CHAPTER 1: Creating and Capturing Customer Value

Marketing is a process by which companies create value for customers and build
strong customer relationships to capture value from customers in return​
• The most simple definition of Marketing is “managing profitable customer
relationships” (Kotler, P., & Armstrong, G., 2012)

•Marketing is defined as “the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers,
clients, partners, and society at large” (American Marketing Association, 2007).​
•According to UK’s Chartered Institute of Marketing, “Marketing is the management
process responsible for identifying, anticipating and satisfying customer requirements
profitability” (Dibb, S., & Simkin, L., 2004).

•Marketing Process is a process that identifies market opportunities, satisfies

customers, creates an edge over rivals, differentiates the product or service and
generates suitable financial rewards for the business. (Dibb, S., & Simkin, L., 2004)

•the marketing mix consisted of the 4P’s (Product, Place, Price, and Promotion). ​
(People, Processes and Physical Environment) making it 7P’s.

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.

Exchange is the act of obtaining a desired objects from someone by offering something
in return.​
Markets are the set of actual and potential buyers of a product.

Marketing Management is the art and science of choosing target markets and building
profitable relationships with them​
​ - What customers will we serve?​
​ - How can we best serve these customers?

Market Segmentation refers to dividing the markets into segments of customers​

Target Market refers to which segments to go after

Value proposition Set of benefits of values a company promises to deliver to

customers to satisfy their needs

Production concept is the idea that consumers will favor products that are available or
highly affordable​
Product concept is the idea that consumers will favor products that offer the most
quality, performance, and features. Organization should therefore devote its energy to
making continuous product improvements.

Selling concept is the idea that consumers will not buy enough of the firm’s products
unless it undertakes a large scale selling and promotion effort​
Marketing concept is the idea that achieving organizational goals depends on knowing
the needs and wants of the target markets and delivering the desired satisfactions
better than competitors do.

Societal marketing concept is the idea that a company should make good marketing
decisions by considering consumers’ wants, the company’s requirements, consumers;
long-term interests, and society’s long-run interests

The marketing mix: set of tools (four Ps) the firm uses to implement its marketing
strategy. It includes product, price, promotion, and place.​
Integrated marketing program: comprehensive plan that communicates and delivers
the intended value to chosen customers

Customer- perceived value The difference between total customer value and total
customer cost​
Customer satisfaction The extent to which a product’s perceived performance
matches a buyer’s expectations

Customer-managed relationships Marketing relationships in which customers,

empowered by today’s new digital technologies, interact with companies and with each
other to shape their relationships with brands.

Partner relationship management involves working closely with partners in other

company departments and outside the company to jointly bring greater value to
customers

Supply chain is a channel that stretches from raw materials to components to final
products to final buyers

Customer lifetime value is the value of the entire stream of purchases that the
customer would

Share of customer is the portion of the customer’s ​ purchasing that a company gets
in its product categories

Customer equity is the total combined customer lifetime values of all of the company’s
customers
CHAPTER 2: Company and Marketing Strategy Partnering to Build Customer
Relationships

Strategic Planning is the process of developing and maintaining a strategic fit between
the organization’s goals and capabilities and its changing marketing opportunities

The mission statement is the organization’s purpose, what it wants to accomplish in

the larger environment​
Market oriented mission statement defines the business in terms of satisfying basic
customer needs

BUSINESS OBJECTIVES

-Build profitable customer relationship

-Invest in research

-Improve profits

MARKETING OBJECTIVES

-Increase market share

-Create local partnership

-Increase promotion

The Business portfolio is the collection of businesses and products that make up the
company​
Portfolio analysis is a major activity in strategic planning whereby management
evaluates the products and businesses that make up the company

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 business

STAR – high market growth rate, high market share

CASH COW – low market growth rate, high market share

QUESTION MARK – high market growth rate, low market share

DOG – low market growth rate, high market share

Product/market expansion grid is a tool for ​ identifying company growth

opportunities through market penetration, market ​ development, product
development, or diversification
Market penetration is a growth strategy increasing ​ sales to current market segments
without changing the product​
Market development is a growth strategy that identifies and develops new market
segments for current products

Product development is a growth strategy that offers new and modified products to
existing market segments​
Diversification is a growth strategy through starting up or acquiring businesses outside
the company’s current products and markets

Downsizing is the reduction of the business portfolio by eliminating products or

business units that are not profitable or that no longer fit the company’s overall strategy

Value Chain is a series of departments that carry out value-creating activities to design,
produce, market, deliver, and support a firm’s products

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

Market segmentation is the division of a market ​ into distinct groups of buyers who
have distinct needs, characteristics, or behavior and who might require separate
products or marketing mixes​
Market segment is a group of consumers who respond in a similar way to a given set
of marketing efforts

Market targeting is the process of evaluating each ​ market segment’s attractiveness

and selecting one or more segments to enter​
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

Marketing mix is the set of controllable tactical marketing tools - product, price, place,
and promotion – that the firm blends to produce the response it wants in the target
market
Implementing is the process that turns marketing plans into marketing actions to
accomplish strategic marketing objectives

1.​ Functional Organization

2.​ Geographical Organization
3.​ Product Organization
4.​ Market or customer Management

Controlling is the measurement and evaluation of results and the taking of corrective
action as needed​
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

CHAPTER 3: Analyzing the Marketing Environment

The marketing environment includes the actors and forces outside marketing that
affect marketing management’s ability to build and maintain successful relationships
with customers

Microenvironment consists of the actors close to the company that affects its ability to
serve its customers - the company, suppliers, marketing intermediaries, customer
markets, competitors, and publics

The Company

Top Management​
​
​
​

Suppliers Provide the resources to produce goods and service Treated as partners to
provide customer value
Marketing Intermediaries Help the company to promote, sell and distribute its products
to final buyers

Competitors Firms must gain strategic advantage by positioning their offerings against
competitors’ offerings

Publics Any group that has an actual or potential interest in or impact on organization’s
ability to achieve its objectives​
​ - Financial publics​
​ - Media publics​
​ - Government publics​
​ - Citizen-action publics​
​ - Local publics ​
​ - General Publics​
​ - Internal publics

Customers

Consumer markets​
​
​

Macroenvironment consist of broad, uncontrollable external forces that affect the

ability of the company to serve its customers

Demography is the study of human populations in terms of size, density, location, age,
gender, race, occupation, and other statistics​
Demographic environment is important because it involves people, and people make
up markets​
Demographic trends include age, family structure, geographic population shifts,
educational characteristics, and population diversity

Baby boomers include people born between 1946 and 1964​

•Most affluent Americans

Generation X includes people born between 1965 and 1976 ​

•High parental divorce rates​
•Cautious economic outlook​
•Less materialistic​
•Family comes first​
•Lag behind on retirement savings
Millennials (gen Y or echo boomers) include those born between 1977 and 2000​
Comfortable with technology​
​
​

Generation marketing is important in segmenting people by lifestyle of life ​ state

instead of age

ECONOMIC ENVIRONMENT

Value marketing involves ways to offer financially cautious buyers greater value – the
right combination of quality and service at a fair price

Ernst Engel – Engel’s Law​

​
​

Natural environment involves the natural resources that are needed as inputs by
marketers or that are affected by marketing activities

Technological Environment

•Most dramatic force changing the marketplace​

•Creates new products and opportunities​
•Safety of new product always a concern

Political environment consists of laws, government agencies, and pressure groups

that influence or limit various organizations and individuals in a given society

Cultural environment consists of constitutions and other forces that affect a society’s
basic values, perceptions, and behaviors

Core beliefs and values are persistent and are passed on from parents to children and
are reinforced by schools, churches, business, and government​
Secondary beliefs and values are more open to change and include people’s view of
themselves, others, organization, society, nature, and the universe

CHAPTER 4: MANAGING MARKETING INFORMATION TO GAIN CUSTOMER

INSIGHTS

Customer Insights Are:​

• Fresh and deep insights into customers needs and wants​
• Difficult to obtain​
 -Not obvious​
-Customers unsure of their behavior​
• Not derived from more information but better information and more effective use of
existing information.

•Companies are forming customer insights teams:​

•Include all company functional areas​
-Use insights to create more value for their customers​
-Customers controlled could be a problem

Marketing information system (MIS)

Consists of people and procedures for:

❖​ Assessing the information needs

❖​ Developing needed information
❖​ Helping decision makers use the information for customer.

MIS provides information to the company’s marketing and other managers and external partners such as
suppliers, resellers, and marketing service agencies.

MARKETERS OBTAIN INFORMATION FROM:

Internal database are electronic collections of consumer and market information obtained from data
sources within the company network

Marketing intelligence is the systematic collection and analysis of publicly available information about
customers, competitors, and developments in the market place

Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a
specific marketing situation facing an organization

MARKETING RESEARCH DEFINING A PROBLEM AND RESEARCH OBJECTIVES

1.​ Exploratory Research

2.​ Descriptive Research
3.​ Causal Research
The objective of exploratory research is to gather preliminary information that will help define the problem
and suggest hypotheses.
The objective of descriptive research is to describe things, such as the market potential for a product or
the demographics and attitudes of consumers who buy the product.
The objective of causal research is to test hypotheses about cause-and-effect relationships.

Marketing Research Written Research Plan includes:

1.​ Management Problem

2.​ Research Objectives
3.​ Information Needed
4.​ How the result will help management decisions
5.​ Budget

Marketing Research Developing The research Plan

Secondary data consist of information that already exist somewhere, having been
collected for another purpose​
Primary data consist of information gathered for the special research plan
​ Research Approaches
Observational research involves gathering primary data by observing relevant people, actions, and
situation​
Ethnographic research involves sending trained observers to watch and interact with consumers in their
natural environment
Experiment research is best for gathering causal information– causal-and-effect relationships
Survey research is the most widely used method and is best for descriptive information– knowledge,
attitudes, preferences, and buying behavior​

Flexible​
People can be unable or unwilling to answer​
Gives misleading or pleasing answers​
Privacy concerns
​ Focus groups​
-Six to ten people with a trained moderator ​
-Challenges ​
•Expensive​
•Difficult to generalize from small group​
•Consumers not always open and honest
 ONLINE RESEARCH

SAMPLING PLAN

Sample is a segment of the population selected for marketing research to represent the population as a
whole

❖​ who is to be surveyed?

❖​ How many people should be surveyed?

❖​ How should the people be chosen?

RESEARCH INSTRUMENT

Questionnaires

▪​ Most common

▪​ Administered in person, by phone, or online

▪​ Flexible

▪​ Watch working and ordering of questions

Closed-end questions include all possible answers, and subjects make choices among them
 o​ Provide answers that are easier to interpret and tabulate

Open-end questions allow respondents to answer in their own words

o​ Used in exploratory research

Customer Relationship Management consist of sophisticated software and analytical tools that
integrate customer information from all sources, analyze it in depth, and apply the results to built stronger
customers relationships

Information distribution involves entering information into databases and making it available in a
time-useable manner

-Intranet provides information to employees and other stakeholders

-Extranet provides information to key customers and suppliers

CHAPTER 5: Consumer Markets And Consumer Buyer Behaviour

MODEL OF CONSUMER BUYER

Consumer Buyer Behavior refers to the buying behavior of final consumers—individuals and
households who buy goods and services for personal consumption.​
Consumer Market refers to all of the personal consumption of final consumers

CHARACTERISTIC AFFECTING CONSUMER BEHAVIOUR

Culture is the learning values, perceptions, wants, and behavior from family and other important
institutions.

Subcultures are the groups of people within a culture with shared value systems based on common life
experiences and situations.

Social classes are society’s relatively permanent and ordered divisions whose members share similar
values, interests, and behaviors.
Word-of-mouth influence and buzz marketing
o​ Opinion leaders are people within a reference group who exert social
influence on others
o​ Also called influentials or leading adopters
o​ Marketers identify them to use as brand ambassadors.
Online Social Networks are online communities where online socialize or exchange
information and opinions
SOCIAL FACTORS

​ Family is the most important consumer-buying organization in the society

​ The groups, family, clubs, and organizations that a person belongs to define
his/her social role and status

PERSONAL FACTORS

​ Age and life-cycle stage

​ RBC Royal Band Stages

​ Youth: younger than 18

​ Getting started: 18-35

​ Builders: 35-50

​ Accumulators: 50-60

​ Preservers: over 60

Occupation affects the goods and services bought by consumers

Economic situation includes trends in:

1.​ Personal Income

2.​ Savings
3.​ Interests rates

Lifestyle is a person’s pattern of living as expressed in his or her psychographics

Personality And Self-concept

​ Personality refers to the unique psychological characteristics that lead to consistent and lasting
responses to the consumer’s environment
PSYCHOLOGICAL FACTORS

​ A motive is need that is sufficiently pressing to direct the person to seek satisfaction

​ Motivation research refers to qualitative research designed to probe consumers’ hidden,

subconscious motivations

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 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 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.

Learning is the change in an individual’s behaviour arising from experience and occurs through the
interplay of:

❖​ Drives

❖​ Stimuli

❖​ Cues

❖​ Responses

❖​ Reinforcement

Belief is a descriptive thought that a person has about something based on knowledge, Opinion, and
Faith
Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object
or idea
Need Recognition

Occurs when the buyer recognizes a problem or need triggered by:

❖​ Internal stimuli
❖​ External stimuli

Information Search

Source of Information

​ Personal sources-family and friends

​ Commercial sources-advertising, Internet

​ Public sources-mass media, consumer organizations

​ Experiential sources-handling, examining, using the product

Evaluation of Alternatives

How the consumer process information to arrive at brand choices

Purchase Decision
The act by the consumer to buy the most preferred brand

The purchase decision can be affected by:

​ Attitudes of others

​ Unexpected situational factors

Post-Purchase Decision

▪​ 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

Customer satisfaction is a key to building profitable relationships with consumers-to keeping and
growing consumers and reaping their customer lifetime value

The Buyer Decision Process for a New Products

Adoption process is the mental process an individual goes through from first learning about an
innovation to final regular use.