V

Create value for customers and build customer relationships

Understand the marketplace and customer needs and wants

Design a customer-driven marketing strategy

Construct an integrated marketing program that delivers superior value

Capture value from customers in return

Build profitable 1 relationships and I J create customer delight

Capture value from customers to create profits and customer equity

# FIGURE I 1.1 A Simple Model of the Marketing Process

In this chapter and the next, we will examine the steps of this simple model of marketing. In this chapter, we will review each step but focus more on the customer relationship steps—understanding customers, building customer relationships, and capturing value from customers. In Chapter 2, we'll look more deeply into the second and third steps— designing marketing strategies and constructing marketing programs.

Understanding the Marketplace and Customer Needs (PP 30-32)

As a first step, marketers need to understand customer needs and wants and the marketplace within which they operate. We now examine five core customer and marketplace concepts: (1) needs, wants, and demands; (2) market offerings (products, services, and experiences); (3) value and satisfaction; (4) exchanges and relationships; and (5) markets.

Customer Needs, Wants, and Demands

The most basic concept underlying marketing is that of human needs. Human needs are 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. These needs were not created by marketers; they are a basic part of the human makeup.

Wants are the form human needs take as they are shaped by culture and individual personality. A Briton needs food but wants a rumpsteak sub and chips. A person in Papua New Guinea needs food but wants taro, rice, yams, and pork. Wants are shaped by one's society and are described in terms of objects that will satisfy needs. When backed by buying power, wants become demands. Given their wants and resources, people demand products with benefits that add up to the most value and satisfaction.

Outstanding marketing companies go to great lengths to learn about and understand their customers' needs, wants, and demands. They conduct consumer research and analyze mountains of customer data. Their people at all levels—including top management—stay close to customers. In the United States, for example, at Southwest Airlines, all senior executives handle bags, check in passengers, and serve as flight attendants once every quarter. At the consumer products giant Procter & Gamble (P&G), executives from the CEO down routinely spend time with consumers in their homes and other settings. "We all go out and really spend time with consumers," notes P&G's global marketing officer, Jim Stengel, "just to look at the differences in how they [think] about brands [and what's] important in their lives."6

Market Offerings—Products, Services, and Experiences

Consumers' needs and wants are fulfilled through market offerings—some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Market offerings are not limited to physical products. They also include services—activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, airline, hotel, tax preparation, and home repair services.

More broadly, market offerings also include other entities, such as persons, places, organizations, information, and ideas. AFor example, UNCF, a U.S. nonprofit that provides . financial assistance for students at traditionally black colleges and universities, markets the idea that "A Mind Is a Terrible Thing to Waste." The nation's oldest and most successful African American education assistance organization, UNCF has helped more than 350,000 minority students graduate from college.7

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. They are so taken with their products that they focus only on existing wants and lose sight of underlying customer needs.8 They forget that a product is s--N

rthoi I Marketing is all about Comment | creating value for customers. So, as the first step in the marketing process, the company must fully understand consumers and the

, marketplace In which It operates.

Needs

States of felt deprivation.

Wants

The form human needs take as shaped by culture and Individual personality.

Demands

Human wants that are backed by buying power.

Market offering

Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Marketing myopia

The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.

UNCF helps thousands of deserving students. But we At T Tvt rrr nMl-f'Pf ^

have to turn away thousands more. So please give nil X vtajkw to the United Negro College Fund. Vour donation Mil ¡Sj COLLEGE rUND

make a difference. Visit uncf.org or call 1 -800-332.8623. cp a mmo ¡s a tmrwe thing to waste?

Market offerings are not limited to physical products. UNCF powerfully markets the idea that "A mind is a terrible thing to waste."

UNCF helps thousands of deserving students. But we At T Tvt rrr nMl-f'Pf ^

have to turn away thousands more. So please give nil X vtajkw to the United Negro College Fund. Vour donation Mil ¡Sj COLLEGE rUND

make a difference. Visit uncf.org or call 1 -800-332.8623. cp a mmo ¡s a tmrwe thing to waste?

only a tool to solve a consumer problem. A manufacturer of 6 mm drill bits may think that the customer needs a drill bit. But what the customer really needs is a quarter-inch hole. These sellers will have trouble if a new product comes along that serves the customer's need better or less expensively. The customer will have the same need but will want the new product.

Smart marketers look beyond the attributes of the products and services they sell. By orchestrating several services and products, they create brand experiences for consumers. For example, you don't just watch a Manchester United football game, you tune into MUTV or log on to RedCafe.net and immerse yourself in the exhilarating Reds experience. Similarly, computer maker Hewlett-Packard recognizes that a personal computer is much more than just a collection of wires and electrical components. It's an intensely personal user experience. As noted in a recent HP ad, "There is hardly anything that you own that is more personal. Your personal computer is your backup brain. It's your life It's your astonishing strategy, staggering proposal, dazzling calculation. It's your autobiography, written in a thousand daily words."9

Customer Value and Satisfaction

Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many market offerings? Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others.

Marketers must be careful to 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 raise expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. We will revisit these core concepts later in the chapter.

Exchanges and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange relationExchange ships. Exchange is the act of obtaining a desired object from someone by offering something The act of obtaining a desired object from ¡n return. In the broadest sense, the marketer tries to bring about a response to some market someone by offering something in return. offering. The response may be more than simply buying or trading products and services. An

MP candidate, for instance, wants votes, a parish church wants membership, an amateur players company wants an audience, and a social action group wants idea acceptance.

Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object. Beyond simply attracting new customers and creating transactions, the goal is to retain customers and grow their business with the company. Marketers want to build strong relationships by consistently delivering superior customer value. We will expand on the important concept of managing customer relationships later in the chapter.

Markets

Market The concepts of exchange and relationships lead to the concept of a market. A market is

The set of all actual and potential buyers the set of actual and potential buyers of a product. These buyers share a particular need or of a product or service. want ^^ can be satisfied through exchange relationships.

Marketing means managing markets to bring about profitable customer relationships. However, creating these relationships takes work. Sellers must search for buyers, identify their needs, design good market offerings, set prices for them, promote them, and store and deliver them. Activities such as consumer research, product development, communication, distribution, pricing, and service are core marketing activities.

A Modern Marketing System

Each party in the system adds value. A retailer like Tesco can't meet its goal of lower prices unless Its suppliers provide low costs. A carmaker like Aston Marton can't deliver high quality to car buyers unless its dealers provide outstanding service.

Each party in the system adds value. A retailer like Tesco can't meet its goal of lower prices unless Its suppliers provide low costs. A carmaker like Aston Marton can't deliver high quality to car buyers unless its dealers provide outstanding service.

Company

Competitors

Marketing intermediaries
Crushing Your Goals and Achieving Success

Crushing Your Goals and Achieving Success

Meeting Realistic Goals Can Be Easy if You Have the Right Understanding of the Process. The Reason So Many People Fail at Meeting Their Goals is Because They Have a Confused Understanding of Realistic Goal Setting and Self-Motivation Methodology.

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