Transcript Marketing Overview

BUAD 307—MARKETING FUNDAMENTALS
MARKETING OVERVIEW
Note: Topic summaries are available
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What purposes—other than immediate sales—
do these machines serve?
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Learning Objectives
• Identifying
– The scope and basic objectives of
the marketing function
– Customer value
– Benefits of and opportunities for
relationship marketing
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Usage and Reach of Marketing
• Who markets?
• Who buys?
– Businesses
– Government
units
– Non-profit
organizations
– Cause related
organizations
• What is
marketed?
– Goods
– Services
– Ideas
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– Ultimate consumers
– Organizational
buyers
• For internal use
• For resale
(wholesalers,
retailers)
• Manufacturers
(components)
• Customer
benefits?
– Utility
• Consumption
• Convenience
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2007 American Marketing Association
(AMA) Definition
Marketing: “The (1) activity, (2)
set of institutions, and (3)
processes for (4) creating, (5)
capturing, (6) communicating, (7)
delivering, (8) and exchanging (9)
offerings that have (10) value for
(11) customers, (12) clients, (13)
partners, and (14) society at
large.” (Numbering added.)
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ACTIVITY
INSTITUTIONS
PROCESSES
MARKETING
CREATION
COMMUNICATION
DELIVERY
EXCHANGE
CUSTOMERS
OFFERINGS
VALUE
CLIENTS
PARTNERS
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SOCIETY
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Marketing As an Exchange
• Each side receives something more valuable than
what it gave up  “win-win” deal
• Part of the value may be assurance of continued
quality over time (value of the brand)
• In principle, money does not have to be exchanged.
For goods and services, this is usually the most
convenient way of trade. For ideas, there may be no
monetary exchange as such.
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Myth vs. Reality
• Imitating successful competitors is usually
NOT an effective strategy
• Selling things online is usually MORE
expensive than selling through conventional
retailers (Amazon is estimated to lose some
$5-6 billion per year on tangible merchandise
sold!)
• Having a great product does NOT
necessarily mean you will be successful
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Relationship Marketing
• Selling (selling existing
products with whatever
methods are necessary) vs.
marketing orientation (serving
customer needs whether in
current or new forms)
• Maintaining a relationship with
the customer over time rather
than just focusing on
immediate sales
– Anticipating customer needs
– Providing solutions
– Investing in products and services
optimized for the customer
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CRITICAL
QUESTION:
WHAT IS THE
CUSTOMER BENEFIT
OF THIS OFFERING?
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Products vs. Solutions
NETFLIX STARTED
OUT SHIPPING
DVDs TO
CUSTOMERS
ORIGINAL
PRODUCT
OFFERING
RECOMMENDATION
DATA BASE
EXISTING CUSTOMER
BENEFIT BROUGHT
ALONG TO NEW FORM
(COMPETITIVE
ADVANTAGE)
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ABILITY TO
WATCH MOVIES
ACTUAL
CUSTOMER
BENEFIT
NOW MOST
MOVIES ARE
OFFERED
THROUGH
STREAMING
ENHANCED WAY OF
PROVIDING THE
CUSTOMER BENEFIT
(SOLUTION)
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Value
BENEFITS RECEIVED
VALUE 
COST
• Benefits—perceived by
the customer (may not be
objectively accurate)
– Convenience
• In delivery
• In usage
–
–
–
–
–
–
• Costs—examples
– Money
– Time
– Risk
Reliability
Durability
Performance
Style/aesthetics
Prestige
Service component
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Customer Benefits and Value
IS THE CUSTOMER
BENEFIT GREATER
THAN THE SACRIFICE
(COST)?
CUSTOMER
BENEFIT
NO
POTENTIAL
GOOD VALUE
POOR VALUE
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YES
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Creating, Communicating, and Capturing
Customer Value
AVAILABILITY
DELIVERY:
DISTRIBUTION,
EXECUTION OF
SERVICES
OFFERINGS:
PRODUCTS,
SERVICES, AND
IDEAS
CREATION:
RESEARCH,
DESIGN,
MANUFACTURING
UTILITY
CONVENIENCE
COMMUNICATION
VALUE:
EXCHAGE
CUSTOMER
BENEFITS
SECURITY
CAPTURE
EFFECTIVENESS
SELLER
PLEASURE
Exact model is NOT
needed for exam!
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EASE OF USE
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MONEY,
BEHAVIOR
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Creating Customer Value
PERCEIVED
NEEDS OF
OTHERS
INSTINCTS
BELIEFS
ABOUT WHAT
IS “RIGHT”
CUSTOMER
DESIRES
MARKET
RESEARCH,
ANALYSIS, AND
DEVELOPMENT
COSTS OF
OFFERINGS
(NEGATIVE)
BELIEFS
ABOUT THE
WORLD
BELIEFS
ABOUT
OFFERINGS
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SELLER
OFFERINGS
Exact model is NOT
needed for exam!
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CUSTOMER
VALUE
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Customer Value: AFLAC Insurance
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Customer Value, Part I
• Value is the ratio of the benefits
received (usually goods or services)
to what is given up (usually money)
• For a transaction to take place, the
benefits received must usually be
greater than the sacrifice for both
parties—usually
– The customer values the goods and
services received more than the money
spent
– The seller values the money received
more than the goods or services given
up (i.e., it is worthwhile to produce these
in order to get this payment)
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Customer Value, Part II
• A low priced product may not
represent value to a customer if the
benefits received are perceived to be
low, too.
• Different customer segments will
have different value perceptions and
desires
• A product which is adapted to the
needs of a particular segment can be
very valuable to that segment even if
the overall “quality” is not seen as
superior by most other consumers
• Cost may be in terms of money or
other sacrifice
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Tools to Provide Customer Value (4Ps)
• Product (both the tangible item and associated
services)
• Price (different segments of customers will pay
different amounts depending on their product needs
and preferences)
• Place (distribution—making the product available
where it is convenient to the customer)
• Promotion (advertising, sales promotion, publicity,
selling, special events)
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Examples of Customer Value to Different
Customers
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Customer Value: Raw Fish (Ugh!)
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Customer Value: Ziploc Bags
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Customer Value: iPhone 6
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Customer Value: Sally Hansen Nail
Polish
Cost
Reduction
Choice
Durability
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Convenience
Performance
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Risk reduction
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Value: Nordstrom’s
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Value: Walmart
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Value Engineering
• Increasing offering value by
– Decreasing cost
– Improving
•
•
•
•
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Durability
Performance
Reliability
Convenience
Aesthetics
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No box  lower
cost, less waste,
less bulk,
less hassle
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Customer Value: Soda Vending
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Customer Value: Netflix
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Customer Value: Starbucks
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Value: Recap
• A low quality, low price
product represents poor
value for many customers
• A very high benefit
product at a high price
can represent value for
some segments
• Customer segments differ
in what they find valuable
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