Chapter 1: Introduction
1. What is marketing?
What?
Marketing refers to “the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society at
large”.
= Definition of the American marketing association
Why?
Marketing, seen as a value-focused mindset, is vital for organizational success. Marketing is critical
to attract new customers and maintain and develop relationships with existing customers by
offering products that match their needs and wants. In this way, marketing is the core driver of
any organization’s financial success and overall worth.
Marketing is all about ‘value’: The modern marketing concept recognizes that marketing is only
meaningful when it purposefully creates value for customers and other stakeholders.
® Value reflects a trade-off between the benefits and costs perceived by the beneficiary.
The beneficiary can be the organization itself, the customer, but also other stakeholders such as
employees, investors, or the community. Customers are a key beneficiary of the organization since
they are key to organizational success.
ð Customer value = When focusing on value for the customer. Customer value is a
fundamental concept within marketing for at least 2 key reasons:
1. Customer value influences customers’ decision-making.
- Example: A customer wants to buy a car, they asses the expected value in terms of
benefits (positive aspects) and costs (negative) of alternative cars.
2. Customer value has an impact on the customer’s evaluative judgments such as customer
satisfaction and loyalty, which drive the success of the organization.
- Example: After the customer has bought the car and uses it, they evaluate the
realized benefits and costs, which impacts the extent to which they are satisfied with
the car.
Overall, customer value is thus crucial in the pre-purchase as well as post-purchase phase and
impacts organizational success.
2. Why is marketing relevant?
1. Marketing is essential to attract new customers.
2. Marketing is crucial to keep existing customers happy and build long-lasting relationships.
3. Marketing is the primary source of revenues.
3. The role of marketing in the organization
The role of marketing within the organization depends on the so-called management orientation of
the organization.
ð The management orientation can be considered a philosophy that determines how the
organization looks at customers and itself.
1
,We can distinguish 5 key management orientations:
Management Starting point Focus of organization
orientation
Production Customers prefer products that are available The organization focuses on
orientation and affordable. internal capabilities to enhance
productivity and efficiency.
Product Customers prefer products that have the The organization focuses on
orientation highest quality and performance. They are innovation and adding new
looking for innovative functions and functions and features.
features.
Sales Customers only buy in case of aggressive The organization focuses on
orientation selling and promotions from the aggressive selling and
organization. promotions.
Marketing Customers prefer products that satisfy their The organization focuses on
orientation needs and wants. They decide and evaluate understanding customers’ needs
based on the value of products. and wants. It focuses on creating
customer value.
Societal Although customers prefer products that The organization focusses on
marketing satisfy their needs and wants, organizations understanding customers’ needs
orientation should also consider societal well-being in and wants, but also considers the
the short and long term. well-being of society. It focuses
on customer value as well as
societal value.
The first 3 orientations are based on product centricity. This can lead to marketing myopia, which
refers to the error of focusing too much on the products of the organization instead of focusing on
the needs and wants of customers.
The last 2 orientations are based on customer centricity, which is based on the notion of mutual
value creation (for customers and organization).
Product centricity Customer centricity
Philosophy Sell products Serve customers
Approach Short-term transactions Long-term relationships with customers
Focus Internally focused: focus on the Externally focused: focus on customers and
organization and what it can do their needs and wants
Marketing Marketing as a function Marketing as a mindset
Profit Profit based on selling large Profit based on creating value for
volumes. customers and building relationships with
them
The societal marketing orientation: organization focuses on the creation of value for customers,
while also striving for the creation of so-called ‘transformative value’.
ð Transformative value involves enhancing (verbeteren) the lives of individuals, families,
communities, and/or society at large.
- For instance, Tony’s Chocolonely strives for 100% slave-free chocolate and Patagonia
engages itself to save our planet.
- It relates to sustainability and corporate social responsibility. When specifically
related to environmental issues: green marketing.
2
,4. The evolution of marketing definition
• 1935: Marketing is the performance of business activities that direct the flow of goods and
services from producers to consumers.
o It’s about what the company thinks is valuable for customers.
• 1985: Marketing is the process of planning and executing the conception, pricing, promotion,
and distribution of goods, ideas, and services to create exchanges that satisfy individual and
organizational goals.
o Individual goals: They started thinking about the value for the customers themselves.
• 2004: Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer relationships
in ways that benefit the organization and its stakeholders.
o More intention for building long term relationships! For example, real beauty
campaign: women of all sizes and colors are beautiful. Welcoming all types of beauty
showing relationships with customers.
• 2017: Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large.
o Most relevant definition of marketing today! Marketing can be a mindset about
creating value for not only customers but also partners and society at large (multiple
stakeholders).
§ For example, KBC mobile application: Through the mobile app the third
parties can get access to the customers, so they create value for 3rd parties.
§ For example, Decathlon: Not only selling products but also renting out
because of circular economy principles. They also create value for society at
large when it relates to the environmental facet of it.
5. Marketing in various types of organizations
Business-to-consumer marketing (B2C): involves marketing in the context of products purchased by
individuals or households for personal consumption.
Business-to-business (B2B) or industrial marketing: relates to marketing in the context of products
that are bought by other firms. These firms buy industrial products for 2 main reasons: (1) to produce
other products or (2) to facilitate their own operations.
Business-to-government marketing (B2G): involves marketing linked to products that are bought by
governmental bodies.
Non-profit marketing: is used by non-profit organizations such as charity organizations and social
enterprises. These organizations can sell products for instance to raise money for a good cause, but
they can also use marketing to attract volunteers, encourage donations or raise awareness.
Social marketing: involves the use of marketing to influence individuals’ behavior in order to improve
individual and/or societal well-being.
6. Essence of marketing
Marketing as a process to co-create value for customers and other stakeholders, for example:
organization, employees, shareholders, communities, the environment, the society and the whole
wide world.
3
, 7. Shifts in marketing
• Traditional marketing: role of marketing in organization shifts from tactics/strategy to
process/culture
• Digital marketing: focus on leveraging technology to create and co-create value in innovative
ways
• Service marketing: shift in nature of offerings from goods and service to staging unique
customer experiences
• Transformative marketing: shift from market orientation to sustainable market orientation
8. Marketing to co-create value
8.1 Value as core concept
What value entails differs from person to person: different views.
8.1.1 Trade-off view on value
Valerie Zeithaml: Value is a perception, and it is a trade off in what you see as benefits and costs.
Perceived value = evaluative judgement that results from trade-offs between perceived benefits
(quality) and costs (price) of a product or service.
For example:
- “Value is low price”
- “Value is the quality I get for the price I pay”
- “Value is what I get for what I give”
- “Value is whatever I want in a product”
8.1.2 Experiential view on value
Holbrook: Value = core element of the consumption experience which varies along three dimensions.
- Intrinsic aspect: naturally satisfying
- Extrinsic aspect: it serves a purpose
- Social aspect: self-oriented or other-oriented
8.1.3 Combined view on value: experiential trade-off view on value
Leroi-Werelds: between Zeithaml and Holbrook.
4
1. What is marketing?
What?
Marketing refers to “the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society at
large”.
= Definition of the American marketing association
Why?
Marketing, seen as a value-focused mindset, is vital for organizational success. Marketing is critical
to attract new customers and maintain and develop relationships with existing customers by
offering products that match their needs and wants. In this way, marketing is the core driver of
any organization’s financial success and overall worth.
Marketing is all about ‘value’: The modern marketing concept recognizes that marketing is only
meaningful when it purposefully creates value for customers and other stakeholders.
® Value reflects a trade-off between the benefits and costs perceived by the beneficiary.
The beneficiary can be the organization itself, the customer, but also other stakeholders such as
employees, investors, or the community. Customers are a key beneficiary of the organization since
they are key to organizational success.
ð Customer value = When focusing on value for the customer. Customer value is a
fundamental concept within marketing for at least 2 key reasons:
1. Customer value influences customers’ decision-making.
- Example: A customer wants to buy a car, they asses the expected value in terms of
benefits (positive aspects) and costs (negative) of alternative cars.
2. Customer value has an impact on the customer’s evaluative judgments such as customer
satisfaction and loyalty, which drive the success of the organization.
- Example: After the customer has bought the car and uses it, they evaluate the
realized benefits and costs, which impacts the extent to which they are satisfied with
the car.
Overall, customer value is thus crucial in the pre-purchase as well as post-purchase phase and
impacts organizational success.
2. Why is marketing relevant?
1. Marketing is essential to attract new customers.
2. Marketing is crucial to keep existing customers happy and build long-lasting relationships.
3. Marketing is the primary source of revenues.
3. The role of marketing in the organization
The role of marketing within the organization depends on the so-called management orientation of
the organization.
ð The management orientation can be considered a philosophy that determines how the
organization looks at customers and itself.
1
,We can distinguish 5 key management orientations:
Management Starting point Focus of organization
orientation
Production Customers prefer products that are available The organization focuses on
orientation and affordable. internal capabilities to enhance
productivity and efficiency.
Product Customers prefer products that have the The organization focuses on
orientation highest quality and performance. They are innovation and adding new
looking for innovative functions and functions and features.
features.
Sales Customers only buy in case of aggressive The organization focuses on
orientation selling and promotions from the aggressive selling and
organization. promotions.
Marketing Customers prefer products that satisfy their The organization focuses on
orientation needs and wants. They decide and evaluate understanding customers’ needs
based on the value of products. and wants. It focuses on creating
customer value.
Societal Although customers prefer products that The organization focusses on
marketing satisfy their needs and wants, organizations understanding customers’ needs
orientation should also consider societal well-being in and wants, but also considers the
the short and long term. well-being of society. It focuses
on customer value as well as
societal value.
The first 3 orientations are based on product centricity. This can lead to marketing myopia, which
refers to the error of focusing too much on the products of the organization instead of focusing on
the needs and wants of customers.
The last 2 orientations are based on customer centricity, which is based on the notion of mutual
value creation (for customers and organization).
Product centricity Customer centricity
Philosophy Sell products Serve customers
Approach Short-term transactions Long-term relationships with customers
Focus Internally focused: focus on the Externally focused: focus on customers and
organization and what it can do their needs and wants
Marketing Marketing as a function Marketing as a mindset
Profit Profit based on selling large Profit based on creating value for
volumes. customers and building relationships with
them
The societal marketing orientation: organization focuses on the creation of value for customers,
while also striving for the creation of so-called ‘transformative value’.
ð Transformative value involves enhancing (verbeteren) the lives of individuals, families,
communities, and/or society at large.
- For instance, Tony’s Chocolonely strives for 100% slave-free chocolate and Patagonia
engages itself to save our planet.
- It relates to sustainability and corporate social responsibility. When specifically
related to environmental issues: green marketing.
2
,4. The evolution of marketing definition
• 1935: Marketing is the performance of business activities that direct the flow of goods and
services from producers to consumers.
o It’s about what the company thinks is valuable for customers.
• 1985: Marketing is the process of planning and executing the conception, pricing, promotion,
and distribution of goods, ideas, and services to create exchanges that satisfy individual and
organizational goals.
o Individual goals: They started thinking about the value for the customers themselves.
• 2004: Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer relationships
in ways that benefit the organization and its stakeholders.
o More intention for building long term relationships! For example, real beauty
campaign: women of all sizes and colors are beautiful. Welcoming all types of beauty
showing relationships with customers.
• 2017: Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large.
o Most relevant definition of marketing today! Marketing can be a mindset about
creating value for not only customers but also partners and society at large (multiple
stakeholders).
§ For example, KBC mobile application: Through the mobile app the third
parties can get access to the customers, so they create value for 3rd parties.
§ For example, Decathlon: Not only selling products but also renting out
because of circular economy principles. They also create value for society at
large when it relates to the environmental facet of it.
5. Marketing in various types of organizations
Business-to-consumer marketing (B2C): involves marketing in the context of products purchased by
individuals or households for personal consumption.
Business-to-business (B2B) or industrial marketing: relates to marketing in the context of products
that are bought by other firms. These firms buy industrial products for 2 main reasons: (1) to produce
other products or (2) to facilitate their own operations.
Business-to-government marketing (B2G): involves marketing linked to products that are bought by
governmental bodies.
Non-profit marketing: is used by non-profit organizations such as charity organizations and social
enterprises. These organizations can sell products for instance to raise money for a good cause, but
they can also use marketing to attract volunteers, encourage donations or raise awareness.
Social marketing: involves the use of marketing to influence individuals’ behavior in order to improve
individual and/or societal well-being.
6. Essence of marketing
Marketing as a process to co-create value for customers and other stakeholders, for example:
organization, employees, shareholders, communities, the environment, the society and the whole
wide world.
3
, 7. Shifts in marketing
• Traditional marketing: role of marketing in organization shifts from tactics/strategy to
process/culture
• Digital marketing: focus on leveraging technology to create and co-create value in innovative
ways
• Service marketing: shift in nature of offerings from goods and service to staging unique
customer experiences
• Transformative marketing: shift from market orientation to sustainable market orientation
8. Marketing to co-create value
8.1 Value as core concept
What value entails differs from person to person: different views.
8.1.1 Trade-off view on value
Valerie Zeithaml: Value is a perception, and it is a trade off in what you see as benefits and costs.
Perceived value = evaluative judgement that results from trade-offs between perceived benefits
(quality) and costs (price) of a product or service.
For example:
- “Value is low price”
- “Value is the quality I get for the price I pay”
- “Value is what I get for what I give”
- “Value is whatever I want in a product”
8.1.2 Experiential view on value
Holbrook: Value = core element of the consumption experience which varies along three dimensions.
- Intrinsic aspect: naturally satisfying
- Extrinsic aspect: it serves a purpose
- Social aspect: self-oriented or other-oriented
8.1.3 Combined view on value: experiential trade-off view on value
Leroi-Werelds: between Zeithaml and Holbrook.
4
