Introduction to Marketing:

Value Exchange Process

Prof Agus W. Soehadi PhDaws@pmbs.ac.id

Hugo Boss

What is Marketing?

Marketing is the process of planning and executing

the conception, pricing, promotion

and distribution of ideas, goods and services

to create exchanges (maintain relationship)

that satisfy individual

and organizational objectives

(AMA 2004)

Nike

The SellingConcept

The Marketing Concept

Startingpoint

Existingproducts

Profits throughsales volume

Selling andpromoting

Factory

Customerneeds

Profits throughcustomer value

Integratedmarketing

Market

Focus Means Ends

What is Marketing?

Indo Mie

MODERN MARKETING SYSTEM

Suppliers MarketingIntermediaries

Company(marketer)

Competitors

FinalUsers

Understand themarketplace andcustomer needs

wants

Design acustomer-driven

marketingstrategy

Construct anintegratedmarketing

programs thatdelivers

superior value

Build profitablerelationshipsand createcustomer

delight

Capture valuefrom customersto create profit and customer

equity

Create value for customers andbuild customer relationships

Capture value from customers

in return

MARKETING PROCESS

The Marketing Process

• A simple model of the marketing process:– Understand the marketplace and customer needs

and wants.• Design a customer-driven marketing strategy.– Construct a marketing program that delivers

superior value.– Build profitable relationships and create customer

delight.– Capture value from customers to create profits

and customer quality.

Gabbot (2004)

Holcim

Needs, Wants, & Demands

• Need: State of felt deprivation including physical, social, and individual needs.– Physical needs:• Food, clothing, shelter, safety

– Social needs:• Belonging, affection

– Individual needs:• Learning, knowledge, self-expression

Gabbot (2004)

Needs, Wants, & Demands

• Wants: Form that a human need takes, as shaped by culture and individual personality.

• Wants + Buying Power = Demand

Gabbot (2004)

Need / Want Fulfillment

• Needs and wants are fulfilled through a Marketing Offer:– Some combination of products, services,

information, or experiences offered to a market to satisfy a need or want.

Gabbot (2004)

Need / Want Satisfiers

• Products:– Persons– Places– Organizations– Information– Ideas

• Services– Activity or benefit

offered for sale that is essentially intangible and does not result in ownership.

Brand Experiences: “. . . dazzle their senses, touch their hearts, stimulate their minds.”

Gabbot (2004)

Mercedes-Benz

Needs,wants,and

demands

Products

THE CONCEPT OF EXCHANGE(Why people buy?)

Kotler (2006)

Marketing as an exchange

WHAT IS EXCHANGED• There are many definitions and models of

how exchange takes place but importantly we must ask ‘what is being exchanged.– Meanings associated with exchange:

- Utilitarian exchange- Symbolic exchange- Hedonic exchange- Composite exchange

Marketing as an exchange

Utilitarian exchange• This type of exchange is referred to as

economic exchange. Goods are given in return for money or other goods.

Symbolic exchange• Symbolic exchange is an exchange where the

transaction involves psychological or social characteristics.

Marketing as an exchange

Hedonic exchange• Hedonic exchange refers to an exchange

where the transaction involves satisfying five senses

Composite exchange• Composite exchange refers to an

exchange that has both utilitarian and symbolic meaning.

Starbucks Coffee

Exchanging value

• Holbrook extracts three key sources of customer value:– 1. Interaction– 2. Comparison– 3. Experience

• Interaction, comparison and experience form a value system.

Exchanging value

Customer value is:• 1. A trade off between product quality and the price• 2. A trade off between a set of benefits and specific

categories of costs• 3. The hierarchy of derived benefits obtained from

particular product attributes when using the product• 4. The resulting emotional, practical and logical worth

associated with the product• 5. A trade off between received value and desired

value

Conclusion

Suppliers

Company(marketer)

Competitors

FinalUsers

MarketingIntermediaries

Value Exchange