FUNDAMENTALS OF MARKETING

Introduction (1h30)

 Define marketing and understand the customer value creation

The aim of marketing is to find the best way to sell a product (goods or services) in order to get
profitable customer relationship.

Marketing is the process by which companies create value for customers in order to satisfy their
needs and capture value from customers in return.

Simply put, marketing is engaging customers and managing profitable customer

relationships.

What is value ?

Value (or customer-perceived value) is the desirability of a thing. It represents the customer’s
evaluation of the difference between all the benefits and all costs of a market offering relative
to those of competing offers.

The components of the value are :

Document 1 Value Costs & Benefits

Benefits : the firm tries to increase them Costs : the company tries to reduce them
Utiliterian value (functionality received) Psychological costs (stress and risks received)
Hedonistic value (pleasure received) Monetary costs (value for money of the product)
Sign value (prestige received) Transaction costs (time spent to buy the product)

The aim of the company will be to deliver higher value proposition than competitors.

Marketers will try to create customers value by increasing the benefits and reducing the costs.

Example

I need a new polo shirt to play tennis. Both Lidl and Lacoste create value for those polos
shirts. According to you, which polo delivers the highest value ?

Vraux Jean-Pierre – Fundamentals of marketing

Document 2 Polos shirts value

Polo shirt Livergy – slim firt fit Polo shirt Lacoste – slim fit
Quality quilted fabric Quality quilted fabric and breathable
100 % coton 100 % coton
price : 4,99 € price : 62,95 €
source : lidl-shop.be source : tennisplanet.fr

Vraux Jean-Pierre – Fundamentals of marketing

Document 3 costs and benefits assessment

Components of Lidl Lacoste explanations

Benefits
Utilitarian value + ++ Both polos are used to
play tennis. However,
it is indicated
breathable, this is why
I graduated ++ for
Lacoste.
Hedonistic value + + I do not have special
happiness in buying a
polo shirt...
Sign Value -- ++ Of course, the prestige
in buying Lacoste is
much more important
than Lidl. Is there any
prestige in buying
Lidl ?

Components of costs Lidl Lacoste explanations

Psychological costs - ++ In my opinion, there is
more psychological
cost in buying a polo
at 62 € than at 5
euro. I take more risks
in the second situation
because of the price
Monetary costs -- ++ No way for
Lacoste !!!
Transaction costs -- -- The transaction cost is
not effective in that
case.

Value Assessment
++ important
+ fair
- few
-- very few

The prestige and the utilitarian value of a Lacoste polo shirt does not justify the price. This is
my customer perceived value. For me, Lidl proposes a higher value proposition than Lacoste
but it is subjective.

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  Understand the marketing process

Document 4 The marketing process is a five-step model.

• understand the marketplace and customer needs and wants

step 1

• Design a customer value-driven marketing strategy

step 2

• construct a marketing mix that delivers superior value

step 3

• Engage customers, build profitable relationships and create

step 4 customer delight

• Capture value from customers to create profits and customer

step 5 equity

Example : opening a new fast food.

Step 1 : The company must fully understand human needs, wants and demands. The company
will study the micro and macro environment as well.

Customers need food. They want hamburgers and they will transform that want in demand by
buying hamburgers. Before, opening a fast food in Strasbourg, I will analyse the marketplace
(customers behaviors, competitors : Mac Donald’s, Burger king, Kentucky fries Chicken) and
all constraints (legal, economics, etc.)

Step 2 : the company will design a marketing strategy.

Which customers the hamburger company will serve and how I will bring them value ? The
firm will divide the market into segments (segmentation) of customers (teenagers, young
adults, families, etc.) and select (targeting) which segment it will go after. For hamburgers, the
company has decided to target families. Then the company will choose a value proposition in
order to differentiate and position (positioning) itself in the marketplace. The company has
decided to propose the following value proposition « more for the same ». The hamburgers are
bigger for the same price, you receive more French fries than the other companies.

Vraux Jean-Pierre – Fundamentals of marketing

Step 3 : construct a marketing mix that delivers superior value

It is time to transform the marketing strategy into action. The company must create a marketing
program (restaurant, hamburgers, French fries) that delivers the value proposition. It is called
the four Ps of marketing : Product, Price, Place and Promotion.

Step 4 : engage customers, build profitable relationship, and create customer delight

How my new fast-food will foster engaged customers and satisfaction ? Do my products match
the customers’ expectations? How can I improve the customer experience ? How can I reduce
the waiting time ? Is my restaurant always clean? Can the customers order hamburgers from
their mobile phone ? Digital and social media enable the company to build strong relationships
with them.

Step 5 capturing value from customers

The final step involves capturing value in return in form of sales and profit. The company will
introduce a loyalty program in order to retain them. The company will try to acquire new
customers.

 Identifying the changing marketing landscape

Major trends and force are changing the marketing landscape.

The digital age : Marketers will use digital marketing tools (social media, mobile apps, ads,
online video, email, blogs, etc.) to engage consumers everywhere at anytime via their digital
service.

Alibaba.com enables customers to buy goods directly from Asia.

Facebook.com tries to increase customer involvement in shaping brand conversations,

experiences, and community. In 2020, @McDonalds has 79 million fans.

Marketers use mobile channels to stimulate immediate buying, make shopping easier or enrich
the brand experience.

Vraux Jean-Pierre – Fundamentals of marketing

Postmodernism : it is defined by an attitude of skeptism, irony and rejection of modernism
ideology (rational, logical, predictable). The consumer is much more unpredictable. Nothing is
fixed.

Example : a consumer can buy goods in low-cost supermarkets and book a 4 stars hotel.

The changing Economic Environment : The great recession of 2008 and 2009 had modified
consumer incomes and spending. American are now showing an enthusiasm for frugality. The
Coronavirus crisis has tremendously changed consumer behavior. Buy online pick up in store
purchases surge 248% at the end of May 2020 compared with before the pandemic.

Sustainable marketing : The social responsibility and environmental movements will have
more and more importance in companies’ strategies. Customer’ needs had changed. They
recycle their products and buy biological foods. People care more and more about the animals.

Document 5 The new Vegan Ben & Jerrys Ice Cream

Vraux Jean-Pierre – Fundamentals of marketing