Transcript Chapter1

BUS 243
Introduction to
Marketing & Distribution
Professor Marshall
Queens College
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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.
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What is Marketing?
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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.
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Marketing has Changed
Marketing used to be thought of as telling
& selling
Today marketing is more about satisfying
customer needs through the creation and
management of profitable relationships.
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Amazon.com
Good example of a company which sees the
importance of managing customer relationships.
Tracks your purchases.
Simplifies the act of making a purchase.
Notifies you of similar books or related items
through use of ‘collaborative filtering’ technology
to examine past purchasing experiences and fit
you to profiles of similar customers.
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Careers in Marketing
Sales
Advertising
Brand Management
Public Relations
Logistics (distribution)
Marketing Research
See Appendix 4 for more information.
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5-Step Marketing Process
Understand
Marketplace &
Customer
needs/wants
Design CustomerDriven Marketing
Strategy
Construct
Marketing
Program
Build Profitable
Relationships
Capture value
from Customers
& Generate
Profits
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Step 1: Understand the Marketplace
Marketers must understand customer needs
and wants.
Needs
Physical: Food, clothing, shelter, safety
Social: Belonging, affection
Individual: Learning, knowledge, self-expression
Wants
Form that a human need takes, as shaped by culture and
individual personality.
Wants + Buying Power = Demand
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People demand products with benefits that
add up to the most value and satisfaction
(provide the greatest utility).
These needs and wants are fulfilled
through a Marketing Offer – a
combination of products, services,
information, and/or experiences.
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Marketing Myopia
When sellers pay more attention to the
specific product they are selling and lose
sight of benefits produced by the products.
They focus on the ‘wants’ and lose sight of
the ‘needs’. These sellers will have
trouble if a new product comes along that
can serve the customers needs better.
Example: a consumer of a ½ inch drill bit really needs a ½ inch hole.
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Exchange: the act of obtaining a desired
object by offering something in return.
Transaction: trade of values between two
parties (unit of measurement).
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What is a Market?
The set of actual and potential buyers of a
product.
These people share a need or want that
can be satisfied through exchange
relationships.
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Step 2: Design a Customer-Driven
Marketing Strategy
Once they understand their customers,
marketing managers can design a
customer-driven strategy.
Marketing Management is the art and
science of choosing target markets and
building profitable relationships with them.
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Marketing Managers’ Questions
Marketing Managers cannot serve all customers in every way, this may
result in not serving any customers well. Instead, the company wants to
select only those customers that it can serve well and profitably.
Example: Porsche verses Family Dollar
What customers will we serve (what is our
target market)?
How can we serve these customers best
(what is our value proposition)?
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Segmentation & Target Marketing
Market Segmentation
– Divide the market into segments of customers
Target Marketing
– Select the target to cultivate
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Value Proposition
The set of benefits or values a company
promises to deliver to satisfy consumers’
needs.
This differentiates one brand from another.
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Targeting Examples
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Targeting Examples
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Targeting Examples
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Demarketing
Temporarily or permanently reducing the
number of customers or shifting their
demand.
Example: highway department encouraging mass
transit or carpooling to prevent congestion.
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Step 3: Construct a Marketing Program
In this step, the marketing strategy is
transformed into action.
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The Marketing Mix
The set of marketing tools the firm uses to
implement its marketing strategy.
The major tools are classified as the 4 P’s:
Product
Price
Distribution (Place)
Promotion
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Step 4: Build Profitable Relationships
Customer relationship management: the
overall process of building and maintaining
profitable customer relationships by
delivering superior value and satisfaction.
(all aspects of acquiring, keeping and growing customers)
Customer perceived value: a customer’s
evaluation of the difference between all
benefits and all costs of a marketing offer
compared to competing offers.
(customers act on perceived value)
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Customer Satisfaction
Product’s perceived performance relative to a
buyer’s expectations.
Outstanding marketing companies go out of their way to
keep important customers satisfied. Smart companies try
to go above and beyond the customers’ expectations by
delivering more than they promise. Highly satisfied
customers make repeat purchases and tell others about
their good experiences with the product.
Customer-centered firms only attempt to maximize
customer satisfaction subject to a certain profit level.
(simply maximizing customer satisfaction would result in
lower profits).
Have you had experiences with customer satisfaction that stand out
in your mind? Have these experiences been positive or negative?
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Partner Relationship Marketing
Partners inside the firm
– All employees must be customer-focused
– Teams coordinate efforts toward customers
Partners outside the firm
– Supply chain management (strengthening
connections with partners from raw materials
to final products)
– Strategic alliances (for example Dell has
partnered with Microsoft and Intel)
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Step 5: Capture value from Customers
By creating highly satisfied customers who
stay loyal and buy more, the firm sees
greater long-term returns.
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Loyalty & Retention
Customer Lifetime Value: the value of the
entire stream of purchases a customer
would make over his or her lifetime.
Customer Equity: total customer lifetime
values of all of the company’s customers.
Share of Customer: the percentage of the
customer’s purchasing in the company’s
product category. Example: 30% of your beverage
purchases may go to Coca-Cola.
Lexus estimates that every one satisfied & loyal customer is
worth $600k in lifetime sales. Taco Bell estimates its customer
lifetime value to be $12,000.
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Customer Relationship Groups
Spend a lot but shop around –
use promotions to target them
Profitable & loyal. Come back
regularly and tell others about good
experiences
High Profitability
Butterflies
True Friends
Good fit between company’s
offerings and customer’s needs
Good fit between company’s
offerings and customer’s needs
Low Profitability
Strangers
Barnacles
Little fit between company’s
offerings and customer’s needs
Little fit between company’s
offerings and customer’s needs
Short-Term Customers
Don’t invest in them
Long-Term Customers
Customer who doesn’t spend enough
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to make it worth it to keep him
Video Case
Subaru
(10 minutes)
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Thoughts
Can a company have a relationship with a
customer?
How does Subaru communicate with its
customers?
What does each party get from the
relationship?
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