MKTG 301

Principles of
Marketing

CHAPTER

DEVELOPING
CUSTOMER
RELATIONSHIPS AND
VALUE THROUGH
MARKETING

AFTER READING THIS CHAPTER

YOU SHOULD BE ABLE TO:

Define marketing and explain the

importance of (1) discovering and

(2) satisfying consumer needs and
wants.

Distinguish between marketing mix

elements and environmental factors.

AFTER READING THIS CHAPTER

YOU SHOULD BE ABLE TO:

Understand how organizations build

strong customer relationships using

current thinking about customer value
and relationship marketing.

Describe how todays market orientation

differs from prior eras oriented to
production and selling.

AFTER READING THIS CHAPTER

YOU SHOULD BE ABLE TO:

Understand the meaning of ethics and

social responsibility and how they relate

to the individual, organizations, and
society.

Know what is required for marketing to

occur and how it creates customer
value and utilities for customers.

Would you sell more 43-inch

Hitachi Big Screen HDTV
monitors for $ 1799 or $499
each?

WHAT IS MARKETING?

Being a Marketing Expert:

Good News-Bad News

The Good News:

You Already Have

Marketing Experience
The Bad News: Surprises About
the Obvious

How would you

define
marketing ?

Marketing
Marketing
Marketing is
is the
the process
process of
of planning
planning and
and
executing
executing the
the conception,
conception, pricing,
pricing,
promotion,
promotion, and
and distribution
distribution of
of ideas,
ideas,
goods,
goods, and
and services
services to
to create
create exchanges
exchanges
that
that satisfy
satisfy individual
individual and
and organizational
organizational
objectives.
objectives.

Products
and
Services

Needs, wants,
and demands

Core
Core
Marketing
Marketing
Concepts
Concepts
Markets

Value, satisfaction,
and quality
Exchange, transactions,
and relationships

WHAT IS MARKETING?

Marketing:

Using Exchanges to
Satisfy Needs
The Diverse Factors Influencing
Marketing Activities

EXCHANGE

Exchange

Exchange
Exchange is
is the
the trade
trade of
of things
things of
of value
value
between
between buyer
buyer and
and seller
seller so
so that
that each
each is
is
better
better off
off after
after the
the trade.
trade.

FIGURE 1-3 An organizations marketing department

relates to many people, groups, and forces
The Organization

Society
Alliances
Other
Organizations

Research
and
Development

Manufacturing

Human
Resources

Management

Society
Ownership

Information
Systems

Partnerships

Relationships

Suppliers

Finance

Environmental
Social

Shareholders
(owners)

Economic

Marketing

Customers

Forces

Technological

Competitive

Regulatory

Requirement for Marketing to

Occur

Two or More Parties with Unsatisfied Needs

Desire and Ability to Satisfy These Needs
A Way for the Parties to Communicate
Something to Exchange

HOW MARKETING DISCOVERS AND

SATISFIES CONSUMER NEEDS

Discovering Consumer Needs

The Challenge of Launching Winning

New Products
Consumer Needs and Consumer Wants
What a Market Is

How many new

products are
launched each year
in US?

What percentage
succeed in the long
run ?

1. Make sure to focus on what the

customer benefit is?
2. Learn key lessons from the past

Marketings first task:

discovering consumer needs and wants

Organizations
marketing department
Discover consumer needs and wants

What Motivates a Consumer

to Take Action?

Needs - states of felt

deprivation including physical

needs for food, social needs
for belonging and individual
needs for self-expression.
i.e. I am thirsty.

What Motivates a Consumer

to Take Action?

Wants - form that a human need

takes as shaped by culture and

individual personality. i.e. I want a
Cola.

Wants- Is it enough?
Popularity is NOT the objective
Dont want virtual consumption- the
phenomenon that occurs when
consumer love your products but
dont feel a need to buy it..

What Motivates a Consumer

to Take Action?

Demands - human wants backed by

buying power. i.e. I have money to
buy a Coca-Cola.

What is
Market ?

What is a Market?
Potential consumers make up a market,
which is:
1.people
2.with the desire and
3.with the ability to buy a specific product.

Target Market

One
One or
or more
more specific
specific groups
groups of
of potential
potential
customers
customers toward
toward which
which an
an organization
organization
directs
directs its
its marketing
marketing program.
program.

Marketings first task:

discovering consumer needs and
wants

Organizations
marketing department
Discover consumer needs and wants

Information about needs and wants

Potential consumers: The market

Do you know too much about

your consumer?
Marketers have always watch consumers
asked questions, but what most marketer
dont do is watch consumer CLOSELY
enough

If you ignore a single bit of

potentially valuable information
about consumers you are wasting
money.

What should you know about your

customers.

Who buys our product or service?

Who initiates and makes the decision to purchase and who
influences the process?
How is the purchase decision made?
What attributes or criteria are important to customers?
What are customers perceptions of and attitudes
toward our company, product/service or brands?
What factors influence the decision making process?
Contact points where customers can be reached?

Marketings second task: Satisfying

consumer needs
Organizations marketing department
Discover consumer
needs

Satisfy consumer needs

Find the right combination of:
Product
Price
Promotion
Place

Information about needs

Goods, services, ideas

Potential consumers: The market

Marketing Mix

Product

Place

C
Price

Promotion

Environmental Factors

ator
ces
y f or

fo r
ce
s

e
c
a
Pl

Technological forces

forc
es

Marketing
program

Consumer
Pr
ic

no
mi
c

Soci
al

Ec
o

n
otio
Prom

ul
Reg

Prod
uct

e
p
m
Co

ve
it ti

es
c
f or

Concept Check

1. What is marketing?
A: Marketing is the process of planning and
executing the conception, pricing, promotion, and
distribution of ideas, goods, and services to create
exchanges that satisfy individual and
organizational objectives.

Concept Check

discovering
2. Marketing focuses on __________
satisfying consumer needs
and ___________

Concept Check

3. What four factors are needed for

marketing to occur?
A: (1) Two or more parties with unsatisfied
needs, (2) a desire and ability on their part be
satisfied, (3) a way for the parties to
communicate, and (4) something to exchange.

Customer Value
Customer
Customer value
value is
is the
the unique
unique combination
combination
of
of benefits
benefits received
received by
by targeted
targeted buyers
buyers
that
that includes
includes quality,
quality, price,
price, convenience,
convenience,
on-timer
on-timer delivery
delivery and
and both
both before-sale
before-sale
and
and after-sale
after-sale service.
service.

THE MARKETING PROGRAM: HOW

CUSTOMER RELATIONSHIPS ARE BUILT

Global Competition, Customer Value,

and Customer Relationships

Relationship Marketing and the
Marketing Program

Relationship Marketing:

Easy to

Understand
Relationship Marketing: Difficult to
Implement

The Marketing Program

Relationship Marketing
The
The hallmark
hallmark of
of developing
developing and
and
maintaining
maintaining effective
effective customer
customer
relationships
relationships is
is today
today called
called relationship
relationship
marketing,
marketing, linking
linking the
the organization
organization to
to its
its
individual
individual customers,
customers, employees,
employees,
suppliers,
suppliers, and
and other
other partners
partners for
for their
their
long
long term
term benefit.
benefit.

Marketing Program
The
The marketing
marketing program
program is
is aa plan
plan that
that
integrates
integrates the
the marketing
marketing mix
mix to
to provide
provide aa
good,
good, service,
service, or
or idea
idea to
to prospective
prospective
buyers.
buyers.

THE MARKETING PROGRAM: HOW

CUSTOMER RELATIONSHIPS ARE BUILT

A Marketing Program for Rollerblade

Expanding the Market for Rollerblade

Skates
Exploiting Strengths in Technology

Concept Check

1. An organization cant satisfy the

needs of all consumers, so it must
focus on one or more subgroups,
markets
which are its target
____________.

Concept Check

2. What are the four marketing mix

elements that make up the
organizations marketing program?
A: product, price, promotion, place

Concept Check

3. What are uncontrollable variables?

A: Environmental factors the organizations
marketing department cant control. These
include social, economic, technological,
competitive, and regulatory forces.

FIGURE 1-7 Four different orientations in

the history of American business

Company Orientations Towards

the Marketplace
Production
Production Era
Era

Get out production,

cut the price.
If we can built a better
product , the world will
beat a path to our
door.

Marketing Myopia

The Marketing Myopia

Marketers should NEVER sell
products to consumers!

People buy holes, not

drills!

Fashion, status,
reference groups
approval, and warmth,
but not coats!

Company Orientations
Towards the Marketplace
Selling
Selling Concept
Concept Era
Era

Get the customers to

the fit the companys
offering.

Marketing Concept

The
The marketing
marketing concept
concept is
is the
the idea
idea that
that an
an
organization
organization should
should strive
strive to
to satisfy
satisfy the
the
needs
needs of
of consumers,
consumers, while
while also
also trying
trying to
to
achieve
achieve the
the organizations
organizations goals.
goals.

Company Orientations
Towards the Marketplace
Marketing
Marketing Concept
Concept Era
Era

Find wants and feel

them

Marketing Concept
WE MAKE IT HAPPEN
FOR YOU
HAVE IT YOUR WAY
TO FLY, TO SERVE
WE ARE NOT
SATISFIED UNTIL YOU
ARE

Starting
point

Focus

Means

Ends

Factory

Existing
products

Selling and
promotion

Profits through
sales volume

(a) The selling concept

Market

Customer
needs

Integrated
marketing

Profits through
customer
satisfaction

(b) The marketing concept

Market Orientation
An
An organization
organization that
that has
has aa market
market
orientation
orientation focuses
focuses its
its efforts
efforts on
on
continuously
continuously collecting
collecting information
information
about
about customers
customers needs
needs and
and competitors
competitors
capabilities,
capabilities, sharing
sharing this
this information
information
across
across departments,
departments, and
and using
using the
the
information
information to
to create
create customer
customer value.
value.

Company Orientations
Towards the Marketplace
Market
Market Orientation
Orientation

Customer

Competition

Balancing Customer and Competitor

Orientation
Competitor
Competitor Driven
Driven

Moves mainly based on competitors

actions and reactions

Customer
Customer Driven
Driven

Focuses on customer
developments in designing its
marketing strategy and on
delivering superior value to its
target customers.

Market
Market Orientation
Orientation
Pays balanced attention both
customers and competitors in
designing its marketing strategies

Customer Relationship
Management (CRM)
Customer
Customer relationship
relationship management
management is
is
the
the process
process of
of identifying
identifying prospective
prospective
buyers,
buyers, understanding
understanding them
them intimately,
intimately,
and
and developing
developing long-term
long-term perceptions
perceptions of
of
the
the organization
organization and
and its
its offering
offering so
so that
that
buyers
buyers will
will choose
choose them
them in
in the
the
marketplace.
marketplace.

HOW MARKETING
BECAME SO IMPORTANT

Ethics and Social Responsibility:

Balancing the Interests of Different

Groups

Ethics
Social Responsibility
Societal marketing concept
Macromarketing
Micromarketing

Societal Marketing Concept

The
The societal
societal marketing
marketing concept
concept is
is the
the
view
view that
that an
an organization
organization should
should discover
discover
and
and satisfy
satisfy the
the needs
needs of
of its
its consumer
consumer in
in aa
way
way that
that also
also provides
provides for
for societys
societys wellwellbeing.
being.

Macromarketing

Macromarketing
Macromarketing looks
looks at
at how
how the
the
aggregate
aggregate flow
flow of
of aa nations
nations goods
goods and
and
services
services benefits
benefits society.
society.

Micromarketing

Micromarketing
Micromarketing is
is how
how an
an individual
individual
organization
organization directs
directs its
its marketing
marketing
activities
activities and
and allocates
allocates its
its resources
resources to
to
benefit
benefit its
its customers.
customers.

HOW MARKETING
BECAME SO IMPORTANT

The Breadth and Depth of Marketing

Who Markets?
What is Marketed?

Lets watch some commercials

(Almost) Anything Can be

Marketed

Consumer
Consumer
Goods
Goods
and
and
Services
Services

BusinessBusinesstotoBusiness
Business
Marketing
Marketing

Not-ForNot-ForProfit
Profit
Marketing
Marketing

Idea,
Idea,
Place,
Place,
People
People
Marketing
Marketing

HOW MARKETING
BECAME SO IMPORTANT

The Breadth and Depth of Marketing

(cont)

Who Buys and Uses What is Marketed?

Ultimate consumers
Organizational buyers

Who Benefits?
How Do Consumers Benefit?
Utility

Ultimate Consumer

Ultimate
Ultimate consumers
consumers are
are the
the people
people who
who
use
use the
the goods
goods and
and services
services purchased
purchased for
for
aa household.
household.

Organizational Buyers

Organizational
Organizational buyers
buyers are
are units
units such
such as
as
manufacturers,
manufacturers, retailers,
retailers, or
or government
government
agencies
agencies that
that buy
buy goods
goods and
and services
services for
for
their
their own
own use
use of
of for
for resale.
resale.

Who Benefits?

Consumers

Company

Society

Utility

Utility
Utility is
is the
the benefit
benefit or
or customer
customer value
value
received
received by
by uses
uses of
of aa product.
product.

UTILITIES PROVIDING by
MARKETING
Utility
Utility

Examples
Examples of
of Marketing
MarketingActions
Actions
that
that Create
Create Utility
Utility

Form
Form

benefit
benefitprovided
providedby
bytransforming
transformingraw
rawmaterials
materials
into
intothe
thefinished
finished(PRODUCTION)
(PRODUCTION)

Place
Place

benefit
benefitprovided
providedby
bymaking
makingthe
theproducts
products
available
availablewhere
whereconsumers
consumerswant
wantthem
them

Time
Time

benefit
benefitprovided
provided by
bystoring
storingproducts
productsuntil
untilthey
they
need
need

benefit
provided
by
allowing
the
consumer
to
benefit
provided
by
allowing
the
consumer
to
Possession
Possession own,
own,use
useand
andenjoy
enjoythe
theproduct
product

Concept Check

1.

Like Pillsbury and General Electric,

many firms have gone through four distinct
orientations for their businesses: starting
production era and ending with
with the __________
todays ________________
market orientation era.

Concept Check

2. What are the two key characteristics of

the marketing concept?
A: An organization should (1) strive to
satisfy the needs of consumers (2) while
also trying to achieve the organizations
goals.

Concept Check

3. In this book the term product refers to

what three things?
A: Goods (physical products), services,
and ideas