Principles of Marketing Chapter1 Note

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A simple definition of marketing is

Marketing must both attract new customers and grow the current customers.
Every organization must perform marketing functions, not just for-profit companies.
Non-profits (colleges, hospitals, churches, etc.) also must also perform marketing.

Most people think of marketing as selling and/or advertising²³telling and selling.´
Marketing must focus on satisfying customer needs.
We define
as the process by which companies create value for customers and
build strong customer relationships in order to capture value from customers in return.

1. 0nderstand the marketplace and customer needs and wants.

2. Design a customer-driven marketing strategy.
3. Construct a marketing program that delivers superior value.
4. Build profitable relationships and create customer delight.
5. Capture value from customers to create profits and customer quality.
In the first four steps, companies work to understand consumers, create customer value,
and build strong customer relationships.
In the final step, companies reap the rewards of creating superior customer value. By
creating value consumers, they in turn capture value consumers in the form of
sales, profits, and long-term customer equity.
0

ÿive core customer and marketplace concepts are critical: (1) -
(2) - (3) - (4)
- and (5) .

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The most basic concept underlying marketing is that of

Human
are states of felt deprivation. They include
needs. These needs were not created by marketers- they are a basic part of the human
Chapter 1: Marketing: Creating and Capturing Customer Value
makeup.

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are the form human needs take as they are shaped by culture and individual
personality. An American food but a Big Mac.
When backed by buying power, wants become

.
The best marketing companies go to great lengths to learn and understand their
customers¶ needs, wants, and demands.

occurs when a company becomes so taken with their own products
that they lose sight of underlying customer needs.

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 switch to competitors and disparage the product to others.
Customer value and customer satisfaction are key building blocks for developing and
managing customer relationships.

!

is the act of obtaining a desired object from someone by offering something in
return.
Marketing consists of actions taken to build and maintain desirable exchange

with target audiences.

A is the set of actual and potential buyers of a product.
Marketing means managing markets to bring about profitable customer relationships.

" #

is defined as the art and science of choosing target markets and
building profitable relationships with them.
The marketing manager must answer two important questions:

1. What customers will we serve (what¶s our target market)?
19
ëart 1: Defining Marketing and the Marketing ërocess
2. How can we serve these customers best (what¶s our value proposition)?

$

Marketing management wants to design strategies that will build profitable relationships
with target consumers. But what should guide these marketing strategies?
There are five alternative concepts under which organizations design and carry out their
marketing strategies:

%&

The

holds that consumers will favor products that are available and
highly affordable.
Management should focus on improving production and distribution efficiency.
'&

The
holds that consumers will favor products that offer the most in
quality, performance, and innovative features.
0nder this concept, marketing strategy focuses on making continuous product

improvements.

(&

The

holds that consumers will not buy enough of the firm¶s products
unless it undertakes a large-scale selling and promotion effort.
The concept is typically practiced with unsought goods²those that buyers do not
normally think of buying, such as insurance or blood donations.
These industries must be good at tracking down prospects and selling them on product
benefits.

)&

The

holds that achieving organizational goals depends on knowing
the needs and wants of target markets and delivering the desired satisfactions better than
competitors do.
0nder the marketing concept, customer focus and value are the to sales and profits.
The job is not to find the right customers for your product but to find the right products
for your customers.
20
Chapter 1: Marketing: Creating and Capturing Customer Value
u companies research current customers deeply to learn about their
desires, gather new product and service ideas, and test proposed product improvements.
u marketing is understanding customer needs even better than customers

themselves do and creating products and services that meet existing and latent needs.

*&

The

questions whether the pure marketing concept
overlooks possible conflicts between consumer and consumer
.
The societal marketing concept holds that marketing strategy should deliver value to
customers in a way that maintains or improves both the consumer¶s
well-being.

+
!

!

u is the most important concept of modern marketing.
Customer relationship management is the overall process of building and maintaining

profitable customer relationships by delivering superior customer value and satisfaction.
It deals with all aspects of acquiring, keeping, and growing customers.

Customer satisfaction depends on the product¶s perceived performance relative to a
buyer¶s expectations.
If the product¶s performance falls short of expectations, the customer is dissatisfied. If

performance matches expectations, the customer is satisfied. If performance exceeds
expectations, the customer is highly satisfied or delighted.
Although the customer-centered firm seeks to deliver high customer satisfaction relative
to competitors, it does not attempt to customer satisfaction.
A company can always increase customer satisfaction by lowering its price or increasing
its services. But this may result in lower profits.
The purpose of marketing is to generate customer value profitably.
21
ëart 1: Defining Marketing and the Marketing ërocess

,
!

The aim of customer relationship management is to create not just customer satisfaction,
but customer delight.
This means that companies must aim high in building customer relationships.
Customer delight creates an emotional relationship with a product or service, not just a
rational preference.
22

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c 

A simple definition of marketing is  

Most people think of marketing as selling and/or advertising²³telling and selling.´

Marketing must focus on satisfying customer needs.

1. 0nderstand the marketplace and customer needs and wants.

The most basic concept underlying marketing is that of 

When backed by buying power, wants become  

Dissatisfied customers switch to competitors and disparage the product to others.

Marketing consists of actions taken to build and maintain desirable exchange

A  is the set of actual and potential buyers of a product.

Marketing means managing markets to bring about profitable customer relationships.

The marketing manager must answer two important questions:

Management should focus on improving production and distribution efficiency.

0nder this concept, marketing strategy focuses on making continuous product

u  marketing is understanding customer needs even better than customers

The  

 ! 

Customer relationship management is the overall process of building and maintaining

It deals with all aspects of acquiring, keeping, and growing customers.

If the product¶s performance falls short of expectations, the customer is dissatisfied. If

The purpose of marketing is to generate customer value profitably.

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c

A simple definition of marketing is

The most basic concept underlying marketing is that of

When backed by buying power, wants become

A is the set of actual and potential buyers of a product.

u marketing is understanding customer needs even better than customers

The

!