Chapter 1: Marketing: Creating Customer Value and Engagement Flashcards
Simple marketing definition
engaging customers and managing profitable customer relationships
The twofold goal of marketing
Goals of marketing
to attract new customers by promising superior value and to keep and grow current customers by delivering value and satisfaction.
satisfaction and value
Marketing definition
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
1) understand the marketplace and customer needs and wants
2) Design a customer value driven marketing strategy
3) Construct an integrated marketing program that delivers superior value
4) Engage customers, build profitable relationships, and create customer delight
5) Capture value from customers to create profits and customer equity
The marketing process explained
In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value
The first four steps focus on
Understanding the Marketplace and Customer Needs
Five core customer and marketplace concepts:
Broken into 5 core customer and marketplace
(1) needs, wants, and demands;
(2) market offerings (products, services, and experiences);
(3) customer value and satisfaction;
(4) exchanges and relationships;
(5) markets.
Needs
States of felt deprivation
Include: Basic physical needs for food, clothing, warmth and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression.
Markers did not create these, it is human makeup
Wants
the form human needs take as they are shaped by culture and individual personality
Wants are shaped by one’s society and are described in terms of objects that will satisfy those needs
Demands
Human wants that are backed by buying power
Market Offerings
Products, services, information, and experiences
Some combination of products, services, information, or experiences offered to a market to satisfy a need or a want
not limited to physical products
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, retailing, and home-repair services.
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
Exchange
the act of obtaining a desired object from someone by offering something in return.
Market
the set of actual and potential buyers of a product or service.
Both ____ and ____ carry out marketing
Buyers
Sellers
marketing management
the art and science of choosing target markets and building profitable relationships with them.
The marketing manager’s aim
is to engage, keep, and grow target customers by creating, delivering, and communicating superior customer value.
the marketing manager must answer two important questions:
two questions
What customers will we serve (what’s our target market)?
and
How can we serve these customers best (what’s our value proposition)
A brand’s value proposition
the set of benefits or values it promises to deliver to consumers to satisfy their needs.
answer the customer’s question: “Why should I buy your brand rather than a competitor’s?”
five alternative concepts under which organizations design and carry out their marketing strategies:
Marketing Management Orientations
the production, product, selling, marketing, and societal marketing concepts.
The Production Concept
The idea that consumers will favour products that are available and highly affordable.
Therefore, management should focus on improving production and distribution efficiency.
The Product Concept
consumers will favour products that offer the most in quality, performance, and innovative features.
Under this concept, marketing strategy focuses on making continuous product improvements.
Can lead to marketing myopia``
The 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.
Often seen in normally non bought things such as life insurance or blood donations
The Marketing Concept
A philosophy in which achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.
The job is not to find the right customers for your product but to find the right products for your customers.
The selling concept figure 1.3
Factory - Existing products - Selling and promoting - Profit through sales volume
The marketing concept figure 1.3
Market - customer needs - integrated marketing - profits through customer satisfaction
The Societal Marketing Concept
The idea that a company’s marketing decisions should consider consumer’s wants, the company’s requirements, consumer’s long-run interests, and society’s long-run interests
companies should balance three considerations in setting their marketing strategies:
company profits, consumer wants, and society’s interests
The major marketing mix tools are classified into four broad groups, called the four Ps of marketing:
FOUR P’S of Marketing
1) product,
2) price,
3) place,
4) promotion
_________ management is perhaps the most important concept of modern marketing
Customer relationship
customer relationship management
the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
It deals with all aspects of acquiring, engaging, and growing customers.
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
customers often do not judge values and costs “accurately” or “objectively.”
They act on ________
perceived value.
Customer satisfaction
The extent to which a product’s perceived performance matches 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.
customer-engagement marketing
Making the brand a meaningful part of consumer’s conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community
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 others.
Partner Relationship Management
working with others inside and outside the company to jointly engage and bring more value to customers.
Customer lifetime value
The value of the entire stream of purchases a customer makes over a lifetime of patronage
Share of customer
The potion of the customer’s purchasing that a company gets in its product categories
examples: Supermarkets and restaurants want to get more “share of stomach.” Car companies want to increase “share of garage,” and airlines want greater “share of travel.”
Customer equity
the total combined customer lifetime values of all of the company’s current and potential customers
May be better measure of a firm than market share or profits
________ 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 _____
Customer equity
future
Customer relationship groups
Strangers, Butterflies, Barnacles, True Friends
Strangers
show low potential profitability and little projected loyalty
Don’t invest anything in them; make money on every transaction.
Butterflies
potentially profitable but not loyal.
There is a good fit between the company’s offerings and their needs.
However, like real butterflies, we can enjoy them for only a short while and then they’re gone
Example: stock market investors who trade shares often and in large amounts but who enjoy hunting out the best deals without building a regular relationship with any single brokerage company
True friends
both profitable and loyal
- strong fit between their needs and the company’s offerings
- Best of the best
Barnacles
Highly loyal but not very profitable
There is a limited fit between their needs and the company’s offerings
Example: bank customers who bank regularly but do not generate enough returns to cover the costs of maintaining their accounts
Major trends and forces that are changing the marketing landscape and challenging marketing strategy
1) the digital age,
2) the growth of not-for-profit marketing,
3) rapid globalization,
4) the call for sustainable marketing practices.
The Digital Age: Online, Mobile, and Social Media Marketing
Engaging consumers via their digital devices using digital marketing tools
Digital and social media marketing
involves using digital marketing tools such as websites, social media, mobile ads and apps, online video, email, blogs, and other digital platforms to engage consumers anywhere, anytime via their computers, smartphones, tablets, internet-ready TVs, and other digital devices
Mobile Marketing
perhaps the fastest-growing digital marketing platform
Using mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience
Big Data
Mass amounts of information that can be used to benefit a brand and customers.
use such big data to gain deep customer insights, personalize marketing offers, and improve customer engagements and service.
artificial intelligence (AI)
AI involves machines that think and learn in a way that looks and feels human but with a lot more analytical capacity
The Growth of Not-for-Profit Marketing
many not-for-profit organizations, such as universities, hospitals, museums, zoos, symphony orchestras, foundations, and even churches.
Sound marketing can help them attract membership, funds, and support.
market segmentation
dividing the market into segments of customers
target marketing
selecting which segments it will cultivate
Target Market
- Selecting customers to serve
- Market segmentation refers to dividing the markets into segments of customers.
- Target marketing refers to selecting which segments to go after.
- The company wants to select only customers that it can serve well and profitably!
Marketing Management Orientations
- Production concept
- Product concept
- Selling concept
- Marketing concept
- Societal marketing concept
Managing Customer Relationship sand Capturing Customer Value
Engaging customers and managing customer relationships–Customer relationship management–Customer-engagement marketing–Consumer-generated marketing–Partner relationship management
Capturing Value from Customers
–Creating customer loyalty and retention
–Growing share of customer
–Building customer equity
Customer-driven companies
Customer driven
research customers deeply to learn about their desires, gather new product ideas, and test product improvements.
Frequency marketing program
Asher Airlines instituted a marketing program whose intent is to create a relationship with customers with seat upgrades and free miles for their continued patronage. What customer relationship tool is Asher Airlines using?
