marketing as the process by which companies engage customers, build strong customer relationships, and create

customer value in order to capture value from customers in return. 4

needs are states of felt deprivation. Wants are the form human needs take as they are shaped by culture and
individual personality. When backed by buying power, wants become demands.

market offerings—some combination of products, services, information, or experiences offered to a market to

satisfy a need or a want. Market offerings are not limited to physical products.
Many sellers make the mistake of paying more attention to the specific products they offer than to the benefits and
experiences produced by these products. These sellers suffer from marketing myopia.

A market is the set of actual and potential buyers of a product or service.

Marketing means managing markets to bring about profitable customer relationships. However, creating these
relationships takes work.
We define marketing management as the art and science of choosing target markets and building profitable
relationships with them.

Marketing Management Orientations

There are five alternative concepts under which organizations design and carry out their marketing strategies: the
production, product, selling, marketing, and societal marketing concepts.

The Production Concept. The production concept holds that consumers will favor products that are available
and highly affordable.
The Product Concept. The product concept holds that consumers will favor products that offer the most in
quality, performance, and innovative features.
The Selling Concept. Many companies follow the selling concept, which holds that consumers will not buy
enough of the firm’s products unless it undertakes a large-scale selling and promotion effort.
The Marketing Concept. The marketing concept holds that achieving organizational goals depends on
knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

Capture value from customers to create profits and customer equity

The Societal Marketing Concept. The societal marketing concept questions whether the pure marketing
concept overlooks possible conflicts between consumer short- run wants and consumer long-run welfare.

Managing Customer Relationships and Capturing

Customer Value
customer relationship management is the overall process of build- ing and maintaining profitable customer
relationships by delivering superior customer value and satisfaction
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.
Customer satisfaction depends on the product’s perceived performance relative to a buyer’s expecta- tions.
The new marketing is customer-engagement marketing—fostering direct and continuous customer involvement
in shaping brand conversations, brand experiences, and brand community.
consumer-generated marketing, by which consumers themselves play role in shaping their own brand
experiences and those of others.

partner relationship management—working closely with others inside and outside the company to jointly
engage and bring more value to customers.

Capturing Value from Customers

Creating Customer Loyalty and Retention

Good customer relationship management creates customer satisfaction. In turn, satisfied customers remain loyal and
talk favorably to others about the company and its products.
Customer equity is the total combined customer lifetime values of all of the company’s current and potential
customers

Building the Right Relationships with the Right Customers.

Company-Wide Strategic Planning: Defining Marketing’s
Role
strategic planning—the process of developing and maintaining a strategic fit be- tween the organization’s goals
and capabilities and its changing marketing opportunities.

Defining a Market-Oriented Mission

Many organizations develop formal mission statements that answer these questions. A mission statement is a
statement of the organization’s purpose—what it wants to accomplish in the larger environment.

Developing Strategies for Growth and Downsizing

One useful device for identifying growth opportu- nities is the product/market expansion grid

market penetration—making more sales in its current product lines and markets.
Under Armour might consider possibilities for market development—iden- tifying and developing new markets
for its current products.
product development—offering modified or new prod- ucts to current markets.
Under Armour can consider diversifi- cation—starting up or buying businesses outside of its current products and
markets
Marketing Strategy and the Marketing Mix
marketing strategy—the marketing logic by which the company hopes to create this customer value and achieve
these profitable relationships

Customer Value–Driven Marketing Strategy

The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or
behaviors and who might require separate marketing strategies or mixes is called market segmentation.

A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.

Market targeting involves evaluating each market segment’s attractiveness and selecting one or more segments to
enter.

Positioning is arranging for a product to occupy a clear, distinc- tive, and desirable place relative to competing
products in the minds of target consumer

Developing an Integrated Marketing Mix

Product means the goods-and-services combination the company offers to the tar- get market.
Price is the amount of money customers must pay to obtain the product.
Place includes company activities that make the product available to target con- sumers.
Promotion refers to activities that communicate the merits of the product and per- suade target customers to buy it
Managing the Marketing Effort
Managing the marketing function begins with a complete analysis of the company’s situ- ation. The marketer should
conduct a SWOt analysis
Strengths include internal capabilities, resources, and positive situational factors that may help the company serve its
customers and achieve its objectives. Weaknesses include internal limitations and negative situational factors that
may interfere with the company’s performance. Opportunities are favorable factors or trends in the external
environment that the company may be able to exploit to its advan- tage. And threats are unfavorable external factors
or trends that may present challenges to performance.

A marketing strategy consists of specific strategies for target markets, positioning, the marketing mix, and marketing
expenditure levels.

Marketing imple- mentation is the process that turns marketing plans into marketing actions to accomplish
strategic marketing objectives.

Measuring and Managing Marketing Return on Investment

marketing performance measure is marketing return on investment (or marketing rOI). Marketing ROI is the
net return from a marketing invest- ment divided by the costs of the marketing investment. It measures the profits
generated by investments in marketing activities.

The Microenvironment and Macroenvironment

The microenvironment consists of the actors close to the company that affect its ability to engage and serve its
customers—the company, suppliers, marketing intermediar- ies, customer markets, competitors, and publics. The
macroenvironment consists of the larger societal forces that affect the microenvironment—demographic,
economic, natural, technological, political, and cultural forces. We look first at the company’s microenvironment.
Marketing Research
Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific
marketing situation facing an organization.

Defining the Problem and Research Objectives

Marketing managers and researchers must work together closely to define the problem and agree on research
objectives.
The objective of exploratory research is to gather preliminary information that will help define the problem and
suggest hypotheses. The objective of descriptive re- search is to describe things, such as the market potential for
a product or the demograph- ics and attitudes of consumers who buy the product. The objective of causal
research is to test hypotheses about cause-and-effect relationships.

Model of Consumer Behavior

Characteristics Affecting Consumer Behavior

Cultural Factors
Cultural factors exert a broad and deep influence on consumer behavior. Marketers need to understand the role
played by the buyer’s culture, subculture, and social class.

Culture is the most basic cause of a person’s wants and behavior. Human behavior is largely learned.
Each culture contains smaller subcultures, or groups of people 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.
Social Factors
Groups and Social Networks

Many small groups influence a person’s behavior. Groups that have a direct influence and to which a person
belongs are called membership groups.

Family

Family members can strongly influence buyer behavior. The family is the most important consumer buying
organization in society, and it has been researched extensively

Personal Factors
Occupation A person’s occupation affects the goods and services bought

Age and Life Stage People change the goods and services they buy over their lifetimes.

Economic Situation A person’s economic situation will affect his or her store and product choices.

Lifestyle People coming from the same subculture, social class, and occupation may have quite dif- ferent
lifestyles. Lifestyle is a person’s pattern of living as expressed in his or her psycho- graphics.

Personality and Self-Concept Each person’s distinct personality influences his or her buying behavior.
Personality refers to the unique psychological characteristics that distinguish a person or group.

Psychological Factors
A person’s buying choices are further influenced by four major psychological factors: moti- vation, perception, learning,
and beliefs and attitudes

A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction.
Perception is the process by which people select, organize, and interpret information to form a meaningful picture
of the world.
Learning describes changes in an individual’s behavior aris- ing from experience. Learning theorists say that most
human behavior is learned.
A belief is a descriptive thought that a person holds about some- thing.
Attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea.
Buying Decision Behavior and the Buyer Decision
Process
Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive
significant differences among brands
Dissonance-reducing buying behavior occurs when consumers are highly involved with an expensive,
infrequent, or risky purchase but see little difference among brands.
habitual buying behavior occurs under conditions of low-consumer involvement and little significant brand
difference.
variety-seeking buying behavior in situations characterized by low consumer involvement but sig- nificant
perceived brand differences.

The Buyer Decision Process

need recognition—the buyer recognizes a problem or need.
the consumer may store the need in memory or undertake an information search related to the need
alternative evaluation, that is, how consumers pro- cess information to choose among alternative brands.
purchase decision will be to buy the most preferred brand, but two factors can come between the purchase
intention and the purchase deci- sion. The first factor is the attitudes of others. If someone important to you thinks that
you should buy the lowest-priced car, then the chances of you buying a more expensive car are reduced.
After purchasing the product, the consumer will either be satisfied or dissatisfied and will engage in postpurchase
behavior of interest to the marketer.

Business Buyer Behavior

Participants in the Business Buying Process
• Users are members of the organization who will use the product or service. In many cases, users initiate the
buying proposal and help define product specifications.

• Influencers often help define specifications and also provide information for evaluat- ing alternatives. Technical
personnel are particularly important influencers.

• Buyers have formal authority to select the supplier and arrange terms of purchase. Buyers may help shape
product specifications, but their major role is in selecting ven- dors and negotiating. In more complex purchases,
buyers might include high-level officers participating in the negotiations.

• Deciders have formal or informal power to select or approve the final suppliers. In routine buying, the buyers are
often the deciders, or at least the approvers.

• Gatekeepers control the flow of information to others. For example, purchasing agents often have authority to
prevent salespersons from seeing users or deciders. Other gatekeepers include technical personnel and even personal
secretaries.

The Business Buyer Decision Process

general need description that describes the characteristics and quantity of the needed item.
The buying organization next develops the item’s technical product specifications, often with the help of a value
analysis engineering team.
The buyer now conducts a supplier search to find the best vendors.
In the proposal solicitation stage of the business buying process, the buyer invites quali- fied suppliers to submit
proposals.
During supplier selection, the buying center often will draw up a list of the desired supplier attributes and their
relative importance.
The buyer now prepares an order-routine specification. It includes the final order with the chosen supplier or
suppliers and lists items such as technical specifications, quantity needed, expected delivery time, return policies,
and warranties. In the case of mainte- nance, repair, and operating items, buyers may use blanket contracts rather
than periodic purchase orders.