Marketing in a Changing World: Creating Customer Value and Satisfaction

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CHAPTER 1

• Marketing in a Changing World Creating Customer
  Value and Satisfaction
• Objective Introducing the basic concepts and
  philosophies of marketing.

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What is Marketing?

• Marketing is the management of creating and
  exchanging products and value in order to satisfy
  the needs and wants.
• Marketing satisfy customers at a profit.
• The goal of marketing is (1) to attract new
  customers by promising superior value (e.g.
  Ritz-Carlton memorable experiences, Always
  Coca Cola) and (2) to keep current customers by
  delivering satisfaction.

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Needs, Wants, and Demands

• Consumers have needs (physical, social,
  individual etc.) wants, and demands to be
  satisfied. Consumers view products as bundles of
  value (benefits) and choose products that give
  them the best value for their money. E.g. Honda
  Civic ? transportation, low price, fuel economy
  Mercedes ? comfort, luxury, status

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Products

• A product (persons, places, organizations,
  activities, ideas) is anything that can satisfy
  a need or want. Producers must see themselves as
  providing a solution to a need rather than just
  selling a product. Otherwise, when a new product
  satisfies the needs better or less expensively,
  they would not make money.
• Research is a must to understand the needs and
  wants of the customers to produce the right
  product. E.g. At Disney World, each manager
  spends a day in the park in a Mickey costume or
  work on the front line - taking tickets, selling
  pop-corn.

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Value, Satisfaction, and Quality

• How do customers choose among these many
  products? Consumers make choices based on
• Value is the difference between owning the
  product and the cost of obtaining the product, in
  an way profit to the customer. Customers do not
  judge product values objectively, on the contrary
  they act on perceived value. E.g. Is Hilton
  really the best hotel company?

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• Satisfaction is the difference between the
  products performance and buyers expectations.
  If the products performance falls short of
  expectations, the buyer is dissatisfied. If the
  performance matches or exceeds expectations, the
  buyer is satisfied. Smart companies aim to
  satisfy customers by promising only what they can
  give, then giving more than they promise. Benefit
  of satisfying customers Customer satisfaction
  create an emotional tie (customer loyalty) to a
  product. Highly satisfied customers make (1)
  repeat purchases, (2) are less price sensitive,
  (3) talk positively to their friends.

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• Quality simply quality can be defined as
  freedom from defects. Today, most companies
  define quality in terms of customer satisfaction.
  E.g. according to Motorola if the customer
  doesnt like the product, its a defect.
  Quality starts with customer needs and ends with
  customer satisfaction. The concept of total
  quality management is in a away total customer
  satisfaction. Improving the quality of a
  product that customers want increases customer
  satisfaction, therefore increases profit.

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Exchange, Transactions, and Relationships

• Marketing occurs when people decide to satisfy
  needs and wants through exchange.
• Exchange (transaction) is the act of getting an
  object (product, service, idea ) from someone
  by giving something in return.
• Marketing should create mutually beneficial
  relationships (good for both parties) to generate
  profitable transactions.
• Marketing is the art of attracting and keeping
  profitable customers.

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Markets

• A market is the set of actual and potential
  buyers of a product. These buyers share a
  particular need or want that can be satisfied
  through exchanges and relationships.
• The size of the market depends on the number of
  people (1) who have the need, (2) have resources
  (money) for the exchange and (3) want to spend
  these resources in the exchange.

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Marketing

• Marketing means managing markets to bring about
  exchanges and relationships for the purpose of
  creating value and satisfying needs and wants.
• Exchange process involve work. Sellers must
  identify customer needs, design right products,
  set right prices, promote and deliver the
  products in the right ways. These are the core
  marketing principles.

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Marketing Management

• Marketing management is the analysis, planning,
  implementation, and control of programs to create
  exchanges with target buyers to achieve
  organizational objectives. In a way, marketing
  management is demand - customer management.
• A companys demand comes from two groups new
  customers and repeat customers. Marketing
  management deals with finding ways (1) to attract
  new customers and create transactions with them
  and also (2) to retain current customers and
  build lasting customer relationships.

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Marketing Management Philosophies

• There are five concepts that organizations
  conduct their marketing activities the
  production, product, selling, marketing and
  societal marketing concepts.
• The Production Concept holds that consumers will
  favor products that are available and highly
  affordable. Here, the management focus on
  improving production and distribution. This
  oldest philosophy is useful in two types of

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• situation. (1) when the demand for a product
  exceeds the supply (2) when the products cost is
  too high and improved productivity is needed to
  bring it down. E.g. Henry Fords Model T, TI
  watches.
• The Product Concept holds that consumers favor
  products that offer the most quality,
  performance and innovative features. Here, the
  organization should focus on making continuous
  product improvement.
• The Selling Concept holds that consumers do not
  buy enough products if there are not large-scale
  selling and promotion effort. Most

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• companies use the selling concept when they have
  overcapacity. This concept focuses on creating
  sales transactions rather than on building
  long-term, profitable relationships with
  customers.
• The Marketing Concept holds that achieving
  organizational goals (making profit) depends on
  understanding the needs and wants of target
  markets and delivering the desired satisfactions
  more effectively and efficiently than competitors
  do. E.g. Disney, McDonalds, Bosch are
  customer-driven companies.

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• The Societal Marketing Concept holds that the
  organization should not only satisfy the needs
  and wants but also improve both customers and
  societys well-being. This newest philosophy
  focus on customer long-term welfare, since today
  we have environmental problems, resource
  shortages, population growth etc. E.g. Critics
  against fast-food restaurants that food has a lot
  of fat and salt harmful for health, a lot of
  packaging increasing waste and pollution. Here,
  the companies try to balance (1) company profits,
  (2) consumer wants, (3) societys interests.