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Defining Marketing and the MarketingProcess

Marketing: Managing Profitable CustomerRelationships Chapter 1


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You Will Learn

Definition of marketing and its coreconcepts

Relationship between customer value,satisfaction and quality

Definition of marketing management andunderstand how marketers managedemand and build profitable customerrelationships

Comparison of the 5 marketingmanagement philosophies Analysis of the major challenges facing

marketers.


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What is Marketing?

Marketing is the delivery of customersatisfaction at a profit

Sound marketing critical to the success of everyorganization

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 activitiescompeting for your attention and purchasing power.


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Marketing Defined

It is not just selling and advertising these are twofunctions of marketing

It is not making a sale but it is satisfying customerneeds

It is the homework that managers undertake toassess needs, measure their extent and intensity anddetermines whether a profitable opportunity exists

It continues through the products life cycle, trying tofind new customers and keep current customers byimproving product appeal and performance

A marketer thus, understands customer needs,develops products that provide superior value andprices and distributes and promotes them effectively

Hence the marketing mix is a set of marketing toolsthat work together to affect the market place.


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Marketing Defined

A social and managerial process whereby

individuals and groups obtain what theyneed and want through creating andexchanging products and value with

others


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A simple model of the marketingprocess

1. Understand the marketplace an customerneeds and wants

2. Design a customer driven market strategy

3. Construct an integrated marketingprogram that delivers superior value

4. Build profitable relationships and createcustomer delight

5. Capture value from customers to createprofits 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 andindividual personality

Demand Human want that isbacked by buying power


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Products and Services

Product Anything that can be offered to a market forattention, acquisition, use, or consumption that mightsatisfy a want or need. It includes physical objects,services, persons, places, organizations and ideas.

Service Any activity or benefits that one party canoffer to another that is essentially intangible and doesnot result in the ownership of anything.

The essence is to concentrate on the benefit or solutionoffered by the product or service rather than the physicalgood.

Avoid amarketing myopiai.e. focus not only onexisting wants but also on underlying needs of thecustomer.


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Value, Satisfaction and Quality

Customer value the difference b/w the values thecustomer gains from owning and using a product and thecost of obtaining the product.

Customer satisfaction the extent to which the productperceived performance matches a buyers expectations.

Performanceexpectation=delight

TQM programs designed to constantly improve thequality of products, services and marketing processes i.efreedom from defects


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Exchange, Transactions andRelationships

Marketing occurs when people decide to satisfy needs andwants throughexchange 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 thingsof value, agreed upon condition, a time and place ofagreement

Transaction marketing is part of a larger idea ofrelationship marketing The process of creating, maintaining and enhancing

strong value laden relationships with customers andstake holders. A marketing network consists of and all its supporting

stake holders: customers, employees, suppliers,distributors, retailer, ad agencies and others with whom ithas built a mutually profitable business relationship


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What Are Markets?

A simple marketing system

Industry Products/ Services Markets(sellers) (buyers)

Money

Information


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Main Actors and Forces in aModern Marketing System

Company

(marketer)

Suppliers Marketing End user

Intermediaries market

Competitors

Environment


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Marketing Management

The analysis, planning,implementation, and control of

programs designed to create, build,

and maintain beneficial exchangeswith target buyers for the purposeof achieving organizational

objectives. It seeks to affect the

level, timing and nature of demandin away that helps the organizationachieve its objectives


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Marketing Management

Demand management:

Increasing demand

Changing sales

Demarketing

Building profitable customerrelationships:

Attract new customers

Create transactions with them

Retain current customers

Build lasting customer relationships


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Marketing ManagementPractice

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 ManagementPhilosophies

1. Production:consumers will favor products that areavailable and highly affordable

2. Product:consumers favor products that offer themost in quality, performance, and innovative features

3. Selling:consumers will not buy unless it undertakesa large-scale selling and promotional effort

4. Marketing:determining the needs and wants oftarget markets and delivering the desiredsatisfactions more effectively and efficiently then thecompetitors

5. Societal marketing:generating customersatisfaction and long-run societal well-being are thekeys to both achieving the companys goals andfulfilling its responsibilities


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Selling versusMarketing Concept

Starting Focus Means EndsPoint

THE SELLING CONCEPT

Factory Existing Selling & Profitsproducts promoting through sales

volumeTHE MARKETING CONCEPT

Market Customer Integrated Profits

needs marketing throughcust.satisfaction


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Marketing in theConnected World

Connecting

Technologies

Computer

Information

Communication

Transportation

Connections with customersMore selectively

For life

Directly

Connections with Marketing PartnersWith other company departments

With suppliers and distributors

Through strategic alliances

Connections with the World Around UsGlobal connections

With values and responsibilities

Broadened connections


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The Changing Nature of CustomerRelationships

Relating with more carefully selectedcustomers

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 makeover a lifetime of patronage

Growing share of customer Share of customer: the portion of the customers

purchasing that a company gets in its productcategories

Building customer equity Customer equity: The total combined customer

lifetime values of all of the companys customers


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Building the Right Relationshipswith the Right Customer

Pg 22. Fig 1.5


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An expanded model of the marketigprocess

Pg 29, Fig1.6

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