Chapter 1 “What is marketing?”
Marketing is engaging customers and managing profitable customer
relationships. The twofold goal of marketing is to attract new customers by
promising superior value and to keep and grow current customers by
delivering value and satisfaction.
Marketing defined
Marketing must be understood not in the sense of making a sale, but in
the sense of satisfying customer needs. If the marketer engages
consumers effectively, understands their needs, develops products that
provide superior customer value, and prices, distributes, and promotes
them well, these products will sell easily. Peter Drucker: “The aim of
marketing is to make selling unnecessary.”
Broadly defined, marketing is a social and managerial process by which
individuals and organizations obtain what they need and want through
creating and exchanging value with others. In a narrower business context,
marketing involves building profitable, value-laden exchange relationships
with customers. We define marketing as the process by which companies
engage customers, build strong customer relationships, and create
customer value in order to capture value form customers in return.
The marketing process
This figure presents a simple, five-step model of the marketing process for
creating and capturing customer value.
In the first four steps, companies work to understand consumers, create
customer value, and build strong customer relationships. In he final step,
companies reap the rewards of creating superior customer value. By
creating value for consumers, they in turn capture value from consumers
in the form of sales, profits, and long-term customer equity.
,Objective 1-2: Explain the importance of understanding the
marketplace and customers and identify the five core marketplace
concepts.
We examine five core customer and marketplace concepts:
1. Needs, wants and demands
2. Market offerings (products, services and experiences)
3. Value and satisfaction
4. Exchanges and relationships
5. Markets
Customer needs, wants and demands
The most basic concept underlying marketing is that of human needs.
Human needs are states of felt deprivation. They include basic physical
needs for food, clothing, warmth, and safety; social needs for knowledge
and self-expression. Marketers did not create these needs; they are a basic
part of the human makeup.
Wants are the form human needs take as they are shaped by culture and
individual personality. Wants are shaped by one’s society and are
described in terms of objects that will satisfy those needs. When backed
by buying power , wants become demands. Given their wants and
resources, people demand products and services with benefits that add up
to tho most value and satisfaction. To understand this companies conduct
customer research, analyze customer data, and observe customers as
they shop and interact, offline and online.
Market offerings
Consumers’ needs and wants are fulfilled through market offerings. Many
sellers make the mistake of paying more attention to the specific products
they offer than to the benefits and experiences produced by these
products. These sellers suffer from marketing myopia. They lose sight of
underlying customer needs.
Customer value and satisfaction
Customers form expectations about the value and satisfaction that various
market offerings will deliver and buy accordingly. Satisfied customers buy
again and tell others about their good experiences. Dissatisfied customers
often switch to competitors and disparage the product to others. If
marketers set expectations too low, they may satisfy those who buy but
fail to attract enough buyers. If they set expectations too high, buyers will
be disappointed. Customer value and customer satisfaction are key
building blocks for developing and managing customer relationships.
,Exchanges and relationships
Marketing occurs when people decide to satisfy their needs and wants
through exchange relationships. Exchange is the act of obtaining a
desired object from someone by offering something in return. In the
broadest sense, the marketer tries to bring about a response to some
market offering. The response may be more than simply buying or trading
products and services. Marketing consists of actions taken to create,
maintain, and grow desirable exchange relationships with target audiences
involving a product, service, idea, or other object.
Markets
A market is the set of actual and potential buyers of a product or service.
These buyers share a particular need or want that can be satisfied through
exchange relationships. Marketing means managing markets to bring
about profitable customer relationships. Sellers must search for and
engage buyers, identify their needs, design good market offerings, set
prices for them, promote them, and store and deliver them. Activities such
as consumer research, product development, communication, distribution,
pricing, and service are core marketing activities.
This figure shows the main elements in a marketing system. The company
and competitors research the market and interact with consumers to
understand their needs. Then they create and exchange market offerings,
messages, and other marketing content with consumers, either directly or
through marketing intermediaries.
Objective 1-3 Identify the key elements of a customer value-
driven marketing strategy and discuss the marketing
management orientations that guide marketing strategy.
Customer value-driven marketing strategy
We define marketing management as the art and science of choosing
target markets and building profitable relationships with them. The
, marketing manager’s aim is to engage, keep, and grow target customers
by creating, delivering, and communicating superior customer value. To
design a winning marketing strategy, the marketing manager must answer
two important questions: What customers will we serve (what’s our target
market)? How can we serve these customers best (what’s our value
proposition)?
Selecting customers to serve
By dividing the market into segments of customers, the company can
decide after which segment they will go after. The company wants to
select only customers that it can serve well and profitably. Marketing
managers must decide which customers they want to target and the level,
timing, and nature of their demand. Simply put, marketing management is
customer management and demand management.
Choosing a value proposition
The company must also decide how it will serve targeted customers – how
it will differentiate and position itself in the marketplace. A brand’s value
proposition is the set of benefits or values it promises to deliver to
consumers to satisfy their needs. Value propositions differentiate one
brand from another. Companies must design strong value propositions that
give them the greatest advantage in their target markets.
Marketing management orientations
There are five alternative concepts under which organizations design and
carry out their marketing strategies: the production, product, selling,
marketing, and societal marketing concepts.
The production concept
The production concept holds that consumers will favor products
that are available and highly affordable. Management should focus
on improving production and distribution efficiency. This concept is
one of the oldest orientations that guide sellers. The production
concept can lead to marketing myopia.
The product concept
The product concept holds that consumers will favor products that
offer the most quality, performance, and innovative features.
Marketing strategy focuses on making continuous product
improvements. Focusing only on the company’s products can also
lead to marketing myopia. For example, manufactures believe they
can make a better product, but buyers may be searching for another
type of product to solve their problem.
The selling concept
Many companies follow the selling product, which holds that
consumers will not buy enough of the firm’s products unless it
Marketing is engaging customers and managing profitable customer
relationships. The twofold goal of marketing is to attract new customers by
promising superior value and to keep and grow current customers by
delivering value and satisfaction.
Marketing defined
Marketing must be understood not in the sense of making a sale, but in
the sense of satisfying customer needs. If the marketer engages
consumers effectively, understands their needs, develops products that
provide superior customer value, and prices, distributes, and promotes
them well, these products will sell easily. Peter Drucker: “The aim of
marketing is to make selling unnecessary.”
Broadly defined, marketing is a social and managerial process by which
individuals and organizations obtain what they need and want through
creating and exchanging value with others. In a narrower business context,
marketing involves building profitable, value-laden exchange relationships
with customers. We define marketing as the process by which companies
engage customers, build strong customer relationships, and create
customer value in order to capture value form customers in return.
The marketing process
This figure presents a simple, five-step model of the marketing process for
creating and capturing customer value.
In the first four steps, companies work to understand consumers, create
customer value, and build strong customer relationships. In he final step,
companies reap the rewards of creating superior customer value. By
creating value for consumers, they in turn capture value from consumers
in the form of sales, profits, and long-term customer equity.
,Objective 1-2: Explain the importance of understanding the
marketplace and customers and identify the five core marketplace
concepts.
We examine five core customer and marketplace concepts:
1. Needs, wants and demands
2. Market offerings (products, services and experiences)
3. Value and satisfaction
4. Exchanges and relationships
5. Markets
Customer needs, wants and demands
The most basic concept underlying marketing is that of human needs.
Human needs are states of felt deprivation. They include basic physical
needs for food, clothing, warmth, and safety; social needs for knowledge
and self-expression. Marketers did not create these needs; they are a basic
part of the human makeup.
Wants are the form human needs take as they are shaped by culture and
individual personality. Wants are shaped by one’s society and are
described in terms of objects that will satisfy those needs. When backed
by buying power , wants become demands. Given their wants and
resources, people demand products and services with benefits that add up
to tho most value and satisfaction. To understand this companies conduct
customer research, analyze customer data, and observe customers as
they shop and interact, offline and online.
Market offerings
Consumers’ needs and wants are fulfilled through market offerings. Many
sellers make the mistake of paying more attention to the specific products
they offer than to the benefits and experiences produced by these
products. These sellers suffer from marketing myopia. They lose sight of
underlying customer needs.
Customer value and satisfaction
Customers form expectations about the value and satisfaction that various
market offerings will deliver and buy accordingly. Satisfied customers buy
again and tell others about their good experiences. Dissatisfied customers
often switch to competitors and disparage the product to others. If
marketers set expectations too low, they may satisfy those who buy but
fail to attract enough buyers. If they set expectations too high, buyers will
be disappointed. Customer value and customer satisfaction are key
building blocks for developing and managing customer relationships.
,Exchanges and relationships
Marketing occurs when people decide to satisfy their needs and wants
through exchange relationships. Exchange is the act of obtaining a
desired object from someone by offering something in return. In the
broadest sense, the marketer tries to bring about a response to some
market offering. The response may be more than simply buying or trading
products and services. Marketing consists of actions taken to create,
maintain, and grow desirable exchange relationships with target audiences
involving a product, service, idea, or other object.
Markets
A market is the set of actual and potential buyers of a product or service.
These buyers share a particular need or want that can be satisfied through
exchange relationships. Marketing means managing markets to bring
about profitable customer relationships. Sellers must search for and
engage buyers, identify their needs, design good market offerings, set
prices for them, promote them, and store and deliver them. Activities such
as consumer research, product development, communication, distribution,
pricing, and service are core marketing activities.
This figure shows the main elements in a marketing system. The company
and competitors research the market and interact with consumers to
understand their needs. Then they create and exchange market offerings,
messages, and other marketing content with consumers, either directly or
through marketing intermediaries.
Objective 1-3 Identify the key elements of a customer value-
driven marketing strategy and discuss the marketing
management orientations that guide marketing strategy.
Customer value-driven marketing strategy
We define marketing management as the art and science of choosing
target markets and building profitable relationships with them. The
, marketing manager’s aim is to engage, keep, and grow target customers
by creating, delivering, and communicating superior customer value. To
design a winning marketing strategy, the marketing manager must answer
two important questions: What customers will we serve (what’s our target
market)? How can we serve these customers best (what’s our value
proposition)?
Selecting customers to serve
By dividing the market into segments of customers, the company can
decide after which segment they will go after. The company wants to
select only customers that it can serve well and profitably. Marketing
managers must decide which customers they want to target and the level,
timing, and nature of their demand. Simply put, marketing management is
customer management and demand management.
Choosing a value proposition
The company must also decide how it will serve targeted customers – how
it will differentiate and position itself in the marketplace. A brand’s value
proposition is the set of benefits or values it promises to deliver to
consumers to satisfy their needs. Value propositions differentiate one
brand from another. Companies must design strong value propositions that
give them the greatest advantage in their target markets.
Marketing management orientations
There are five alternative concepts under which organizations design and
carry out their marketing strategies: the production, product, selling,
marketing, and societal marketing concepts.
The production concept
The production concept holds that consumers will favor products
that are available and highly affordable. Management should focus
on improving production and distribution efficiency. This concept is
one of the oldest orientations that guide sellers. The production
concept can lead to marketing myopia.
The product concept
The product concept holds that consumers will favor products that
offer the most quality, performance, and innovative features.
Marketing strategy focuses on making continuous product
improvements. Focusing only on the company’s products can also
lead to marketing myopia. For example, manufactures believe they
can make a better product, but buyers may be searching for another
type of product to solve their problem.
The selling concept
Many companies follow the selling product, which holds that
consumers will not buy enough of the firm’s products unless it
