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Principles of Marketing
Chapter I
Creating and Capturing Customer Value
Chapter 1- slide 2 Francois Gaucher - Principals of Marketing
Creating
and Capturing Customer Value
What Is Marketing?
Why Study Marketing?
The Marketing Strategy
The Changing Marketing Landscape
Topic Outline
Chapter 1- slide 3 Francois Gaucher - Principals of Marketing
Creating and
Capturing Customer Value
Chapter 1- slide 4 Francois Gaucher - Principals of Marketing
What Is Marketing?
Peter Drucker
“Marketing is the business as seen from the customer”
Chapter 1- slide 5 Francois Gaucher - Principals of Marketing
What Is Marketing?
• Marketing impact the society as a whole: it has a social dimension
• Marketing concerns management: the strategies and tools used to market product and services
Role of Marketing
Chapter 1- slide 6 Francois Gaucher - Principals of Marketing
Principals of Marketing
What is Marketing?
Chapter 1- slide 7 Francois Gaucher - Principals of Marketing
What Is Marketing?
Chapter 1- slide 8 Francois Gaucher - Principals of Marketing
What Is Marketing?
1836: first paid advertising in a newspaper (in France)
1864: earliest recorded use of the telegraph for mass unsolicited spam
1867: earliest recorded billboard rentals
1880s: early examples of trademarks as branding
1905: the University of Pennsylvania offered a course in "The Marketing of Products"
1922: radio advertising commences
1940s: electronic computers developed
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What Is Marketing?
Chapter 1- slide 10 Francois Gaucher - Principals of Marketing
What Is Marketing?
1940s: electronic computers developed
1941: first recorded use of television advertising
1950s: systematization of telemarketing
1970s: E-commerce invented
1980s: emergence of relationship marketing
1990s : CRM dominance in promotions and marketing
planning
1996: identification of viral marketing
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What Is Marketing? Defining Marketing
Chapter 1- slide 12 Francois Gaucher - Principals of Marketing
What Is Marketing?
Defining Marketing
Marketing is more than
“telling and selling”
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What Is Marketing?
So What is Marketing?
The essence of marketing is to understand your customers' needs and develop a plan that surrounds those needs.
Chapter 1- slide 14 Francois Gaucher - Principals of Marketing
What Is Marketing?
Marketing is about making it easy for the customer to say
“YES”
Chapter 1- slide 15 Francois Gaucher - Principals of Marketing
What Is Marketing?
Peter Drucker :
• “Marketing is the whole business seen from the point of view of its final result, that is from the customer’s point of view”
• “The aim of marketing is to know the consumer well enough to develop products that sell themselves.”
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What Is Marketing?
More recent definition (Kotler):
Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return.
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What Is Marketing?
What is VALUE for the Customer?
Defining Marketing
> 1
GETS
GIVES
BENEFITS
EFFORTS
= VALUE =
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What Is Marketing?
What is VALUE captured to Customers? Market Share (width) Wallet share (Depth) Mind share (awareness & image) Heart share (emotions) Information Valuable feedback on products and service Recommendations Co-production Co-innovation Co-Marketing (story telling) Etc.
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What Is Marketing?
Marketing and Sales are two related and often
separated functions in a corporation.
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Principals of Marketing
Why Study Marketing?
Chapter 1- slide 21 Francois Gaucher - Principals of Marketing
Why Study Marketing?
Why Study Marketing?
1. Plays an important role in society
2. Vital to business survival, profits and growth
3. Offers career opportunities
4. Affects your life every day
Chapter 1- slide 22 Francois Gaucher - Principals of Marketing
Why Study Marketing?
1. Plays an important role in society
•Chinese population exceeds 1.3 billion, to feed and clothe them… we need the help of marketing
•Makes products available at the right time, quantities, location, price for the right customer with convenient packages.
•Wealth creation through products innovation
•Avoid head to head competition through differentiation
•Stimulates the economy, make people buy
Chapter 1- slide 23 Francois Gaucher - Principals of Marketing
Why Study Marketing?
1. Plays an important role in society
•Our world is influenced by the action of marketers.
•Ads show us what we should think and how we should act
– Influence and create:
» Culture (Global consumer culture through advertising)
» Lifestyle (e.g. Starbucks)
Chapter 1- slide 24 Francois Gaucher - Principals of Marketing
Why Study Marketing?
1. Plays an important role in society
•Marketing and Culture
– Marketing fosters a Popular culture: clothes, music, movies, sports, celebrities, etc. consumed by the mass market
– Marketing is present in private and public life:
» Cultural events: weddings, death, holidays, birthdays (McDonalds)
» Social issues (NGOs, government policies, etc.)
» Political issues (election campaigns, etc.)
– Marketing affects the way we view the world around us.
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Why Study Marketing?
2. Vital to business survival, profits and growth
•Business survives in making profits
•Marketing helps reach these profit goals
•All business manager must be familiar with
marketing to survive in today’s competition
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Why Study Marketing?
3. Offers career opportunities
•1/4th to 1/3rd of the entire civilian workforce in the U.S. performs marketing activities
– Marketing Research
– Advertising
– Retail Buying
– Distribution Management
– Product Management
– Product Development
– Wholesaling
•Fastest route up the corporate ladder
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Why Study Marketing?
4. Affect our life every day
•Become a better-informed consumer
•Half of every dollar spent by consumers pays for
marketing costs (USA)
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Principals of Marketing
Marketing Philosophies
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The Marketing Philosophies
Production concept
Product concept
Selling concept
Marketing concept
Societal concept
Marketing Management Orientations
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The Marketing Philosophies
Marketing Management Orientations
Philosophy Key principles
Production
Focus on efficiency of internal operations
Product Focus on product quality and performance
Sales Focus on aggressive techniques for overcoming customer
resistance
Market Focus on satisfying customer needs and wants
Societal Focus on satisfying customer needs and wants while
enhancing individual and societal well-being
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The Marketing Philosophies
• Production concept focuses on improving production and distribution efficiency
• Based on the idea that customer will favor products that are available or highly affordable
• Appropriate in the following situations:
– Demand exceeds Supply
– No competition
– Generic products
The Production Concept
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The Marketing Philosophies
“Any customer can have a car painted any colour that he wants so long as it is black” Henry Ford
The Production Concept
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The Marketing Philosophies
• Product concept is the idea that
consumers will favor products that offer the most quality, performance, and features.
• Marketing strategy focus on increasing quality, performances, and features through continuous improvements.
• The concept can lead to “Marketing myopia”
Product Concept
Old saying: “Make a better
mousetrap and the world will
beat a path to your door.” if you
just have a good product, your
business will be a success
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The Marketing Philosophies
All instruction is but a
finger pointing to the
moon; and those whose
gaze is fixed upon the
pointer will never see
beyond.
The Production Concept
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The Marketing Philosophies
• Focuses on stimulating buyers’ interest
through selling and promotion efforts.
• Based on the idea that people will buy
more goods if aggressive sales
techniques and promotions are used to
overcome customer resistance.
Selling Concept
China Life
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The Marketing Philosophies
• Typically practiced with
unsought goods
– those that buyers do not normally
think of buying, such as insurance
or non-profit areas (blood
donations, NGOs, political
campaigns, etc.)
• Low involvement purchase
– Detergent as Tide, etc.
Selling concept
Passengers in a metro station in Shanghai pass by
a huge advertisement board of Allianz..
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• Sales depends on consumers decision rather than an aggressive sales force
• Therefore, success depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do.
– Customer focus
– Competitor intelligence
– Customer relationships
Marketing concept
The Marketing Philosophies
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The Marketing Philosophies
Marketing concept
• Instead of product-centered “make and sell”
philosophy, the marketing concept is a customer-centered “sense and response” philosophy.
• The job is not to find the right customers for your product but to find the right products for your customers.
• The selling concept takes an inside-out perspective.
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The Marketing Philosophies
Customer-driven strategy
companies research current customers deeply to learn about their desires, gather new product and service ideas, and test proposed product improvements.
Customer-driving strategy
marketing is understanding customer needs even better than customers themselves do and creating products and services that meet existing and latent needs.
Marketing Management Orientations
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The Marketing Philosophies
Societal Marketing
Societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and the society’s well being. Marketing concept considers consumer short run wants, Societal concept includes the consumer long run welfare.
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The Marketing Philosophies
Societal Concept
Chapter 1- slide 42 Francois Gaucher - Principals of Marketing
The Marketing Philosophies
Societal Concept
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The Marketing Philosophies
Production concept
Product concept
Selling concept
Marketing concept
Societal concept
Marketing Management Orientations
Inside-Out Outside-In
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The Marketing Philosophies
Marketing Management Orientations
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What Is Marketing?
“Marketing is too important to be left to the
marketing department.” David Packard, Hewlett-Packard
Everybody within the company should be concerned by
Marketing = Customer-centric organization
Definition
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Principals of Marketing
The Marketing Process
Chapter 1- slide 47 Francois Gaucher - Principals of Marketing
So, What Is Marketing?
Understand the Customer
and Marketplace
Design a Marketing Strategy
Construct the Marketing
Plan
Build Customer
Relationships Capture Value
1 2 3 4 5
Research
Marketing
Information
System
Segmenting &
Targeting
Value
Proposition:
Differentiating
and Positioning
Product and
Service design
Pricing
Distribution
Promotion:
communicate the
value proposition
Customer
Relationship
Management
Partners
Relationship
Management
Create Satisfied,
Loyal customers
Increase share of
Market and share
of Customer
The Marketing Process
Analyzing the
Marketing
Environment
Create Value Manage Relationships Capture Value
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What Is Marketing?
1. Understand the marketplace and customer needs and wants.
2. Design a customer-driven marketing strategy.
3. Construct a marketing program that delivers superior value.
4. Build profitable relationships and create customer delight.
5. Capture value from customers to create profits and customer equity.
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. By creating value for consumers, they in turn capture value from consumers in the form of sales, profits, and long-term customer equity.
The Marketing Process