Transcription
Hello and welcome to Principles of Marketing. I am Miss Marie. Believing Institute for marketing these days is the American Marketing Association, or the AMA. A lot of the definitions I'm going to use, including the definition you see here for marketing, will come from the AMA. That's because the AMA has used a process in which marketing managers around the country, and even around the world, have come to some sort of preset or at least agreeable definitions on things. So I really like to use those definitions because we know that these are the definitions being used out in the real world, you might want to say. And you can find a lot more about the AMA down at their website. You can see at the bottom where I've actually taken the definition from for this one.
So let's kind of get into it. What is marketing? Well, marketing is the process by which companies create value for consumers. We build up these strong customer relationships in order to capture that value from consumers in return. Basically, you know, there's a dual goal of marketing. One is to attract new customers by promising some sort of superior value than they could get somewhere else, and to keep and grow your current customers by delivering satisfaction. Now, what we need to do as a company is engage customers and manage the profitable customer relationship. It is much easier and much cheaper to keep an already established customer than to gain a new customer.
Now, marketing is basically going to be the most critical thing in all organizations. I mean, marketing is used by large for-profit companies like Google and Target and Microsoft. They're also used for like not-for-profit organizations, your colleges, your hospitals, museums, orchestras, all of these types of things are going to use marketing, including your local church. So marketing is something that is there everywhere. Everywhere you look, there is something being marketed.
So the marketing concept holds that, you know, achieving organizational goals will depend on knowing the needs and of the target market. We'll talk a little bit more about what those are, but those are the people that you're trying to attract. And by providing some sort of satisfaction to them, then your other competition, if you do it better than the next guy, then hopefully they're going to come to you.
Now, when we look at marketing, we talk about a five-step model of the marketing process. And what you can see here is that the first thing we need to do is we need to understand the marketplace and we need to understand what customers' needs and wants are. Once we understand what those needs and wants are, we can then begin to design basically some sort of a value-driven marketing strategy, something that will drive them to our products or want them to come and do whatever it is that we're asking them to. Well, construct some sort of a marketing program that delivers that process. Then we're going to try to engage. And finally, what will happen is we will capture that value that customers are having for us. And if we do this correctly, we're going to be a successful company.
But one of the first things that you need to understand is the difference between a need and a want as far as psychology is concerned, because marketing is a lot about psychology. So needs are kind of interesting. Needs are basically their biological. So I'm walking along, I think I'm hungry. Now, that hunger is going to lead me to some sort of recognition. And once I recognize that I'm hungry, that's gonna lead me to a want. So in this case, I want a hot dog. Now, if that want gets strong enough, that's gonna drive me to an action. And in this case, driving to my favorite hot dogs and mustards I stand there in Melbourne. Now, if that action has been taken, then what's going to happen is that some of this is going to go away because I won't be hungry anymore. But here's the interesting thing. All I've done is reduce the need. Why? Because as I walk along and it's a few hours later, I'm hungry again. So needs are very different than wants. And this is critical for you to understand that a need and a want in marketing and in psychology are two different things.
Now, as I just said, needs are different than wants. Needs, their basic, their biological, they're going to be with us always. We might have a reduction in them, but they're always going to be there. I'm always going to need food and water and love and shelter and air. These are basic needs. Now, when we don't have one of these, we will begin to feel deprived of that need. As we begin to feel deprived of that need, that's where that want was beginning to be created. But remember, what's satisfying needs and wants can go away, but needs will always be with us.
So as an example, I need something to drink. I want Mountain Dew Code Red. That leads me eventually to stop at 7-Eleven and buy a Mountain Dew Code Red. Now, I drink the Mountain Dew Code Red. My need to drink something has gone down. But I think it tastes horrible, like cough syrup. So will my want from Mountain Dew Code Red come back? Absolutely not. My need to drink will come back, but my new want will be perhaps I know, tropical flavored Sprite. See, my want has changed. So needs don't change. They're basic, they're biological. Wants satisfy needs, but they can go away.
But here's the interesting thing. Wants will become demands. Now, a demand is a little bit different than a want. A demand basically is something that you have to have the ability to gain. So think of it as a product or an idea, or I don't know, a service. So when we're looking for this object, we're looking at what the market has to offer us. Now, the marketplace is what we sort of referred to as this general concept of shopping, of the concept of exchanging ideas and things like this. It's where we operate.
Now, we also know that wants and demands are gonna be structured based on your culture and your personal desires. You know, some people are going to go out to shop and buy meat. Some people are vegans, and they're going to go and shop for non-meat products. Your biases come into play for this. So what we have to do as organizations is offer the products and information, the organizations, and the ideas that people are looking for. Because if I can get people to understand they have a need and that my product or service or information will fulfill that need, then they're going to want that object or that idea or that whatever. So we have a very famous saying in marketing: Find a need and fill it. Not find a want, but find a need. And that's what we're going to focus on during this class. It's learning how to find those needs.
Another very important concept in marketing is the concept of exchange. What we're talking about here is that marketing occurs when people decide to satisfy their needs and wants through this exchange relationship. Now, an exchange is an act of obtaining some desired object from someone else or someplace else, and there can offer something in return. Basically, marketing consists of actions taken to create, maintain, grow desirable exchange relationships within our target audience. Ma'am, this is going to involve products, service, ideas, and other objects. Now, companies, they want to spill these strong relationships by constantly delivering superior customer value. But we also have to understand that while we may be focusing on products right here, that the act of exchange and the act of marketing has a lot to do with, as I said, pretty much everything in life.
Now, I picked this picture on purpose because here are people voting. What we're doing is we're exchanging our vote for an idea that somebody is going to do for us, basically a service. And so this is an exchange, just like if you gave $1 to get a popsicle. It's still in exchange. So exchanges are still going to occur. This is still marketing, whether it's a non-profit, whether it's for-profit, whether it is an idea, whether it is political, whether it is to donate money to St. Jude. St. Jude is offering and asking you to give them money. In exchange, what you get is a good feeling that you have helped a child with cancer perhaps survive. So all of marketing is based on this concept of exchange. So if I don't have anything to exchange with you, this is not going to occur. Thus, marketing is not going to occur. So if I don't understand what your needs are, then I can't satisfy that need with a want. And if I can't satisfy that need with a want, I'm not gonna drive you to the action I'm going to ask of you. In this case, it would be a candidate trying to drive you to vote for them. That is the action that they're asking you to take.
So let's talk a little bit then what markets are. Now, a market is basically a set of actual and potential buyers of a product or service. Now, sellers must search for these buyers and, you know, we're identifying their needs and we're designing goods to offer them. And we also set prices, we promote these items, and we store and we deliver them. All of this is the market. Now, we might tend to mistakenly think of markets and marketing as only advertising. That's the sexy part. But you can't have advertising if you don't have a product. You can have a product if you don't have price. And you can't have either one if you don't have some place to sell these things. Now, it doesn't have to be a brick and mortar, it could be online, but that's still some place to sell these things.
So this process that you're seeing here is sort of the major environmental forces that are out there to shape what marketing does. So that means that we need to understand what marketing management is, because that is the process of what you as a marketer would be doing. So marketing management, it's it's both an art and a science of choosing a target market and building this profitable relationship with them. We need to design a winning marketing strategy. Basically, the marketing manager must have answers to sort of two important questions. First, what is the target market? Who are we going after? Who is going to be basically the group of people that we want to potentially buy our products? And second, what value are we saying we're going to offer to those people? So these two things are going to be answered through a variety of steps and processes. The designing of a marketing strategy. My companies first have to decide who they're going to sell and who they're going to service. Now, we do this by dividing up a market into segments of customers. We call this market segmentation. And then we'll select which segment we're going to go after. We call that target marketing. Now, a company must decide how it's going to differentiate its position and its company or process in the marketplace compared to others. So a brand value is basically going to be something that's important. So a brand value proposition is the set of benefits or values that it that the company promises to deliver to consumers to satisfy their needs. So for example, Vine gives you the best way to see and share life in motion, or perhaps Facebook says, here's a way that you can share your experiences with your family and friends, or Coca-Cola, who says, hey, you know, drink a Coke and share a smile. But basically, as each group going to do this. So these words are words we're going to use a great deal. When we go in a week or two, we're going to start talking about segmenting a market and looking at these different target markets that you're going to identify and then begin to research.
Within this, we have to understand that there are several different marketing philosophies. Now, the first one is production. You know, what can we build most effectively? Now, the problem with this is that this can be pretty narrow because it basically looks at only what the company can do. This can constantly be called marketing myopia, which refers to basically sellers paying more attention to the specific product a company can offer than the benefits and experience that produced by these products. Now, companies, they can forget that a product is only a tool to solve a customer problem. And you might not think of that way, but that's what the truth is. You know, sellers will have this trouble if a new product comes along that services customers' needs and some better or less expensive way. So the customer will have to have the same need, but it'll want a new product. With production orientation, we may be looking at things like this is cheaper if we do it this way, or we can make more this way, but we're forgetting the customer in this process.
With product orientation, we basically say, hey, if we built it, they will come. It's sort of the field of dreams. But they're not gonna buy unless, you know, we do something to make the product different. And there are lots of products out there that have been produced that seemed great but just aren't purchased. Go to any one of these home shows that are at a Civic Center, and you walk along and you see all these really cool things. Well, if they were really needed, they would be in major stores. So I always remember I went to our Home Show with my mother, and she bought this rake. And the rake was adjustable. You could make it wide, you could make it skinny. And I thought this was an interesting thing. And when we brought it home, she was using it, but it broke. It broke about a year and a half after she had it. We went to all the major stores that, you know, carry rakes, and nobody had an adjustable rake. And so we were asking them, why don't you carry an adjustable rake? And one store who said, you know, we had it for a very short time, but people really just don't want adjustable rakes. And so what it is is this person had created a product, but they didn't really look to see if people wanted adjustable rakes. Most people buy one rake. If they're gonna rake leaves, there's a rake for raking leaves. If they're gonna rake in between plants, there's a different type of rake for that. The tongs are different, the bucket catching concepts are different according to the people. So most people didn't want an adjustable rake that would change. They would just buy one or two rakes and be done. They were also much cheaper than buying this adjustable rake. So we made this great product, he just didn't have enough consumers who wanted the product. So that's sort of a product orientation.
Now, with the selling orientation, the concept is is that basically customers aren't going to buy this thing unless we push this really hard. Now, in some cases, selling might be the way to do something. One of the items that we kind of hard push sell is funerals. Most people don't wake up and say, I think I'll go out and buy the stuff I need for a funeral, like a coffin or a burial space. So as people get older, quite often they're going to get contacted by companies that say, hey, you know, why don't you make these plans now so your families don't have to worry? You're gonna get exactly what you want. You know, you don't want to die and then have your family go, oh, there's no plot available. They don't want to deal with that. And so this may be one of the few things which, you know, sort of hard selling tends to work because customers aren't going out to look for those items. But in most cases, people aren't real comfortable with hard selling these days.
Now, the orientation that basically we propose these days that really works, or the anyway, I would say the most modern, is the marketing philosophy. Now, this is a cost-centered philosophy, and that's important to remember because we just sat there and talked about needs and wants, and we have to understand the consumers and needs so that we can produce a product they want to satisfy those needs. Cuz remember, we said products are basically there to solve some sort of a problem that a customer has. So with a market orientation, we're going to understand their desires and we're going to understand what they desire and want and how we can fit our product to fill that need. And that's what we're gonna be doing in this class. We're gonna be developing a product based on a set of consumers' needs.
There is another one that's out there, and these are called societal marketing philosophies. And basically, what they say is, what's good for society is good for business. An example: no smoking in a restaurant, or reducing energy consumption. There are a lot of companies that have a societal bend to them. Tom's is a shoe company where if you buy a set of shoes from Tom's, they'll give a set of shoes to somebody who doesn't have one. There is another organization that makes socks, and if you buy socks from them, they make a cheaper pair of socks, but they give it to the homeless. These are societal type marketing things, and these are becoming more and more popular. You might want to say the younger generation is looking for companies that are trying to give back to society in some way. After all, if I help you out as a company by buying your product, I expect that you're going to help us out here in a group that perhaps needs some more assistance.
This brings us to customer relationship management. Now, this is the overall process of building and maintaining basically profitable customer relations by delivering the essence or superior customer value and satisfaction. It does deal with all aspects of acquiring and keeping and growing cost customers. The key to building lasting customer relations is to create superior customer value and satisfaction. Now, marketers can use specific marketing tools to develop these strong bonds of customers. Again, some of the tools you may have even had used yourself, such as frequency marketing programs that reward customers who buy something frequently or in large amounts, loyalty reward companies that offers special benefits to customers who buy frequently, and even club marketing programs that offer members have special benefits and create members communities. All of these are different things that we can do as a company to maintain our good relationship with our customers.
In the normal world outside of marketing, we tend to throw value and satisfaction around as basically similar terms. But in marketing, they're really very different. Essentially, value is when a consumer perceives that they're going to get some sort of a good deal from a company, a brand, a product, or service. Now, let's put this a little bit more in marketing terms rather than sort of layman terms. What we're saying here is that the consumer will see value when they see that the benefit from the product or brand or service exceeds some sort of a cost. Now, the cost can be financial, but don't forget, cost can also involve things like time or effort. Now, the effort that's involved in acquiring this product is something that consumers will take into their their head and into their decision-making. Now, potential customers will be attracted to the offering if they perceive that the benefit exceeds the cost, which basically equates to value. The ability of a firm to be able to offer our good value as paramount in the success of generating ongoing new customers. This means that value is kind of a pre-purchase assessment of the product by consumers. If a consumer perceives that a product or brand or service offers very little value based on their pre-purchase assessment, or if they perceive that it offers less value than a competitor's offering, then the consumer is not going to buy that particular item.
So let's kind of think about it this way. I am going to be having a lunch break, and I desire a salad. Now, I can go to the place that has probably the best salads, but that's gonna take me about 20 minutes to get there, and there's a lot of traffic on the way. Or I could go to a place that's closer that has not as good a salad, but I'm gonna be able to get in and out of that place very quickly. Now, what's my value? What I'm looking for is a quiet, easy lunch, and I only have an hour. Do I really want to spend 20 minutes of driving there and twice it's driving back, even though they've got a really good salad? That's gonna meet me only about 20 minutes to eat. And perhaps if I am really in the desire for having that really wonderful tasting salad, I would perceive that even though the effort of driving there is going to be great, that the flavor is something I want. I'm going to receive that as being valuable, and I'll make the effort to make it there. But if I feel like that effort is too much and that that does not add value then to the salad, I'm going to go for perhaps the salad that isn't as good, but that I'm satisfied with and it's a satisfying lunch. The value is that I can get in, I can have now instead of 20 minutes to eat, because it only takes me five minutes to get to this location. This will give me 50 minutes to eat. And that 50 minutes has a lot of value. It's not gonna take me all 15 minutes to eat the salad. Maybe it's gonna take me 30 minutes to eat this salad, but it's gonna give me some time just to sit, relax, play on my phone. That has value. And so in this case, that value, that time, which is an unusual type of aspect, you might want to say, to value because we can't buy time, we can't store time, we can't sell time. Time is this very valuable thing to us. So even though that may be an inferior tasting product, the value that this particular location gives me, or this particular fast-food restaurant gives me, is the value of time. So I will consider that to be superior, and thus I perhaps will go to that place. So it's the benefits, it's that total benefits I'm looking for.
Whereas customer satisfaction, into their hand, occurs after the purchase. So where value is pre-purchase, satisfaction is post-purchase. This means that somebody's already purchased the product, or they've already dealt with the service or the firm that they're looking with. Now, customer satisfaction is an assessment of how well the value was evert. That is, did they get the value they expected to receive from the product? So if I go to my local fast food restaurant, and I may only get there for five minutes, but it takes me 10 minutes to get my food, well, that's 15 minutes. Now, the question is, is did am I satisfied? Because I could have spent 20 minutes and gotten a superior product. And if I don't feel like I'm satisfied because I had to wait in line so long, I'll say, well, next time my models will just go ahead and make the trip to the other location because I wasn't satisfied. I didn't get the value that I had expected. So customer value and customer satisfaction are key building blocks for developing and managing customer relations. As we go through this course, we're going to talk a lot more about these core concepts, value and satisfaction, because this is going to determine if you have new customers or even returning customers.
Today's companies are using online, mobile, social media to refine their targeting and to engage custer's in a more deeply an interactive way. So customer engagement marketing refers to fostering those direct and continuous customer involvement in the shaping of the brand's conversations, in the brand experiences, and the brand community to make up a brand more meaningful part of consumers' conversations and more meaningful within their lives. Now, the internet and social media, well, they've given this huge boost to customer engagement marketing. For companies, newly empowered consumers have more information about brands, and they have numerous digital platforms for sharing their brand views with others. Now, the thing is though, is greater consumer empowerment means that companies must practice marketing by attraction. This is them by creating marketing offerings and messages that engage consumers rather than just simply interrupt them. I mean, Starbucks has more than 30 million Facebook fans, and Coca-Cola is very close to a hundred million Facebook fans. So the key to engagement marketing is to find a way to enter consumers' conversations with engaging and relevant brand messages. Now, simply posting some sort of humorous video, or creating a social media page, or writing a blog isn't really enough. That isn't really engagement. Successful engagement marketing means that you've made some sort of relevant and genuine contribution to the consumers' lives and conversations. Apple computers, or Apple as the corporation, it's a really good example of a company that uses customer engagement marketing. People are very into having conversations about their Apples and being very dedicated to the Apple brand, and they talk about it. They have their live chats, they have Facebook and social media. There's a whole world just set up about Apple, and Apple does participate in those things. Steve Jobs was wonderful at customer engagement marketing.
Consumer generated marketing is different. Now, the last one we talked about, basically the consumers are having conversations that the brand is part of their lives. When we talk consumer generated marketing, we're talking about that the consumer themselves are playing sort of an increasing role in shaping the brand and other customers' experiences. The easiest one for me to sort of use in this example of this may be a streaming service for either videos or movies. So I happen to use a company called Pandora for some music listening, and they have these little thumbs. And I give a thumbs up if I like a piece of music, and I press the thumbs down if I don't like that piece of music. Now, when I do that, I'm actually shaping what music will play on that particular station and what music may not play on that particular station. As more people give thumbs up, that piece of music will be in the rotation more often. And if there's enough thumbs down, that piece of music will be completely removed from that station. So I'm actually generating basically the brand. I'm I'm in there with my choices making shifts and changes to the brand. Now, this might happen through what we say uninvited consumer to consumer exchanges. Those are things like blogs and videos, sharing sites, social media. There's tons of digital formats. But what's kind of interesting is is that more and more companies are starting to invite consumers to play a more active role in shaping products and brand content. You know, one of the examples is is that for many years, PepsiCo actually had a contest where you could design an ad for consumers for that would run during the Super Bowl. There are all kinds of examples like this where we are basically asking consumers to step in and be part of the creation of the brand and the brand image.
While there are multiple ways of creating marketing, probably the last one we're going to talk about that's really out there as far as popularity of use is partner relationship marketing. Now, when it comes to creating customer value and building strong customer relations, today we know that we just basically we can't go this alone. If my company, we got to really work with other marketing partners. So in addition to customers relation management, marketers must also be able to have good relationships with other people within the channel, so our suppliers, our media people, the actual community that surround us, all of these people we need to partner with to be able to help us develop the best communications and relationships that we have with our consumers.
In the early 1990s, media options consisted of basically TV, print, radio, cinema, and outdoor. But by the mid-90s, the digital category had started to emerge. At that time, digital media was used mainly to refer to sort of these banner advertisement placements. They were basically at a few small number of websites. Now, since that time, we know the emergence of digital media has probably completely changed the marketing industry. It is the most significant change to the industry since basically the advent of television. Digital media includes, but it's not limited to, website, social networking environment, search engines, banner ads, email communications, streaming audio and videos, online gaming, and mobile services.
Mobile marketing is any advertising activity that promotes a product or service via mobile devices such as tablets and smartphones. Mobile marketing makes use of features of modern mobile technology, including location services. It this way, they can tailor the marketing campaigns based on individuals' locations. Now, mobile marketing is a way in which technology can be used to create personalized promotion of goods or services to a user who is constantly connected to the network.
Social marketing has traditionally referred to a branch of marketing that is concerned with the use of marketing knowledge, concepts, and techniques to enhance social consequences of the marketing strategies, decisions, and actions. Now, this type of marketing is designed to influence the behavior of a target market. Social marketing can be carried out, you know, for a for-profit, but also for public and private not-for-profit organizations, or even by individuals. So an example would be an influencing an individual to stop smoking, that's presented by the American Cancer Society, or report crimes, which is often promoted by the US Department of Justice. It could even be an attempt of one friend to influence another friend to try a product when they talked about it on Facebook. These ways, these digital ages have really come into play, probably even more profoundly recently, as we have found our traditional brick and mortar places that we don't want to go to, not because they're inconvenient, but because we may even feel they're dangerous right now to go to because of this virus. So we're going to see that this digital age is really going to change a lot of the delivery messages of marketing, but it's not going to change the heart of marketing. Meaning is is that the concept of marketing and the concept of the philosophy that we have to understand the needs of our consumer isn't going to change. What's changing is the tools to deliver the messages that we have, and perhaps the tools to deliver the actual products.
There's always sort of an argument of we bring the four Ps of marketing and at the beginning of a conversation about marketing or toward the end of the first conversation of marketing. And as you can see, I brought it in toward the end. Why? Because I feel like as we are moving forward from here, we've done our introduction because needs and wants are one of the first things you need to understand. You need to understand what value and satisfaction is. If we have those basic concepts down, then we can move into the actual marketing mix of product, price, place, and promotion, what we call the four Ps of marketing. Each one of these, we're going to cover in much more detail as we move forward. Each one has a very specific purpose, and if one of these is not done, then your company is not going to be successful. One of the things your company has to consider is which one of these is your company going to be superior at versus your competition? Is it going to be your actual product? Is it going to be the price? And let's make sure you understand price is not simply going to be the coinage or the amount. Price can also be about time, it can be about service. There's all kinds of things when we talk about the price of a product in that exchange. Is it going to be the location of the place? This is not very sexy, but Jeff Bezos would tell you that it's very profitable. If we think about Amazon, the competition is losing to Amazon because Amazon figured out, or Jeff Bezos figured out, that the location at your house is much superior to you than going to a store. Why? Because it saves you time. And these are routine purchases that you buy all the time. So place, one. And then the last one is promotion. That's the sexy part. That's the part that is your advertising and your personal selling and digital media. All of those go into promotion. But these four Ps, one of these has to be where your company is superior to your competitors.
You, what you'll notice is that we have expanded from the original five aspects of the marketing process to include a lot more things. That's because the first five are rather than rather over simplistic, you might want to say. In order to understand the marketplace, we need research and we need to understand our customers. In order to design value-driven marketing strategies, we need to figure out which group we're going to actually target and we need to determine what the value is. And if we're going to construct a marketing program, we need to know the product, the place, the price, the promotion, although those come there. And if we're going to engage your customers, we need to build customer relations. So we're not just talking about these five steps. Each one of these steps is going to have detail and assessment added to it.
Marketing is almost an art in a way, but it's a scientific art. Meaning is that there is a reason that we had to do research. We have to talk to people. We can't use our gut. It's simply not going to always be correct. In fact, in most cases, your gut's going to be wrong because you're not making this product for yourself. You're making this product for others. If you're making this product for yourself, you're doing product orientation, and that is a field of dreams. Yes, you like the product. Yes, you'd use the product, but you're not the consumer.
So through the marketing process, marketers practice customer relationship management to create customer satisfaction and delight. And as we do that, we're going to be successful. I do encourage you to go ahead and send me an email if you have any questions about this material. You can also post a question in the Blackboard. Either way, I will see you in Chapter two.