Principles of Marketing

DEFINING MARKETING AND

THE MARKETING PROCESS
This lesson introduces us to the basic
concepts of marketing.

We start with the question: What is

marketing?
Next, we discuss the five steps in the
marketing process.
Finally, we discuss the major trends and
forces affecting marketing in this new age of
digital, mobile, and social media.
 At the end of this lesson, I
Definecan:
marketing and outline Explain the importance of Identify the key elements of a
the steps in the marketing understanding the customer value–driven
process. marketplace and customers marketing strategy and
and identify the five core discuss the marketing
marketplace concepts. management orientations that
1 2 guide marketing strategy. 3

Discuss customer Describe the major trends

relationship management and forces that are changing
and identify strategies for the marketing landscape in
creating value for customers this age of relationships.
and capturing value from
customers in return
4 5
 What is Marketing?
Marketing, more than any other business function, deals with customers.

Marketing is engaging customers and managing profitable customer relationships

NIKE
“Just Do AMAZON
It” “Find and discover anything they
might want to buy online.” FACEBOOK
“Connect and share with the people
in their lives.”
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.
“The aim of marketing is to make selling unnecessary.”
– Peter Drucker, a management guru.
 Marketing as the process by which companies engage
customers, build strong customer relationships, and create
customer value in order to capture value from customers in
return.
THE MARKETING
PROCESS
 Understanding the Marketplace
and Customer Needs
Five core customer and marketplace concepts:

Needs, Wants, and Demands;

Market Offerings (Products, Services, and Experiences);
Value and Satisfaction;
Exchanges and Relationships; and
Markets.
 Customer Needs, Wants, and
Demands

NEED WANT DEMAN

The form human Human wants
S
States of felt S
needs take as they are
shaped by culture and
DS
that are
backed by
deprivation.
individual personality.
buying power.
 Customer Needs, Wants, and
Demands
Companies go to great lengths to learn about and understand customer needs,
wants, and demands.

Example:
Target’s energetic CEO,
Brian Cornell, makes
regular unannounced visits
to Target stores,
accompanied by local
moms and loyal Target
shoppers.
 Market Offerings—Products,
Services, and Experiences
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—Products,
Services, and Experiences
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.
 Market Offerings—Products,
Services, and Experiences
More broadly, market offerings also include other entities, such as persons,
places, organizations, information, and ideas.
 Market Offerings—Products,
Services, and Experiences
MARKETING MYOPIA
The mistake of paying more attention to the specific products a company offers
than to the benefits and experiences produced by these products.
 Market Offerings—Products,
Services, and Experiences
BRAND EXPERIENCES for consumers.
Example: Walt Disney World Resort
 Customer Value and Satisfaction

Customers form expectations about the value and satisfaction that various market
offerings will deliver and buy accordingly.
 Customer Value and Satisfaction
Marketers must be careful to set the right level of expectations.
Customer value and customer satisfaction are key building blocks for developing
and managing customer relationships.
 Exchanges and Relationship

Marketing occurs when people decide to satisfy their needs and wants through
exchange relationships.

Exchange - The act of obtaining a desired object from someone by offering

something in return.

A political candidate, for instance, wants votes; a church wants membership and
participation; an orchestra wants an audience; and a social action group wants
idea acceptance.
 Exchanges and Relationship

Marketing consists of actions taken to create,

maintain, and grow desirable exchange relationships
with target audiences involving a product, service,
idea, or other object.
 Exchanges and Relationship

Market
The set of all actual and potential buyers of a product
or service.
Designing a Customer Value–Driven Marketing
Strategy and Plan
Customer Value–Driven Marketing Strategy

Once it fully understands consumers and the marketplace,

marketing management can design a customer value–driven
marketing strategy. We define marketing management as the art
and science of choosing target markets and building profitable
relationships with them.
Designing a Customer Value–Driven Marketing
Strategy and Plan
Customer Value–Driven Marketing Strategy

What customers will we serve (what’s our target market)?

How can we serve these customers best (what’s our value
proposition)?
Customer Value–Driven Marketing Strategy
Selecting Customers to Serve

The company must first decide whom it will serve.

• Market Segmentation
• Target Marketing
Customer Value–Driven Marketing Strategy
Selecting Customers to Serve

Some people think of marketing management as finding as

many customers as possible and increasing demand. But
marketing managers know that they cannot serve all
customers in every way.
Customer Value–Driven Marketing Strategy
Choosing a Value Proposition

A brand’s value proposition is the set of benefits or values it

promises to deliver to consumers to satisfy their needs.
“Why should I buy your brand rather than a
competitor’s?”
Managing Customer Relationships and Capturing
Customer Value
Engaging Customers and Managing Customer Relationships
The first three steps in the marketing process—understanding the marketplace
and customer needs, designing a customer value–driven marketing strategy,
and constructing a marketing program—all lead up to the fourth and most
important step: engaging customers and managing profitable customer
relationships.
Managing Customer Relationships and Capturing
Customer Value
Engaging Customers and Managing Customer Relationships
CUSTOMER RELATIONSHIP MANAGEMENT
The overall process of building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction.
Managing Customer Relationships and Capturing
Customer Value
Engaging Customers and Managing Customer Relationships
CUSTOMER-PERCEIVED VALUE
The customer’s evaluation of the difference between all the benefits and all the costs
of a marketing offer relative to those of competing offers.
Managing Customer Relationships and Capturing
Customer Value
Engaging Customers and Managing Customer Relationships
CUSTOMER SATISFACTION
The extent to which a product’s perceived performance matches a buyer’s
expectations.
Managing Customer Relationships and Capturing
Customer Value
Engaging Customers and Managing Customer Relationships
CUSTOMER-ENGAGEMENT MARKETING
Making the brand a meaningful part of consumers’ conversations and lives by
fostering direct and continuous customer involvement in shaping brand
conversations, experiences, and community.

Example: Facebook, Twitter, Instagram, Youtube

Managing Customer Relationships and Capturing
Customer Value
Engaging Customers and Managing Customer Relationships
CONSUMER-GENERATED MARKETING
Brand exchanges created by consumers themselves—both invited and uninvited—
by which consumers are playing an increasing role in shaping their own brand
experiences and those of other consumers.
Managing Customer Relationships and Capturing
Customer Value
Engaging Customers and Managing Customer Relationships
PARTNER RELATIONSHIP MANAGEMENT
Working closely with partners in other company departments and outside the
company to jointly bring greater value to customers.
The Changing Marketing Landscape

Every day, dramatic changes are occurring in the marketplace.

Richard Love of HP observed, “The pace of change is so rapid that the ability to
change has now become a competitive advantage.”
Yogi Berra, the legendary New York Yankees catcher and manager, summed it up
more simply when he said, “The future ain’t what it used to be.”
As the marketplace changes, so must those who serve it.
The Changing Marketing Landscape
The Digital Age: Online, Mobile, and Social Media
Marketing
DIGITAL AND SOCIAL MEDIA MARKETING

Using digital marketing tools such as websites, social media, mobile apps and ads,
online video, email, and blogs to engage consumers anywhere, at any time, via their
digital devices.
The Changing Marketing Landscape
The Digital Age: Online, Mobile, and Social Media
Marketing
Social Media Marketing
Social media provide exciting opportunities to extend customer engagement and get
people talking about a brand.
Facebook has more than 1.59 billion active monthly members.
Instagram has more than 400 million active monthly users.
Twitter has more than 315 million monthly users.
Google+ racks up 300 million active monthly visitors
Pinterest draws in more than 100 million users.
The Changing Marketing Landscape
The Digital Age: Online, Mobile, and Social Media
Marketing
Mobile Marketing

Mobile marketing is perhaps the fastest-growing digital marketing platform.

Smartphones are ever present, always on, finely targeted, and highly personal. This
makes them ideal for engaging customers anytime, anywhere as they move through
the buying process.

Example: Starbucks
 Pulling it all together, as discussed throughout the lesson, the major new
developments in marketing can be summed up in a single concept: engaging
customers and creating and capturing customer value.

Today, marketers of all kinds are taking advantage of new opportunities for building
value-laden relationships with their customers, their marketing partners, and the
world around them.