Understanding Marketing Concepts for Business Success
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Topic 1: Marketing Concept
Marketing is a business function dealing with customers.
The simplest definition: Marketing is engaging customers and managing profitable customer relationships.
The goal of marketing is twofold:
- Attract new customers by promising superior value
- Keep and grow current customers by delivering satisfaction
Marketing is not only selling and advertising; it is satisfying customers' needs. We define marketing as the process by which companies create value for customers and build strong relationships to capture value from customers in return.
American Marketing Association (AMA, 2013): Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
We define marketing as the process by which companies create value for customers and build strong relationships in order to capture value from customers in return (Kotler and Armstrong, 2016).
Marketing Process
(1) Understand the marketplace and the customer needs (research)
(2) Design a customer-driven marketing strategy (select customer to serve, segmentation, and targeting)
(3) Construct an integrated marketing program that delivers superior value (4P)
(4) Build profitable relationships and create customer delight (CRM – building strong relationships with target customers; PRM – building strong relationships with marketing partners)
(5) Capture value from customers to create profit and customer equity.
Marketing process involves:
- Need, Wants, Demands
- Market Offerings
- Value & Satisfaction
- Exchanges & Relationships
- Markets
The marketing manager must answer two important questions when designing a marketing strategy:
- What customers will we serve (target market)?
- How can we serve these customers best (value proposition)?
Key Concepts in Customer Relationship Management
Customer Perceived Value: The customer’s evaluation of the differences between all the benefits and all the costs of a market offering relative to those of competing offers.
Customer Lifetime Value: The entire stream of purchases that the customer will make over a lifetime of patronage.
Customer Equity: Total combined customer lifetime values of all of the company’s current and potential customers.
Customer Satisfaction: Product’s perceived performance compared to prior expectations.
Customer Engagement: Fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand communities. It is not just selling but being a meaningful part of consumers' lives.
Partner Relationship Management: Working closely with others inside and outside the company to jointly engage and bring more value to customers.