Chapter 2MARKETING AND MARKETING

MANAGEMENT: CREATING CUSTOMER VALUE AND SATISFACTION

REVIEWING PREVIOUS CHAPTER

• We learned from Chapter 1 that from its mother science, economics, marketing has emerged as a distinct action discipline enriched by borrowings from related disciplines such as management, accounting, political science and the behavioral sciences.

• We also learned that history and stages of marketing thought are surveyed to the point to the growth and development of marketing.

• To be successful in business, each company should deal with customers on a daily basis, not only be customer-driven, but be customer-obsessed. The best way to achieve this objective is to develop a sound marketing function within the organization.

CHAPTER OBJECTIVES

At the end of the chapter, you should be able to:• Define what marketing is and discuss its core concepts.• Explain the relationships between customer value, satisfaction,

and quality.• Define marketing management and understand how marketers

manage demand and build profitable customer relationships. • Compare the five marketing management philosophies.• Analyze the major challenges facing marketers heading into the

new “connected” millennium.

What Is Marketing?

Simple Definition: Marketing is managing profitable customer relationships.

Goals: 1.Attract new customers by promising superior value. 2.Keep and grow current customers by delivering

satisfaction.

Marketing Defined

• A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

OLD Viewof Marketing:Making a Sale –“Telling & Selling”

New View of Marketing:

Satisfying

NEW View of Marketing:

Satisfying Customer Needs

Core Marketing Concepts

Marketing Defined

Process by which individuals and groups obtain what they need and want through

creating and exchanging products and value with others.

What are Consumers’ Needs, Wants, and Demands?

Needs Needs - state of felt deprivation including physical, social, and individual needs i.e hunger

WantsWants - form that a human need takes as shaped by culture and individual personality i.e. bread

DemandsDemands - human wants backed by buying power i.e. money

ExperiencesExperiences PersonsPersons

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

PlacesPlaces

OrganizationsOrganizations IdeasIdeasActivitiesActivities

What Will Satisfy Consumers’ Needs and Wants?

ServicesActivity or Benefit Offered for Sale That is Essentially

Intangible and Doesn’t Result in the Ownership of Anything

ServicesActivity or Benefit Offered for Sale That is Essentially

Intangible and Doesn’t Result in the Ownership of Anything

How Do Consumers ChooseAmong Products and Services?

Total Quality Management Involves Improving the Quality of Products, Services, and

Business Processes

Product’s Perceived Performance in Delivering Value Relative to Buyer’s

Expectations is Customer Satisfaction

Value Gained From Owning a Product and Costs of Obtaining the Product is

Customer Value

ExchangesExchanges TransactionsTransactions

Relationships Relationships Building a MarketingNetwork by Adding:•Financial Benefits

•Social Benefits•Structural Ties

•Profitable Customers

How Do Consumers Obtain Products and Services?

Modern Marketing System

Marketing Management

Attracting new customers and retaining and building relationships with current customers

ProfitableCustomer

Relationships

Finding and increasing demand, also changing or reducing demand such as in Demarketing

DemandManagement

Involves managing demand, which involves managing customer relationshipsMarketing

Management

Stage 1. Entrepreneurial MarketingStage 1. Entrepreneurial Marketing

Stage 2. Formulated MarketingStage 2. Formulated Marketing

Stage 3. Intrepreneurial MarketingStage 3. Intrepreneurial Marketing

Marketing Management Practice

Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Societal Marketing ConceptSocietal Marketing Concept

Marketing Management Philosophies

Difference between Marketing and Sales Concepts

Societal Marketing Concept

The New Marketing Landscape

Learn About &Track CustomersWith Databases

Communicate WithCustomers in Groups

Or One-on-One

Create Products &Services Tailored to

Meet Customer Needs

Distribute Products More Efficiently &

Effectively

Connecting Technologies in Computers,

Telecommunications,Information, & Transportation

Help To:

Technologies for Connecting

The Internet

• The Internet has been hailed as the technology behind a New Economy.

• New applications include:• “click-and-mortar” companies• “click-only” companies• Business-to-business e-commerce

• Business-to-business transactions online are expected to reach $3.6 trillion in 2003.

• By 2005, 500,000 companies will use the Internet to do business.

Connections With Customers

• Most marketers are targeting fewer, potentially more profitable customers.

• Asking:• What value does the customer bring

to the organization?• Are they worth pursuing?

• Connecting for a customer’s lifetime.

Direct Connections With Customers

• Many companies use technologies to let them connect more directly with their customers.

• Products available via telephone, mail-order catalogs, kiosks and e-commerce.

• Some firms sell only via direct channels (i.e. Dell Computer, http://www.amazon.com/), others use a combination.

• Direct marketing is redefining the buyer’s role in connecting with sellers.

• Buyers are active participants in shaping the marketing offer and process; some buyers design their own products online such as at http://www.us.levis.com/.

Connections With Marketing’s Partners

• Connecting Inside the Company

• Every employee must be customer-focused

• Teams coordinate efforts toward customers

• Connecting With Outside Partners

• Supply Chain Management

• Strategic Alliances

Connections With the World Around Us

Global Connections

Value Connections

Social Responsibility Connections

Broadening Connections