Marketing: Customer Engagement and Value Creation
Marketing
Marketing is a process by which companies: (1) engage customers, (2) build strong customer relationships, and (3) create customer value to capture value from customers in return. Today, marketing must be understood not in the sense of making a sale (“telling and selling”) but in the sense of satisfying customer needs.
Marketing Offerings
Marketing offerings are services, information, or experiences offered to a market to satisfy a need or want.
Marketing Myopia
Marketing myopia is focusing only on existing wants (short-term) and losing sight of underlying consumer needs. The company is not able to identify and understand customer needs (to look beyond the company or the product).
Customer Value and Satisfaction
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 set expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships.
Production Concept
The production concept is the idea that consumers will favor products that are available and highly affordable; therefore, the organization should focus on improving production and distribution efficiency.
Product Concept
The product concept is the idea that consumers will favor products that offer the most quality, performance, and features; therefore, the organization should devote its energy to making continuous product improvements.
Selling Concept
The selling concept is the idea that consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort. It is typically practiced with unsought goods such as life insurance, land investments, etc.
Marketing Concept
The marketing concept involves knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do (providing value).
Societal Marketing
Societal marketing is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests.
Customer Relationship Management (CRM)
Customer Relationship Management (CRM), in a broad conceptualization, is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. As a practice (narrower view), it involves managing detailed information about individual customers and carefully managing customer “touchpoints” to maximize customer loyalty.
Marketing Environment
The marketing environment includes actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers.
Microenvironment
The microenvironment consists of the actors close to the company that directly affect (positively or negatively) its ability to serve its customers.
Macroenvironment
Macroenvironmental forces (not actors) provide opportunities and pose threats to the company. Some forces can be predicted; others can’t. The macroenvironment also influences the microenvironment.
Perception
Perception is the process by which people select, organize, and interpret information to form a meaningful idea of society from 3 perceptual processes:
- Psychological Factors:
- Perception:
- Selective Attention: consumers pay attention to a few sources of information and external stimuli.
- Selective distortion: consumers interpret information to support what they already believe.
- Selective retention: consumers remember a limited amount of information about brands; they tend to remember good points about a brand they like and forget about competing brands.
Psychological factors: learning.
Marketing Strategy
Marketing strategy aims to create value for targeted customers by 4 paths: market segmentation, targeting, differentiation, and positioning.
Select Customers to Serve
- Segmentation: Divide the total market into smaller segments.
- Targeting: Select the segment or segments to enter.
Decide on a Value Proposition
- Differentiation: Differentiate the market offering to create superior customer value.
- Positioning: Position the market offering in the minds of target customers.
Consumer Market Segmentation
Geographic, demographic, behavioral, psychological.
Requirements for Effective Segmentation
Measurable, Accessible, Substantial, Differentiable, Actionable.
A target market is a set of buyers who share common needs or characteristics that the company decides to serve.
4 Types of Target Marketing Strategies
- Undifferentiated (mass) marketing targets the whole market with one offer.
- Differentiated marketing targets several different market segments and designs separate offers for each. Its goal is to achieve higher sales and a stronger position.
- Concentrated (niche) marketing targets a large share of a smaller market. Its pros and cons are that it can be very rewarding, but also very harmful.
- Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. It is divided into local (different depending on cities, neighborhoods, stores, etc.) and individual marketing (tailoring products and marketing programs to the needs and preferences of individual customers. Also known as one-to-one marketing).
Choosing a Differentiation and Positioning Strategy
- Identifying a set of possible competitive advantages to build a position.
- Choosing the right competitive advantages (number and type).
- Selecting an overall positioning strategy.
- Communicating and delivering the chosen position to the market.
How Many Differences to Promote?
One very strong (unique selling proposition) vs. more than one (more potential buyers, might not be credible).
Which Differences to Promote?
A competitive advantage should be: Important, Distinctive, Superior, Communicable, Preemptive (competitors cannot easily copy the difference), Affordable, and Profitable.
Positioning Statement
A positioning statement summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference).