CHAPTER Eighth Edition MARKET IN G TH E CO RE 1 Creating Customer Relationships and Value through Marketing Roger A. Kerin Steven W. H artley ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO: 1. Define marketing and identify the diverse factors influencing marketing actions. 2. Explain how marketing discovers and satisfies consumer needs. 3. Distinguish between marketing mix factors and environmental forces. 4. Explain how organizations build strong customer relationships and customer value through marketing. 5. Describe the characteristics of a market orientation. 1-2 ©McGraw-Hill Education. CREATING CUSTOMER VALUE: THE CHOBANI WAY! Creating an exceptional product. Connecting with customers: • Social Media • CHOmobile Chobani Ad Distribution in major grocery chains. Today: yogurt drinks, cafes, food incubators. 1-3 ©McGraw-Hill Education. WHAT IS MARKETING? (1 of 2) What is marketing? • You are a marketing expert already. • Involved in thousands of buying decisions. • Involved in some selling decisions. • Marketing is NOT easy. Chobani Web Site 1-4 ©McGraw-Hill Education. WHAT IS MARKETING? (2 of 2) Marketing and your career: • Goal is to “do marketing!” • Small businesses offer marketing careers. You, too, could start a successful business! 1-5 ©McGraw-Hill Education. WHAT IS MARKETING? DELIVERING VALUE TO CUSTOMERS Marketing Seeks to: • Discover needs and wants of customers. • Satisfy those needs. Exchange AMA Definition of Marketing 1-6 ©McGraw-Hill Education. WHAT IS MARKETING? DIVERSE ELEMENTS INFLUENCE MARKETING ACTIONS 1. The organization itself and its departments 2. Society 3. Environmental forces 1-7 ©McGraw-Hill Education. FIGURE 1-1 A marketing department relates to many people, organizations, and environmental forces. Access the text alternative for these images. ©McGraw-Hill Education. 1-8 WHAT IS MARKETING? REQUIREMENTS FOR MARKETING TO OCCUR 1. Two+ parties with unsatisfied needs 2. A desire and ability to be satisfied 3. A way for the parties to communicate 4. Something to exchange Domino’s Pizza 1-9 ©McGraw-Hill Education. HOW MARKETING DISCOVERS CONSUMER NEEDS THE CHALLENGE: NEW PRODUCTS Consumers may not know or cannot describe what they need or want. Most new products fail. The challenge: • Focus on the Consumer Benefit. • Learn From Past Mistakes. 1-10 ©McGraw-Hill Education. Wearable Computer What factors are “benefits” and “showstoppers”? Wearable computer Mid-calorie soda Automobile subscription service Google Glass Coca-Cola Stevia YoYo 1-11 ©McGraw-Hill Education. HOW MARKETING DISCOVERS CONSUMER NEEDS NEEDS vs. WANTS Needs Wants Does marketing persuade people to buy the “wrong” things? Market 1-12 ©McGraw-Hill Education. FIGURE 1-2 Marketing seeks to discover consumer needs through research and then satisfy them with a marketing program. Access the text alternative for these images. ©McGraw-Hill Education. 1-13 HOW MARKETING SATISFIES CONSUMER NEEDS THE FOUR Ps Target market The 4 Ps: Controllable marketing mix factors 1. 2. 3. 4. Product Promotion Price Place 1-14 ©McGraw-Hill Education. HOW MARKETING DISCOVERS CONSUMER NEEDS ENVIRONMENTAL FORCES Customer value proposition Uncontrollable, environmental forces • • • • • Social Competitive Economic Regulatory Technological 1-15 ©McGraw-Hill Education. THE MARKETING PROGRAM HOW CUSTOMER RELATIONSHIPS ARE BUILT Customer Value Strategies • Best Price: Target • Best Service: Nordstrom • Best Product: Starbucks Target Ad Nordstrom Ad Starbucks Ad 1-16 ©McGraw-Hill Education. THE MARKETING PROGRAM MARKETING PROGRAM AND SEGMENTS Relationship marketing • Easy to understand • Hard to do Marketing program Market segments 1-17 ©McGraw-Hill Education. 3M’S STRATEGY AND MARKETING PROGRAM DISCOVERING AND SATISFYING STUDENT STUDY NEEDS (1 of 2) Move from ideas to a marketable highlighter product. Add the Post-it® Flag Pen. Develop a marketing program for the Post-it® Flag 3M Post-it Highlighter and Pen. Flag Highlighter 1-18 ©McGraw-Hill Education. FIGURE 1-3 Marketing programs for two new 3M Post-it® brand products targeted at college students and office workers. Marketing Program Action to Reach: Marketing Mix Element College Student Market Segment Office Worker Market Segment Rationale for Marketing Program Action Product Strategy Offer Post-it® Flag Highlighter to help college students in their studying. Offer Post-it® Flag Highlighter to help office workers in their day-to-day activities. Listen carefully to the needs and wants of potential customer segments to use 3M technology to introduce a useful, innovative product. Price Strategy Seek retail price of about $3.99 to $4.99 for a single Post-it® Flag Highlighter or $5.99 to $7.99 for a three pack. Seek retail price of about $3.99 to $4.99 for a single Post-it® Flag Pen; wholesale prices are lower. Set prices that provide genuine value to the customer segment being targeted. Promotion Strategy Run a limited promotion with a TV ad and some ads in college newspapers and then rely on student word-ofmouth messages. Run limited promotion among distributors to get them to stock the product. Increase awareness among potential users who have never heard of this new, innovative 3M product. Place Strategy Distribute Post-it® Flag Highlighters through college bookstores, office supply chains, and mass merchandisers. Distribute Post-it® Flag Pens through office wholesalers and retailers as well as mass merchandisers. Make it easy for prospective buyers to buy at convenient retail outlets (both products) or get at work (Post-it® Flag 1-19 Pens only) ©McGraw-Hill Education. 3M’S STRATEGY AND MARKETING PROGRAM DISCOVERING AND SATISFYING STUDENT STUDY NEEDS (2 of 2) Extending the product line. Developed third-generation Post-it® Flag Highlighter 1-20 ©McGraw-Hill Education. HOW MARKETING BECAME IMPORTANT EVOLUTION OF THE MARKET ORIENTATION Market orientation Customer relationship management (CRM) Customer experience • What firms think they offer customers • What customers say they receive 1-21 ©McGraw-Hill Education. HOW MARKETING BECAME IMPORTANT ETHICS AND SOCIAL RESPONSIBILITY Balancing the interests of different groups. Ethics: Companies develop codes of ethics. Social responsibility: Organizations are accountable to a larger society. Societal marketing concept 1-22 ©McGraw-Hill Education. HOW MARKETING BECAME IMPORTANT BREADTH AND DEPTH OF MARKETING (1 of 2) Who markets? What is marketed? • Products (Goods) • Services • Ideas Hermitage Tour 1-23 ©McGraw-Hill Education. HOW MARKETING BECAME IMPORTANT BREADTH AND DEPTH OF MARKETING (2 of 2) Who buys and uses what is marketed? Ultimate consumers Organizational buyers Who benefits? How consumers benefit: Utility • Form utility • Place utility • Time utility • Possession utility ©McGraw-Hill Education. 1-24 VIDEO CASE 1 CHOBANI: MAKING GREEK YOGURT A HOUSEHOLD NAME Chobani Video Case 1-25 ©McGraw-Hill Education. VIDEO CASE 1 Chobani Greek Yogurt (1 of 5) 1. From the information about Chobani in the case and at the start of the chapter, (a) who did Hamdi Ulukaya identify as the target for his first cups of Greek yogurt and (b) what was his initial 4Ps marketing strategy? 1-26 ©McGraw-Hill Education. VIDEO CASE 1 Chobani Greek Yogurt (2 of 5) 2. (a) What marketing actions would you expect the companies selling Yoplait, Dannon, and PepsiCo yogurts to take in response to Chobani’s appearance and (b) how might Chobani respond? 1-27 ©McGraw-Hill Education. VIDEO CASE 1 Chobani Greek Yogurt (3 of 5) 3. What are (a) the advantages and (b) the disadvantages of Chobani’s Customer Loyalty Team that handles communications with customers—from phone calls and e-mails to Facebook and Twitter messages? 1-28 ©McGraw-Hill Education. VIDEO CASE 1 Chobani Greek Yogurt (4 of 5) 4. As Chobani seeks to build its brand, it opened a unique retail store in New York City: Chobani SoHo. Why did Chobani do this? 1-29 ©McGraw-Hill Education. VIDEO CASE 1 Chobani Greek Yogurt (5 of 5) 5. (a) What criteria might Chobani use when it seeks markets in new countries and (b) what three or four countries meet these criteria? 1-30 ©McGraw-Hill Education. IN-CLASS ACTIVITY 1-1 DESIGNING A CANDY BAR 1-31 ©McGraw-Hill Education. ICA 1-1 Designing a Better Candy Bar Designing a Better Candy Bar Example: Ghirardelli Chocolate Ghirardelli Ad Ghirardelli Web Site 1-32 ©McGraw-Hill Education. ICA 1-1: Designing a Candy Bar Handout Marketing Program and Points of Difference Your Marketing Actions What is it? (Product) Specify features, benefits, form, size, etc. and why. How much will consumers pay for it? (Price) Specify cost and why. How will consumers find out about it? (Promotion) Specify methods to inform and generate trial and why. Where will consumers buy it? (Place) Specify types of retailers and why. How is it different from others? (Points of difference) Specify why it is superior to competitors’ offerings. 1-33 ©McGraw-Hill Education. IN-CLASS ACTIVITY 1-2 WHAT MAKES A BETTER MOUSETRAP? 1-34 ©McGraw-Hill Education. ICA 1-2 A Victorious Mouse “If a man (woman) makes a better mousetrap, the world will beat a path to his (her) door.” ~ Ralph Waldo Emerson 1-35 ©McGraw-Hill Education. ICA 1-2 Victor® Metal Bait Pedal & Live Catch Mousetraps Making A Better Mousetrap Example: Victor Mousetraps Metal Bait Pedal Website Video Live Catch Website 1-36 ©McGraw-Hill Education. ICA 1-2: Why Did the New Plastic Mousetrap Fail to Meet Sales Expectations? 1. OLD WOODEN TRAP NEW PLASTIC TRAP Wood Plastic 2 for 15¢ 25¢ each 50% efficiency 90% efficiency 2. 3. 4. 5. 6. 7. Some Key Marketing Questions: What triggers the decision to buy a mousetrap? Who in the family makes the decision to buy? Who actually buys the mousetrap? Where does the person buy the mousetrap? Who in the family uses the mousetrap and how do they use it? What features do users want in a mousetrap? Why did the “better” plastic mousetrap not meet sales expectations? 1-37 ©McGraw-Hill Education. ICA 1-2: Which of the Markets (A, B, C, or D) Was the Largest for Mousetraps 25 Years Ago? Market Segment Product: Kind of Mousetrap Wooden Trap Plastic Trap “Disposers” A B “Reusers” C D 1-38 ©McGraw-Hill Education.
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