Marketing in a Changing World: Creating Customer Value and Satisfaction Emergence of the Marketing Concept • Occurred during the shift from a sellers’ market to a buyer’s market after World War II. • Created the need for greater consumer orientation. • Business philosophy incorporating the marketing concept that emphasizes first determining unmet consumer needs and then designing a system for satisfying them. • Marketing concept Companywide consumer orientation for achieving longterm success. • Example: Apple computer, which polls show “delivers great consumer experiences with outstanding design.” • Relationship marketing Developing and maintaining of longterm, costeffective relationships with individual customers, suppliers, employees, and other partners for mutual benefit.
Chapter Chapter 11 Marketing in a Changing World: Creating Customer Value and Satisfaction What What is is Marketing? Marketing? • Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others • More simply: Marketing is the delivery of customer satisfaction at a profit Core Core Marketing Marketing Concepts Concepts Needs, wants, and demands Products and Services Core Core Marketing Marketing Concepts Concepts Markets Value, satisfaction, and quality Exchange, transactions, and relationships Emergence of the Marketing Concept • Occurred during the shift from a sellers’ market to a buyer’s market after World War II • Created the need for greater consumer orientation • Business philosophy incorporating the marketing concept that emphasizes first determining unmet consumer needs and then designing a system for satisfying them • Marketing concept Company-wide consumer orientation for achieving long-term success • Example: Apple computer, which polls show “delivers great consumer experiences with outstanding design.” • Relationship marketing Developing and maintaining of long-term, costeffective relationships with individual customers, suppliers, employees, and other partners for mutual benefit What What Motivates Motivates aa Consumer Consumer to to Take Take Action? Action? • Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging i.e I am thirsty • Wants - form that a human need takes as shaped by culture and individual personality i.e I want a Coca-Cola • Demands - human wants backed by buying power i.e I have money to buy a Coca-Cola What What Will Will Satisfy Satisfy Consumer’s Consumer’s Needs Needs and and Wants? Wants? • Products - anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a need or want • Examples: persons, places, organizations, activities, and ideas • Services - activities or benefits offered for sale that are essentially intangible and don’t result in the ownership of anything • Examples: banking, airlines, haircuts, and hotels CONVERTING NEEDS TO WANTS •Effective marketing focuses on the benefits resulting from goods and services Example: Need for a pair of pants converted to a desire for jeans • Companies must pay attention to what consumers want Example: Demand for cell phones and wireless services Number of Wi-Fi Internet users grew 57 percent in a recent year AVOIDING MARKETING MYOPIA Marketing myopia Management’s failure to recognize the scope of its business How How Do Do Consumers Consumers Choose Choose Choose Choose Among Among Products Products and and Services? Services? • Customer Value - benefit that the customer gains from owning and using a product compared to the cost of obtaining the product • Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations Linked to Quality and Total Quality Management (TQM) How How do Consumers Consumers Obtain Obtain Products Products and and Services? Services? • Exchanges - act of obtaining a desired object from someone by offering something in return • Transactions - trade of values between parties Usually involves money and a response • Relationships - building long-term relationships with consumers, distributors, dealers, and suppliers Marketing Marketing Management Management Marketing Management Implementing programs to create exchanges with target buyers to achieve organizational goals Demand Management Finding and increasing demand, also changing or reducing demand Profitable Customer Relationships Attracting new customers and retaining current customers Marketing Marketing Management Management Philosophies Philosophies Production Production Concept Concept • Consumers favor products that are available and highly affordable •Improve production and distribution Product Product Concept Concept •Consumers favor products that offer the most quality, performance, and innovative features Selling Selling Concept Concept •Consumers will buy products only if the company promotes/ sells these product Marketing Marketing Concept Concept Societal Societal Marketing Marketing Concept Concept •Focuses on needs/ wants of target markets & delivering satisfaction better than competitors •Focuses on needs/ wants of target markets & delivering superior value •Society’s well-being Marketing Marketing & & Sales Sales Concepts Concepts Contrasted Contrasted Starting Point Factory Focus Existing Products Means Ends Selling and Promoting Profits through Volume The The Selling Selling Concept Concept Market Customer Needs Integrated Marketing Profits through Satisfaction The The Marketing Marketing Concept Concept Societal Societal Marketing Marketing Concept Concept Society Society (Human (Human Welfare Welfare)) Societal Societal Marketing Marketing Concept Concept Consumers Consumers (Wants) (Wants) Company Company (Profits) (Profits) New New Marketing Marketing Challenges Challenges New Marketing Landscape & Information Technology Ethical Concerns Nonprofit Marketing Emerging Emerging Challenges Challenges Changing World Economy Globalizatio n EXPANDING THE TRADITIONAL BOUNDARIES OF MARKETING MARKETING IN NOT-FOR-PROFIT ORGANIZATIONS • 10 percent of U.S population works or volunteers for a not-forprofit organization • Operate in public sector and private sector • Not-for-profits sometimes promote their messages through partnerships with commercial firms Example: America’s Second Harvest receiving assistance from food manufacturers and grocery stores NONTRADITIONAL MARKETING CREATIVITY AND CRITICAL THINKING • The challenges of the marketplace require critical thinking and creativity • Creativity produces original ideas or knowledge Example: George de Mestral inventing Velcro after noticing burrs that stuck to his wool socks • Critical thinking determines the authenticity, accuracy, and worth of information, knowledge, claims, and arguments Example: Microsoft forming an Internet research lab to develop and evaluate new products TECHNOLOGY REVOLUTION IN MARKETING • Technology—The business application of knowledge based on scientific discoveries, inventions, and innovations • Communications technology has revolutionized the way we business More than half of all U.S households have at least one computer Internet sales in U.S topped $143 billion in a recent year • Technology also opens new markets INTERACTIVE AND INTERNET MARKETING • Interactive, customizable technology that gives users quick access to information • Interactive marketing—Customer controls amount and type of information received from a marketer FROM TRANSACTION-BASED MARKETING TO RELATIONSHIP MARKETING • View of marketing as transaction-based is being replaced by a longer-term approach • Focus is on developing customers into repeat, loyal customers • Over long-term, increases lifetime value of the customer • Goal is to move customer up the loyalty ladder: • New customer • Regular purchaser • Loyal supporter • Advocate • Repeat customers are a source of buzz marketing DEVELOPING PARTNERSHIPS AND STRATEGIC ALLIANCES • Relationship marketing also applies to business-to-business relationships with suppliers, distributors, and other partners • Strategic alliances Partnerships in which two or more companies combine resources and capital to create competitive advantages in a new market Example: Yahoo! and TiVo blending some of their services • Not-for-profits often raise awareness and funds through strategic partnerships COSTS AND FUNCTIONS OF MAREKTING • Marketing costs are typically 40 to 60 percent of total product costs • Marketing performs eight universal functions: Exchange functions—buying and selling Physical distribution functions—transporting and storing Facilitating functions—standardizing and grading, financing, risk taking, and securing marketing information ETHICS AND SOCIAL RESPONSIBILITY: DOING WELL BY DOING GOOD • Ethics—Moral standards of behavior expected in a society • Most businesspeople follow ethical practices • Social responsibility—Marketing philosophies, policies, procedures, and actions whose primary objective is to enhance society Often takes the form of philanthropy • Committee to Encourage Corporate Philanthropy gives awards annually to corporations that demonstrate a commitment to social responsibility References: • Kotler, P., & Armstrong, G., (1999), Principles of Marketing, 8th Ed, Prentice Hall International, UK • Boone, LE., & Kurtz, DL., (2007), Contemporary Marketing 13th Ed, South-Western, USA ... Concept Market Customer Needs Integrated Marketing Profits through Satisfaction The The Marketing Marketing Concept Concept Societal Societal Marketing Marketing Concept Concept Society Society... Societal Societal Marketing Marketing Concept Concept Consumers Consumers (Wants) (Wants) Company Company (Profits) (Profits) New New Marketing Marketing Challenges Challenges New Marketing Landscape... buy products only if the company promotes/ sells these product Marketing Marketing Concept Concept Societal Societal Marketing Marketing Concept Concept •Focuses on needs/ wants of target markets