Chp 1: Marketing: Creating Customer Value and Engagement

Marketing is a process by which companies create value for customers and build strong customer
relationships in order to capture value from customers in return.

Marketing Process:

Understanding the Marketplace and Customer Needs

Market offerings are some combination of products, services, information, or experiences offered to
a market to satisfy a need or want.

Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs.

Customer Value & Satisfaction

Exchanges & Relationships

Exchange is the act of obtaining a desired object from someone by offering something in return.

Marketing actions try to create, maintain, and grow desirable exchange relationships.

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Markets

Creating Customer Value & Engagement

Understanding the marketplace and customers and the 5 core marketplace concepts.

• Customer Needs, Wants, and Demands

• Market Offerings – Products, Services, and Experiences

• Customer Value and Satisfaction

• Exchanges and Relationships

• Markets

Selecting Customers to Serve

Marketing management is the art and science of choosing target markets and building profitable
relationships with them.

• What customers will we serve?

• How can we best serve these customers?

Market segmentation refers to dividing the markets into segments of customers.

Target marketing refers to which segments to go after.

A brand’s value proposition is the set of benefits or values it promises to deliver to customers to
satisfy their needs.

Marketing Management Orientations

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Production concept:

Consumers will favor products that are available and highly affordable.

Product concept:

Consumers favor products that offer the most quality, performance, and features.

The focus is on continuous product improvements.

Selling concept:

Consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling
and promotion effort.

Marketing concept:

Know the needs and wants of the target markets and deliver the desired satisfactions better than
competitors.

Societal marketing:

The company’s marketing decisions should consider consumers’ wants, the company’s requirements,
consumers’ long-run interests, and society’s long-run interests.

Preparing an Integrated Marketing Plan and Program

The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. This
set includes product, price, promotion, and place.

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An integrated marketing program is a comprehensive plan that communicates and delivers the
intended value to chosen customers.

Customer relationship management is the overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction.

Relationship Building Blocks:

Customer- Customer
perceived value satisfaction

•The difference •The extent to

between total which perceived
customer performance
perceived matches a
benefits and buyer’s
customer cost expectations

Customer Relationship Levels & Tools:

Frequency
Basic Relationships – Full Partnerships
Marketing
low-margin – high-margin
Programs – reward
customers customers
customers

Customer Engagement and Today’s Digital & Social Media

Customer-Engagement Marketing makes the brand a meaningful part of consumers’ conversations

and lives by fostering direct and continuous customer involvement in shaping brand conversations,
experiences, and community.

Customer engagement and the social media: Hertz’s “Share It Up” social media campaign

Consumer-Generated Marketing

Brand exchanges created by consumers themselves—both invited and uninvited—by which

consumers are playing an increasing role in shaping their own brand experiences and those of other
consumers.

Engaging customers: Life is good starts with a deeply felt, engagement-worthy sense of purpose:
spreading the power of optimism.

Partner relationship management involves working closely with partners in other company
departments and outside the company to jointly bring greater value to customers

Customer lifetime value is the value of the entire stream of purchases that the customer would
make over a lifetime of
patronage.

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Share of customer is the portion of the customer’s purchasing that a company gets in its product
categories.

Customer equity is the total combined customer lifetime values of all of the company’s customers.

Customer Relationship Groups:

Digital and social media marketing involves using digital marketing tools such as web sites, social
media, mobile ads and apps, online videos, e-mail, and blogs that engage consumers anywhere, at
any time, via their digital devices.

Digital and social media marketing involves using digital marketing tools such as web sites, social
media, mobile ads and apps, online videos, e-mail, blogs, and other digital platforms that engage
consumers anywhere, anytime via their computers, smartphones, tablets, Internet-ready TVs, and
other digital devices. These days, it seems that every company is reaching out to customers with
multiple web sites, newsy Tweets and Facebook pages, viral ads and videos posted on YouTube, rich-
media e-mails, and mobile apps that solve consumer problems and help them shop.

Social media provide exciting opportunities to extend customer engagement and get people talking
about a brand.

Mobile marketing is perhaps the fastest-growing digital marketing platform.

In recent years, marketing has also become a major part of the strategies of many not-for-profit
organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, foundations, and
even churches. The nation’s not-for-profits face stiff competition for support and membership.
Sound marketing can help them attract members, funds, and support. For example, Alex’s Lemonade
Stand Foundation is a not-for-profit organization with a special mission: “Fighting childhood cancer,
one cup at a time.”

As they are redefining their customer relationships, marketers are also taking a fresh look at the ways
in which they relate with the broader world around them. Today, almost every company, large or
small, is touched in some way by global competition. Marketers are reexamining their relationships
with social values and responsibilities and with the very Earth that sustains us. As the worldwide
consumerism and environmentalism movements mature, today’s marketers are being called on to
develop sustainable marketing practices.

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 Chp 3: Analyzing the Marketing Environment
The marketing environment includes the actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful relationships with target customers.

Microenvironment consists of the actors close to the company that affect its ability to serve its
customers—the company, suppliers, marketing intermediaries, customer markets, competitors, and
publics.

Macroenvironment consists of the larger societal forces that affect the microenvironment—
demographic, economic, natural, technological, political, and cultural forces.

Microenvironment

The Company: In designing marketing plans, marketing management takes other company groups
into account.

• Top management
• Finance
• R&D
• Purchasing
• Operations

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 • Accounting
Suppliers:

• Provide the resources to produce goods and services

• Treat as partners to provide customer value

Marketing Intermediaries: Marketing intermediaries are firms that help the company to promote,
sell, and distribute its goods to final buyers. Types of marketing intermediaries are as follows:

Competitors: Firms must gain strategic advantage by positioning their offerings strongly against
competitors’ offerings in the minds of consumers.

Publics: Any group that has an actual or potential interest in or impact on an organization’s ability to
achieve its objectives:

• Financial publics
• Media publics
• Government publics
• Citizen-action publics
• Local publics
• General public
• Internal publics
Customers:

• Consumer markets

• Business markets

• Reseller markets

• Government markets

• International markets

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Macroenvironment:

Demography is the study of human populations-- size, density, location, age, gender, race,
occupation, and other statistics.

Demographic environment involves people, and people make up markets.

Demographic trends include changing age and family structures, geographic population shifts,
educational characteristics, and population diversity.

Generational marketing is important in segmenting people by lifestyle or life stage instead of age.

Changing Family Structures

• More couples and Divorcing or separating

• More people choosing not to marry or marrying later

• More people marrying without intending to have children

• Increasing number of working women

• Increasing number of stay-at-home dads

Geographic Shifts

• Migration to metropolitans-

• Change in where people work

 Telecommuting

 Home office

Economic Environment

The economic environment consists of factors that affect consumer purchasing power and spending
patterns.

• Industrial economies are richer markets.

• Subsistence economies consume most of their own agriculture and industrial output.

• Developing economies also offer outstanding marketing opportunities.

Changes in Consumer Spending

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Value marketing involves offering financially cautious buyers greater value—the right combination of
quality and service at a fair price.

The Natural Environment

The natural environment is the physical environment and the natural resources that are needed as
inputs by marketers or that are affected by marketing activities.

Trends in the Natural Environment

• Growing shortages of raw materials

• Increased pollution

• Increased government intervention

• Developing strategies that support environmental sustainability

Environmental sustainability involves developing strategies and practices that create a world
economy that the planet can support indefinitely.

Technological Development

• Most dramatic force in changing the marketplace

• New products, opportunities

• Concern for the safety of new products

Political & Social Environment

Legislation regulating business is intended to protect

• companies from each other

• consumers from unfair business practices

• the interests of society against unrestrained business behavior

 Increased emphasis on ethics

 Socially responsible behavior

 Cause-related marketing

Cultural Environment

The cultural environment consists of institutions and other forces that affect a society’s basic values,
perceptions, and behaviors.

Core beliefs and values are persistent and are passed on from parents to children and are reinforced
by schools, mosques, churches, businesses, and government.

Secondary beliefs and values are more open to change and include people’s views of themselves,
others, organizations, society, nature, and the universe.

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Shifts in Secondary Cultural Values of People’s Views

Responding to the Marketing Environment

Chp 2: Company and Marketing Strategy

The hard task of selecting an overall company strategy for long-run survival and growth is called
Strategic Planning.

Strategic planning is the process of developing and maintaining a strategic fit between the
organization’s goals and capabilities, and its changing marketing opportunities.

Steps in Strategic Planning

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Step 1: Defining a Market-Oriented Mission

The mission statement is the organization’s purpose; what it wants to accomplish in the larger
environment.

Mission statements should . . .

• serve as a guide for what the organization wants to accomplish.

• be “market-oriented” rather than “product-oriented”.

• be neither too narrow, nor too broad.

• fit with the market environment.

• be motivating.

• Mission Statements must:

• Be Realistic

• Be Specific

• Fit the Market Environment

• Be Motivating

Step 2: Setting Company Objectives and Goals

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Step 3: Designing the Business Portfolio

The business portfolio is the collection of businesses and products that make up the company.

Portfolio analysis is a major activity in strategic planning whereby management evaluates the
products and businesses that make up the company.

Strategic business units can be a

• Company division

• Product line within a division

• Single product or brand

Analyzing the Current Business Portfolio

Growth-share matrix is a portfolio-planning method that evaluates a company’s SBUs in terms of

market growth rate and relative market share.

• Stars are high-growth, high-share businesses or products requiring heavy investment to finance
rapid growth. They will eventually turn into cash cows.

• Cash cows are low-growth, high-share businesses or products that are established and successful
SBUs requiring less investment to maintain market share.

• Question marks are low-share business units in high-growth markets requiring a lot of cash to
hold their share.

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• Dogs are low-growth, low-share businesses and products that may generate enough cash to
maintain themselves but do not promise to be large sources of cash.

Problems of BCG Matrix and and Matrices:

• Difficulty in defining SBUs and measuring market share and growth

• Time consuming

• Expensive

• Focus on current businesses, not future planning

Product/market expansion grid looks at new products, existing products, new markets, and existing
markets for company growth opportunities.

Downsizing is when a company must prune, harvest, or divest businesses that are unprofitable or
that no longer fit the strategy.

Step 4: Planning Marketing: Partnering to Build Customer Relationships

Partnering with Other Company Departments

Value chain is a series of departments that carry out value-creating activities to design, produce,
market, deliver, and support a firm’s products.

Value delivery network is made up of the company, suppliers, distributors, and ultimately customers
who partner with each other to improve performance of the entire system.

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Marketing Strategy and the Marketing Mix

Marketing strategy is the marketing logic by which the company hopes to create customer value and
achieve profitable customer relationships.

Market segmentation is the division of a market into distinct groups of buyers who have different
needs, characteristics, or behaviors and who might require separate products or marketing mixes.

Market segment is a group of consumers who respond in a similar way to a given set of marketing
efforts.

Market targeting is the process of evaluating each market segment’s attractiveness and selecting
one or more segments to enter.

Market positioning is the arranging for a product to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers.

Differentiation begins the positioning process.

Marketing mix is the set of controllable, tactical marketing tools—product, price, place, and
promotion—that the firm blends to produce the response it wants in the target market.

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Developing and Integratd Marketing Mix

Managing the Marketing Effort

1. Marketing Analysis

SWOT Analysis

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2. Marketing Planning

3. Marketing Implementation

• Turning marketing strategies and plans into marketing actions to accomplish strategic
marketing objectives

• Addresses who, where, when, and how

4. Marketing Control

• Evaluating results

• Taking corrective action

• Operating control

• Strategic control

Return on Marketing Investment (Marketing ROI)

Net return from a marketing investment divided by the costs of the marketing investment

Measurement of the profits generated by investments in marketing activities.

Measuring and Managing Return on Marketing Investment

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