4. Understanding the Marketplace and Customer Needs Customer needs, wants, and demands Market offerings Value and satisfaction Exchanges and relationships Markets Core Concepts
5. Understanding the Marketplaceand Customer Needs Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs
7. Designing a Customer-Driven Marketing Strategy Market segmentation refers to dividing the markets into segments of customers Target marketing refers to which segments to go after Selecting Customers to Serve
8. Designing a Customer-Driven Marketing Strategy Choosing a Value Proposition The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs
10. The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion, and place. Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers. Preparing an Integrated Marketing Plan and Program
12. Building Customer Relationships Supply chain is a channel that stretches from raw materials to components to final products to final buyers Supply management Strategic partners Strategic alliances Partner Relationship Management
13. Capturing Value from Customers Customer lifetime value is the value of the entire stream of purchases that the customer wouldmake over a lifetime of patronage Creating Customer Loyalty and Retention
14. Capturing Value from Customers Share of customer is the portion of the customer’s purchasing that a company gets in its product categories Growing Share of Customer
15. Capturing Value from Customers Customer equity is the total combined customer lifetime values of all of the company’s customers
18. Companywide Strategic Planning Analyzing the Current Business Portfolio Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses Company division Product line within a division Single product or brand
21. Companywide Strategic Planning Developing Strategies for Growth and Downsizing Product/market expansion grid is a tool for identifying company growth opportunities through market penetration, market development, product development, or diversification
23. Planning Marketing Partnering to Build Customer Relationships Value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products
24. Planning Marketing Partnering to Build Customer Relationships Value delivery network is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system
26. Marketing Strategy and the Marketing Mix Customer-Centered Marketing Strategy Market positioning is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumer
28. Measuring and Managing Return on Marketing Investment Return on Marketing Investment (Marketing ROI) Return on marketing investment (Marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment. Marketing ROI provides a measurement of the profits generated by investments in marketing activities.
31. The Company’s Microenvironment Publics Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives Financial publics Media publics Government publics Citizen-action publics Local publics General public Internal publics
33. The Company’s Macroenvironment Generational marketing is important in segmenting people by lifestyle of life state instead of age Demographic Environment
34. The Company’s Macroenvironment More people are: Divorcing or separating Choosing not to marry Choosing to marry later Marrying without intending to have children Increased number of working women Stay-at-home dads Demographic Environment
35. The Company’s Macroenvironment CValuemarketing involves ways to offer financially cautious buyers greater value—the right combination of quality and service at a fair price Economic Environment
36. The Company’s Macroenvironment Economic Environment Changes in Consumer Spending Patterns Ernst Engel—Engel’s Law As income rises: The percentage spent on food declines The percentage spent on housing remains constant The percentage spent on savings increases
37. The Company’s Macroenvironment Technological Environment Most dramatic force in changing the marketplace Creates new products and opportunities Safety of new product always a concern
38. The Company’s Macroenvironment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society Political Environment
39. The Company’s Macroenvironment Cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors Cultural Environment
40. The Company’s Macroenvironment Cultural Environment Persistence of Cultural Values Core beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, churches, businesses, and government Secondary beliefs and values are more open to change and include people’s views of themselves, others, organization, society, nature, and the universe
48. Developing Marketing Information Marketing Research Research Instruments—Questionnaires Closed-end questions include all possible answers, and subjects make choices among them Provide answers that are easier to interpret and tabulate Open-end questions allow respondents to answer in their own words Useful in exploratory research
53. Characteristics Affecting Consumer Behavior Occupation affects the goods and services bought by consumers Economic situation includes trends in: Personal Factors
55. Characteristics Affecting Consumer Behavior Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes Selective attention Selective distortion Selective retention Psychological Factors
56. Characteristics Affecting Consumer Behavior Psychological Factors Selective attention is the tendency for people to screen out most of the information to which they are exposed Selective distortion is the tendency for people to interpret information in a way that will support what they already believe Selective retention is the tendency to remember good points made about a brand they favor and forget good points about competing brands
60. The Buyer Decision Process Information Search Sources of Information Personal sources—family and friends Commercial sources—advertising, Internet Public sources—mass media, consumer organizations Experiential sources—handling, examining, using the product
61. The Buyer Decision Process How the consumer processes information to arrive at brand choices Evaluation of Alternatives
62. The Buyer Decision Process The act by the consumer to buy the most preferred brand The purchase decision can be affected by: Attitudes of others Unexpected situational factors Purchase Decision
63. The Buyer Decision Process The satisfaction or dissatisfaction that the consumer feels about the purchase Relationship between: Consumer’s expectations Product’s perceived performance The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction Cognitive dissonance is the discomfort caused by a post-purchase conflict Post-Purchase Decision
64. The Buyer Decision Process Customer satisfaction is a key to building profitable relationships with consumers—to keeping and growing consumers and reaping their customer lifetime value Post-Purchase Decision
65. The Buyer Decision Process for New Products Adoption process is the mental process an individual goes through from first learning about an innovation to final regular use. Stages in the process include:
68. Business Markets Supplier development is the systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell Types of Decisions and the Decision Process
69. Business Buyer Behavior Straight rebuy is a routine purchase decision such as reorder without any modification Modified rebuy is a purchase decision that requires some research where the buyer wants to modify the product specification, price, terms, or suppliers New task is a purchase decision that requires thorough research such as a new product Major Types of Buying Situations
70. Business Buyer Behavior Participants in the Business Buying Process Buying center is all of the individuals and units that participate in the business decision-making process Users Influencers Buyers Deciders Gatekeepers
74. Business Buyer Behavior E-Procurement Advantages Access to new suppliers Lowers costs Speeds order processing and delivery Shares information Sales Service and support Disadvantages Can erode relationships as buyers search for new suppliers Security
Editor's Notes
Note to InstructorThis Web link is to Procter & Gamble is an interesting site to explore with the students. Click on the Family of products. Discussion QuestionWhich product categories might be growing markets, slower markets, and emerging markets. This site can be explored again when viewing Figure 2.2—the BCG grid.
Note to InstructorStars are high-growth, high-share businesses or products requiring heavy investment to finance rapid growth. They will eventually turn into cash cows.Cash cows are low-growth, high-share businesses or products that are established and successful SBUs requiring less investment to maintain market share.Question marks are low-share business units in high-growth markets requiring a lot of cash to hold their share.Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves but do not promise to be large sources of cash.
Note to InstructorConsumers stand in the center. The goal is to create value for customers and build profitable customer relationships. Next comes marketing strategy—the marketing logic by which the company hopes to create this customer value and achieve these profitable relationships. The company decides which customers it will serve (segmentation and targeting) and how (differentiation and positioning). It identifies the total market, then divides it into smaller segments, selects the most promising segments, and focuses on serving and satisfying the customers in these segments. Guided by marketing strategy, the company designs an integrated marketing mix made up of factors under its control—product, price, place, and promotion (the four Ps). To find the best marketing strategy and mix, the company engages in marketing analysis, planning, implementation, and control. Through these activities, the company watches and adapts to the actors and forces in the marketing environment.
Note to InstructorIt is interesting to ask how to make the 4Ps more customer centric? This leads to a redefining of the 4Ps to the 4Cs as follows:Product—Customer solutionPrice—Customer costPlace—ConveniencePromotion—Communication
Note to InstructorIn slideshow view, click on movie icon to launch Tom’s Shoes video snippet. See accompanying DVD for full video segment
Note to InstructorThis graphic highlights a car targeted to India’s growing middle class. Discussion QuestionsWhat changes might there be in U.S. income over the next year? What are positioned as “value cars.”The students might quote current economic declines or rises. The “value cars” will probably include some of the smaller cars by Kia, Ford, Honda, and Toyota.
Note to InstructorDiscussion QuestionAsk students what changes they have seen in technology in the past four years including medical products, communications, and media.They will most likely talk about the use of artificial organs and stem cell research, the growth of PDA’s like the iPod, and the use of new media products including DVR or TiVo.
Note to InstructorThese can be explained in more depth:Exploratory research—objective is to gather preliminary information that will help define the problem and suggest hypotheses.Descriptive research—describes things.Causal research—tests hypothesis about cause and effect relationships.Discussion QuestionConsider a local business near campus. . .How would they conduct exploratory research? What might they want to find out in descriptive research?What relationships might they explore in causal research?Students will have the following responses for the above questions: exploratory research (focus groups, interviews); descriptive research (who, when, how, why);causal research (price/demand, environment/purchase rate).
Note to InstructorDiscussion QuestionAsk students the disadvantages with open-ended questions.They might realize from their own experience that they get tired filling out many open ended questions and that they often lead to hard-to-code information.
Note to InstructorIt is interesting to talk about the buyer’s black box and one of the largest challenges in marketing is to understand what happens in this black box. Students will enjoy this video by Derren Brown. It is unclear how he obtains his results and how scientific this is, but it will certainly have students realize the mystery of the consumer’s brain.
Note to InstructorDiscussion QuestionWhat groups are you a member of and what are your aspirational groups. How does this influence you as a consumers?
Note to InstructorIt is interesting to talk about brand personalities and ask students the personality of several brands:A brand personality is the specific mix of human traits that may be attributed to a particular brand. One researcher identified five brand personality traits1. Sincerity (down-to-earth, honest, wholesome, and cheerful)2. Excitement (daring, spirited, imaginative, and up-to-date)3. Competence (reliable, intelligent, and successful)4. Sophistication (upper class and charming)5. Ruggedness (outdoorsy and tough)
Note to InstructorDiscussion QuestionIf you watched television last night, what ads do you remember seeing?Probe to find out why they remember certain ads—was it that they broke through the clutter, that they saw them many times, or that they are in the market for that certain product?
Note to InstructorThis Web link brings you to PriceGrabber—an online comparison shopping site. What is interesting on this site is on the left hand side, you can search by features. These features help a consumer know how to evaluate a product. For instance, this example is laptop computers and one can search by processing speed, processor type, screen size, etc.
Note to InstructorThe IKEA example in the text is excellent on understanding the importance of supplier development:IKEA challenge is finding enough of the right kinds of suppliers to help design and produce the billions of dollars of affordable goods.IKEA currently relies on about 1,800 suppliers in more than 50 countries to stock its shelves.If the giant retailer continues at its current growth rate, it will need to double its supply network by 2010.IKEA doesn’t just buy from its suppliers. It involves them deeply in the process of designing and making stylish but affordable furniture.
Note to InstructorThis Web link goes to the American Enterprise Institute’s economic outlook newsletter. There are other economic indicators that might be interesting to draw to the students attention including GDP and CPI.
