:

‘We will truly understand their needs better than

any other company.’
Discussion – the ubiquity of marketing
- Think about a product or service that you use regularly. How
does it add value to your life? What are some alternative
solutions that you could use instead (direct or indirect
competitors) – in what ways are they just as good, and in
what ways are they not as good?
- Write down the name of the product/service, at least 1 way it adds
value to your life, and at least 2 alternative solutions

- Share your list and discuss why you think the company
was effective in connecting you with this product. What are
they doing right with their marketing?
What is a market?

The set of actual and potential customers for a

good or service.
What is a market?

The set of actual and potential customers for a

good or service.

People with desire and ability to buy.

What is a market?

The set of actual and potential customers for a

good or service.

People with desire and ability to buy.

End users, intermediaries.

Evolution of marketing
Production Era
Sales Era
Marketing Orientation Era
Value-Based Marketing Era
 Discussion – value-based marketing

● What do you think about Patagonia’s “Don’t Buy This

Jacket” campaign? Is this a good advertising strategy
for this brand? Why or why not?

● Are there any products or brands that you like

because of the values they have? How do they
communicate those values to the world?
Evolution of marketing
● Product Orientation
○ compete on dimensions of price and quality
○ assumed product would sell itself
● Sales Orientation
○ focus on acquiring customers – focus on selling
● Market Orientation
○ wants/needs of consumers should guide all firm actions
● Value-Based Orientation
○ value in broader sense
○ focus on retaining customers; functional integration
Rethinking the Product-Based Approach

Product-based approach: less effective today vs in the past

What has changed?

Rethinking the Product-Based Approach

Product-based approach: less effective today vs in the past

What has changed?

○ Technology:
■ Product life-cycles have become much shorter
○ Global Competition
■ firms can copy innovation very quickly
○ Consumer Power: highly informed and empowered customers
Focus on the Customer

● Value-based firms understand, attract, and retain the most

valuable customers
● No business can succeed without customers
○ Customers do not buy products, they buy benefits/value
○ “Customers do not want a quarter-inch drill”
Customer Lifetime Value
Customer Lifetime Value

● One coffee per visit – $3

Customer Lifetime Value

● One coffee per visit – $3, usually two visits per week
Customer Lifetime Value

● One coffee per visit – $3, usually two visits per week
● 52 weeks in a year – $312 annually
Customer Lifetime Value

● One coffee per visit – $3, usually two visits per week
● 52 weeks in a year – $312 annually
● If I continue to do this for 20 years, my expected CLV is $6240
Discussion: Customer Service Experiences
Discussion: Customer Service Experiences
Maintaining a relationship with the customer

- new customers aren’t cheap:

- costs up to 25x to attract a new customer vs retain an
existing one

- firms use customer relationship management strategies to

build long-term relationships (e.g., customer service, loyalty
programs)
What is marketing?

Create, communicate, deliver, and exchange an

offering.

Product, Promotion, Place, and Price

The 4 P’s of the marketing mix

Product
Promotion Tactical elements
Place
Price
The 3 C’s of Marketing

Customer
Company Analysis
Competitors
Customer

Satisfying Wants / Needs

Segmentation, Targeting, Positioning

Customer Lifetime Value

Company

● Development of distinctive and hard to replicate resources

– value proposition

● SWOT
○ Strengths
internal factors
○ Weaknesses
○ Opportunities
external factors
○ Threats
Competitors

● Positioning: How a firm’s offerings are perceived by

customers, relative to what competitors can offer

● Direct competitors, indirect competitors

● Competitive Analysis
 Analysis: 3 C’s
customer company competitors

Strategy: STP, value proposition

segmentation targeting positioning

Tactics: 4 P’s of the marketing mix

product price promotion place
What’s next?
The Marketing Plan &
The Marketing Environment

Group Project
- Marketing Plan
- Case Analysis