CHAPTER 1: MARKETING & MARKETING

PROCESS
A. WHAT IS MARKETING?
MARKETING is the process by which companies create value for customers and build
strong customer relationships to capture value from customer in return.

OLD view of NEW view of

marketing: marketing:
Making a Sale— Satisfying Customer
“Telling and Selling” Needs

B. MARKETING PROCESS
Create value for customers and build relationships Capture value
from customers
in return

Understand
Construct an Build Capture value
the Design a
intergrated profitable from
marketplace customer-
marketing relationships customers to
and driven
program that and create create profits
customers marketing
delivers customer and customer
needs and strategy
superior value delight equity
wants

C. Understand the marketplace and customers needs and wants

 Customer Needs, Wants, and Demands
 Market Offerings
 Customer Value and Satisfaction
 Exchanges and Relationships
 Markets
 1. Customer Needs, Wants, and Demands

• States of deprivation
• Physical—food, clothing, warmth, safety
Needs • Social—belonging and affection
• Individual—knowledge and self-expression

• Form that human needs take as they are shaped

Wants by culture and individual personality

Demands • Human wants backed by buying power

MASLOW : PHYSIOLOGICAL => SAFETY => LOVE => ESTEEM=> SELF-ACTUALIZATION

2. MARKET OFFERINGS
 fulfill customer needs and wants.
 include both tangible and intangible products.
Some combination of products, services, information, or experiences offered to a market to
satisfy a need or want.
MARKETING MYOPIA
 Focusing only on existing wants and losing sight of underlying consumer needs
 They forget that a product is only a tool to solve a consumer‟s problem.
 Smart marketers look beyond the attributes of the products and services they sell.
3. CUSTOMER VALUE & SATISFACTION

• The customer’s evaluation of the difference

between all the benefits and all the costs of a
marketing offer relative to those of competing
Customer Perceived offers.
Value • Customers often do not judge values and costs
“accurately” or “objectively”. They act on
perceived value.

• The extent to which a product’s perceived

Customer Satisfaction performance matches a buyer’s expectations

 Customer satisfaction -> Customer loyalty

 Delivering more than promise -> Delight customers
 Delighted customers = “Customer Evangelists”
 4. EXCHANGE & RELATIONSHIP
 Exchange 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
relationships with target audiences involving a product, service, idea, or other object.
5. MARKETS
 Market is the set of actual and potential buyers of a product or service.
 Marketing means managing markets to bring about profitable customer relationship.

D. DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY

Marketing Management
 Selecting Customers to Serve
 Choosing a Value Proposition
Marketing Management Orientation
 Production Concept
 Product Concept
 Selling Concept
 Marketing Concept
 Societal Marketing Concept
1. MARKETING MANAGEMENT
Marketing management is the art and science of choosing target markets and building
profitable relationships with them.
1. What customers will we serve? (What is our target market?)
2. How can we serve these customers best? (What is our value proposition?)
a. SELECTING CUSTOMERS TO SERVE
The company must first decide whom it will serve by dividing the market into segments of
customers (market segmentation) and selecting which segments it will go after (market
targeting).
b. 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
customers to satisfy their needs.
2. MARKETING MANAGEMENT ORIENTATION

Societal
Production Marketing
Product concept Selling concept marketing
concept concept
concept
 a. PRODUCTION CONCEPT
The idea that
1. consumers will favor products that are available or highly affordable,
2. the organization should therefore focus on improving production and distribution
efficiency
b. PRODUCT CONCEPT
The idea that
1. consumers will favor products that offer the most quality, performance, and
features.
2. the organizations should therefore devote its energy to making continuous
product improvements.
c. SELLING CONCEPT
The idea that consumers will not buy enough of the firm‟s products unless it undertakes a
large-scale selling and promotion effort.
d. MARKETING CONCEPT
The idea that achieving organizational goals depends on knowing the needs and wants of
the target markets and delivering the desired satisfactions better than competitors do.
It calls for Customer-driving Marketing.
e. SOCIETAL MARKETING CONCEPT
The idea that a company should make good marketing decisions by considering
1. consumers’ wants.
2. the company’s requirements.
3. consumers’ long-term interests.
4. society’s long-run interests.
It calls for Sustainable Marketing

E. PREPARING AN INTEGRATED MARKETING PLAN AND

PROGRAM
INTEGRATED MARKETING PLAN AND PROGRAM
Integrated Marketing Program is a comprehensive plan that communicates and
delivers the intended value to chosen customers.
It transforms the Marketing strategy into action
 The Marketing Mix – 4Ps. 4Cs
 Product  Customer Solution
 Price  Customer Cost
 Place  Convenience
 Promotion  Communication

7Ps= 4Ps+ people + physical environment + process.

F. BUILDING CUSTOMER RELATIONSHIPS

1. CUSTOMER RELATIONSHIP MANAGEMENT
The key to building lasting relationships is to create and deliver superior customer value
and satisfaction.
2. CUSTOMER VALUE & SATISFACTION
Customer Value = perceived benefits – perceived costs
Customer Satisfaction:
Product ‟s perceived performance = Customer ‟s expectation
3. CUSTOMER DELIGHT
Product ‟s perceived performance > Customer ‟s expectation
 Customer Delight
 Positive emotional reaction
 Emotional relationship with the brand, not just rational preference.
 Keep customers coming back.
Problem: Over time, „Delighters‟ becomes expected.
 Constantly strive to find new ways of delighting
 Innovative thinking & Listening to customers are KEYS.
 Higher financial performance
 Greater customer loyalty
 Willingness to pay higher price
4. PARTNER RELATIONSHIP MANAGEMENT
Working closely with
 other departments inside the firm
 marketing partners outside the firm – suppliers, channel partners, or competitors
 to jointly bring greater value to customers
a. PARTNERS INSIDE THE FIRM
“Marketing is far too important to be left only to the marketing department.”
b. PARTNERS OUTSIDE THE FIRM
Success at building customer relationships also rests on how well the entire supply chain
performs against competitors‟.
 G. CAPTURING VALUE FROM CUSTOMERS
1. CREATING CUSTOMER LOYALTY & RETENTION
 New customers are 5x more expensive than existing customers
 Losing a customer means losing more than a single sale.
 It means losing the customer lifetime value.
2. GROWING SHARE OF CUSTOMER
Offer greater variety to current customers: UP-SELL + CROSS-SELL
3. BUILDING CUSTOMER EQUITY
Ʃ customer lifetime values of the company‟s current & potential customers
High Customer Equity = Ultimate Aim of CRM
 Building the right relationship with the right customer

High
Butter Files True Friends
Profitability
Profitability
Potential

Low Strangers Barnacles

Short – terms
Long - term
Customers
Projected Loyalty

H. THE CHANGING MARKETING LANDSCAPE

 The Digital Age
 The Changing Economic Environment
 The Growth of Not-for-Profit Marketing
 Rapid Globalization
 Sustainable Marketing - The Call for More
 Social Responsibility
CHAPTER 1:
Page Lesson
30 Wants and Demands can be affected by marketing
32 The respond may be more than simply buying and trading products and services
Both sellers and buyers carry out marketing
33 Marketing management is customer management and demand management
34 Value proposition differentiate one brand from another
Production and product concept lead to myopia
Selling concept is typical with unsought good such as insurance, blood donation.
35 Figure 1.3
product-centered make-and-sell philosophy
Marketing concept is based on customer-centered sense-and-respond philosophy.
Selling concept = inside-out perspective
Marketing concept = outside-in …..
Societal Marketing Concept => conflict consumer short-run wants and consumer long-run
welfare.
39 Firms do NOT MAXIMIZE customer satisfaction.
Low-margin customers => basic relationship
High-margin customer => full relationship
Frequency marketing program = awarding customer buying frequently
Club ………………………………………. = member special benefit + create communities.
40 Customer engagement marketing with purpose of making brand meaningful with
customer’s life.
The growing form is consumer-generated marketing.

CHAPTER 5:
Page Lesson
170 cross-cultural marketing: the practice of including ethnic themes and cross-cultureal
perspectives within their mainstream marketing
Figure 5.3

`171 Opinion leaders are called the influential or leading adopters.

175 Lifestyle changes are result from demographics and life-changing events
176 Identify the occupational groups that have an above-average interest in their products.
177 Brand personality is a mix of human traits.
Brand personality traits:
 Sincerity
 Excitement
 Competence
 Sophistication
 Ruggedness
 Concept related to personality – a person’s self-concept/ self-image.
Biological needs = state tension (hunger, thirst and discomfort.
Psychological needs
Sigmund Frued assumed that pp are unconscious about real psychological forces shaping
behaviors
179 Motivation research refers to qualitative one.
180 Pp are affected by subliminal advertising without knowing its message.
187 Innovators – try new ideas at some risks
Early adopter – opinion leaders try new ideas but carefully
Early mainstream – rarely a leader, try new ideas before average person.
Late ………………… - adopt an innovation after majority of pp tried it.
Lagging adopter - adopt only when it become tradition.
 CHAPTER 3: MARKETING
ENVIRONMENT
A. Marketing environment:
 The marketing environment includes the actors and forces outside marketing that
affect marketing management’s ability to build and maintain successful
relationships with target customers.
 A marketing-oriented firm look outwards to the environment in which it operates,
adapting to take advantage of emerging opportunities, and minimize potential
threats.

Micro-environment

Marketing
Environment

Macro-environment

B. Micro-environment:

The Marketing Competitor Public Customer

Suppliers
Company intermediarie s s s
s

MARKETING

 These factors affect the firm’s capabilities to operate effectively in its chosen markets.
 1. The company:
Each department is a link in the company’s internal value chain which carries out value-
creating activities to serve customers.
2. Suppliers:
 Suppliers provide the resources needed by the company to produce goods &
services.
 Supplier problems cost sales in the short run & damage customer satisfaction in
the long run.
Suppliers = Partners
3. Competitors:
Adapting to the target customers’ needs is not enough!
 Must provide greater customer value & satisfaction than competitors.
 Must gain strategic advantage.

Identifying Accessing Selecting

competitors competitors competitors

 INDUSTRY  Objectives
point of  Strategies
view.  Strengths &  Attack
 MARKET Weakness  Avoid
poit of view.  Reaction
patterns

4. Public:
Any group that has an actual or potential interest in or impact on an organization’s
ability to achieve its objectives
 Financial publics
 Media publics
 Government publics
 Citizen-action publics
 Local publics
 General public
 Internal publics
5. Customers:
 Customer markets
 Business markets
 Reseller markets
 Government markets
 International markets
 C. MACRO-ENVIRONMENT:
Demographic Economic Natural Technological Political Cultural

COMPANY

 Shape Opportunities
 Pose Threat
1. Demographic factors:
Concerns changes in human populations (size, density, location, age, gender, race,
occupation, etc.)
 Helps to predict the size & growth rates of markets, and the needs for products.

2. Economic factors:
Changes in major economic variables have a large impact on the marketplace:
 Income
 Cost of living
 Interest rates
 Saving & borrowing pattern
 Affect consumer purchasing power & spending pattern.
The faltering & uncertain economy causes consumers to rethink their spending
priorities & to cut back on their buying.
 “Frugality has made a comeback”

3. Natural factors:
Marketers should be aware of several trends in natural environment, such as:
 Growing shortage of raw materials (air, water, forests, oil, coal, minerals, etc.)
 Increased pollution (chemical wastes, dangerous mercury levels in the ocean,
chemical pollutants in soil, littering with packaging materials, etc.)
 Increased government intervention in natural resource management
Healthy Ecology = Healthy Economy
 Environmental actions can also be good business.
 Developing strategies & practices that support environmental sustainability.
 Responding to consumer demands with more environmentally responsible products.
 4. Technology factors:
Marketing-oriented companies seek to use technology to improve their marketing
operation
 Monitor technological trends
 Pioneer technological breakthroughs
 Transform markets & shift competitive advantage in their favour.
5. Political factors:
Almost every marketing activity is subject to a wide range of laws & regulations
Each company must work out a philosophy of socially responsible & ethical
behaviors.
 look beyond what is legal & allowed
 develop standards based on:
o personal integrity
o corporate conscience
o long-run consumer welfare
 Cause-related Marketing

6. Cultural factors:
Affect a society’s basic values, perceptions, and behaviors
 The most basic cause of a person’s wants and behaviors

CULTURAL
VALUES

CORE BELIEFS & SECONDARY

VALUES BELIEFS & VALUES

fairly
more open to change
persistent

passed on from include people's

parents to children views of themselves,
others,
organisations,
society, nature, and
reinforced by universe
school, churches,
businesses, and
government

 Marketing campaigns should reflect target audiences’ beliefs & values.

 CHAPTER 5: CONSUMER MARKETS &
BUYER BEHAVIOR
CONSUMER BUYER BEHAVIOR
Consumer buyer behavior = buying behavior of final consumers – individuals &
households who buy goods & services for personal consumption.

Consumer buyer behavior influences the choice of target market & the composition of
the marketing mix.

 Understanding consumers is a cornerstone of Marketing.

CONTENTS

 Model of Consumer Behavior

 The Buyer Decision Process
 Characteristics affecting Consumer Behavior

A. MODEL OF CONSUMER BEHAVIOR

Marketing Stimuli
- Product
Buyer Responses
- Price
- Product choice
- Promotion - Buyer‟s Decision - Brand choice
- Place Process
- Dealer choice
Others - Buyer‟s
Characteristics - Purchase timing
- Economic
- Purchase amount
- Technological
- Purchase frequency
- Social
- Cultural

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 B. BUYER DECISION PROCESS
Buying process starts long before the actual purchase & continues long after.

Evaluation Post-
Need Information Purchase
Of purchase
Recognition Search Decision
Alternatives Behavior

 Focus on the entire process rather than on the purchase decision only.

I. NEED RECOGNITION
 Occurs when the buyer recognizes a problem or need.
 Need Stimulation
 Internal Stimuli
 External Stimuli

II. INFORMATION SEARCH

The objective of information search is to build up the awareness set – the array of
brands that may provide a solution to the problem.

 It helps consumers to:

 Learn about several brands available
 Drop certain brands from consideration

Sources of Information:

 Personal sources (family, friends, acquaintances, etc.)

▪ the most effective ones, esp. in this digital era
▪ legitimize or evaluate products for buyer
 Commercial sources (advertising, salespeople, packaging, websites, etc.)
▪ controlled by marketers
▪ provide information → inform the buyer
 Public sources (mass media, internet searches, etc.)
 Experiential sources (handling, examining, using the product)

III. EVALUATION OF ALTERNATIVES & PURCHASE DECISION

Consumers use information to evaluate & rank alternative brands in their choice
set, and form purchase intentions.

It depends on:

 individual consumer
 specific buying situation
 the Level of Involvement is the KEY
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 LEVEL OF INVOLVEMENT
HIGH INVOLVEMENT LOW INVOLVEMENT

Purchases that are likely to include Simple purchases in which consumers are
high expenditure or personal risk likely to make quick choices (a bottle of
(house, car,computer, etc.) water, a bar of chocolate, etc.)
 extensive evaluation  simple evaluation

 Personal Beliefs  Attitudes  Awareness  Trial Repeat  Purchase

 Normative Beliefs  Subjective  The behavior becomes habitual with little
Norms conscious thought or formation of
 Purchase Intentions attitudes preceding behavior.
 Purchase  Consumers are likely to look for a
satisfactory solution rather than the
Example of the buyer believes: best one.
 iPhone = more cost-saving
(which is very important to this
buyer)
 Both models are virtually
identical on other attributes (eg.
reliability, design & speed)

FOUR TYPES OF BUYER BEHAVIOR

High Involvement Low Involvement

Significant differences Variety – seeking buying
Complex buying behavior
between brands behavior
Dissonance – reducing
Few differences … Habitual buying behavior
buying behavior

IV. POST-PURCHASE DECISION

Consumers feel at least some post-purchase dissonance for every purchase.

Cognitive dissonance = post-purchase concerns

 Uncertainty about making the right decision

 The choice of one product = The rejection of the alternatives
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Effective Marketing aims to create customer satisfaction in both low- & high-
involvement situations.

Consumer’s expectations  Customer  Product’s perceived performance

 Positive experiences from the purchase of the products or services are

essential.

However, not all consumers follow the same buyer decision process as above.
Because the consumer behavior process can be influenced by a number of factors:

 External: Cultural, Social

 Internal: Personal, Psychological

C. CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Cultural factors  Social factors
o Groups & Social Networks
o Culture
o Family
o Subculture
o Roles & Status
o Social class
 Psychological Factors
 Personal Factors
o Motivation
o Age & Life cycle stage
o Perception
o Occupation
o Learning
o Economic situation
o Beliefs & Attitudes
o Lifestyle
o Personality & Self-concept
I. CULTURAL FACTORS

a. Culture
 Culture = Traditions, taboos, values & basic attitudes of the whole society in
which an individual lives
 Culture = The most basic cause of a person‟s wants& behavior
 Culture may vary greatly from country to country
 Marketers are always trying to spot cultural shifts to discover new products that
might be wanted.
o Greater concern for beauty & fitness
 Health and fitness service (such as spa, gym, herbal medicine, plastic
surgery, etc.)
o Greater concern for life experience
 Travel and tourism-related service

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 b. Subculture
Groups of people with shared values based on common life experiences & situations.

c. Social Class
Social classes are society‟s relatively permanent and ordered divisions whose
members share simi lar values,interests, and behaviors.

 Upper-class
 Middle-class
 Lower-class

In the US, it is measured by a combination of occupation, income, education, wealth,

and other variables.

In the UK, it is largely based on occupation.

II. SOCIAL FACTORS

a. GROUPS & SOCIAL NETWORKS

Membership groups = groups to which a person already belongs to

 family, friends, co-workers, neighbors, etc.

 religious, professional, trade unions, etc.

Reference groups = groups to which a person would like to belong to

 Opinion Leader/ Influential – Brand Ambassador

 Buzz Marketing (Word-of-mouth power + opinion leader)→Word-of-mouth
influence

Online social networks

b. FAMILY
Family = the most important consumer buying organization in society.

Family members have different roles & influence on the purchase of different
products & services

FAMILY MEMBERS’ DIFFERENT ROLES

 Initiators – who suggest purchasing a product or service

 Influencers – who try to affect the out come decision with their opinions
 Deciders – who have the final decision
 Buyers – who are responsible for the contract
 End users – who actually use or consume the item purchased

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Buying roles change based on evolving consumer lifestyles & products/services

 The buying roles of husband & wife are changing

 The strong influence of kids on family buying decision
 Understanding the roles (initiator/ influencer/ decider/ buyer/ user)* is very
important for targeting persuasive communications.

c. Role & Status

A role consists of activities people are expected to perform according to people
around them

Each role carries a status reflecting the general esteem given to it by society.

III. PERSONAL FACTORS

a. Age & Life-cycle Stage

People change the goods & services they buy over their lifetimes, for their needs,
incomes, expenses, lifestyles, etc. change over their lifetime

 Buying is shaped by the stage of the family life-cycle

 Appropriate products & marketing plans are developed for each stage

Young couples,
Single Young parents
no children

Middle-aged, Empty nester, Empty nester,

parents married, working married, Retired

Solitary, retired

b. Occupation
“A person normally buys goods that suit his occupation.”

Ex: A car might be considered as necessity for a businessman but luxury for a teacher

 Occupation affects the consumption of goods and services

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 c. Economic Situation
Economic situation = personal income, savings &interest rates

 Affects a person’s store & product choices

 Products need to be redesigned, repositioned, and repriced according to
economic situations

d. Lifestyle
Lifestyle is the way of living that an individual chooses according to his/her activities,
interests, and opinions (AIO dimensions).

▪ A = work, hobbies, shopping, sports, social events, etc.

▪ I = food, fashion, family, recreation, etc.

▪ O = about themselves, social issues, business, products, etc.

 It profiles a person‟s whole pattern of acting & interacting in the world.

Consumers don‟t just buy products, they buy values and lifestyles those products
represent.

e. Personality & Self-concept

Personality = unique psychological characteristics that distinguish a person or a
group

Brands also have personalities, and consumers are likely to choose brands that
match their own.

V. PSYCHOLOGICAL FACTOR

a. Motivation

Needs Motives Actions Goals Satisfaction

aroused to a sufficient level of intensity

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 b. Perception
Perception is the complex process by which people select, organize, & interpret
information to form a meaningful picture of the world.

Selective Attention Selective Distortion Selective Retention

 screen out most of the  interpret info in a way  remember good points made
information to which they that will support what about a brand they favor
are exposed they already believe  forget good points about
 ad needs to catch  ad has to present competing brands
attention message clearly  help reduce cognitive dissonance

c. Learning

Drive Stimulus Cue Response Reinforcement

Look for a
Want to have skincare Good
Sampling Take & use
a fairer skin product to experience
buy

The result of the learning process is the creation of product positioning.

 Marketers have to create a clear & favorable position in the mind of the
consumer.

d. Beliefs & Attitudes

Beliefs = consumer ‟ thoughts about a product/service

 Form Attitudes (favorable/unfavorable)

 B&A play an important part in the evaluation of alternatives in the buyer
decision process.
 It is essential for marketers to consider their:
 Product design (match product attributes to bel iefs & attitudes)
 Persuasive communication (reinforce existing positive B&A; correcting
misconceptions & establ ish new B&A)
 Pricing (match price with customers‟ bel iefs about what a „good‟ product would
cost)

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 D. BUYER DECISION PROCESS FOR NEW PRODUCTS

ADOPTION PROCESS
The mental process through which an individual passes from first learning about an
innovation to final adoption.

Awareness Interest Evaluation Trial Adoption

 This model suggests that the new-product marketer should think about how to
help consumers move through these stages.

ADOPTER CATEGORIZATION

Lagging
Late adopters
mainstream 16%
Early 34%
mainstream
Early 34%
adopters
13.5%
Innovators
2.5%

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 Chapter 3: ANALYZING THE MARKET ENVIRONMENT.
I. Micro-environment:
1. Marketing intermediaries: (p. 96)
● Help the company promote, sell and distribute its products to final buyers.
- Reseller (wholesalers and retailers): distribution channel firms that help the company find
customers or make sales to them; buy and resell merchandise.
- Physical distribution firms: help the company stock and move goods from their points of
origin to their destinations.
- Marketing services agencies: marketing research firms, advertising agencies, media firms,
marketing consulting firms 🡪 help the company target and promote its products to the right
markets.
- Financial intermediaries: banks, credit companies, insurance companies 🡪 help finance
transactions or insure against the risks associated with the buying and selling of goods.
II. Macro-environment:
1. Economic Environment: (P. 106)
- Industrial economies: rich markets for many different kinds of goods.
- Subsistence economies: consuming most of their agricultural and industrial output and offer
few market opportunities.
- Developing economies: offering outstanding marketing opportunities for the right kinds of
products.
2. Political: (P.111)
● Business legislation:
- Protect companies from each other.
- Protect customers from unfair business practices.
- Protect the interest of society against unrestrained business behaviour.
● Companies using cause-related marketing might find themselves walking a fine line
between increased sales and an improved image and facing charges of exploitation.

Chapter 7: CUSTOMER-DRIVEN MARKETING STRATEGY

● Value proposition: The full positioning of a brand—the full mix of benefits on which it is
positioned. (p. 244)