Module 1: Marketing Introduction

Course Objectives

1. Define marketing and outline the steps in the marketing process.

2. Explain the importance of understanding customers and the marketplace and identify
the five core marketplace concepts.

3. Identify the key elements of a customer-driven marketing strategy and discuss the
marketing management orientations that guide marketing strategy.

4. Discuss customer relationship management and identify strategies for creating value
for customers and capturing value from customers in return.

5. Describe the major trends and forces that are changing the marketing landscape in
this age of relationships.

Marketing

The process by which companies create value for customers and build strong customer
relationships in order to capture value from customers in return. Today, marketing must be
understood not in the old sense of making a sale—“telling and selling”—but in the new sense
of satisfying customer needs. If the marketer understands consumer needs; develops
products that provide superior customer value; and prices, distributes, and promotes them
effectively, these products will sell easily.

In fact, according to management guru Peter Drucker, “The aim of marketing is to make
selling unnecessary.” Selling and advertising are only part of a larger “marketing mix”—a set
of marketing tools that work together to satisfy customer needs and build customer
relationships.
(Kotler and Armstrong, 2012)

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.

The Marketing Process

The Marketing Process

PPT Presentation Synchronous – Recorded for the students’ leisure to view again.

..\..\AY 2019 - 2020\2nd Semester\Principles of Marketing\Marketing Process.pptx

Understanding the Marketplace

As a first step, marketers need to understand customer needs and wants and the
marketplace in which they operate. 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; and (5) markets

Needs, Wants, and Demands

Human needs are states of felt deprivation. They include basic physical needs for food,
clothing, warmth, and safety; social needs for belonging and affection; and individual 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. An American needs food but wants a Big Mac, french fries, and a soft drink. A
person in Papua New Guinea needs food but wants taro, rice, yams, and pork. 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 with benefits that add up to the most value and satisfaction.

Consumers’ needs and wants are fulfilled through Market Offerings—some combination of
products, services, information, or experiences offered to a market to satisfy a need or a want.
Market offerings are not limited to physical products. They also include services—activities
or benefits offered for sale that are essentially intangible and do not result in the ownership
of anything. Examples include banking, airline, hotel, tax preparation, and home repair
services.

Products:

1. Goods – Physical products which are tangible

2. Services – Intangible products which are experienced
3. Ideas – Intangible yet are sellable or could be used to finish a product

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 are so taken with their products that they focus only on existing
wants and lose sight of underlying customer needs. They forget that a product is only a tool
to solve a consumer problem. A manufacturer of quarter-inch drill bits may think that the
customer needs a drill bit. But what the customer really needs is a quarter-inch hole. These
sellers will have trouble if a new product comes along that serves the customer’s need better
or less expensively. The customer will have the same need but will want the new product.

Customer Value and Satisfaction

Consumers usually face a broad array of products and services that might satisfy a given
need. How do they choose among these many market offerings? 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. Marketers must
be careful to set the right level of expectations. If they 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 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. Apolitical candidate, for instance, wants votes, a church wants membership,
an orchestra wants an audience, and a social action group wants idea acceptance.

Marketing consists of actions taken to build and maintain desirable exchange

relationships with target audiences involving a product, service, idea, or other object.
Beyond simply attracting new customers and creating transactions, companies want to retain
customers and grow their businesses. Marketers want to build strong relationships by
consistently delivering superior customer value.
Markets

The concepts of exchange and relationships lead to the concept of a market. 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.

However, creating these relationships takes work. Sellers must search for 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.

The figure above shows the main elements in a marketing system. Marketing involves serving
a market of final consumers in the face of competitors. The company and competitors
research the market and interact with consumers to understand their needs. Then they
create and send their market offerings and messages to consumers, either directly or through
marketing intermediaries. Each party in the system is affected by major environmental forces
(demographic, economic, natural, technological, political, and social/cultural).

Each party in the system adds value for the next level. The arrows represent relationships
that must be developed and managed. Thus, a company’s success at building profitable
relationships depends not only on its own actions but also on how well the entire system
serves the needs of final consumers.

Marketing management

It is the art and science of choosing target markets and building profitable relationships with
them.
Customer Relationship Management

Customer relationship management is perhaps the most important concept of modern

marketing. Some marketers define it narrowly as a customer data management activity (a
practice called CRM). By this definition, it involves managing detailed information about
individual customers and carefully managing customer “touchpoints” to maximize customer
loyalty.

In this broader sense, 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.

The key to building lasting customer relationships is to create superior customer value and
satisfaction. Satisfied customers are more likely to be loyal customers and give the company
a larger share of their business.

Customer Value. Attracting and retaining customers can be a difficult task. Customers often
face a bewildering array of products and services from which to choose. A customer buys
from the firm that offers the highest customer-perceived value—the customer’s evaluation
of the difference between all the benefits and all the costs of a market offering relative to
those of competing offers. Importantly, customers often do not judge values and costs
“accurately” or “objectively.” They act on perceived value.

Customer Satisfaction. 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. Outstanding marketing companies go out of their way to keep important
customers satisfied.

Most studies show that higher levels of customer satisfaction lead to greater customer loyalty,
which in turn results in better company performance. Smart companies aim to delight
customers by promising only what they can deliver and then delivering more than they
promise. Delighted customers not only make repeat purchases but also become willing
marketing partners and “customer evangelists” who spread the word about their good
experiences to others

Evolution Process of Marketing (Kotler, 2011)

Marketing 1.0 is noted for reaching clients’ minds … 1.0 companies do a good job, offer good
quality products to people and generate earnings.

In Marketing 2.0, some companies decide to learn more about to who they are selling their
products, set out to fabricate and sell quality goods, to understand their clients through the
study of large databases and to offer them a differential service. (digital analytical tools)

Marketing 3.0doesn’t only aim to sell products in the best way possible but to also to make
the world a better place. Marketing 3.0 is providing: product, service and value.

The Changing Nature of Customer Relationships

Two-Way Customer Relationships. New technologies have profoundly changed the ways in
which people relate to one another. New tools for relating include everything from e-mail,
Web sites, blogs, cell phones, and video sharing to online communities and social networks,
such as Facebook, YouTube, and Twitter.

This changing communications environment also affects how companies and brands relate
to customers. The new communications approaches let marketers create deeper customer
involvement and a sense of community surrounding a brand—to make the brand a
meaningful part of consumers’ conversations and lives.
The marketing world is now embracing not only customer relationship management, but also
Customer-Managed Relationships. Marketing relationships in which customers,
empowered by today’s new digital technologies, interact with companies and with each other
to shape their relationships with brands.

Consumer-Generated Marketing. A growing part of the new customer dialogue is consumer-

generated marketing, by which consumers themselves are playing a bigger role in shaping
their own brand experiences and those of others. This might happen through uninvited
consumer-to-consumer exchanges in blogs, video-sharing sites, and other digital forums. But
increasingly, companies are inviting consumers to play a more active role in shaping products
and brand messages.

Capturing Value from Customers

Creating Customer Loyalty and Retention Good customer relationship management creates
customer delight. In turn, delighted customers remain loyal and talk favorably to others
about the company and its products. Studies show big differences in the loyalty of customers
who are less satisfied, somewhat satisfied, and completely satisfied. Even a slight drop from
complete satisfaction can create an enormous drop in loyalty. Thus, the aim of customer
relationship management is to create not only customer satisfaction but also customer
delight.
Losing a customer means losing more than a single sale. It means losing the entire stream of
purchases that the customer would make over a lifetime of patronage.

Customer lifetime value. The value of the entire stream of purchases that the customer
would make over a lifetime of patronage.
Building Customer Equity

The ultimate aim of customer relationship management is to produce high customer equity.
Customer equity is the total combined customer lifetime values of all of the company’s
current and potential customers. As such, it’s a measure of the future value of the company’s
customer base. Clearly, the more loyal the firm’s profitable customers, the higher its
customer equity. Customer equity may be a better measure of a firm’s performance than
current sales or market share. Whereas sales and market share reflect the past, customer
equity suggests the future.

Case Study Format

Title: ___________________________________

I. Point of View:
This is the standpoint of the proponent of the case. The standpoint will determine
what kind of action the proponent will undertake in doing the following:
1. Identifying the problem in the case.
2. Presenting the problem
3. Identifying the key facts of the case that confirms the problem as one problem if not
the main problem of the case.
4. Proposing the courses of action
5. In choosing and recommending the proponent’s best course of action
6. In preparing an action plan for the implementation of the chosen course of action.
II. Statement of the Problem
This is the main problem of the case in the point of view of the proponent. This
should be presented in a complete sentence and should not be elaborated in this part
of the case study.

III. Facts of the Case

This is where the proponent points out the statements in the case which proves
and supports his stated problem as the key problem of the case. These facts will also
be used in developing the courses of action and in choosing the best course of action
among which the proponent will then create a plan in the implementation of the chosen
as best course of action.

IV. Alternative Courses of Action

The proponent offers three different courses of action. He will then think of the
advantages and disadvantages of the course of action. He can include the opportunities
and threats to be faced in the future if that course of action is done. The proponent
will have to identify at least three advantages and also three disadvantages for every
course of action presented.

A. 1ST OPTION
ADVANTAGES DISADVANTAGES
  .
 
 

B. 2ND OPTION
ADVANTAGES DISADVANTAGES
 
 
 

C. 3RD OPTION
ADVANTAGES DISADVANTAGES
 
 
 

V. Recommendation
The proponent chooses his choice as the best plan of action among the
alternative courses of action he presented in the Alternative Courses of Action section.
The recommendation should be in paragraph form. In it, the proponent identifies his
chosen best course of action and also the reasons why he chose it. He can cite its
advantages over the other courses of action.
VI. Plan of Action (Action Plan)
An action plan is a document that lists what steps must be taken in order to
achieve a specific goal. The purpose of an action plan is to clarify what resources are
required to reach the goal, formulate a timeline for when specific tasks need to be
completed and determine what resources are required.
Activity 1: Stew Leonard’s Case

..\..\AY 2019 - 2020\2nd Semester\Principles of Marketing\StewLeonardsCaseStudy-

pkc-060712-01.pdf

..\..\AY 2019 - 2020\2nd Semester\Principles of Marketing\Stew Leonard's Is Part

Grocery Store, Part Amusement Park.mp4

Activity 2: Tom’s Shoes

..\..\AY 2019 - 2020\2nd Semester\Principles of Marketing\toms case.pdf

..\..\AY 2019 - 2020\2nd Semester\Principles of Marketing\TOMS- The Business of

Footwear and Philanthropy.mp4

..\..\AY 2019 - 2020\2nd Semester\Principles of Marketing\TOMS - Gives new shoes

to children in need. One for One..mp4