1ste Ba TEW: Marketing
PART 1: CORE PRINCIPLES, CONTEXT, AND CUSTOMERS
CHAPTER 1: MARKETING PRINCIPLES AND PRACTICE
1.1 What is marketing?
The primary goal of marketing is understanding and meeting customer needs to create value
Marketing is a social and managerial process by which individuals and groups obtain what they need and want through
creating and exchanging products and value with others.
In business context: to build and maintain profitable customer relationships with stakeholders.
Marketing applies to physical products, services, retail, experiences, events, films, music & theater, places, ideas, charities
and non-profits, people anywhere “buyers” have a choice
1.2 What is the difference between Customers and Consumers?
A customer is a buyer, a purchaser, a patron, a client, or a shopper – someone buying from a shop, a website, a business
and, in the sharing economy, another customer (e.g., Airbnb or Uber).
The difference between customer and consumer is that a customer purchases or obtains an offering, but a consumer uses it
(or eats it, in case of food).
Consumer = broad term for anyone who is a potential customer or who has an influence
Consumers’ buying roles: (the roles could be different people or one person who has all these roles)
- Initiator: initiates idea
- Influencer: influences
- Decider: ultimate buying decision
- Buyer: actual purchase
- Payer: pays
- User: consumes
- Gatekeeper: controls access
Example: a cat could play the role of the user (consumes cat food) but also of the influencer (influencing their owner to buy
a certain brand)
Difference buyer and payer: if you buy something as an employee with the credit card of the company, then you’re a buyer
and not a payer because you’re not paying with your own money
1.3 Market orientation
= the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination
of the intelligence across the departments, and organization-wide responsiveness to it
= organization-wide belief in delivering customer value
Understanding consumer needs even better than consumers themselves do
- “Get closer than ever to your customers. So close that you tell them what they need well before they realize it
themselves.” – Steve Jobs
Creating products that meet existing and latent needs, now or in future.
Developing a market orientation means developing:
- Customer orientation: concerned with creating superior value by continuously developing and redeveloping
offerings to meet customer needs, meaning that we should measure customer satisfaction on a continuous basis
and train front-line service staff
- Competitor orientation: requiring an organization to develop an understanding of its competitors’ short-term
strengths and weaknesses, and its own long-term capabilities and strategies
1
, - Interfunctional coordination: requiring all an organization’s functions to work together for long-term profit
growth
Customer centricity is also:
- NOT trying to please ALL customers
- Fulfilling needs in a PROFITABLE way
Idea of marketing = choosing a segment of customers and pleasing that certain segment
1.4 Marketing’s intellectual roots
Marketing as a discipline has developed because of the influence of its practitioners, but also developments in several
related disciplines, including the areas of industrial economics, psychology, sociology, and anthropology, as follows:
Industrial economics influences: Our knowledge of the matching of supply and demand within industries owes much to the
development of microeconomics. The economic concepts of perfect competition and the matching of supply to demand
underlie the marketing concept, particularly in relation to the price at which offerings are sold and the quantity distributed
and the nature of business-to-business marketing. Theories of income distribution, scale of operation, monopoly,
competition, and finance all come from economics, although the influence of economics on marketing has declined.
Psychological influences: Our understanding of consumer behavior derives principally from psychology - especially from
motivation research in relation to consumer attitudes, perceptions, motivations, and information processing, and our
understanding of persuasion, consumer personality, and customer satisfaction. Understanding buyer psychology is
fundamental to the marketing function. Because marketing is about understanding customers’ needs, empathy with
customers is a prerequisite.
Sociological influences: Our knowledge of how groups of people behave derives from sociology, with insights into how
people from similar gender and age groups behave (demographics), how people in different social positions within society
behave (class), why we do things in the way that we do (motivation), general ways in which groups behave (customs), and
culture. What society thinks (that is, public opinion) and how communications pass-through opinion leaders, as well as how
we influence the way people think, for example propaganda research, have all informed marketing practice.
Anthropological influences: Our debt to social anthropology is increasing as we use qualitative approaches such as
ethnography, netnography, and observation in researching consumer behavior - particularly the behavior of subgroups and
cultures (for example tweenagers, haul girls).
Computer science influences: Marketing’s debt to advances in computer science is substantial in the digital age but is set to
be greater still in the next few decades. For example, this has influenced the algorithms that are used to make
recommendations in the entertainment choices you make (such as Netflix) and to determine a supermarket group’s retail
site location decisions. Advances in our understanding of human-computer interaction have allowed the development of
better (that is, easier to navigate) website pages and the use of artificially intelligent customer service chatbots. For
example, Spotify, Facebook, and Messenger app bot allows customers to search for, listen to, and share music.
1.5 Differences between Sales and Marketing
Sales: product push, short-term focus on satisfaction of customer needs
Marketing: product pull, long-term focus on satisfaction of customer needs, high focus on stimulation of demand
2
,Acquisition vs. retention:
- Acquisition = sales
Attracting consumers to your brand
- Retention = marketing
Attracting and maintaining your consumers
1.6 What do marketers do?
The core competencies of the marketer are to generate customer insights, champion the customer and hence customer
focus, and develop marketing strategy (see green segments for technical competencies include).
Marketing inherently puts customers first and should develop further in enhancing a firm’s relationships with its customers
and in terms of the power wielded inside companies. However, there are signs that major public companies are beginning
to bring sales-and-marketing experience to their boards. Marketing functions can, however, be divorced from a strategic
role in some companies. This is likely to change only if marketers demonstrate and are able to quantify marketing’s value of
marketing to their organizations.
This lack of strategic input arises because marketers do not control all the marketing mix elements. For example, marketers
do not always control pricing, distribution, product development, and even promotion, given that this is often outsourced
to agencies, although marketers usually exercise some influence across these activities. Marketing is not always organized
as a separate department, but the ethos and influence of marketing philosophy should nonetheless be apparent and impact
upon an organization’s decision-making. Marketing is present in all aspects of an organization, since all departments play a
role in creating, delivering, and satisfying customers. Employees in the research and development (R&D) department,
designing new products to meet existing customer needs, are performing a marketing role. Similarly, members of the
procurement department buying components for a new offering must purchase those components at a specific quality and
cost that meets customer needs. We could go through all a company’s departments and discover that, in each department,
3
, there is a marketing role to be played to some extent. In other words, marketing is distributed throughout the organization
and all employees can be considered part-time marketers.
Placing the customer at the center of a company’s operations and decision-making processes
- Generate customer insights
- Develop marketing strategy
1.7 Marketing as exchange
Exchange = the act of obtaining a desired object from someone by offering something in return
- At least two parties
- Each must hold something of value to offer
Customer value: the customer’s assessment of the product’s overall capacity to satisfy his/her needs
- Parties must want to deal with each other
Exchange creates value, gives people more consumption choices or possibilities.
Example of value:
- Tesla
Benefit: save money on gas, subsidy to buy electric vehicles, green image, it can drive itself
Drawback: expensive, huge backorder on Tesla’s, long waiting time until it’s charged
- British Royal Mail has a stamp that guarantees next-day delivery (97% does deliver the next day)
Campaign to change perception; “It’s better than the Germans” this helped to change the
perceptions, since Germans are very punctual (pünktlich)
Value:
- Customer value
= the consumer’s assessment of the product’s overall capacity to satisfy his/her needs
= ratio between perceived benefits and costs (both monetary and non-monetary)
- Perceived value/subjective value
Value is the most important part and more specifically creating value for customers/consumers
Exchange of value:
Outcomes of creating customer value include repeat purchases, positive word-of-mouth (brand ambassadorship), customer
loyalty and retention, growing market share, growing share of customer and building customer equity.
- Customer equity = combined lifetime value of all your customers
Satisfaction leads to repeat purchases and positive word-of-mouth. Dissatisfaction entails discontinuation of purchase and
negative word-of-mouth.
while the average satisfied customer tells 3 others about good experiences, the average dissatisfied customer tells 10
others of his/her bad experience.
4
PART 1: CORE PRINCIPLES, CONTEXT, AND CUSTOMERS
CHAPTER 1: MARKETING PRINCIPLES AND PRACTICE
1.1 What is marketing?
The primary goal of marketing is understanding and meeting customer needs to create value
Marketing is a social and managerial process by which individuals and groups obtain what they need and want through
creating and exchanging products and value with others.
In business context: to build and maintain profitable customer relationships with stakeholders.
Marketing applies to physical products, services, retail, experiences, events, films, music & theater, places, ideas, charities
and non-profits, people anywhere “buyers” have a choice
1.2 What is the difference between Customers and Consumers?
A customer is a buyer, a purchaser, a patron, a client, or a shopper – someone buying from a shop, a website, a business
and, in the sharing economy, another customer (e.g., Airbnb or Uber).
The difference between customer and consumer is that a customer purchases or obtains an offering, but a consumer uses it
(or eats it, in case of food).
Consumer = broad term for anyone who is a potential customer or who has an influence
Consumers’ buying roles: (the roles could be different people or one person who has all these roles)
- Initiator: initiates idea
- Influencer: influences
- Decider: ultimate buying decision
- Buyer: actual purchase
- Payer: pays
- User: consumes
- Gatekeeper: controls access
Example: a cat could play the role of the user (consumes cat food) but also of the influencer (influencing their owner to buy
a certain brand)
Difference buyer and payer: if you buy something as an employee with the credit card of the company, then you’re a buyer
and not a payer because you’re not paying with your own money
1.3 Market orientation
= the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination
of the intelligence across the departments, and organization-wide responsiveness to it
= organization-wide belief in delivering customer value
Understanding consumer needs even better than consumers themselves do
- “Get closer than ever to your customers. So close that you tell them what they need well before they realize it
themselves.” – Steve Jobs
Creating products that meet existing and latent needs, now or in future.
Developing a market orientation means developing:
- Customer orientation: concerned with creating superior value by continuously developing and redeveloping
offerings to meet customer needs, meaning that we should measure customer satisfaction on a continuous basis
and train front-line service staff
- Competitor orientation: requiring an organization to develop an understanding of its competitors’ short-term
strengths and weaknesses, and its own long-term capabilities and strategies
1
, - Interfunctional coordination: requiring all an organization’s functions to work together for long-term profit
growth
Customer centricity is also:
- NOT trying to please ALL customers
- Fulfilling needs in a PROFITABLE way
Idea of marketing = choosing a segment of customers and pleasing that certain segment
1.4 Marketing’s intellectual roots
Marketing as a discipline has developed because of the influence of its practitioners, but also developments in several
related disciplines, including the areas of industrial economics, psychology, sociology, and anthropology, as follows:
Industrial economics influences: Our knowledge of the matching of supply and demand within industries owes much to the
development of microeconomics. The economic concepts of perfect competition and the matching of supply to demand
underlie the marketing concept, particularly in relation to the price at which offerings are sold and the quantity distributed
and the nature of business-to-business marketing. Theories of income distribution, scale of operation, monopoly,
competition, and finance all come from economics, although the influence of economics on marketing has declined.
Psychological influences: Our understanding of consumer behavior derives principally from psychology - especially from
motivation research in relation to consumer attitudes, perceptions, motivations, and information processing, and our
understanding of persuasion, consumer personality, and customer satisfaction. Understanding buyer psychology is
fundamental to the marketing function. Because marketing is about understanding customers’ needs, empathy with
customers is a prerequisite.
Sociological influences: Our knowledge of how groups of people behave derives from sociology, with insights into how
people from similar gender and age groups behave (demographics), how people in different social positions within society
behave (class), why we do things in the way that we do (motivation), general ways in which groups behave (customs), and
culture. What society thinks (that is, public opinion) and how communications pass-through opinion leaders, as well as how
we influence the way people think, for example propaganda research, have all informed marketing practice.
Anthropological influences: Our debt to social anthropology is increasing as we use qualitative approaches such as
ethnography, netnography, and observation in researching consumer behavior - particularly the behavior of subgroups and
cultures (for example tweenagers, haul girls).
Computer science influences: Marketing’s debt to advances in computer science is substantial in the digital age but is set to
be greater still in the next few decades. For example, this has influenced the algorithms that are used to make
recommendations in the entertainment choices you make (such as Netflix) and to determine a supermarket group’s retail
site location decisions. Advances in our understanding of human-computer interaction have allowed the development of
better (that is, easier to navigate) website pages and the use of artificially intelligent customer service chatbots. For
example, Spotify, Facebook, and Messenger app bot allows customers to search for, listen to, and share music.
1.5 Differences between Sales and Marketing
Sales: product push, short-term focus on satisfaction of customer needs
Marketing: product pull, long-term focus on satisfaction of customer needs, high focus on stimulation of demand
2
,Acquisition vs. retention:
- Acquisition = sales
Attracting consumers to your brand
- Retention = marketing
Attracting and maintaining your consumers
1.6 What do marketers do?
The core competencies of the marketer are to generate customer insights, champion the customer and hence customer
focus, and develop marketing strategy (see green segments for technical competencies include).
Marketing inherently puts customers first and should develop further in enhancing a firm’s relationships with its customers
and in terms of the power wielded inside companies. However, there are signs that major public companies are beginning
to bring sales-and-marketing experience to their boards. Marketing functions can, however, be divorced from a strategic
role in some companies. This is likely to change only if marketers demonstrate and are able to quantify marketing’s value of
marketing to their organizations.
This lack of strategic input arises because marketers do not control all the marketing mix elements. For example, marketers
do not always control pricing, distribution, product development, and even promotion, given that this is often outsourced
to agencies, although marketers usually exercise some influence across these activities. Marketing is not always organized
as a separate department, but the ethos and influence of marketing philosophy should nonetheless be apparent and impact
upon an organization’s decision-making. Marketing is present in all aspects of an organization, since all departments play a
role in creating, delivering, and satisfying customers. Employees in the research and development (R&D) department,
designing new products to meet existing customer needs, are performing a marketing role. Similarly, members of the
procurement department buying components for a new offering must purchase those components at a specific quality and
cost that meets customer needs. We could go through all a company’s departments and discover that, in each department,
3
, there is a marketing role to be played to some extent. In other words, marketing is distributed throughout the organization
and all employees can be considered part-time marketers.
Placing the customer at the center of a company’s operations and decision-making processes
- Generate customer insights
- Develop marketing strategy
1.7 Marketing as exchange
Exchange = the act of obtaining a desired object from someone by offering something in return
- At least two parties
- Each must hold something of value to offer
Customer value: the customer’s assessment of the product’s overall capacity to satisfy his/her needs
- Parties must want to deal with each other
Exchange creates value, gives people more consumption choices or possibilities.
Example of value:
- Tesla
Benefit: save money on gas, subsidy to buy electric vehicles, green image, it can drive itself
Drawback: expensive, huge backorder on Tesla’s, long waiting time until it’s charged
- British Royal Mail has a stamp that guarantees next-day delivery (97% does deliver the next day)
Campaign to change perception; “It’s better than the Germans” this helped to change the
perceptions, since Germans are very punctual (pünktlich)
Value:
- Customer value
= the consumer’s assessment of the product’s overall capacity to satisfy his/her needs
= ratio between perceived benefits and costs (both monetary and non-monetary)
- Perceived value/subjective value
Value is the most important part and more specifically creating value for customers/consumers
Exchange of value:
Outcomes of creating customer value include repeat purchases, positive word-of-mouth (brand ambassadorship), customer
loyalty and retention, growing market share, growing share of customer and building customer equity.
- Customer equity = combined lifetime value of all your customers
Satisfaction leads to repeat purchases and positive word-of-mouth. Dissatisfaction entails discontinuation of purchase and
negative word-of-mouth.
while the average satisfied customer tells 3 others about good experiences, the average dissatisfied customer tells 10
others of his/her bad experience.
4
