Chapter 1

Introduction to Marketing
Building customers
Definition relationship

philosophies Marketing
challenges

Understanding
the market place TUTORIAL 1

Marketing plan
Marketing Defined
“Marketing is a social and managerial process by
which individuals and groups obtain what they
need and want through creating and exchanging
value with others”

Keywords:
-creating & exchanging value with others.
-not only telling and selling but the sense of
satisfying customer needs.
American Marketing Association
Definition

Marketing is the process by which

companies create value for customers
& build strong customer relationships
in order to capture value from
customers in retun
Marketing is about managing profitable
customer relationships:

Attracting new customers

Retaining and growing current customers
-the customers still keep on buying/using your
product/services.
Marketing Management

Marketing management is the art and

science of choosing target markets and
building profitable relationships with them.

Keywords:
• What customers will we serve?
-based on segmentation and target marketing
• How can we serve these customers best?
-how you want to differentiate or position
your product in the marketplace.
Marketing Philosophies

Production Concepts Selling Concepts

Product Concepts Marketing Concepts

Societal Market
Differences
Concepts
Marketing Philosophies

Production concept
Consumer: will favor products that available and highly affordable.
Management: focus on improving production/distribution efficiency.
This concept will occur if product exceeds the supply: management
should look for ways to increase production. If the product’s cost is
to high and improved productivity is needed to bring it down.
Eg: Lenovo;highly competitive, price sensitive Chinese PC(low
labor cost)
Product concept
Consumer: will favor products that offer the most quality,
performance and innovative features.
Marketing strategies: making continuous product improvements.
Ex: shampoo, mousetraps, cameras

Selling concept
Consumer: will not buy enough of firm’s product unless
undertakes large-scale selling or more promotion effort
Practiced with unsought goods-insurance, blood donation-buyers
do not normally think of buying/using,
Marketing strategies: if faces overcapacity, aim to sell what they
make rather than the market wants.
Marketing concept
Company goal: on knowing the needs/wants of target
markets and delivering the desired satisfaction better than
competitor’s do.

The Societal-Marketing concept

See the conflicts between consumer short run wants and
consumer long run welfare.
Ex: McDonalds-the company should balance the 3
consideration in marketing strategies: company profit,
consumer wants and society interests.
Stress the honesty, integrity and putting the people
(consumer first) before gain the profit
3 consideration: Society (human welfare)
Consumer (want satisfaction)
Company (profit)
Differences between sales and market orientation

Starting Focus Means Ends

Point
Selling Profits
Existing
Factory and through
Products Promoting Volume

The
The Selling
Selling Concept
Concept

Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction

The
The Marketing
Marketing Concept
Concept
Understanding the Marketplace

Need
State of felt deprivation
Not created by marketer-it is basic part of human life
Example: Need food, cloth, safety
Wants
The form of needs as shaped by culture and the individual
Example: Want a Big Mac
Demands
Wants which are backed by buying power
Given their wants & resources, people demand product with
benefits that add up to the most value and satisfaction
Marketing offers
Combination of products, services, information or experiences that
satisfy a need or want
Keywords: Offer may include services, activities, people, places,
information or ideas
Value
Customers form expectations regarding value
Marketers must deliver value to consumers
Satisfaction
A satisfied customer will buy again and tell others about their
good experience, dissatisfied customer will tell about she/he
experiences to 11 person.
dissatisfied, satisfied and delighted customer.
Exchange
The act of obtaining a desired object from someone by offering
something in return
One exchange is not the goal, relationships with several exchanges
are the goal
Relationships are built through delivering value and satisfaction
Keywords: relationships with exchanges are the goal and how you
delivering value and satisfaction.
Market
Set of actual and potential buyers of a product
Marketers seek buyers that are profitable
The Marketing Plan

Transforms the marketing strategy into action

The Marketing Mix

8P’s of marketing mix
Set of controllable tactical marketing tools
Marketing tools that the firm uses to pursue its marketing objectives in
the target market
Product
-goods and services (combination) the company offers to the target
markets
-product variation, quality, design, features, brand name
Price
-the amount of money customers have to pay to obtain the product
-list price, discount, allowances

Place
-company activities that make the product available to target consumers
-channels, locations, coverage

Promotion
-activities that communicate the merits of the product and persuade
target customers to buy it
People
-consumers must be educated in order for their expectations of the
product/service to be managed and employees must be motivated and
well trained in order to ensure that high standards of service are
maintained

Process (Proximity)
-as the success of the service is dependent on the total customer
experience a well designed

Physical Aspect
-appearance of the delivery location and the elements provided to
make the service more tangible can enhance the experience. Great
atmosphere, constant reminders of the firm’s corporate identity help to
build customer awareness and loyalty
Protection
-patent (patent holder legal monopoly status), copyright, trademark-
work, symbol or device)
Building Customer Relationships
CRM – Customer Relationship Management: the overall process of
building and maintaining profitable customer relationships by delivering
superior customer value and satisfaction.
Keywords: It deals with all aspects of acquiring, keeping and growing
customers.
Value and Satisfaction
Perceived Value
The customer’s evaluation of the difference between benefits and
costs. (You get what you pay)
Customers often do not judge values and costs accurately or
objectively.
Customer Satisfaction
Product’s perceived performance relative to customer’s expectations.
Capturing Value from Customers
Customer Loyalty and Retention
Customer delight leads to emotional relationships and loyalty
Customer Lifetime Value (CLV) shows true worth of a customer
Keywords: you will see your loss if the customer switch to your
competitor. The loss is equivalent with the CLV. Therefore, try to
retain your customer to capture positive CLV.
Share of Customer
Share of customer’s purchase in a product category.
Achieved through offering greater variety, cross-sell and up-sell
strategies
Keywords: if you buy one product, you can earn bonus point,
whereas you can redeem the points to other products.
Therefore, the customer will buy the product to earn more bonus
point.
Or otherwise, beside selling books, you also can sell accessories,
gifts, toys, etc. ex: Amazon.
Customer Equity
The combined customer lifetime values of all current and potential
customers.
Measures a firm’s performance, but in a manner that looks to the
future.
Choosing the “best” customers is key
Keywords: not just acquire the customer but keeping and growing
them as well.
Customer equity can be measure of a firm’s performance from
current sales/market share. High customer that give profit, high
customer equity.
Marketing Challenges
Digital age
Growth of the Internet
Advances in telecommunications, information, transportation
Customer research and tracking
Product development
Distribution
New advertising tools-Internet, E-Commerce
24/7 marketing through the Internet
Globalization
Geographical and cultural distances have shrunk-borderless
Greater market coverage
More options for purchasing and manufacturing
Increased competition from foreign competitors-pros & cons for SME
Ethics and social responsibility
Marketers need to take great responsibility for the impact of their
actions
Keywords: seek profit by serving the best long run interest of their
customers and communities
Not-for-profit marketing
Many organizations are realizing the importance of strategic
marketing. Example: Performing arts (museum, orchestras),
Government agencies, Colleges, Hospitals, Churches
Marketing relationships
Profits through managing long-term customer equity
Improve customer knowledge-for your latest product
Target profitable customers
Keep profitable customers
Keywords: retain and maintain the customer relationship