WVIT 343: Chapter 1 Reading Notes
WVIT 343: Chapter 1 Reading Notes WVIT 343
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This 8 page Class Notes was uploaded by Emily Notetaker on Friday January 22, 2016. The Class Notes belongs to WVIT 343 at California Polytechnic State University San Luis Obispo taught by Professor William Amspacher in Fall 2016. Since its upload, it has received 34 views. For similar materials see Branded Wine Marketing in Agriculture and Forestry at California Polytechnic State University San Luis Obispo.
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Date Created: 01/22/16
WVIT 343 Winter 2016 Professor Amspacher Chapter 1: Marketing – Creating and Capturing Customer Value I. First Step a. Jet Blue focuses on creating meaningful customer relationships b. The airline offers tangibles such as personal LCD TVs, Wi-fi, SiriusXM Radio, free beverages and snacks, and more c. Jet Blue employees also go above and beyond to treat customers well and live Jet Blue’s core values d. Because of these things, customers provide excellent word of mouth promotion for the airline e. Bottom Line: Jet Blue’s customer centered focus creates happy, loyal customers who promote the airline themselves II. What is Marketing? a. “Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.” – Page 5 b. Marketers want consumers to live their brand c. Marketing isn’t sales, it’s satisfying consumer needs d. Marketing Mix: “A set of marketing tools that work together to satisfy customer needs and build customer relationships.” – Page 5 III. Understanding the Marketplace and Customer Needs a. The 5 Core Customer and Marketplace Concepts: i. Needs, wants and demands 1. Everyone has basic human needs a. Physical needs like food, shelter b. Social needs to belong and be loved c. Individual needs for knowledge and self expression 2. Wants are human needs that are influenced by culture and personalities a. For example, I need food but I want ice cream 3. Demands are wants backed by buying power 4. Marketers work to understand their customers’ needs, wants and demands ii. Market offerings 1. A combination of products, services and experiences that satisfy a need, want or demand 2. Marketing Myopia is a mistake markets make when they pay more attention to the products a firm offers than to the benefits and experiences produced by the products 3. Products should create an experience for customers iii. Value and satisfaction 1. Satisfied customers buy again 2. Dissatisfied buyers switch to competitors’ products and provide negative word of mouth to others about your product 3. Marketers should set expectation of a product’s performance reasonably a. Too low leads to customers not buying the product b. Too high creates dissatisfied customers iv. Exchanges and relationships 1. “An exchange is the act of obtaining a desired object from someone by offering something in return” – Page 7 2. Marketers create an exchange with customers v. Markets 1. “A market is the set or all actual and potential buyers of a product or service.” – Page 8 2. In marketing one must manage markets to bring about profitable customer relationships 3. Markets face major forces including: a. Suppliers b. Competitors c. Marketing intermediaries d. Final consumers 2 IV. Designing a Customer-Driven Marketing Strategy a. “Marketing Management is the art and science of choosing target markets and building profitable relationships with them.” – Page 9 i. Think customer management and demand management b. The company has to decide which customers they want to serve through market segmentation i. Market Segmentation is dividing customers into different segments or groups ii. The target market is the segment the company wants to serve c. A product should be differentiated, or have unique qualities that customers find valuable and make it stand out from other similar products d. The value proposition is the set of benefits or values [a product or service] promises to deliver to its customers.” – Page 9 e. The 5 Strategies of Organizational Design i. The Production Concept: “The idea that consumers will favor products that are available and highly affordable; therefore, the organization should focus on improving production and distribution efficiency.” – Page 10 ii. The Product Concept: “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.” – Page 10 iii. The Selling Concept: “The idea that consumers will not buy enough of the firm’s products unless the firm undertakes a large scale selling and promotion effort” – Page 10 Focus: How: Ends: Start: Existing Selling & through Factory Products Promotion sales WVIT volume 3 iv. The Marketing Concept: “A philosophy in which achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do.” – Page 10 Focus: How: Ends: Start: Customer Integrated Profits through Market needs marketing customer satisfaction v. The Societal Marketing Concept: “The ideal that a company’s marketing decisions should consider consumers’’ wants, the company’s requirements, consumers’ long term interested and society’s long term interests.” – Page 11 V. Preparing an Integrated Marketing Plan and Program a. The 4 Ps: i. Price: How much the product or service will cost ii. Product: The market offering (can be a service or experience) iii. Place: How consumers get the offering iv. Promotion: How marketers will communicate a product’s benefits to the target market VI. Building Customer Relationships a. The most important step b. “Customer Relationship Management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.” – Page 12 i. Deals with getting, keeping and getting more customers c. Relationships are made when a customer finds superior value and satisfaction with your product i. Customer-Perceived Value is the customer’s evaluation of the difference between all the benefits and all the costs of a market offering to those of competitors (Page 13) ii. Customers don’t judge things accurately, they judge on perception! 4 iii. Customer satisfaction is the extent to which a product’s perceived value matches the buyer’s expectations (Page 13) d. Companies should make sure they deliver on the basics (customer service) as well as their product or service e. A company may develop several different kinds of relationships with customers: i. Basic relationships work best for low-margin customers 1. For example, Nike does not get to know customers personally. They do not call customers or offer loyalty product upgrades. ii. Full partnerships, which include getting to know the customer personally, are best when there are a few, high- margin customers f. Marketers can also use frequency marketing programs to reward loyal customers or club marketing programs that offer unique benefits g. You can fire the customer! i. Stop targeting consumers that are more expensive to maintain and don’t provide the company with sales ii. Focus on loyal customers that provide value for the company h. Customer-managed relationships are growing i. Customer-managed relationships are “marketing relationships in which customers, empowered by today’s technology, interact with companies and with each other to shape their relationship with brands.” – Page 18 ii. Companies should be careful about entering a customer’s “digital personal space” 1. One should only interact when relevant, not burst into unrelated conversation i. Consumer-Generated Marketing is also on the rise i. Consumer-generated marketing consists of “brand exchanges created by customers themselves – both invited and uninvited- by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers.” – Page 19 1. For example, Doritos Super Bowl commercial competition 5 VII. In-N-Out Burger: The Power of Customer Delight a. Only a few menu items – the menu hasn’t changed in decades b. In-N-Out focuses on what they do well (hamburgers and milkshakes) c. Annual sales double Burger King d. It’s the In-N-Out experience that makes customers happy VIII. Capturing Value from Customers a. Partner relationship management is an important part of bringing increased value to customers i. Partner relationship management consists of “working closely with partners in other company departments and outside the company (like suppliers) to jointly bring more value to customers.” – Page 20 b. Satisfied customers are loyal and share positive word of mouth i. Customer lifetime value is "the value of the entire stream of purchases a customer makes over a lifetime of patronage.” – Page 21 ii. Companies may even lose money on one specific transaction with a loyal customer, but they still benefit from that long-term customer relationship c. Companies are always looking to increase their share of customer i. Share of customer is the portion of customers a company has captured out of all customers in that product category 1. For example, 60% of all adult coffee drinkers purchase Starbucks brand coffee. Starbucks has a 60% share of customers who purchase coffee. d. Customer equity is the total combined customer lifetime values of all the company’s customers e. Different types of customers: i. Strangers: Low potential profitably, low projected loyalty ii. Butterflies: Potentially profitable, but low loyalty iii. True friends/believers: Profitable and loyal iv. Barnacles: Loyal but not profitable IX. The Changing Marketing Landscape a. The market changes rapidly with new trends 6 b. The recession of 2008 has made customers much more price- sensitive c. Companies now are focusing more on parts of their mottos that emphasize savings i. For example, Target pushes the “Pay Less” part of their motto, “Expect More. Pay Less.” X. A New Era of More Sensible Consumption a. Consumers are moving from mindless consumption to mindful consumption b. Customers would rather fix something, like an appliance, than buy a new one c. Companies should “forgo the flash and prove your product’s worth” d. With the internet, many companies are now click-and-mortar – they have physical stores and online stores e. Not-for-profit marketing is also on the rise i. Non-profits need marketing too ii. St. Jude’s excels at this f. The world is globalizing quickly and companies should be prepared to expand and understand their clientele in other nations g. Sustainable marketing practices are increasingly on trend i. Social responsibility and environmental movements are now popular ii. Companies are being called on to practice caring capitalism – being a civic minded business XI. So What is Marketing? Pulling It All Together a. The first 4 steps of the marketing process focus on creating value for customers i. Understanding the marketplace and customer needs ii. Designing a customer driven marketing strategy iii. Preparing an integrated marketing plan and program iv. Building customer relationships b. In the final step, the company captures value from highly satisfied customers i. Capturing customer value c. Creating meaningful customer relationships is crucial to marketing and selling a product 7 d. Trends like globalization, not-for-profit marketing, economic status and sustainability should be watched 8
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