Doyle Stern All Notes Condensed Notes

The first priority of a business should be to satisfy its customers’ needs and wants. The aim of marketing is to create and deliver products and services that customers will value and this is the central task of management.

Needs and Products

• Smith (1776) showed that the drive of competing firms to make a profit, by providing customers with what they want, is ultimately in the interests of consumers because they obtain more and better products at lower prices.

• Marketing management is the task of facilitating this process by professionally identifying the needs of customers and developing those offers that give customers what they want.

• Need = is a basic requirement that an individual wishes to satisfy.

• Want = a specific product to satisfy the underlying need.

• Demand = a want for a specific product supported by an ability and willingness to pay for it.

• Companies do not create the need for food or social status but they try to influence demand by designing their products to be attractive, work well, be affordable and be readily available.

• Product = anything that a firm offers to satisfy the needs or wants of customers.

Value and Choice

• Every customer has a product choice set which consists of the number of alternatives that are considered when seeking to satisfy a certain need. This choice is the governed by a need set, for example a need for speed, service, convenience, perceived quality, ambience and reliability. Each alternative in the choice set is weighed against the need set.

• The choice that is ultimately chosen is the one that is perceived to have the highest utility. This is the consumer’s estimate of the products overall capacity to satisfy their needs. As prices of products are not identical consumers have to determine which product they consider to give the best value.

• Value = a combination of price and utility.

• This concept of value provides companies with two ways to increase their demand in order to increase the customers perception of value:

  1. Enhancing the features.

  2. Cutting the price.

• Negotiation = the process of trying to arrive at a mutually acceptable exchange.

• Transaction marketing = a one of negotiation. Here both parties aim to maximise their profits.

• Relationship marketing = a long-term, continuous series of transactions between parties. When a good working relationship is built, negotiating time and costs are reduced and pattern of transactions becomes predictable.

• Relationship marketing has become a central focus of marketing, and high emphasis is placed on increasing customer loyalty. Managers have realised it is more beneficial to invest in quality and customer service to keep customers happy.

• Satisfied customers stay with the business in the long term and are more profitable than new customers:

  1. The firm does not have to incur the selling costs of acquiring new customers.

  2. Satisfied customer place more business with the firm, recommend it to others and are less price sensitive.

  • EXAMPLE: Studies by management consultants Bain & Company suggest that the annual profits generated from a customer who has been with a company for seven years are typically more than five times the amount it generates in the first year (Doyle & Stern, 2006).

• Marketing network = consists of the company and those other organisations (suppliers, bankers, distributors, key customers) with which it has built long-term, dependable relationships.

• Market = all potential customers sharing a specific need or want who might be willing and able to exchange to satisfy a need or want.

• Industry = a collection of sellers.

The Customer Led Business

• The task of marketing is to facilitate the exchange process and enhance the organisation’s ability to engage in mutually beneficial exchanges. Marketing management seeks to attract and retain customers by offering desirable products.

• Marketing management consists of five tasks:

  1. Identifying target markets - Management has to identify those customers it desires to make exchanges with. Choice of markets will be governed by the wealth they possess and the organisation’s capability to serve them.

  2. Marketing research - Management has to collect information on the current and potential needs of customers in the markets chosen, how they buy and what competitors are offering.

  3. Product development - The business must develop products (and/or services) which will meet needs and wants sufficiently to attract target customers to buy.

  4. Marketing mix - Management will have to determine the price, promotion and distribution for the product. Marketing mix is tailored to offer value, communicate the offer and make it accessible and convenient.

  5. Monitoring - Since management will wish to build relationships which retain customers, it needs to obtain feedback on customer satisfaction with the exchange and to modify the product and marketing mix as needs and competitive environments change.

• Marketing management = the process of identifying target markets, researching the needs of customers in these markets and then developing the product, price, promotion and distribution to create exchanges that satisfy the objectives of the organisation’s stakeholders.

1. Product Orientation

• In some companies the product is given higher importance than the customer.

  1. The premise here is that the customer will want the product, but no effort is made to research whether this is actually the case.

     • EXAMPLE: In high-tech companies there is often a belief that developing technologically superior products is the route to success. Here scientists make the product decisions. Generally the results are offers that are over-engineered, too costly to produce and insufficiently appealing to the market.

  2. The second variant is the view that success lies in producing the product more efficiently than competitors. Possessing the lowest cost is seen as a source of competitive advantage.

2. Sales Orientation

• Once a product has been produced that is unappealing to the customer,...

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