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Marketing: An Introduction

Thirteenth Edition

Chapter 1

Marketing: Creating Customer Value and Engagement

Learning Objectives (1 of 4)

1-1. Define marketing and outline the steps in the marketing process.

1-2. Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

1-3. Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

This chapter defines marketing and outlines the steps in the marketing process, explains the importance of understanding the marketplace and customers and identifies the five core marketplace concepts. It also identifies the key elements of a customer value-driven marketing strategy and discusses the marketing management orientations that guide marketing strategy.

Learning Objectives (2 of 4)

1-4. Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

1-5. Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

The chapter further discusses customer relationship management and identifies strategies for creating value for customers and capturing value from customers in return. Finally, this chapter describes the major trends and forces that are changing the marketing landscape in this age of relationships.

First Stop: Nike

The Nike swoosh—it’s everywhere. Nike has mastered social networking, both online and off, creating deep engagement and community, with and among customers.

Nike built image and market share by outspending competition on endorsements, promotional events and expensive “Just Do It” ads.

The Nike swoosh—it’s everywhere. Nike has mastered social networking, both online and off, creating deep engagement and community, with and among customers.

Nike’s outstanding success results from much more than just making good sports gear. The iconic brand has become ever-present and valued in their customers’ lives and conversations.

Nike is highly innovative in its use of social media and is ranked first in creating brand “tribes” – large groups of highly engaged users on social media sites like Facebook. In addition to Likes on the main Facebook page, Nike has an impressive 45 million Likes on its Soccer, Basketball and Running Facebook pages combined.

Nike excels at cross-media campaigns that integrate digital media with traditional tools to connect with customers. The “Risk Everything” World Cup soccer campaign presented captivating 4 to 5 minute videos embedded in both Nike social media sites and the “Risk Everything” Web site.

Learning Objective 1-1

Define marketing and outline the steps in the marketing process.

What Is Marketing?

Marketing is engaging customers and managing profitable customer relationships.

Goals of Marketing

Attract new customers by promising superior value

Keep and grow current customers by delivering satisfaction

Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The dual goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction.

Sound marketing is critical to the success of every organization. Marketing is used by large for-profit firms, such as Google, Target, Coca-Cola and Microsoft as well as not-for-profit organizations, such as colleges, hospitals, museums, symphony orchestras, and even churches.

Forms of Marketing

Traditional

Making a sale

Abundance of products in the nearby shopping centers

Television, magazine, and direct-mail ads

Contemporary

Satisfying customer needs

Imaginative Web sites and mobile phone apps, blogs, online videos, and social media

Reach customers directly, personally, and interactively

Today, marketing must be understood not in the old sense of making a sale—“telling and selling”—but in the new sense of satisfying customer needs.

In the traditional form, marketing is seen in abundance at shopping malls and in magazine, television, and direct-mail advertisements. Therefore, marketing in the old sense refers to making a sale—“telling and selling”.

In the contemporary form, marketers have assembled a host of new marketing approaches—imaginative Web sites, mobile phone apps, blogs, online videos, and social media. Thus, marketing in the new sense involves satisfying customer needs.

There is much more to marketing than meets the consumer’s casual eye. Behind it all is a massive network of people, technologies, and activities competing for your attention and purchases.

Figure 1.1 - The Marketing Process: Creating and Capturing Customer Value

This important figure shows marketing in a nutshell. By creating value for customers, marketers capture value from customers in return. This five-step process forms the

marketing framework for the rest of the chapter and the remainder of the text.

This figure presents a simple, five-step model of the marketing process for creating and capturing customer value. 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 rewards are in the form of sales, profits, and long-term customer equity.

Learning Objective 1-1 Summary

Marketing creates value for customers

understand marketplace and customers

design a customer value-driven marketing strategy

construct a marketing program

engage customers, build relationships

Captures value from customers

Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The marketing process involves five steps. The first four steps create value for customers. First, marketers need to understand the marketplace and customer needs and wants. Next, marketers design a customer value-driven marketing strategy with the goal of getting, engaging, and growing target customers. In the third step, marketers construct a marketing program that actually delivers superior value. All of these steps form the basis for the fourth step: engaging customers, building profitable customer relationships, and creating customer delight. In the final step, the company reaps the rewards of strong customer relationships by capturing value from customers.

Learning Objective 1-2

Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

Understanding the Marketplace and Customer Needs

Five core customer and marketplace concepts:

Needs, wants, and demands

Market offerings

Value and satisfaction

Exchanges and relationships

Markets

Marketers need to understand customer needs and wants and the marketplace in which they operate. The five core customer and marketplace concepts are needs, wants, and demands, market offerings that include products, services, and experiences, value and satisfaction, exchanges and relationships, and markets. Each of these core concepts are discussed in detail in the following slides.

Customer Needs, Wants, and Demands (1 of 2)

Needs

States of felt deprivation

Physical needs - Food, clothing, warmth, and safety

Social needs - Belonging and affection

Individual needs - Knowledge and self-expression

Wants

Form taken by human needs when shaped by culture and individual personality

Demands

Human wants that are backed by buying power

Customer needs are the states of felt deprivation. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression.

Wants are the form human needs take as they are shaped by culture and individual personality. For example, an American needs food but wants a Big Mac, French fries, and a soft drink. Wants are shaped by one’s society and are described in terms of objects that will satisfy those needs.

When backed by buying power, wants become demands. Given their wants and resources, people demand products and services with benefits that add up to the most value and satisfaction.

Customer Needs, Wants, and Demands (2 of 2)

Staying close to customers: Target’s energetic new CEO

Target’s energetic new CEO, Brian Cornell, makes regular unannounced visits to Target stores, accompanied by local moms and loyal Target shoppers.

Market Offerings

Products, services, information or experiences

Offered to satisfy a need or want

Marketing myopia - paying more attention to the specific products than to the benefits and experiences produced

Consumers’ needs and wants are fulfilled through market offerings. Market offerings are a combination of products, services, persons, places, organizations, information, ideas, or experiences offered to a market to satisfy a need or a want. For example, the Ad Council and the National Highway Traffic Safety Administration created a “Stop the Texts. Stop the Wrecks.” campaign that markets the idea of eliminating texting while driving. The campaign points out that a texting driver is 23 times more likely to get into a crash than a non-texting driver.

Marketing myopia refers to sellers paying more attention to the specific products a company offers than to the benefits and experiences produced by these products. They forget that a product is only a tool to solve a consumer problem. These sellers will have trouble if a new product comes along that serves the customer’s needs better or less expensively. The customer will have the same need but will want the new product.

Customer Value and Satisfaction

Customers form expectations about the value and satisfaction of market offerings.

Satisfied customers buy again

Dissatisfied customers switch to competitors

Setting the right level of expectations

Low expectations may fail to attract buyers

High expectations may disappoint buyers

Consumers face a broad array of products and services that might satisfy a given need. Customers form expectations about the value and satisfaction that various market offerings will deliver. Satisfied customers buy again and tell others about their good experiences. While, dissatisfied customers switch to competitors and criticize the product to others.

Marketers should set the right level of expectations. If they set expectations too low, they may satisfy those who buy, but fail to attract enough buyers. If they set expectations too high, buyers will be disappointed.

Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. We will develop these core concepts in more detail later in the presentation.

Exchanges and Relationships

Exchange is the act of obtaining a desired object by offering something in return.

Marketing consists of creating, maintaining, and growing desirable exchange relationships.

Strong relationships are built by consistently delivering superior customer value.

Marketing occurs when people decide to satisfy their needs and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return.

Marketing consists of actions taken to create, maintain, and grow desirable exchange relationships with target audiences involving a product, service, idea, or other object. Companies want to build strong relationships by consistently delivering superior customer value.

In the broadest sense, the marketer tries to bring about a response to some market offering. The response may be more than simply buying or trading products and services. For example, a political candidate wants votes; a church wants membership; an orchestra wants an audience; and a social action group wants idea acceptance.

Markets

All actual and potential buyers of a product

Sellers and Consumers market

Customer-managed relationships

A market is the set of actual and potential buyers of a product or service. Sellers must search for buyers, identify their needs, design good market offerings, set prices for them, promote them, store and deliver them.

Although marketing was traditionally carried out by sellers, the concept now also includes consumers. Consumers engage in marketing when they search for products, interact with companies to obtain information, and make their purchases.

Customer-managed relationships are important as customers are empowered by digital technologies. This has made marketing a two-way affair.

Figure 1.2 - A Modern Marketing System

This figure shows the main elements in a modern marketing system. Marketing involves serving a market of final consumers in the face of competitors.

Each party in the system adds value for the next level. The arrows represent relationships that must be developed and managed. Thus, a company’s success at building profitable relationships depends not only on its own actions but also on how well the entire system serves the needs of final consumers.

For example, Walmart cannot fulfill its promise of low prices unless its suppliers provide merchandise at low costs.

Learning Objective 1-2 Summary

Customers needs, wants, and demands

Customer lifetime value and share of customer

Long-term customer equity

Other marketplace concepts

market offerings

value and satisfaction

exchange and relationships

markets

Value proposition

Outstanding marketing companies go to great lengths to learn about and understand their customers’ needs, wants, and demands. This understanding helps them to design want-satisfying market offerings and build value-laden customer relationships by which they can capture customer lifetime value and greater share of customer. The result is increased long-term customer equity for the firm. The core marketplace concepts are needs, wants, and demands; market offerings (products, services, and experiences); value and satisfaction; exchange and relationships; and markets. Companies address needs, wants, and demands by putting forth a value proposition, a set of benefits that they promise to consumers to satisfy their needs. The value proposition is fulfilled through a market offering, which delivers customer value and satisfaction, resulting in long-term exchange relationships with customers.

Learning Objective 1-3

Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

Designing a Customer Value-Driven Marketing Strategy (1 of 4)

Marketing management: Choosing target markets and building profitable relationships

Designing a winning marketing strategy

Target market?

Value proposition?

Marketing management is the art and science of choosing target markets and building profitable relationships with them.

To design a winning marketing strategy, the marketing manager must answer two important questions. First, what’s the target market? Second, what’s the value proposition?

Designing a Customer Value-Driven Marketing Strategy (2 of 4)

Market segmentation refers to dividing the markets into segments of customers.

Target marketing refers to which segments to go after.

The company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing).

Designing a Customer Value-Driven Marketing Strategy (3 of 4)

Choosing a value proposition - the company must decide how it will differentiate and position itself in the marketplace.

The company must decide how it will differentiate and position itself in the marketplace. A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. For example, Vine gives you “the best way to see and share life in motion” through “short, beautiful, looping videos in a simple and fun way for your friends and family to see” and Facebook helps you “connect and share with the people in your life.”

Designing a Customer Value-Driven Marketing Strategy (4 of 4)

Marketing management orientations

Production concept

Product concept

Selling concept

Marketing concept

Societal marketing concept

There are five alternative concepts under which organizations design and carry out their marketing strategies.

The production concept holds that consumers will favor products that are available and highly affordable. The product concept holds that consumers will favor products that offer the most quality, performance, and features. The selling concept refers to the idea that consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort. The marketing concept is 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 final alternative is the societal marketing concept which holds the idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests.

Figure 1.3 - The Selling and Marketing Concepts Contrasted

This figure contrasts the selling concept and the marketing concept.

The selling concept takes an inside-out view that focuses on existing products and heavy selling. The aim is to sell what the company makes rather than making what the customer wants.

The marketing concept takes an outside-in view that focuses on satisfying customer needs as a path to profits. It starts with a well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers. As Southwest Airlines’ colorful founder puts it, “We don’t have a marketing department, we have a customer department.”

Figure 1.4 - Three Considerations Underlying the Societal Marketing Concept

This figure shows that companies should balance three considerations in setting their marketing strategies: company profits, consumer wants, and society’s interests.

For example, Cosmetics retailer Lush knows that doing what’s right benefits both customers and the company. “We believe in happy people making happy soap,” says the company’s mission statement.

Marketing Mix

Four Ps of Marketing

Product

Price

Place

Promotion

Marketing mix tools should be blended into a comprehensive integrated marketing program.

The marketing mix is the set of marketing tools, the four Ps, the firm uses to implement its marketing strategy.

The major marketing mix tools are product, price, place, and promotion. To deliver on its value proposition, the firm must first create a need-satisfying market offering (product). It must then decide how much it will charge for the offering (price) and how it will make the offering available to target consumers (place). Finally, it must communicate with target customers about the offering and persuade them of its merits (promotion).

The firm must blend each marketing mix tool into a comprehensive integrated marketing program that communicates and delivers the intended value to chosen customers.

Learning Objective 1-3 Summary

Market segmentation

Target marketing

Differentiation and positioning

Production and product concepts

Selling and marketing concepts

Societal marketing concept

To design a winning marketing strategy, the company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will cultivate (target marketing). Next, the company must decide how it will serve targeted customers (how it will differentiate and position itself in the marketplace). Marketing management can adopt one of five competing market orientations. The production concept holds that management’s task is to improve production efficiency and bring down prices. The product concept holds that consumers favor products that offer the most in quality, performance, and innovative features; thus, little promotional effort is required. The selling concept holds that consumers will not buy enough of an organization’s products unless it undertakes a large-scale selling and promotion effort. The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do. The societal marketing concept holds that generating customer satisfaction and long-run societal well-being through sustainable marketing strategies is key to both achieving the company’s goals and fulfilling its responsibilities

Learning Objective 1-4

Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

Customer Relationship Management

Delivering superior customer value and satisfaction to build and maintain profitable customer relationships

Customer-perceived value: Customer’s evaluation of a marketing offer relative to those of competing offers

Customer satisfaction: Extent to which a product’s perceived performance matches a buyer’s expectations

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping, and growing customers. The key to building lasting customer relationships is to create superior customer value and satisfaction.

Customer-perceived value is the customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. Importantly, customers often do not judge values and costs accurately or objectively. They act on perceived value. To some consumers, value might mean sensible products at affordable prices.

Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations. Studies show that higher levels of customer satisfaction lead to greater customer loyalty, which in turn results in better company performance. Outstanding marketing companies aim to delight customers by promising only what they can deliver and then delivering more than they promise. For example, JetBlue creates first-rate, customer-satisfying experiences. Its slogan—JetBlue: YOU ABOVE ALL—tells customers that they are at the very heart of JetBlue’s strategy and culture.

Customer Relationship Levels and Tools (1 of 2)

Levels

Basic relationships

Low-margin customers

Full partnerships

High-margin customers

Tools

Frequency marketing programs

Loyalty rewards programs

Club marketing programs

Companies can build customer relationships at many levels, depending on the nature of the target market. At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with key customers.

Marketers can use specific marketing tools to develop stronger bonds with customers. Some of the tools offered include frequency marketing programs that reward customers who buy frequently or in large amounts, loyalty reward programs that offer special benefits for customers who buy frequently, and club marketing programs that offer members special benefits and create member communities.

Customer Relationship Levels and Tools (2 of 2)

Walgreens: Relationship Marketing Tools

Relationship marketing tools: The innovative Walgreens Balance Rewards program builds stronger customer relationships and helps the brand by helping customers, befitting the chain’s slogan: “Walgreens: At the corner of happy & healthy.”

Used with permission of Walgreen Co. Walgreens Balance® Rewards and “At the corner of healthy and happy®” are registered

trademarks of Walgreen Co.

Customer-Engagement Marketing

Customer-engagement marketing makes the brand a meaningful part of consumers’ conversations and lives.

Greater consumer empowerment means that companies must practice marketing by attraction.

Marketers must find ways to enter consumers’ conversations with engaging and relevant brand messages.

Today’s companies are using online, mobile, and social media to refine their targeting and to engage customers more deeply and interactively. Customer engagement marketing refers to fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community to make the brand a meaningful part of consumers’ conversations and lives.

Internet and social media have given a huge boost to customer-engagement marketing. Newly empowered consumers have more information about brands, and they have numerous digital platforms for sharing their brand views with others. Greater consumer empowerment means that companies must practice marketing by attraction which is creating market offerings and messages that engage consumers rather than interrupt them. For example, Starbucks has more than 38 million Facebook fans, and Coca-Cola has more than 94 million.

The key to engagement marketing is to find ways to enter consumers’ conversations with engaging and relevant brand messages. Simply posting a humorous video, creating a social media page, or hosting a blog isn’t enough. Successful engagement marketing means making relevant and genuine contributions to consumers’ lives and conversations.

Consider T-shirt and apparel maker Life is good which has an authentic, engagement-worthy sense of purpose: spreading the power of optimism. The brand is about helping people to open up, create relationships, and connect with other people.

Consumer-Generated Marketing

Brand exchanges created by consumers

Consumers play an increasing role in shaping their own brand experiences and those of other consumers.

Uninvited and Invited

Consumer-to-consumer exchanges

Consumers invited by companies

New product and service ideas

Active role in shaping ads

Consumer-generated marketing refers to brand exchanges created by consumers by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers.

This might happen through uninvited consumer-to-consumer exchanges in blogs, video-sharing sites, social media, and other digital forums. But increasingly, companies themselves are inviting consumers to play a more active role in shaping products and brand content.

For example, for the past nine years, PepsiCo’s Doritos brand has held a “Crash the Super Bowl” contest in which it invites 30-second ads from consumers and runs the best ones during the game.

Partner Relationship Management

Working closely with partners both inside and outside the company to jointly bring more value to customers

Partners inside the firm—cross-functional teams

Partners outside the firm—suppliers, channel partners

When it comes to creating customer value and building strong customer relationships, today’s marketers know that they can’t go it alone. They must work closely with a variety of marketing partners. In addition to customer relationship management, marketers must also be good at partner relationship management.

Partner relationship management refers to working closely with partners in other company departments and outside the company to jointly bring greater value to customers.

Partners within the firm include cross-functional teams. Rather than letting each department go its own way, firms must link all departments in the cause of creating customer value.

Marketers must also partner with suppliers, channel partners, and others outside the company. Through supply chain management, companies today are strengthening their connections with partners all along the supply chain.

Creating Customer Loyalty and Retention

Keeping customers loyal makes good economic sense.

Customer lifetime value is the value of the entire stream of purchases a customer makes over a lifetime of patronage.

Customer defections can be costly

Can lose that customer’s lifetime value

May cause other customers to defect

Loyal customers spend more and stay around longer. The value of the entire stream of purchases a customer makes over a lifetime of patronage is significant.

Customer defections can be costly. Losing a customer means losing more than a single sale. It means losing that customer’s lifetime value.

For example, the average customer at Stew Leonard’s supermarket spends about $100 a week, shops 50 weeks a year, and remains in the area for about 10 years. If this customer has an unhappy experience and switches to another supermarket, Stew Leonard’s has lost $50,000 in lifetime revenue.

The loss can be much greater if the disappointed customer shares the bad experience with other customers and causes them to defect. In fact, a company can lose money on a specific transaction but still benefit greatly from a long-term relationship. This means that companies must aim high in building customer relationships.

Share of Customer

Portion of the customer’s purchasing in their product categories

Share of Customer is increased by:

Good customer relationship management

Offering greater variety to current customers

Creating programs to cross-sell and up-sell to existing customers

Beyond simply retaining good customers to capture customer lifetime value, good customer relationship management can help marketers increase their share of customer.

This refers to the portion of the customer’s purchasing that a company gets in its product categories. To increase share of customer, firms can offer greater variety to current customers or they can create programs to cross-sell and up-sell to market more products and services to existing customers.

For example, Amazon is highly skilled at leveraging relationships with its 244 million customers to increase its share of each customer’s spending budget.

Customer Equity (1 of 2)

Total combined customer lifetime values of all of the company’s customers

Measures the future value of the company’s customer base

Increases when the loyalty of the firm’s profitable customers increases

Better measure of a firm’s performance than current sales or market share

The aim of customer relationship management is to produce high customer equity. This refers to the total combined customer lifetime values of all of the company’s current and potential customers. It’s a measure of the future value of the company’s customer base. Clearly, the more loyal the firm’s profitable customers are the

higher its customer equity.

Customer equity 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 future.

Customer Equity (2 of 2)

Cadillac: Managing Customer Equity

For example, though Cadillac had a huge share of the luxury car market, most of its buyers were in the older age brackets and average customer lifetime value was falling. Many Cadillac buyers were on their last cars. Thus, although Cadillac’s market share was good, its customer equity was not.

In recent years, Cadillac has struggled to reinvent its target market by focusing on a younger generation of consumers. To increase customer equity, Cadillac is

making the classic car cool again among younger buyers, encouraging consumers to “Dare Greatly.”

Figure 1.5 - Customer Relationship Groups

Figure 1.5 classifies customers into one of four relationship groups, according to their potential profitability and projected loyalty. Each of the four customer relationship groups requires a different relationship management strategy.

The company will not gain anything by investing time and resources in developing relationships with strangers.

For butterflies, the company should create satisfying and profitable transactions, capturing as much of their business as possible in the short time during which they buy from the company. Efforts to convert butterflies into loyal customers are rarely successful.

True friends are loyal and have the potential to generate good profit for the company. The firm should make continuous relationship investments to delight these customers and nurture, retain, and grow them.

Barnacles are highly loyal but not very profitable. There is a limited fit between their needs and the company’s offerings. The company may be able to improve the profitability of barnacles by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be fired.

Learning Objective 1-4 Summary

Customer relationship management

Customer-engagement marketing

Customer equity

Customer value and satisfaction

Creating value for customers and capturing value from customers in return.

Broadly defined, customer relationship management is the process of engaging customers and building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Customer-engagement marketing aims to make a brand a meaningful part of consumers’ conversations

and lives through direct and continuous customer involvement in shaping brand conversations, experiences, and community. The aim of customer relationship management and customer engagement is to produce high customer equity, the total combined customer lifetime values of all of the company’s customers.

The key to building lasting relationships is the creation of superior customer value and satisfaction. In return for creating value for targeted customers, the company captures value from customers in the form of profits and customer equity.

Learning Objective 1-5

Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

The Changing Marketing Landscape

Digital Age

Changing Economic Environment

Growth of Not-for-Profit Marketing

Rapid Globalization

Sustainable Marketing

Every day, dramatic changes are occurring in the marketplace. Five major developments that are changing the marketing landscape and challenging marketing strategy include the digital age, changing economic environment, growth of not-for-profit marketing, rapid globalization, and the call for sustainable marketing practices.

We will examine these developments in more detail on the following slides.

The Digital Age: Online, Mobile, and Social Media Marketing

Digital and social media marketing: Engaging consumers via their digital devices using digital marketing tools

Mobile marketing: Using mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience

Blending the new digital approaches with traditional marketing creates a smoothly integrated marketing strategy and mix.

Digital and social media marketing refers to using digital marketing tools such as Web sites, social media, mobile apps and ads, online video, e-mail, and blogs that engage consumers anywhere, at any time, via their digital devices. Social media provides exciting opportunities to extend customer engagement and get people talking about a brand.

Mobile marketing is the fastest-growing digital marketing platform. Marketers use mobile channels to stimulate immediate buying, make shopping easier, enrich the brand experience, or all of these. For example, Starbucks customers can use their mobile devices for everything from finding the nearest Starbucks and learning about new products to placing and paying for orders.

Although online, social media, and mobile marketing offer huge potential, most marketers are still learning how to use them effectively. The key is to blend the new digital approaches with traditional marketing to create a smoothly integrated marketing strategy and mix.

Changing Economic Environment

The Great Recession undermined consumer confidence.

Post-recession era

Consumers have become more frugal.

New consumer spending values emphasize simpler living.

Marketers are focusing on value, practicality and durability in their product offerings.

The Great Recession of 2008 to 2009 and its aftermath hit American consumers hard. After two decades of overspending, new economic realities forced consumers to bring their consumption back in line with their incomes and rethink their buying priorities.

In the post-recession era, consumer incomes and spending are rising. However, Americans are now showing an enthusiasm for frugality. The new consumer spending values emphasize simpler living and more value for the dollar.

In response, companies in all industries, have realigned their marketing strategies with the new economic realities and are emphasizing the value in their value propositions. They are focusing on value for the money, practicality and durability in their product offerings and marketing pitches.

Growth of Not-for-Profit Marketing

Sound marketing can help not-for-profits attract membership, funds, and support.

Marketing has become a major part of the strategies of many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras,

foundations, and even churches. They face stiff competition for support and membership. Sound marketing can help them attract membership, funds, and support.

For example, Alex’s Lemonade Stand Foundation is a not-for-profit organization with a special mission: “Fighting childhood cancer, one cup at a time.”

Government agencies have also shown an increased interest in marketing. For example, the U.S. military has a marketing plan to attract recruits to its different services.

Various government agencies are now designing social marketing campaigns to encourage energy conservation and concern for the environment or discourage smoking, illegal drug use, and obesity.

Rapid Globalization and Sustainable Marketing

Managers around the world are taking both local and global views of the company’s:

Industry

Competitors

Opportunities

Corporate ethics and social responsibility have become important for every business.

Managers in countries around the world are increasingly taking a global, not just local, view of the company’s industry, competitors, and opportunities. They are asking:

What is global marketing? How does it differ from domestic marketing? How do global competitors and forces affect our business? To what extent should we “go global”?

For example, a new Internet retailer finds itself receiving orders from all over the world, while at the same time, an American consumer goods producer introduces new products into emerging markets abroad.

Marketers are reexamining their relationships with social values and responsibilities and with the very Earth that sustains us. Today’s marketers are being called on to develop sustainable marketing practices. Corporate ethics and social responsibility have gained in importance. They seek ways to profit by serving immediate needs and the best long-run interests of their customers and communities.

Learning Objective 1-5 Summary

Online, mobile and social media marketing

Post-recession economy

Not-for-profit marketing

Connecting globally

Ethical and societal responsibilities

Dramatic changes are occurring in the marketing arena. The digital age has created exciting new ways to learn about and relate to individual customers. As a result, advances in digital and social media have taken the marketing world by storm. Online, mobile, and social media marketing offer exciting new opportunities to target customers more selectively and engage them more deeply. The key is to blend the new digital approaches with traditional marketing to create a smoothly integrated marketing strategy and mix. The Great Recession caused consumers to rethink their buying priorities and bring their consumption back in line with their incomes. Even as the post-recession economy has strengthened, Americans are now showing an enthusiasm for frugality not seen in decades. The challenge is to balance a brand’s value proposition with current times while also enhancing its long-term equity.

In recent years, marketing has become a major part of the strategies for many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, foundations, and even churches. Also, in an increasingly smaller world, many marketers are now connected globally with their customers, marketing partners, and competitors. Finally, today’s marketers are also reexamining their ethical and societal responsibilities. Marketers are being called on to take greater responsibility for the social and environmental impacts of their actions. Pulling it all together, as discussed throughout the chapter, the major new developments in marketing can be summed up in a single concept: engaging customers and creating and capturing customer value. Today, marketers of all kinds are taking advantage of new opportunities for building value-laden relationships with their customers, their marketing partners, and the world around them.

Figure 1.6 - An Expanded Model of the Marketing Process

This figure represents a map for the entire marketing process.

Throughout the marketing process, marketers practice customer relationship management to create customer satisfaction and delight.

In creating customer value and relationships, a firm must work closely with marketing partners both inside the company and throughout its marketing system. Thus, beyond practicing good customer relationship management, firms must also practice good partner relationship management.

Learning Objectives (3 of 4)

1-1. Define marketing and outline the steps in the marketing process.

1-2. Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

1-3. Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

Learning Objectives (4 of 4)

1-4. Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

1-5. Describe the major trends and forces that are changing the marketing landscape in this age of relationships.