Chapter 1 reading – Introduction to Marketing
Simply put, marketing is managing profitable relationships, by attracting new customers by
superior value and keeping current customers by delivering satisfaction. Marketing must be
understood in the sense of satisfying customer needs. Marketing can be defined as the process
by which companies create value for customers and build strong customer relationships to
capture value from customers in return. A five-step model of the marketing process will provide
the structure of this chapter.
Understanding the marketplace and customer needs
There are five different core customer and marketplace concepts.
1. Customer needs, wants and demands. Human needs are states of felt deprivation and can
include physical, social and individual needs. Wants are the form human needs take as
they are shaped by culture and individual personality. Demands are human wants that are
backed by buying power.
2. Market offerings are a combinations of products, services and experiences offered to a
market to satisfy a need or want. These can be physical products, but also services –
activities that are essentially intangible. The phenomenon of marketing myopia is paying
more attention to company products, than to the underlying needs of consumers.
3. Value and satisfaction are key building blocks for customer relationships.
4. Exchanges are the acts of obtaining a desired object form someone by offering
something in return. Marketing consists of actions trying to build an exchange
relationship with an audience.
5. A market is the set of all actual and potential buyers of a product or service. Marketing
involves serving a market of final consumers in the face of competitors.
Designing a customer-driven marketing strategy
Marketing management is the art and science of choosing target markets and building
profitable relationships with them. The aim is to find, attract, keep and grow the targeted
customers by creating and delivering superior customer value. The target audience can be
selected by dividing the market into customer segments (market segmentation) and selecting
which segments to go after (target marketing). A company must also decide how to serve the
targeted audience, by offering a value proposition. A value proposition is the set of benefits or
values a company promises to deliver.
There are five alternative concepts that companies use to carry out their marketing strategy.
1. The production concept: the idea that consumers will favour products that are available
and highly affordable and that the organisation should therefore focus on improving
production and distribution efficiency.
2. The product concept: the idea that consumers will favour products that offer the most
quality, performance, and features and that the organisation should therefore devote its
energy to making continuous product improvements.
3. The selling concept: the idea that consumers will not buy enough of the firm’s product,
unless it undertakes a large-scale selling and promotion effort.
4. The marketing concept: the idea that achieving organisational goals depends on
knowing the needs and wants of target markets and delivering the desired satisfactions
better than competitors do. It can be regarded as an “outside-in view”.
5. The societal marketing concept is the idea that a company’s marketing decisions should
consider consumer wants, the company’s requirements, consumers’ long-term interests
and society’s long-term interests. Companies should deliver value in a way that maintains
consumers and society’s well-being.
Constructing an integrated marketing plan
A marketing strategy outlines which customers it will serve and how it will create value. The
marketer develops an integrated marketing plan that will deliver value to customers. It contains
the marketing mix: the tools used to implement the strategy, which are the four Ps: product,
price, place and promotion.
Capturing customer value
Customer lifetime value is the value of the entire stream of purchases that the customer would
make over a lifetime of patronage. Companies must aim high in building customer relations, to
make sure that customers are coming back. Good customer relationship management (CRM) can
help increase the share of customer, the portion of the customer’s purchasing that a company
gets in its product categories. Customer equity is the total combined customer lifetime values of
all of the company’s customers. It is the future value of the company’s customer base.
The Changing Marketing Landscape
There are five significant trends reshaping the marketing landscape, each with its own set of
challenges and opportunities. Let’s delve into each of these developments:
1. The Digital Age
The advent of the digital age has revolutionized the way businesses interact with consumers.
This encompasses everything from the rise of social media platforms, search engines, and e-
commerce to the use of big data, artificial intelligence, and machine learning to better understand
and predict consumer behavior. The digital age enables more personalized, targeted, and
measurable marketing efforts. However, it also brings challenges, such as data privacy concerns,
the rapid pace of technological change, and the need for continuous adaptation and innovation in
marketing strategies.
2. Changing Economic Environment
The global economic landscape is in a constant state of flux, influenced by factors such as
recessions, inflation, and shifts in consumer spending behavior. Economic downturns can lead to
reduced consumer spending and demand for luxury goods, while economic growth can create
opportunities for expansion and innovation. Companies must be agile, adjusting their marketing
strategies to align with economic conditions, such as emphasizing value propositions during
tough times or capitalizing on consumer optimism during periods of growth.
3. Growth of Not-for-Profit Marketing
Marketing is no longer confined to profit-driven organizations. Non-profit organizations,
charities, and public sector entities have increasingly adopted marketing strategies to raise
awareness, influence public opinion, and drive donations or support. The growth of not-for-profit
marketing has introduced new complexities, as these organizations often have to balance
mission-driven goals with the need to engage and inspire their audiences effectively, often with
limited resources.
4. Rapid Globalization
Globalization has expanded the reach of businesses beyond their local markets, enabling them to
target consumers worldwide. While this presents tremendous opportunities for growth, it also
poses significant challenges, such as understanding and respecting cultural differences,
navigating diverse regulatory environments, and managing global supply chains. Companies
must develop marketing strategies that are both globally consistent and locally relevant to
succeed in this increasingly interconnected world.
5. Call for Sustainable Marketing Practices
Consumers and stakeholders are increasingly demanding that businesses adopt sustainable and
socially responsible practices. This has led to the rise of sustainable marketing, where companies
not only promote their products and services but also demonstrate their commitment to
environmental stewardship and social responsibility. Sustainable marketing practices involve
creating long-term value for consumers and society by minimizing environmental impact,
promoting ethical practices, and supporting causes that resonate with consumers. This shift
requires companies to rethink their entire value chain, from sourcing to production to marketing,
in a way that aligns with these values.
Each of these developments is profoundly influencing how businesses approach their marketing
strategies, requiring continuous learning, flexibility, and a forward-thinking mindset to navigate
successfully.
