Week 1: Introduction to Marketing
Marketing: process by which companies create value for customers and build strong customer R/S in
order to capture value from customers in return.
Marketing process:
1. Understand the marketplace and customer needs
2. Design a customer-driven marketing strategy
3. Construct an integrated marketing program
4. Build profitable R/S and create customer delight
5. Capture value from customers to create profits and customer equity
1. Understand the marketplace and customer needs
Marketing offering: combination of products, services, info offered to a market to satisfy a need or
want.
Marketing myopia: mistake of paying more attention to the product than to the benefits and
experiences derived from these products.
Exchange: act of obtaining a desired object from someone by offering something in return.
Market: set of all actual and potential buyers of a product or service.
Marketing management: art of choosing target markets and building profitable R/S with them.
Value proposition: set of benefits or values a company promises to deliver to consumers to satisfy
their needs.
2. Design a customer-driven marketing strategy
Marketing management orientations:
1. Production concept
- Consumers favour products that are available and highly affordable.
- Management should focus on improving production and distribution efficiency.
2. Product concept
- Favours the products that offers the most quality, performance and innovative features.
- Focuses on making continuous product improvements.
- Might lead to marketing myopia.
3. Selling concept
- Firm must undertake a large-scale selling and promotion effort.
- Typically practiced with unsought goods.
- Portray the image of aggressive sell / hard selling
4. Marketing concept
- Knowing the needs and wants of target markets and delivering the desired satisfactions better
than competitors do.
- Customer focus and value are the paths to sales and profits
- Not about finding the right customers for my products, but finding the right products for my
customers
- Customer-driven: understand customers deeply about what they want and create products that
meet current needs.
,- Customer-driving: understand customer needs better than customers themselves do and create
products that meet needs now and in the future
5. Societal marketing concept
- Considering consumer’s wants, the company’s requirements, consumer’s long run interests and
society’s long run interests
- 3 considerations: company profits, customer wants and society’s interests.
3. Construct an integrated marketing program
Firm’s marketing mix: set of marketing tools that firm uses to implement its marketing strategy
Marketing mix:
- Product
- Price
- Place
- Promotion
4. Build profitable R/S and create customer delight
Customer R/S management: overall process of building and maintaining profitable customer R/S by
delivering superior customer value and satisfaction
Customer perceived value: customer’s evaluation of the difference between all the benefits and all
the costs of a marketing offering relative to those competing offers.
Customer satisfaction: the extent to which a product’s perceived performance matches a buyer’s
expectations
5. Capture value from customers to create profits and customer equity
Customer lifetime value: the value of the entire stream of purchases that a customer would make
over a lifetime of patronage
Share of customer: portion of a customer’s purchasing that a company gets in its product categories
Customer equity: total combined customer lifetime values of all the company’s customers.
The changing landscape of marketing:
1. Digital age
, 2. Rapid globalisation
3. Sustainable marketing- more ethics and social responsibility
4. Growth of not-for-profit marketing
Business portfolio planning involves 2 steps:
1. Analysing its current business portfolio
2. Shaping the future portfolio
Business portfolio: the collection of businesses and products that make up the company
Portfolio analysis: the process by which management evaluates the products and businesses that
make up the company
SBU (strategic business unit): a company division, a product line within a division or a single brand or
product
Growth share matrix: portfolio-planning method that evaluates a company’s strategic business units
in terms of their market growth rate and relative market hare.
Star:
- High growth, high share businesses
- Often need heavy investment to finance
- Eventually their growth slows down and turn in cash cows
Cash cow:
- Low growth, high share businesses
- Established and successful , need little investment to hold their market share
- Produce a lot of cash and supports other SBUs
Question mark:
- Low share business units in high growth markets
- Require a lot of cash to hold their share.
Dog:
- Low growth low share businesses
- Generate enough cash to maintain themselves but does not promise to be large sources of cash
Managing the marketing effort:
, - Analysis
- Planning
- Implementation
- Control
Return on marketing investment (ROI): net return from a marketing investment divided by the costs
of the marketing investment
Marketing: process by which companies create value for customers and build strong customer R/S in
order to capture value from customers in return.
Marketing process:
1. Understand the marketplace and customer needs
2. Design a customer-driven marketing strategy
3. Construct an integrated marketing program
4. Build profitable R/S and create customer delight
5. Capture value from customers to create profits and customer equity
1. Understand the marketplace and customer needs
Marketing offering: combination of products, services, info offered to a market to satisfy a need or
want.
Marketing myopia: mistake of paying more attention to the product than to the benefits and
experiences derived from these products.
Exchange: act of obtaining a desired object from someone by offering something in return.
Market: set of all actual and potential buyers of a product or service.
Marketing management: art of choosing target markets and building profitable R/S with them.
Value proposition: set of benefits or values a company promises to deliver to consumers to satisfy
their needs.
2. Design a customer-driven marketing strategy
Marketing management orientations:
1. Production concept
- Consumers favour products that are available and highly affordable.
- Management should focus on improving production and distribution efficiency.
2. Product concept
- Favours the products that offers the most quality, performance and innovative features.
- Focuses on making continuous product improvements.
- Might lead to marketing myopia.
3. Selling concept
- Firm must undertake a large-scale selling and promotion effort.
- Typically practiced with unsought goods.
- Portray the image of aggressive sell / hard selling
4. Marketing concept
- Knowing the needs and wants of target markets and delivering the desired satisfactions better
than competitors do.
- Customer focus and value are the paths to sales and profits
- Not about finding the right customers for my products, but finding the right products for my
customers
- Customer-driven: understand customers deeply about what they want and create products that
meet current needs.
,- Customer-driving: understand customer needs better than customers themselves do and create
products that meet needs now and in the future
5. Societal marketing concept
- Considering consumer’s wants, the company’s requirements, consumer’s long run interests and
society’s long run interests
- 3 considerations: company profits, customer wants and society’s interests.
3. Construct an integrated marketing program
Firm’s marketing mix: set of marketing tools that firm uses to implement its marketing strategy
Marketing mix:
- Product
- Price
- Place
- Promotion
4. Build profitable R/S and create customer delight
Customer R/S management: overall process of building and maintaining profitable customer R/S by
delivering superior customer value and satisfaction
Customer perceived value: customer’s evaluation of the difference between all the benefits and all
the costs of a marketing offering relative to those competing offers.
Customer satisfaction: the extent to which a product’s perceived performance matches a buyer’s
expectations
5. Capture value from customers to create profits and customer equity
Customer lifetime value: the value of the entire stream of purchases that a customer would make
over a lifetime of patronage
Share of customer: portion of a customer’s purchasing that a company gets in its product categories
Customer equity: total combined customer lifetime values of all the company’s customers.
The changing landscape of marketing:
1. Digital age
, 2. Rapid globalisation
3. Sustainable marketing- more ethics and social responsibility
4. Growth of not-for-profit marketing
Business portfolio planning involves 2 steps:
1. Analysing its current business portfolio
2. Shaping the future portfolio
Business portfolio: the collection of businesses and products that make up the company
Portfolio analysis: the process by which management evaluates the products and businesses that
make up the company
SBU (strategic business unit): a company division, a product line within a division or a single brand or
product
Growth share matrix: portfolio-planning method that evaluates a company’s strategic business units
in terms of their market growth rate and relative market hare.
Star:
- High growth, high share businesses
- Often need heavy investment to finance
- Eventually their growth slows down and turn in cash cows
Cash cow:
- Low growth, high share businesses
- Established and successful , need little investment to hold their market share
- Produce a lot of cash and supports other SBUs
Question mark:
- Low share business units in high growth markets
- Require a lot of cash to hold their share.
Dog:
- Low growth low share businesses
- Generate enough cash to maintain themselves but does not promise to be large sources of cash
Managing the marketing effort:
, - Analysis
- Planning
- Implementation
- Control
Return on marketing investment (ROI): net return from a marketing investment divided by the costs
of the marketing investment
