Transcript The Marketing Concept

Understanding Marketing
Management
Definition of Marketing
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The American Marketing Association
(Approved October 2007): Marketing is 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.
The shortest definition: Marketing is meeting
needs profitably.
Peter Drucker’s Perspective
on Marketing
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There will always, one can assume, be need
for some selling. But the aim of marketing is
to make selling superfluous. The aim of
marketing is to know and understand the
customer so well that the product or services
fits him and sells itself. Ideally, marketing
should result in a customer who is ready to
buy. All that should be needed then is to
make the product or service available.
Definition of Marketing
Management
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Marketing management is the art and science
of choosing target markets and getting,
keeping, and growing customers through
creating, delivering, and communicating
superior customer value.
What is Marketed?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
Case: 日本宮崎縣 (Miyazaki)
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知事：東國原英夫（2007年1月23日就任）
東國原英夫一年365天要上400多個電視通告。日本廣告公司電通
估計，以他曾於一個星期內在182個節目中露臉，出現時間為22小
時30分鐘來看，換算成廣告價值高達165億日圓。
大方開放肖像權讓宮崎業者用來促銷產品。走在宮崎的街上，可
以看到許多以東國原英夫卡通造型當招牌的商店。隨便走進一家
超市，貨架上琳琅滿目的商品，包括土雞料理、拉麵、酒、甜點、
水果等，東國原英夫都在包裝上對你笑咪咪。
日本財經雜誌《Trendy》評選2007年日本十大熱門商品，「宮崎」
高居第六名。日本版《GQ》雜誌評選六位「2007年度風雲人物」，
名列第一的就是東國原英夫。
中華航空自2008年起，增闢台北直飛宮崎的班機。
National Milk Processors
Education Program
Core Marketing Concepts
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Needs, wants and demands
Target markets, positioning, and
segmentation
Offerings and brands
Value and satisfaction
Marketing channels: consist of
communication channels, distribution
channels, and service channels.
Core Marketing Concepts
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Supply chain: a longer channel stretching
from raw materials to components to final
products that are carried to final buyers.
Competition
Marketing environment: consist of the task
environment and the broad environment
Needs, Wants and Demands
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Needs (需要): the basic human requirements.
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Physical: food, clothing, shelter, safety
Social: belonging, affection
Individual: learning, knowledge, self-expression
Wants (慾望): when needs are directed to
specific objects that might satisfy the need.
Demands (需求): wants for specific products
backed by an ability to pay.
Does Marketing Create or Satisfy
Needs?
Take a position: Marketing shapes
consumer needs and wants versus
Marketing merely reflects
the needs and wants of
consumers.
Responsive, Anticipative, and
Creative Marketing
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A responsive marketer finds a stated need and fills it.
An anticipative marketer looks ahead into what
needs customers may have in the near future.
A creative marketer discovers and produces
solutions customers did not ask for but to which they
enthusiastically respond.
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Akio Morita (盛田昭夫) once proclaimed that Sony doesn’t
serve markets; Sony creates markets. The Walkman is a
classic example.
3M: “Our goal is to lead customers where they want to go
before they know where want to go.”
Demand States and Marketing
Tasks
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Marketing managers are responsible for
demand management.
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Negative demand → counter marketing, e.g.
insurance.
Non-existent demand → stimulus, e.g.
encyclopedias.
Latent demand → developing, e.g. solar energy,
Kindle.
Declining demand → remarketing, e.g. Arm &
Hammer, Listerine, and 嬌生嬰兒洗髮精.
Demand States and Marketing
Tasks
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Marketing managers are responsible for
demand management.
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Irregular demand → synchromarketing (同步行銷),
e.g. 黑松沙士, happy hour.
Full demand → maintain marketing
Overfull demand → demarketing (低行銷), e.g.
Mister Donut, 王師父金月娘.
Unwholesome demand → social marketing, e.g.
cigarettes, drunk-driving, anorexia, and 讓座.
Can you name a category of products
for which your negative feelings have
softened?
What precipitated this change?
Company Orientations Toward
the Marketplace
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The production concept
The product concept
The selling concept
The marketing concept
The holistic marketing concept
The Production Concept
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The idea that consumers will prefer products that are
widely available and inexpensive.
Focus: high production efficiency, low costs, and
mass distribution.
It is useful when (1) the demand for a product
exceeds the supply (e.g., developing countries such
as China); (2) the product’s cost is too high.
Examples: Ford’s Model-T, standard raw materials
and components, CD, LCD.
The Product Concept
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The idea that consumers will prefer products
that offer the most quality, performance, or
innovative features.
Focus: making superior products and
improving them over time.
Examples: digital camera, CPU.
Better mousetrap fallacy
Marketing myopia (Theodoes Levitt, 1960)
Product-Oriented vs. MarketOriented Definitions of a Business
The Selling Concept
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The idea that consumers will not buy enough
of the firm’s products unless it undertakes a
large-scale selling and promotion effort.
The selling concept assumes that customers
who are coaxed into buying the product will
like it. Or, if they don’t like it, they will possibly
forget their disappointment and buy it again
later.
The Selling Concept
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Sergio Zyman (Coca-Cola’s former vice
president of marketing): the purpose of
marketing is to sell more stuff to more people
more often for more money to make more
profit.
Focus: undertake an aggressive selling and
promotion effort.
Practiced most aggressively with unsought
goods (e.g., insurance, encyclopedias, and
funeral plots).
The Marketing Concept
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The idea that the key to achieving organizational
goals consists of the company being more effective
than competitors in creating, delivering, and
communicating superior customer value to its
chosen target markets.
The marketing concept emerged in the mid-1950s.
Slogans: “Find wants and fill them”, “Love the
customer, not the product”, and “We do it all for you”
(Toyota).
Three hurdles: organized resistance, slow learning,
and fast forgetting.
Marketing Concept vs. Selling
Concept
Selling concept
Marketing concept
Focus on the needs of the Focus on the needs of the
seller (Theodore Levitt,
buyer (Theodore Levitt,
1960)
1960)
The manufacturer: “This is The consumer: “This is
what I make, won’t you
what I want, won’t you
please buy it”
please make it”
Inside-out perspective
Outside-in perspective
Contrast between the Selling Concept
and the Marketing Concept
The Extreme of the Marketing
Concept – The Customer Concept
The Holistic Marketing
Concept
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Based on the development, design, and
implementation of marketing programs,
processes, and activities that recognize their
breadth and interdependencies.
An approach to marketing that attempts to
recognize and reconcile the scope and
complexities of marketing activities.
Holistic Marketing Dimensions
Integrated Marketing
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The marketer’s task is to devise marketing
activities and assemble fully integrated
marketing programs to create, communicate,
and deliver value for consumers.
McCarthy’s four P’s (the seller’s point of view)
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Product
Price
Place
Promotion
Integrated Marketing
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From a buyer’s point of view, each marketing
tool is designed to deliver a customer benefit.
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Solution: How can I solve my problem?
Information: Where can I learn more about it?
Value: What is my total sacrifice to get this
solution?
Access: Where can I find it?
The Four P Components of the
Marketing Mix
Marketing-Mix Strategy
Internal Marketing
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The task of hiring, training, and motivating
able employees who want to serve customers
well.
Marketing must be embraced by the other
departments (e.g. production, finance, and
human resource); they must also “think
customer.”
An Example of a Coordination Problem that
Requires Effective Internal Marketing
Question: What would you do if you were the VP of
marketing in this airline? How would internal marketing
be of help? Show specific examples
33
Socially Responsible Marketing –
The Societal Marketing Concept
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The idea that holds that a company should
make good marketing decisions by
considering consumers’ wants, the
company’s requirements, consumers’ longrun interests, and society’s long-run interests.
Examples: Body Shop, HSBC, Dell Asia in
Malaysia, Bata Indonesia.
Johnson & Johnson’s Tylenol ($240 million),
保力達蠻牛 (NT 120 million), 金車毒奶事件.
An Example of the Social
Marketing Concept – Earth Tree
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將來自第三世界國家的手工製作品，經由較進
步的國家像歐美、日本等國負責設計與商品化
流程，然後銷售出口。
因為堅持Fair Trade的基本精神，讓第三世界
國家的工錢不被剝削，保有合理的利潤，因此
多販售出一樣商品也就能夠讓他們靠自己的努
力改善困窘的生活，甚至也因為這樣可以學到
新的謀生技能，即便在不穩定的環境中也能靠
他們自己的力量感到榮耀和成就。
Cause-related Marketing (公益
行銷, 善因行銷)
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Link the firm’s contributions to a designated cause to
customers’ engaging directly or indirectly in
revenue-producing transactions with the firm
The creation of the term "cause-related marketing"
is attributed to American Express.
Some experts believe that the positive impact on a
brand from cause-related marketing may be
lessened by sporadic involvement with numerous
causes.
Branding: self-branded, co-branded, and jointlybranded.
Customer Relationship
Management (CRM)
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The overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction.
The ultimate outcome of relationship marketing is a
unique company asset called a marketing network.
A marketing network consists of the company and its
supporting stakeholders – customers, employees,
suppliers, distributors, retailers, ad agencies,
university scientists, and others – with whom it has
built mutually profitable business relationships.
Some Facts that Bear on
Customer Retention
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Acquiring new customers can cost 5 to 10 times
more than the costs involved in satisfying and
retaining current customers.
The average company loses 10% of its customers
each year.
A 5%reduction in the customer defection rate can
increase profits by 25% to 85%, depending on the
industry.
The customer profit rate tends to increase over the
life of the retained customer.
Probability at 75% Customer
Retention
Probability at 80% Customer
Retention
Customer Lifetime Value and
Equity
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Customer lifetime value: the value of the
entire stream of purchases that the customer
would make over a lifetime of patronage.
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Lexus: $600,000; Taco Bell: $12,000;
Supermarket: $50,000.
Customer equity: the total combined
customer lifetime values of all of the
company’s customers.
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Cadillac vs. BMW
Relationship between Customer
Life and Customer Retention
Customer Lifetime Value –
Finite Time Horizon
A Hypothetical Example to
Illustrate CLV Calculations
Customer Lifetime Value –
Infinite Time Horizon
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In the case of an infinite time horizon, if
margins and retention rates stay constant
over time, CLV simply becomes margin (m)
times a margin multiple r/(1+i-r).
Margin Multiple
Selective Relationship
Management
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Weed out losing customers and target
winning ones for pampering.
Examples: Citibank, First Chicago Bank, and
Fidelity Investment.
Risk: future profits are hard to predict.
An Example of Selective
Relationship Management
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西南航空(Southwest Airlines)流傳一個故事，
有一名對公司抱怨不休的顧客，每回搭機後，
一定寫信到公司總部抗議，她在每封信結語中
都發誓再也不搭西南航空的飛機了，但抗議信
還是不斷寄來。最後，有個顧客溝通人員火大
了，把整疊信拿去給創辦人Herb Kelleher。
Kelleher看過後，拿出一張印有公司名稱的信
紙，寫道：「瓊斯太太：我們會想念妳的！」
節錄自哈佛商業評論 全球繁體中文版
(p. 42, December 2007)
Customer Relationship Groups
Butterflies
High
Profitability
Low
Good fit between
company’s offerings and
customer’s needs; high
profit potential
True Friends
Good fit between
company’s offerings and
customer’s needs; highest
profit potential
Strangers
Little fit between company’s
offerings and customer’s
needs; lowest profit
potential
Barnacles
Limited fit between
company’s offerings and
customer’s needs; low
profit potential
Short-term
customers
Projected loyalty
Long-term
customers
Share of Customer
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The portion of the customer’s purchasing in
its product categories that a company gets.
Methods to increase share of customer
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Offer greater variety to current consumers
Train employees to cross-sell and up-sell in order
to market more products and services to existing
customers.
Amazon: books, music, videos, gifts, toys,
consumer electronics, office products, and so
on.
Customer Satisfaction
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The extent to which a product’s perceived
performance matches a buyer’s expectation.
Smart companies aim to delight customers by
promising only what they can deliver, then
delivering more than they promise.
Examples: Lexus; Southwest Airlines;
Seasons Hotels; Nordstrom department store.
Customer Satisfaction Index
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Customer satisfaction index (CSI) is based on
customers’ ratings of their overall satisfaction.
Satisfying Customer Complaints
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Rate of dissatisfaction: 25%; rate of
complaint in dissatisfaction: 5%.
50% of complaints report a satisfactory
problem resolution.
Examples: Williams-Sonoma; Enterprise
Rent-A-Car.
On average, satisfied → 3 people, and
dissatisfied → 11 people.
顧客價值
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直接終身價值：即 customer lifetime value。
間接終身價值：顧客口碑會影響別人與公司的
交易，因而為公司增加或減少利潤。
對新產品來說，一名顧客的口碑價值可能是他
的直接價值的兩倍以上。
不滿的顧客散播負面評語，因而減損的銷售量
也是直接價值的兩倍以上。
節錄自哈佛商業評論 全球繁體中文版
(p. 44, December 2007)
Net Promoter Score
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Net Promoter Score = Promoters –
Detractors
Net Promoter Score
Figure 1-13 Net Promoter Score
Customer Loyalty Score
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Customer loyalty score (CLS) = Customer
satisfaction × Customer Retention ×
Customer Recommendation
Satisfying Customer Complaints
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Rate of complainant repurchase
Resolved
Resolved
quickly
Major
complaints
34%
52%
Minor
complaints
52%
95%
What is your strategy to deal with an
unsatisfied customer?
Customer Relationship Levels
and Tools
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Level of relationship: basic＜ reactive (e.g.
P&G)＜accountable＜proactive＜partnership
(e.g. Boeing).
Tools:
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Add financial benefits, e.g. frequent-flier program.
Add social benefits, e.g. club marketing program.
Add structural ties, e.g. McKesson; FedEx.
Levels of Relationship
Marketing
High margin
Medium
margin
Low Margin
Many customers/
distributors
Accountable
Reactive
Basic or
reactive
Medium number of
customers/
distributors
Proactive
Accountable
Reactive
Few customers/
distributors
Partnership
Proactive
Accountable
Case: Harley-Davidson
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Harley Owners Group (H.O.G.)
H.O.G. benefits include Hog Tales, a touring
handbook, emergency road service, a
specially designed insurance program, theft
reward service, discount hotel rates, and a
Fly & Ride program.
The company also maintains an extensive
Web site devoted to H.O.G., which includes
information on club chapters, events, and a
special members-only section.
In 1981, American Airlines first
introduced the AADVANTAGE
frequent-flier program. When other
airlines copy this strategy, do they
engage in the prisoner’s
dilemma?
Prisoner’s Dilemma
Player 1 ╲ Player 2
Cooperate
Fink
Cooperate
2, 2
-3, 3
Fink
3, -3
-2, -2
How can the firms escape from the
prisoner’s dilemma?