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Chapter 1

Marketing in a Changing World: Creating Customer

Value and Satisfaction

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What is Marketing?

Process by which individuals and groups obtain what they needneed and

want want through creating and exchanging products exchanging products and value

with others.

Simply put: Marketing is the delivery of customer satisfaction at a profit.

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Core Marketing Concepts (Fig. 1-1)

Needs, wants, and demands

Productsand services

Value, satisfaction, and quality

Exchange, transactions,

and relationships

Markets

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Needs Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am hungry.

WantsWants - form that a human need takes as shaped by culture and individual personality. i.e. I want a hamburger, French fries, and a soft drink.

DemandsDemands - human wants backed by buying power. i.e. I have money to buy this meal.

What are Consumer’s Needs, Wants and Demands?

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ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

ExperiencesExperiences PersonsPersons PlacesPlaces

OrganizationsOrganizations IdeasIdeasInformationInformation

What Will Satisfy Consumer’s Needs and Wants?

ServicesActivities or Benefits Offered for Sale That Are EssentiallyIntangible and Don’t Result in the Ownership of Anything

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How Do Consumers ChooseChoose Among Products and Services?

Total Quality Management Involves Improving the Quality of Products, Services, and

Marketing Processes

Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is

Customer Satisfaction

Value Gained From Owning a Product and Costs of Obtaining the Product is

Customer Value

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ExchangesExchanges TransactionsTransactions

Relationships Relationships Building a Marketing

Network Consisting ofThe Company and All

Its SupportingStakeholders

How Do Consumers Obtain Products and Services?

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Who Purchases Products and Services?

People Who Exhibit Need

Resources to Exchange

Willingness to Exchange

UnexpectedSituational

Factors

Attitudes of

Others

Ethical

Potential Buyers

Market –

Buyers who share a

particular need or want that can be

satisfied through

exchange or relationships.

Actual Buyers

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SuppliersSuppliers

End UserMarket

End UserMarket

MarketingIntermediaries

MarketingIntermediaries

CompetitorsCompetitors Company(Marketer)Company(Marketer)

En

vir

on

men

t En

viro

nm

en

t

Modern Marketing System (Fig. 1-3)

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MarketingManagement

Implementing programs to create exchangeswith target

buyers to achieve

organizational goals

DemandManagement

Finding and increasing

demand, alsochanging or

reducing demand such

as inDemarketing

ProfitableCustomer

Relationships

Attracting new customers and retaining and

building relationships with current customers

Marketing Management

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Stage 1. Entrepreneurial Marketing

Stage 2. Formulated Marketing

Stage 3. Intrepreneurial Marketing

Marketing Management Practice

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Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

•Consumers favor products that are available and highly affordable.•Improve production and distribution.

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

•Consumers will buy products only if the company promotes/ sells these products.

•Focuses on needs/ wants of target markets & delivering satisfaction better than competitors.

•Focuses on needs/ wants of target markets & society’s welfare.

Marketing Management Philosophies

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Marketing and Sales Concepts Contrasted

FactoryExistingProducts

Sellingand

Promoting

ProfitsthroughVolume

The Selling ConceptThe Selling Concept

StartingPoint Focus Means Ends

MarketCustomer

NeedsIntegratedMarketing

Profitsthrough

Satisfaction

The Marketing ConceptThe Marketing Concept

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Societal Marketing Concept

Societal Marketing

Concept

Company(Profits)

Consumers(Want Satisfaction)

Society(Human Welfare)

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Marketing Challenges in the New “Connected” Millennium

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ConnectingTechnologies

ComputerInformation

CommunicationTransportation

Connections with CustomersConnecting more selectively

Connecting for lifeConnecting Directly

Connections with Marketing Partners•Connecting with other company departments•Connecting with suppliers and distributors•Connecting through strategic alliances

Connections with the world around us•Global Connections•Connections with values and responsibilities•Broadened connections

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Learn About &Track CustomersWith Databases

Communicate WithCustomers in Groups

Or One-on-One

Create Products &Services Tailored to

Meet Customer Needs

Distribute Products More Efficiently &

Effectively

Connecting Technologies in Computers,

Telecommunications,Information, & Transportation

Help To:

Technologies for Connecting

What aspects ofthe Internetmake it a goodforum formarketing?

How do Web companies compete with brick and mortarcompanies?

Click or press spacebar to return

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The Internet The Internet has been hailed as the

technology behind a new model for doing business.

New applications include: Internet – connecting with customers, Intranets – connecting with others in the company,

and Extranets – connecting with strategic partners,

suppliers, and dealers. Purchasing will be over $1.4 trillion in 2003. 400,000 companies are now using the Internet

to do business.

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Connections With Customers

Most marketers are targeting fewer, potentially more profitable customers.

Asking: What value does the customer

bring to the organization? Are they worth pursuing?

Focus has shifted to: keeping current customers,

and building lasting relationships

based on superior satisfaction and value.

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Direct Connections With Customers

Many companies use technologies to let them connect more directly with their customers. Products available via telephone, mail-order

catalogs, kiosks and e-commerce. Some firms sell only via direct channels (i.e. Dell

Computer, www.Amazon.com), others use a combination.

Direct marketing is redefining the buyer’s role in connecting with sellers. Buyers are active participants in shaping the

marketing offer and process; some buyers design their own products online.

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Connections With Marketing’s Partners

Connecting Inside the Company

Every employee must be customer-focused

Teams coordinate efforts toward customers

Connecting With Outside Partners

Supply Chain Management

Strategic Alliances

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Connections With the World Around Us

Global Connections

Values Connections

Social Responsibility Connections

Broadening Connections

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Review of Concept Connections

Define what marketing is and discuss its core concepts.

Explain the relationships between customer value, satisfaction, and quality.

Define marketing management and examine how marketers manage demand and build profitable customer relationships.

Compare the five marketing management philosophies.

Analyze the major challenges facing marketers heading into the next millennium.