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Table of Contents

▼ Marketing Essentials (20)
  1. Buyer Decision Process
  2. Customer Relationship
  3. Customer Satisfaction
  4. Decision Making Unit
  5. External Influences - Consumer Culture
  6. External Influences - Family Influences (Birth Order)
  7. External influences - Introduction
  8. External Influences - Social Environment and Social Class
  9. Internal Marketing
  10. Marketing and Customer Relationships
  11. Marketing and Functions
  12. Marketing Audit
  13. Marketing Concept
  14. Marketing Contexts
  15. Marketing Environment
  16. Marketing Exchange Process
  17. Three Levels of a Product
  18. Value and Relationship Quality
  19. What is a customer?
  20. What is Marketing?


LESSON 1

Buyer Decision Process

The stages of the Buyer Decision Process

The buyer decision process represents a number of stages that the purchaser will go through before actually making the final purchase decision. The consumer buyer decision process and the business/organisational buyer decision process are similar to each other. Obviously core to this process is the fact that the purchase is generally of value in monetary terms and that the consumer/business will take time to actually assess alternatives. For FMCG (Fast Moving Consumer Goods) the purchase decision process tends to be shorter/quicker, and for habitual purchase behaviour or repeat purchases the decision process is short-circuited.
Let’s look at an example based upon buying a new smart cellphone. The first stage is likely to be that you have a need for communication or access to the Internet, or problem because you cannot interact with friends using social media. The value added by products such as Android, iPhone or Windows phone and others should satisfy your need or solve your problem. So the second stage is where you speak to your friends and surf the Internet looking at alternatives, which represent stage two – or your information search. As a buyer you might visit a local cellphone store and speak to the sales staff to help you complete stage three, i.e. your evaluation of alternatives. Stage four is the selection of product and you go and make your final decision and buy your smartphone from a local store or using an e-commerce website. Stage five involves your post-purchase evaluation whereby you use the phone and have a positive, negative or mediocre experience of the product. If it doesn’t satisfy your needs you take action and more importantly you’ll tell others of your problems. If you’re pleased with the product, you will tell your friends and this will influence stage two (their information search) when they decide to buy a cellphone.
Remember that organisations and businesses also go through this process and that teams of individuals contribute to the decision-making process. This is called a Decision-Making Unit (DMU).
The stages of the buyer decision process are the recognition of the problem, the search for information, an evaluation of all available alternatives, the selection of the final product and its supplier (of course services are included) and then ultimately the post-purchase evaluation. Let’s have a look at each stage and offer a quick explanation of what it’s all about, and then let’s apply it to an organisation to help us work out what it’s all about.

Stage One

Stage one is the recognition of the particular problem or need and here the buyer has a need to satisfy or a problem that needs solving, and this is the beginning of the buyer decision process.

Stage Two

Stage two is where we begin to search for information about the product or service. Buyers here begin to look around to find out what’s out there in terms of choice and they start to work out what might be the best product or service for solving the problem or satisfying any need.

Stage Three

Stage three sees the evaluation of the available alternatives whereby the buyer decides upon a set of criteria by which to assess each alternative.
buyer-decision-process

Stage Four

We buy or select a product/service/supplier at stage four. Individuals or teams of buyers make the final choice of what to buy and from whom to buy it.

Stage Five

Interestingly the process does not stop at the point of purchase because there is a stage five called the post-purchase evaluation. The process continues even when the product or service is being consumed by the individual or business. So if it doesn’t meet your needs or solve your problem you can take action to improve the product or service. Your actions at this point might inform other potential buyers who would be keen to hear about your experiences – good or bad.


LESSON 2

The Customer Relationship

Think about some of the relationships that are important to you. You have parents and friends, and you have workmates and acquaintances. To a greater or lesser extent you have a relationship with all of these people. Say you have a number of roles, such as student, professional, son or daughter, teacher, employer, employee, partner and so on. The customer relationship works in a similar way.
In the past there would have been a simple exchange process which would have seen the delivery of the customer value. However marketers want to retain you as loyal customers. They want to keep you satisfied. So there is a customer relationship which delivers goods and services with which you are satisfied between you and the marketing company. This is a basic customer relationship.
There is sometimes a little confusion between relationship marketing and Customer Relationship Management (CRM). They are quite similar with the main difference being that CRM is an IT concept or strategy. CRM and relationship marketing together give the marketer customer information and data which can be used for long-term value delivery and an exchange process which satisfies customer needs.
The relationship marketing approach can also be used not only for external customers, but also for internal customers or what is known as internal marketing. Essentially one focuses upon employees and work colleagues and building relationships.
However there is a developing and more substantial field called relationship marketing. Let’s have a look at what relationship marketing is.
The process of identifying and establishing, maintaining, enhancing, and when necessary terminating relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met, where this is done by a mutual giving and fulfilment of promises.
Gronroos (2000).
The Gronroos definition is quite strategic in many ways. When trying to learn about relationship marketing it looks a little complex at first glance. In fact relationship marketing can have both a very practical but also a deeply academic foundation. Let’s look at something a little more practical that we can put straight into use.
The relationship marketing perspective is based on the notion that on top of the value of products and/or services that are exchanged, the existence of the relationship between the two parties creates additional value for the customer and also the supplier or service provider.
Gronroos (2004).
So this more straightforward definition reasons that relationship marketing is a perspective rather than a process, which is based upon some straightforward concepts i.e. the exchange process and the relationship between buyer and seller, and the value delivered to them both. The marketing mix is the bridge between buyer and seller.


LESSON 3

Customer satisfaction

So the purpose of marketing centres very much upon creation of value and a long-term customer relationship. Customer satisfaction is a central concept to this proposal. A marketing company aims to set a level of expectation at which customers are satisfied that value is delivered through an exchange process.
Be careful not to set your satisfaction level too low because your customers will go to competitors. On the other hand try not to set your satisfaction level too high because if you don’t achieve that level, then your customers will also go to competitors. So the aim is to satisfy customers so that they come back and buy it again. This is fundamental to relationship marketing and customer relationship management.
Companies today have strategies for recruiting, retaining and extending products and services to customers in order to develop customer loyalty and to retain customers for the long-term. Essentially we are looking at long-term customer relationship management, and relationship marketing. Companies may have in the past looked at satisfying the needs of large target groups or segments, today they look more at marketing to profitable individuals whom they aim to retain for as long as possible.
Reflect for a moment and think of an example of when you were dissatisfied with the product or service. Why were you dissatisfied? Then think of an occasion when you are entirely satisfied or in fact delighted with a product or service. Why were you satisfied? This is the basis of customer satisfaction.
. . the extent to which a product’s perceived performance matches buyers’ expectations.
Kotler and Armstrong 2010.
It’s all about perception. In the mind of the consumer perception is reality, often not reflecting the value that a product or service delivers. Customer satisfaction depends on how the consumer perceives their experience and this is a central job of marketing. Satisfied customers come back time and time again, so aim to deliver slightly more satisfaction than the customer might reasonably expect i.e. delighted them! A central goal of increasing customer satisfaction is paramount, but remember it’s not about dropping your price or promising too much since these would only increase costs to your business. Getting this right is the job of the marketer.
Large organisations would have different levels of customer satisfaction for different customers. Take a business like car manufacturer Ford for example. Ford has products and services which are positioned in a series of segments. Each segment requires a different level of satisfaction, so a low-cost economical budget vehicle would be marketed in one way perhaps, pitched at a lower level of customer satisfaction, whilst a more expensive executive vehicle would have a higher level of customer satisfaction. A more expensive executive vehicle would have a higher margin of profit and therefore customer satisfaction would be costed in to the final price that the consumer pays. The purchaser of an economy product pays less and therefore expectations of customer satisfaction would be lower.


LESSON 4

Decision Making Unit (DMU)

Individuals who make up the DMU

The decision Making Unit (DMU) is a collection or team of individuals who participate in a buyer decision process. Generally DMU relates to business or organisational buying decisions rather than to those of a family for example. There are a number of key players in this process namely the initiators, the gatekeepers, the buyers, the deciders, the users and the influencers. Let’s consider these individually prior to applying the decision making unit to an example of organisational buying.

Influencers

Influencers are those who may have a persuasive role in relation to the deciders. They may be specialists who make recommendations based upon experience and their knowledge of products and services. Examples are consultants employed by businesses to help deciders make a final decision, or another example might be lawyers employed to offer legal advice. There are also informal influences such as family and friends, and people that you meet at trade associations or informal gatherings.
The relationship amongst the key players will be different for every organisation and in every purchase situation. Individuals may influences as well as initiators, and therefore none of these categories is mutually exclusive i.e. stand alone, since there is much crossover and blurring around the edges of roles.

Initiators

Initiators are the players who recognise that there is a need to be satisfied or a problem to be solved. This might come from a drive for efficiency due to the fact that some equipment will need replacing. There could be many reasons which stimulate the initiation.

Gatekeepers

Gatekeepers are individuals who press the stop/go button in the process. Often gatekeepers will be proactive in searching for information and delivering recommendations for those decision-makers further up the line. On other occasions gatekeepers can be seen stalling the flow of the decision-making process.

Buyers

Buyers are the professional function within an organisation generally responsible for purchasing. They are given a brief with a series of criteria against which to judge potential products or services, and their suppliers. They tend to be responsible for sourcing and negotiation.
 decision-making-unit

Deciders

Deciders in a large organisation certainly are responsible for making the final deal or decision. Their role carries the responsibility of placing the final order. They might be senior managers or agents acting on behalf of an organisation in the market. The deciders will review information provided from lower down the buyer decision process from the buyers, gatekeepers and the original initiators.

Users

Users are those who put the service or product into operation once the deal has been clinched. Their opinions will be important especially if they are using manufacturing equipment, flying aircraft, using software to improve customer satisfaction, and so on. Users will be heavily involved in the post-purchase evaluation phase of the buyer decision process.


LESSON 5

Consumer Behaviour

External Influences – Consumer Culture

a. Culture includes knowledge, belief, art, law, morals, customs, and any other capabilities and habits acquired by humans as members of society.
d. Factors that Define a Culture
  • i. Individual/Collective: The culture in the US is an individualistic society, where people generally look out for themselves; The Japanese culture focuses on the collective, and people work to better society as a whole.
  • ii. Extended/Limited Family: In the US, families move away from each other and generally don’t live together in the same house; In many Asian and European countries, parents, kids, grandparents and even aunts and uncles live together in the same house.
  • iii. Adult/Child: Different cultures will define when someone is an adult. In the US it is 18 years old, but in some South American countries it is 14 or 15 years old. In the Hebrew culture a boy becomes a man at 13 during his Bar Mitzvah ceremony. In the Hispanic culture a girl becomes an adult at 15th birthday party.
  • iv. Masculine/Feminine: Cultures define the roles of men and women differently, including their rank, and prestige in society.
  • v. Youth/Age: The value placed on Elders depends on the culture
  • vi. Cleanliness: In the US, cleanliness is very important, in fact most of the products advertised on American TV claim to improve cleaning; In other cultures showering on a daily basis is unnecessary.
  • vii. Tradition/Change: Some societies prefer traditions over making changes.
  • viii. Hard work/Leisure: In some cultures hard work is valued over leisure time.
  • ix. Postponed gratification/Immediate gratification: American culture is centered on immediate gratification “I want it now!”
  • x. Sensual gratification/Abstinence: The Netherlands is a society that openly talks about and advertises sexual activity; in Muslim societies those topics are taboo, and women who get pregnant before marriage are often shunned.
b. How does culture affect consumer behavior? Whatever a person consumes will determine their level of acceptance in their society. If someone does not act consistently with cultural expectations, they risk not being accepted in society.
c. What happens when a company ignores culture? McDonald’s is one of the most popular restaurants in the world. At their American based restaurants they serve beef hamburgers, but when they decided to open restaurants in India, they used lamb meat for their hamburgers, because the Indian people do not eat cow meat; if McDonald’s had ignored this cultural difference they would not have been successful in India! That was the problem when The Walt Disney Company opened EuroDisney outside Paris; it was almost a failure because Disney ignored the culture. The French people drink wine at very young ages and prefer sugar on their popcorn, not salt, like Americans. Disney did not accommodate their theme park until they realized that the French people were indeed their target market, so they changed the name of the park to Disneyland Paris and made modifications to their menus and also to the wait lines in the park.

Behavior
Meaning in the US
Meaning in other cultures
Consuming wine and beer
Those under the age of 21 are not allowed to drink alcohol
In European countries it is common for children to drink wine/beer at family meals; when in a bar in Korea you pour drinks for your friends and family first, then wait for them to pour your drink
Drinking coffee
Generally adults drink it in the morning because of the caffeine, and giving coffee to a child is not accepted
In Turkey, coffee is a special drink that you serve to guests; in Italy coffee is enjoyed after a family meal; in China tea is the drink of choice
Cooking pork ribs
Grilled outside at a backyard party
Jewish and Muslims do not eat pork
Kissing
To express romantic feelings about someone
In many cultures kissing is acceptable when greeting a friend
Using the number 7
Lucky number
Unlucky number in Kenya, Singapore and Ghana


LESSON 6

External Influences – Family Influences (Birth Order)

Where a child places in the birth order can have an effect on how they see themselves, and therefore affects their consumer behavior. The middle child often seems to have the most negative impressions of his lot in life.

Oldest Child

  • Is only child for period of time; used to being center of attention.
  • Believes must gain and hold superiority over other children.
  • Being right, controlling often important.
  • Strives to keep or regain parents’ attention through conformity.  If this failed, chooses to misbehave.
  • May develop competent, responsible behavior or become very discouraged.
  • Sometime strives to protect and help others.
  • Confident.
  • Determined.
  • Born Leader.
  • Organized.
  • Eager to Please.
  • Likes to Avoid Trouble.

Second Oldest Child

  • Never has parents’ undivided attention.
  • Always has sibling ahead who’s more advanced.
  • Acts as if in race, trying to catch up or overtake first child. If first child is "good," second may become "bad." Develops abilities first child doesn’t exhibit. If first child successful, may feel uncertain of self and abilities.
  • May be rebel.
  • Often doesn’t like position.
  • Feels "squeezed" if third child is born.
  • May push down other siblings.

Middle Child of Three Siblings

  • Has neither the rights of oldest nor privileges of youngest.
  • May feel like they don’t have place in family.
  • Becomes discouraged and "problem child" or elevates self by pushing down other siblings.
  • Is adaptable.
  • Learns to deal with both oldest and youngest sibling.

Youngest Sibling

  • Feels every one bigger and more capable.
  • Expects others to do things, make decisions, take responsibility.
  • Becomes boss of family in getting service and own way.
  • Develops feelings of inferiority or becomes "speeder" and overtakes older siblings.
  • Remains "The Baby." Places others in service.
  • If youngest of three, often allies with oldest child against middle child.
  • Persistent
  • Affectionate
  • Crave the Spotlight
Younger children always want to be able to do the things older siblings are allowed to do. And older siblings may feel that the younger siblings get away with things they were not able to when they were the same age. Here are the levels of birth order:
  • Only Child
  • Oldest Child
  • Second Oldest Sibling
  • Middle Child of Three Siblings
  • Youngest Sibling

Only Child

  • Pampered and spoiled
  • Is center of attention; often enjoys position. May feel special.
  • Relies on service from others rather than own efforts.
  • Feels unfairly treated when doesn’t get own way.
  • Likelier to hold a professional position.
  • Concerned with meeting parents’ expectations.
  • Confident.
  • Pays Attention to Detail.
  • Good in School.
  • Overly Critical.


LESSON 7

Consumer Behaviour

External influences – Introduction

What are external influences in consumer behavior?

a. What a consumer eats, wears, and believes are all learned and influenced by the culture they live in, their family, childhood and social environment. All of these are external factors that affect purchases.
Examples include: Religious, Political, Family, Friends, Co-workers, Clubs and Associations.
People are social and they want to belong to special groups. Group members share common interests, influence each other, and share rules and values. Primary groups are those with the most influence, such as family members; secondary groups have less interaction than the primary group, such as clubs and organizations. As children grow into teenagers, their parents become less of an influence and peer groups become more of an influence. All groups exert what is called social power; some groups have more power than others over consumers’ decisions.
  • Values
  • Community
  • Family Life Cycle

  • Type of Social Power
    Description
    Example
    Referent
    A person likes a group and acts like them so the group will accept them
    A teenager wants to join a popular group, so they begin to dress like them and listen to their groups’ chosen music
    Legitimate
    Membership comes with agreements and there will be consequences for nonconformity
    A boss has authority over his employees and can fire them if they don’t do an adequate job
    Expert
    Groups have knowledge that others want to gain
    Consumers who want to be members of The American Medical Association seek to gain their knowledge of health and wellness
    Reward
    Groups with power to give rewards to members
    A school soccer team can give trophies to their best players (members)
    Coercive
    A group can penalize members for not following the rules
    In the army, soldiers who do not report for duty on time can be forced to do manual labor or even get kicked out of the army

    c. External influences can also include situational influences, sometimes called atmospherics—sensory items in an environment that may change buying patterns, such as music, color, smell, and lighting. If a store plays loud rock music, they may attract young adults, but drive away older consumers. Color is a huge influence on behavior, but is also dependent on culture, since different cultures perceive colors differently. In the US white is a color worn at weddings, and in China, red is the color of choice for weddings. Many bakeries will pump the smell of their treats outside the store, so that passersby will be more likely to want to come in.
    d. Before making a purchase, consumers will go through an external information search. They will go through this search in order to evaluate the alternatives and narrow down their list of choices. It includes:
    • Personal experience—have they purchased this product before? How do they feel about it?
    • Websites/Internet search—researching the quality of the product
    • Knowledge—someone with little or no knowledge of the product will need lots of information!
    • Friends/reference groups—consumers ask friends, family and coworkers about their experiences with the product.
    • Advertising and promotions
    e. A purchase may be ultimately made due to Heuristics. This is a personal set of values that everyone has and it causes consumers to buy what they are comfortable buying, such as purchasing from specific countries of origin, or products that they are brand loyal to.
    Here is a list of the external influences that affect consumer behavior:
    • Age
    • Race
    • Gender
    • Education level
    • Cross-cultural influences
    • Sub-cultures (Hispanic-American)
    • Social status (upper, middle, lower)
    • Customs, Beliefs, Expectations, Traditions, Habits
    • Reference groups are groups that have shared beliefs, interests and behaviors and influence a consumer’s behavior:


    LESSON 8

    Consumer Behavior

    External Influences – Social Environment and Social Class

    Social Environment

    Reference groups have an influence on purchasing behavior, but the level of influence will depend on where the product will be consumed—in public or in private—and whether the product is a want or a need.
    PROFILE OF THE AMERICAN CLASS STRUCTURE
    CLASS
    % Pop
    INCOME
    EDUCATION LEVEL
    OCCUPATION
    DESCRIPTION
    Upper-Upper
    .3%
    $5 million and up
    Graduate Degree
    CEO, Executives, Senator
    Inherited wealth, aristocratic, fund charities, “old money”, participate in politics
    Upper
    1.2
    $2 million
    Graduate Degree
    Executive, professional
    Entrepreneurs, Sports Stars, Entertainers
    Lower-Upper
    12.5
    $250,000
    Graduate Degree, medical degree
    Executive, Professional, Doctor
    Education is important, involved in arts
    Middle Class
    32
    $100,000
    College Degree
    Office workers, managers
    Insecure due to economic fluctuations, live in the suburbs
    Working Class
    38
    $50,000
    High school
    Teacher, plumber,
    Skilled workers, may be in danger of falling into a lower class
    Lower
    9
    $20,000
    Some High School
    Janitor, farmer
    Poorly educated, low income, work as laborers
    Lower-Lower
    7
    $9,000 and under
    Grade School
    Minimum wage or unemployed
    Unskilled, may be unemployed for long periods of time, receive government support
    GROUP INFLUENCE ON PRODUCT AND BRAND SELECTION

    Need
    Want
    Public
    Example: fast food lunch
    A product used in public that you need
    weak group influence for product selection, strong group influence for brand selection
    Example: yacht
    A product used in public that you want
    strong group influence for product selection, strong group influence for brand selection
    Private
    Example: bed sheets
    A product used in private that you need
    weak group influence for product selection, weak group influence for brand selection
    Example: hot tub
    A product used in private that you want
    strong group influence for product selection, weak group influence for brand selection

    Social Class

    Populations can be subdivided into groups who members share similar hobbies, opinions, and activities. Americans have two lifestyles—the one they are in and the one they strive to be in, which is usually better than their current situation. It is important for a marketer to understand the subdivisions of society in order to better choose target markets for their products and services.


    LESSON 9

    Internal Marketing

    Internal marketing is inward facing marketing. Internal marketing is used by marketers to motivate all functions to satisfy customers. With internal marketing the marketer is really extending and developing the foundations of marketing such as the marketing concept, the exchange process and customer satisfaction to internal customers.
    Internal customers would be anybody involved in delivering value to the final customer. This will include internal functions within business with which marketing people interact including research and development, production/operations/Logistics, human resources, IT and customer services.
    See also Strategic Internal Marketing.
    There are many techniques that marketers can use to communicate with internal customers and functions. Firstly marketer would need to identify internal and external customers, including their different needs and wants. Secondly the marketing function will provide internal services such as intranets for human resources, internal recruitment, and companywide briefings and announcements. Finally the marketing team can provide extranet services for supporting activities in the supply chain. The supply chain connects internal and external manufacturers and producers, our internal business functions (as discussed above) and our final customer interface at wholesale, retail and ultimately at the consumption of our product and service.
    Internal marketing is orienting a motivating customer contact employees and supporting service people to work as a team to provide customer satisfaction.
    (Kotler and Armstrong 2010).
    A marketing company would embed the basic principles of marketing such as company vision and mission, its overarching objectives, its business strategy, marketing tactics i.e. the marketing mix, and finally how we measure marketing success.

    It’s important that a company recruits the right people. Marketing companies want people that are motivated by its products and services. Take Apple for example. If you visit an Apple store there is a purposefully designed customer experience, part of which is communicated by the Apple people. They are enthusiastic and very knowledgeable and actually uphold Apple principles and brand. They are purposely recruited, they are trained and retained, which is all part of human resource management and also a successful internal marketing program.
    So with the Apple example above you can see that internal marketing ensures that internal staff now link with external customers in a customer relationship. Internal marketing meets external marketing. The basic chain links internally so the concept of the internal customer sees everybody within the organisation treating each other as customers. The Logistics manager would see a customer services function as his internal customers. The customer service function would see field engineers as their customers. The research and development team would see the manufacturing team as their customers. The relationship works in both directions, up and down the supply chain.


    LESSON 10

    Marketing and Customer Relationships

    Marketing today is very much focused upon business relationships, especially in the B2B markets. Historically companies would manufacture products that would be promoted to customers. However as markets have become more competitive, marketing companies seek to attract customer by building strong relationships so that customers are ‘retained’ i.e. you keep hold of your customers. This is the basis for relationship marketing, which we consider here as marketing and the customer relationship.

    The marketing concept, customer focus and relationship marketing.

    At this point in our studies we can now identify a path which connects the marketing concept, customer focus and relationship marketing. The marketing concept centres all organisational activities upon the customer (which is our customer focus) and if we think in terms of the long-term we have now added relationship marketing. Marketing focuses everything on our customer and their recruitment, their retention into the long-term, and finally marketing aims to extend products and services to the same customers from other product categories. So historically marketers would ‘acquire’ or recruit customers whereas today we acquire customers and then we ‘retain’ them.
    There are a couple of theoretical tools that we can use here. So in this next section we are going to take a look at the Pareto principle and the loyalty ladder, which both help us to understand how we move from customer acquisition to customer retention and the implications for marketing.
    Think about the value-added, high quality airlines, such as Emirates. Companies such as these are specialists in building the customer relationship and it is obvious that they add value at each customer contact point. You are treated to high levels of customer service from the moment that you check-in, during your flight and even when you have finished using their service. For example, airlines have air miles promotions and upgrades which keep the customer flying with the company and ‘retains’ them as a customer.
    The key to relationship marketing is the long-term customer relationship. So if you recall your introduction to marketing definitions, this is at opposite ends of the scale to be production or product orientation which is the basis for modern marketing. As a rule of thumb, relationship marketing tends to be practised well in the airline industry and in the travel industry. However branding is another way of maintaining the customer relationship, as is innovation and design. Nike and Apple may not deliver the same amount of face-to-face relationship building, but they do have very loyal long-term customers. Try to think of other examples of businesses that practice strong relationship marketing.


    LESSON 11

    Marketing and Functions

    Marketing’s Relationship with other Functions

    Functions within an organization

    The marketing function within any organization does not exist in isolation. Therefore it’s important to see how marketing connects with and permeates other functions within the organization. In this next section let’s consider how marketing interacts with research and development, production/operations/logistics, human resources, IT and customer service. Obviously all functions within your organization should point towards the customer i.e. they are customer oriented from the warehouseman that packs the order to the customer service team member who answers any queries you might have. So let’s look at these other functions and their relationship with marketing.

    Human resources

    Human Resource Management (HRM) is the function within your organization which overlooks recruitment and selection, training, and the professional development of employees. Other related functional responsibilities include well-being, employee motivation, health and safety, performance management, and of course the function holds knowledge regarding the legal aspects of human resources.
    So when you become a marketing manager you would use the HR department to help you recruit a marketing assistant for example. They would help you with scoping out the job, a person profile, a job description, and advertising the job. HR would help you to score and assess application forms, and will organise the interviews. They may offer to assist at interview and will support you as you make your job offer. You may also use HR to organise an induction for your new employee. Of course there is the other side of the coin, where HR sometimes has to get tough with underperforming employees. These are the operational roles of HR.
    Your human resources Department also have a strategic role. Moving away from traditional personnel management, human resources sees people as a valuable asset to your organization. Say they will assist with a global approach to managing people and help to develop a workplace culture and environment which focuses on mission and values.
    They also have an important communications role, and this is one aspect of their function which is most closely related to marketing. For example the HR department may run a staff development programme which needs a newsletter or a presence on your intranet. This is part of your internal marketing effort.

    IT (websites, intranets and extranets)

    If you’re reading this lesson right now you are already familiar with IT or Information Technology. To define it you need to consider elements such as computer software, information systems, computer hardware (such as the screen you are looking at), and programming languages. For our part is marketers we are concerned with how technology is used to treat information i.e. how we get information, how we process it, how we store the information, and then how we disseminate it again by voice, image or graphics. Obviously this is a huge field but for our part we need to recognise the importance of websites, intranets and extranets to the marketer. So here’s a quick intro.
    A website is an electronic object which is placed onto the Internet. Often websites are used by businesses for a number of reasons such as to provide information to customers. So customers can interact with the product, customers can buy a product, more importantly customers begin to build a long-term relationship with the marketing company. Information Technology underpins and supports the basis of Customer Relationship Management (CRM), a term which is investigated in later lessons.
    An intranet is an internal website. An intranet is an IT supported process which supplies up-to-date information to employees of the business and other key stakeholders. For example European train operators use an intranet to give up-to-date information about trains to people on the ground supporting customers.
    An extranet is an internal website which is extended outside the organization, but it is not a public website. An extranet takes one stage further and provides information directly to customers/distributors/clients. Customers are able to check availability of stock and could check purchase prices for a particular product. For example a car supermarket could check availability of cars from a wholesaler.

    Customer service provision

    Customer service provision is very much integrated into marketing. As with earlier lessons on what is marketing?, the exchange process, customer satisfaction and the marketing concept, customer service takes the needs of the customer as the central driver. So our customer service function revolves around a series of activities which are designed to facilitate the exchange process by making sure that customers are satisfied.
    Think about a time when you had a really good customer service experience. Why were you so impressed or delighted with the customer service? You might have experienced poor customer service. Why was it the case?
    Today customer service provision can be located in a central office (in your home country or overseas) or actually in the field where the product is consumed. For example you may call a software manufacturer for some advice and assistance. You may have a billing enquiry. You might even wish to cancel a contract or make changes to it. The customer service provision might be automated, it could be done solely online, or you might speak to a real person especially if you have a complex or technical need. Customer service is supported by IT to make the process of customer support more efficient and effective, and to capture and process data on particular activities. So the marketer needs to make sure that he or she is working with the customer service provision since it is a vital customer interface. The customer service provision may also provide speedy and timely information about new or developing customer needs. For example if you have a promotion which has just been launched you can use the customer service functions to help you check for early signs of success.

    Research and development

    Research and development is the engine within an organization which generates new ideas, innovations and creative new products and services. For example cell phone/mobile phone manufacturers are in an industry that is ever changing and developing, and in order to survive manufacturers need to continually research and develop new software and hardware to compete in a very busy marketplace. Think about cell phones that were around three or four years ago which are now completely obsolete. The research and development process delivers new products and is continually innovating.
    Innovative products and services usually result from a conscious and purposeful search for innovation opportunities which are found only within a few situations.
    Peter Drucker (1999)
    Research and development should be driven by the marketing concept. The needs of consumers or potential consumers should be central to any new research and development in order to deliver products that satisfy customer needs (or service of course). The practical research and development is undertaken in central research facilities belonging to companies, universities and sometimes to countries. Marketers would liaise with researchers and engineers in order to make sure that customer needs are represented. Manufacturing processes themselves could also be researched and developed based upon some aspects of the marketing mix. For example logistics (place/distribution/channel) could be researched in order to deliver products more efficiently and effectively to customers.

    Production/operations/logistics

    As with research and development, the operations, production and logistics functions within business need to work in cooperation with the marketing department.
    Operations include many other activities such as warehousing, packaging and distribution. To an extent, operations also includes production and manufacturing, as well as logistics. Production is where goods and services are generated and made. For example an aircraft is manufactured in a factory which is in effect how it is produced i.e. production. Logistics is concerned with getting the product from production or warehousing, to retail or the consumer in the most effective and efficient way. Today logistics would include warehousing, trains, planes and lorries as well as technology used for real-time tracking.
    Obviously marketers need to sell products and services that are currently in stock or can be made within a reasonable time limit. An unworkable scenario for a business is where marketers are attempting to increase sales of a product whereby the product cannot be supplied. Perhaps there is a warehouse full of other products that our marketing campaign is ignoring.


    LESSON 12

    Marketing Audit

    How to conduct a marketing audit

    The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process, but also at a series of points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself.

    2. The External Marketing Environment.

    As a market orientated organisation, we must start by asking – What is the nature of our ‘customer?’ Such as:
    • Their needs and how we satisfy them.
    • Their buyer decision process and consumer behaviour.
    • Their perception of our brand, and loyalty to it.
    • The nature of segmentation, targeting and positioning in our markets.
    • What customers ‘value’ and how we provide that ‘value?.’
    What is the nature of competition in our target markets?
    • Our competitors’ level of profitability.
    • Their number/concentration.
    • The relative strengths and weaknesses of competition.
    • The marketing plans and strategies of our competition.
    What is the cultural nature of the environment(s)?
    • Beliefs and religions.
    • The standards and average levels of education.
    • The evolving lifestyles of our target consumers.
    • The nature of consumerism in our target markets.
    What is the demography of our consumers? Such as average age, levels of population, gender make up, and so on. How does technology play a part?
    • The level of adoption of mobile and Internet technologies.
    • The way in which goods are manufactured.
    • Information systems.
    • Marketing communications uses of technology and media.
    What is the economic condition of our markets?
    • Levels of average disposable income.
    • Taxation policy in the target market.
    • Economic indicators such as inflation levels, interest rates, exchange rates and unemployment.
    Is the political and legal landscape changing in any way?
    • Laws, for example, copyright and patents.
    • Levels of regulation such as quotas or tariffs.
    • Labour/labor laws such as minimum wage legislation.

    3. A Review of Our Current Marketing Plan

    • What are our current objectives for marketing?
    • What are our current marketing strategies?
    • How do we apply the marketing mix? (Including factors covered above in (a))
    • Is the marketing process being controlled effectively?
    • Are we achieving our marketing budget?
    • Are we realising our SMART objectives?
    • Are our marketing team implementing the marketing plan effectively?
    • Levels of staffing.
    • Staff training and development.
    • Experience and learning.
    What is our market share? (total sales/trends/sales by product or customer or channel) Are we achieving financial targets? (profit and margins/ liquidity and cash flow/ debt: equity ratio/ using financial ratio analysis)

     

    There are a number of tools and audits that can be used, for example SWOT analysis for the internal environment, as well as the external environment. Other examples include PEST and Five Forces Analyses, which focus solely on the external environment.
    In many ways the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary.
    This lesson considers the basics of the marketing audit, and introduces a marketing audit checklist. The checklist is designed to answer the question, what is the current marketing situation? Lets consider the marketing audit under three key headings:
    • The Internal Marketing Environment.
    • The External Marketing Environment.
    • A Review of Our Current Marketing Plan.

    1.The Internal Marketing Environment.

    What resources do we have at hand? (i.e. The FIVE ‘M’s):
    • MEN (Labor/Labour).
    • MONEY (Finances).
    • MACHINERY (Equipment).
    • MINUTES (Time).
    • MATERIALS (Factors of Production).
    • How is our marketing team organised?
    • How efficient is our marketing team?
    • How effective is our marketing team?
    • How does our marketing team interface with other organisations and internal functions?
    • How effective are we at Customer Relationship Management (CRM)?
    • What is the state of our marketing planning process?
    • Is our marketing planning information current and accurate?
    • What is the current state of New Product Development? (Product)
    • How profitable is our product portfolio? (Product)
    • Are we pricing in the right way? (Price)
    • How effective and efficient is distribution? (Place)
    • Are we getting our marketing communications right? (Promotion)
    • Do we have the right people facing our customers? (People)
    • How effective are our customer facing processes? (Process)
    • What is the state of our business’s physical evidence? (Physical Evidence)


    LESSON 13

    Marketing Concept.

    The marketing concept is a philosophy. It makes the customer and the satisfaction of his or her needs the focal point of all business activities. It is driven by senior managers, passionate about delighting their customers.
    Now that you have been introduced to some definitions of marketing and the marketing concept, remember the important elements summarised as follows:
    • Contemporary marketing focuses on the satisfaction of customer needs, wants and requirements.
    • It’s about the delivery of value to satisfied customers, through an exchange process.
    • The philosophy of marketing needs to be owned by everyone from within the organization.
    • Future needs have to be identified and anticipated.
    • There is normally a focus upon profitability, especially in the corporate sector.
    • More recent definitions recognize the influence of marketing upon society.
    • There is a longer-term relationship with customers.
    The marketing concept holds that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do.
    Kotler and Armstrong (2010).
    The marketing concept arrived after a series of other orientations that marketing companies underwent during the 20th Century. Initially there was production orientation where a company focused upon the science of manufacturing. Then there was a product orientation where a business is not only focused on the production processes but also upon the quality and desirability of a particular product. Then marketing companies progressed to a selling or sales orientation whereby products will proactively sold based upon features rather than the benefits to the individual customer and his or her needs. Hence the arrival of a market orientation which underpins our marketing concept, where needs and wants are satisfied through the delivery of value to satisfied customers. Below are some definitions of the marketing concept which demonstrate the breadth and scope of the term.
    Marketing is not only much broader than selling, it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise.
    Drucker (1955, 2007).
    Implementation of the marketing concept [in the 1990’s] requires attention to three basic elements of the marketing concept. These are: customer orientation; an organization to implement a customer orientation; long-range customer and societal welfare.
    Cohen (1991).


    LESSON 14

    Marketing Contexts

    Marketing in Different Organizational Contexts

    The marketing mix and the services marketing mix should be adapted for different organizational and business contexts. The examples below consider the contexts of FMCG, B2B, services marketing, voluntary and not-for-profit marketing and online marketing. Try to think of your own examples for each business context.

    Service Organization

    Service organizations are more likely to use the services marketing mix, which is also known as the 7Ps of marketing. So let’s consider a well-known service organization and evaluate how it adapts and modifies the marketing mix. For this example let’s look at Bupa which provide healthcare such as hospital care, health insurance, health assessments, care homes, dental care and other health services. Bupa also has some B2B services to businesses.
    • Bupa’s products are all private sector health related services.
    • Pricing is relatively expensive in comparison with the public sector which tends to be subsidised through taxation in many countries, for example Spain.
    • The services are delivered through healthcare professionals and privately owned hospitals and dental surgeries. Obviously place/distribution depends on which service you are consuming and where you are.
    • Bupa invests large sums in marketing communications in order to attract business from a number of profitable segments. So the business would use TV advertising, newspaper advertising and direct mail campaigns amongst others.
    • The process begins when you first have a health assessment and might end if you are unfortunate enough to need to use your healthcare insurance.
    • People would include the individuals that manage your healthcare as well as those that actually deliver the service such as nurses, dentists and doctors.
    • Physical evidence is the building in which the healthcare is delivered.

    Voluntary and not-for-profit organizations

    Voluntary and not-profit-organizations also apply the marketing mix in a slightly different way. Volunteering might include helping to clear land the good of the whole community or visiting elderly people in your area to care for them. Not-for-profit organizations will often run on donations or government funding, since they are not free but instead aim to breakeven. Examples include charities and local voluntary groups. For this example let’s consider the Olympic movement. Okay the Olympics is well-known for attracting huge investment from brands for sponsorship. However the Olympics depends on volunteers for many of its activities including media, editorial and press relations, international relations and all of the activities that go on at competition venues and Olympic villages – from laundry to restaurants.
    • The product would be the service that is provided free of charge by each individual.
    • The price would be the value to the person volunteering after having done some good for the wider community.
    • The place would be the location where the volunteering was delivered such as at an event at the Olympic village.
    • Promotion would be how the individual actually registered interest to volunteer (and in the case of London 2012 this was by Internet), although the Olympic movement is a huge exploiter of the public relations machine, as well as other media.
    • The people are the volunteers, the athletes and the public.
    • The process would be how the volunteer was recruited, trained and their experience of volunteering. Would they do it again?
    • The physical evidence is represented by the venues themselves and the city in which the games are located.
    • Online Businesses

      Finally let’s look at how an online business would adapt the marketing mix for its own target market. In fact as you are more than aware there are very many diverse online businesses, and they themselves cross between the various organizational types from voluntary organizations to FMCG companies as we have considered above. The post-dot-com era has seen many new types of businesses such as the auction site eBay and online retailer Amazon. There will also be emerging social media businesses and time will tell as to the level and nature of their success – if any.
      The example we will look at here is the online business ASOS which is a very successful online clothing and fashion retailer.
      • Their products are the latest fashions as seen on screen! They market a very wide range of products including sunglasses, men’s and women’s clothes, and footwear.
      • Pricing is comparatively reasonable in relation to competitors. The company markets products similar but not the same as much higher priced branded fashion.
      • The goods are sold online.
      • Much of ASOS’s original marketing was done online, although more recently the other elements of the marketing communications mix have been used.
      These are all examples of how the marketing mix can be adapted to suit different marketing contexts and business sectors.

      FMCG

      FMCG stands for Fast moving Consumer goods. Examples of FMCG products would include chocolate bars, toothpaste, newspapers, razors and similar items. In essence these are products that are regularly bought by consumers – hence fast moving. There is little in the way of a buyer decision process once a person is brand loyal, and decisions tend not to be made by teams or Decision-making Units (DMUs). Here’s an example of how the marketing mix is applied and adapted to FMCG products.
      Wrigley’s chewing gum is an example of an FMCG product.
      • The product has a number of varieties for example spearmint and peppermint.
      • It is priced at a relatively low amount to ensure that the product can be regularly consumed as a day to day item.
      • The chewing gum is sold in a wide variety of retail outlets including supermarkets, local stores, vending machines, petrol stations and others.
      • The branding is developed and its marketing communications mix applies many tools for example sales promotion and television advertising.

      B2B Organization

      A business-to-business organization is one which markets to organizations and companies rather to consumers. An example of a B2B organization is Oracle, the owner of Sun Microsystems.
      Oracle provides databases, middleware, applications, and server and storage systems for many large organizations. Their slogan is ‘Hardware and Software, Engineered to Work Together.’ In this instance Oracle also use the marketing mix, but in a different way to Wrigley’s chewing gum.
      • There are many products and core lines which are sold off the shelf or more likely they are adapted the needs of particular businesses that Oracle deals with. Oracle tailors its products to the individual needs of its business customers.
      • Pricing tends to be premium or skimming since there is a lot of added value through service and solutions.
      • Oracle’s products are marketed directly to large organizations or via a series of selected partners whom are able to deliver the same customer experience.
      • Oracle’s uses similar marketing communications channels as Wrigley’s, although it is more likely to employ relations sponsorship to maintain Oracle’s brand profile.


    LESSON 15

    Marketing Environment

    The marketing environment surrounds and impacts upon the organization. There are three key elements to the marketing environment which are the internal environment, the microenvironment and the macroenvironment. Why are they important? Well marketers build both internal and external relationships. Marketers aim to deliver value to satisfied customers, so we need to assess and evaluate our internal business/corporate environment and our external environment which is subdivided into micro and macro.

    Macroenvironment

    The macroenvironment is less controllable. The macro environment consists of much larger all-encompassing influences (which impact the microenvironment) from the broader global society. Here we would consider culture, political issues, technology, the natural environment, economic issues and demographic factors amongst others.
    Again for Walmart the wider global macro environment will certainly impact its business, and many of these factors are pretty much uncontrollable. Walmart trades mainly in the United States but also in international markets. For example in the United Kingdom Walmart trades as Asda. Walmart would need to take into account local customs and practices in the United Kingdom such as bank holidays and other local festivals. In the United Kingdom 2012 saw the 60th anniversary of Queen Elizabeth II’s reign which was a national celebration.
    The United States and Europe experience different economic cycles, so trading in terms of interest rates needs to be considered. Also remember that Walmart can sell firearms in the United States which are illegal under local English law. There are many other macroeconomic influences such as governments and other publics, economic indicators such as inflation and exchange rates, and the level nature of the local technology in different countries. There are powerful influencers such as war (in Afghanistan for example) and natural disasters (such as the Japanese Fukushima Daiichi nuclear disaster) which inevitably would influence the business and would be out of its control.
    To summarise, controllable factors tend to be included in your internal environment and your microenvironment. On the other hand less controllable factors tend to be in relation to your macro environment. Why not list your own controllable versus uncontrollable factors for a business of your choice?


    PEST

    Internal Environment

    The internal environment has already been touched upon by other lessons on marketing teacher. For example, the lessons on internal marketing and also on the functions within an organization give a good starting point to look at our internal environment. A useful tool for quickly auditing your internal environment is known as the Five Ms which are Men, Money, Machinery, Materials and Markets. Here is a really quick example using British Airways. Looking internally at men, British Airways employees pilots, engineers, cabin crew, marketing managers, etc. Money is invested in the business by shareholders and banks for example. Machinery would include its aircraft but also access to air bridges and buses to ferry passengers from the terminal to the aircraft. Materials for a service business like British Airways would be aircraft fuel called kerosene (although if we were making aircraft materials would include aluminium, wiring, glass, fabric, and so on). Finally markets which we know can be both internal and external. Some might include a sixth M, which is minutes, since time is a valuable internal resource.
    Let’s look at an example of how the internal environment would impact a company such as Walmart. We are looking at the immediate local influences which might include its marketing plans, how it implements customer relationship management, the influence of other functions such as strategy from its top management, research and development into new logistics solutions, how it makes sure that it purchases high-quality product at the lowest possible price, that accounting is undertaken efficiently and effectively, and of course its local supply chain management and logistics for which Walmart is famous.

    Microenvironment

    The microenvironment is made from individuals and organizations that are close to the company and directly impact the customer experience. Examples would include the company itself, its suppliers, other marketing input from agencies, the markets and segments in which your business trades, your competition and also those around you (which public relations would call publics) who are not paying customers but still have an interest in your business. The Micro environment is relatively controllable since the actions of the business may influence such stakeholders.
    Walmart’s Micro environment would be very much focused on immediate local issues. It would consider how to recruit, retain and extend products and services to customers. It would pay close attention to the actions and reactions of direct competitors. Walmart would build and nurture close relationships with key suppliers. The business would need to communicate and liaise with its publics such as neighbours which are close to its stores, or other road users. There will be other intermediaries as well including advertising agencies and trade unions amongst others.


    LESSON 16

    Marketing Exchange Process

    Marketing as an Exchange Process

    At the beginning of any marketing course or programme it is important to appreciate how exchange processes work. An exchange process is simply when an individual or an organisation decides to satisfy a need or want by offering some money or goods or services in exchange. It’s that simple, and you enter into exchange relationships all the time.
    The exchange process extends into relationship marketing. With relationship marketing we purposefully look at the long-term relationship with our target audience, and aim to grow our business. By delivering value to our customers we consistently nurture the relationship with customers. Later in your studies you will come across relationship marketing and customer relationship management, which encompass the traits of a basic marketing exchange process and take it much further.
    Exchange is the act of obtaining a desired object from someone by offering something in return.
    (Armstrong et al 2009)
    For example you go into a restaurant and order your favourite meal. You eat the food and then you pay for it with your credit card. That’s a basic exchange relationship.
    You use your Android or iPhone to download an app and you pay for it using PayPal. Again you have gone through and completed an exchange
    process.
    You see a newspaper advertisement asking you to donate blood and you return a coupon to become a blood donor.
    You watch the news on TV and listen to the views of a political candidate, and on polling day you vote for that person.
    Can you think of any more examples of marketing as an exchange process? Write down three more examples in addition to those above.
    Marketing managers attempt to engender a response from a marketing stimulus. This is the exchange process as it begins. Let’s remember that marketing extends further than goods or services. It could be that a government is trying to persuade its population to stop smoking, or speeding. So marketing is a series of actions and plans that are designed to recruit, retain and extend goods and services to a target audience. This is the basic exchange process in marketing.


    LESSON 17

    Three Levels of a Product

    Consumers often think that a product is simply the physical item that he or she buys. In order to actively explore the nature of a product further, let’s consider it as three different products – the CORE product, the ACTUAL product, and finally the AUGMENTED product. This concept is known as the Three Levels of a Product.


    New Product Development (NPD)

    New Product Development (NPD) will take in to account the consumer’s preference for benefits over features by considering research into their needs. NPD aims to satisfy and anticipate needs. NPD delivers products which offer benefits at the core, actual and augmented levels.
    NPD might offer a replacement product for a current line, it could add products to the current line, it could discover new product lines and sometimes it delivers very innovative products which the world might not have seen before.
    New products are launched for all sorts of reasons. As we know from our previous lesson on the business environment, legislation i.e. changes in the law can mean that companies have to design and develop new products. An example of this was when we moved from videotape recorders to digital and DVD recorders. So products need to be modified for changing target markets.
    Three Levels of a Product
    Sometimes the company will need to increase the volume that a production plant delivers, since maybe it is not running at full capacity. An example of this would be a food manufacturer of tinned soup that has a factory which can operate 24/7, designing different derivatives of the soup in order to lower the unit cost of production. So product lines are extended, in this case the reason being is to ease operational efficiency.
    Intense competitive rivalry in the market will also lead to the need for NPD. Just think about your smart phone and how quickly such products go through their product life cycles, throughout your customer life-cycle.
    Change in any element of the marketing mix would influence NPD, for example there is a movement to shop online and some products need to be distributed via online retailers, and the product is adapted to make it compact and simple to deliver. NPD can be driven by many influences from changing consumer tastes to the need to adapt products and services for local or international market.
    Another marketing tool for evaluating PRODUCT is the Product Life Cycle (PLC). Also see the Customer Life Cycle (CLC).
    The CORE product is NOT the tangible physical product. You can’t touch it. That’s because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.
    The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car, it is the vehicle that you test drive, buy and then collect. You can touch it. The actual product is what the average person would think of under the generic banner of product.
    The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car’s manufacturer and any after-sales service. The augmented product is an important way to tailor the core or actual product to the needs of an individual customer. The features of augmented products can be converted in to benefits for individuals.

    Features and benefits of products

    Features and benefits of a product are also relevant to the three levels of the product. Products tend to have a whole series of features but only a small number of benefits to the actual consumer.
    Let’s look at this another way, if you buy a Nintendo console it has many features; for example you can play games alone or you can play against another opponent or two or three opponents. You can also have access to the Internet. Avatars are adaptable so you can create yourself and your friends. These are all examples of features to the consumer. However a consumer may buy it because he or she wants to stay fit and will use software and peripherals to become healthier. Becoming healthier is the benefit to the consumer.
    The consistent marketer will aim to discover the consumer’s preference for benefits and will match individual features to the preference. That is why professional salespeople for example, often ask many questions whereas a novice salesperson will just tell you the features of the product.


    LESSON 18

    Consumer Behavior

    Value and Relationship Quality

    Consumers choose goods and services based on the assumption that they will be rewarded with value and satisfaction. Consumption is the process by which goods and services are used and assigned a level of value by the consumer.
    Quality + Price + Customer Service = Value and Satisfaction

    Products

    • Performance-The product does what it is supposed to do.
    • Features-The product includes all the specifications that it says it has or that are required, this includes safety measures.
    • Reliability-The product performs consistently.
    • Durability-When the product is being used it has to last under the conditions of normal use.
    • Serviceability-The product is easy to maintain or repair either by the consumer or by providing a warranty which says the company will provide repairs.
    • Aesthetics-This is important to consumers, products have to look good, and this contributes to a brand equity and identity.
    • Perception-Even if the product has good quality, if the customer does not think so, then it won’t sell. The customer has to have positive feelings about the product, the company, the brand name and the employees.

    Services

    • Responsiveness-Services are performed in a prompt manner.
    • Reliability-The service is performed right, the first time, and all subsequent times.
    • Assurance-Knowledgeable and friendly employees are essential as customers will equate employees behavior with the entire company. If a customer has a bad experience with an employee, they will be less likely to purchase from the entire company’s offerings. Customers expect technical competence and professionalism from salespeople.
    • Empathy-Providing individualized attention to customers will make them feel special and keep them coming back.
    • Tangibles-Some services provide physical evidence that they occurred, for example a restaurant cooks (service) and provides the food (product).
    That level could be positive, if the customer was satisfied, or it could be negative if they did not find any value in their purchase. Marketers have to provide the right combination of quality, price and customer service in order to give customers positive value and satisfaction. That will in turn create happy, loyal customers. The formula looks like this:
    If a product/service is provided that has low quality, and a high price, that does not create a happy, satisfied customer. At the same time, having a great product at the best possible price means nothing if the customer is treated badly, or not provided with the opportunity to return unwanted items.
    Value Relationship Quality

    So what is meant by ‘Quality?’

    Quality is a product or service’s ability to meet the customers’ need or want. Quality is difficult to define, and varies with each consumer, however we can take a look at some of the components of quality for products and services:


    LESSON 19

    What is a customer?

    In marketing we tend to use the word customer and consumer almost interchangeably. However our customer and the consumer are not strictly speaking the same. A customer is a person or company who purchases goods and services. A customer becomes a consumer when he or she uses the goods or services i.e. where there is some consumption. Customers can be categorised as B2C which stands for Business-to-Customer (B2C) for example where you buy sweets from a shop, Business-to-Business (B2B) where the shopkeeper uses the services of an accountant to write his tax return, C2B which is Customer-to-Business (C2B) for example where an individual sells his gold watch to a jewellery store and C2C or Customer-to-Customer (C2C) where customers sell goods to each other. A great example for C2C is eBay, where consumers sell goods to other consumers.

    A Marketing Oriented Approach

    A marketing orientation underpins our focus on the customer/consumer and their needs and wants. Our marketing orientation occurs as a result of all of the people from within our business from the managing director to the receptionist making the satisfaction of customer needs and wants their whole reason for being. Now let’s take a look at how we find information that will shed light on what our customers and consumers need and want. The benefits of a marketing orientation centre on the fact that customers can be grouped into segments and segments can deliver profits to the organisation. Customers also need information about products and services, and how to use them.
    Therefore we can define a consumer as an individual who (buys and) uses a product or service. So the consumer could be the customer that goes into the shop to buy the sweets. However the final consumer may not always be the customer. For example, a parent goes into the sweet shop and buys some sweets. He or she does not eat them, and so they are not the consumer. The child would eat the sweets and be the consumer, although he or she did no buy the sweets and so they are not the initial customer.
    The reason we need to know the difference between a consumer and the customer is that we will want to design communications and understand the consumer behaviour of the person that instigates and influences a buying decision as well as the final consumer. For example the child will influence the mother’s decision on which sweets to buy. However it can be much more subtle, for example a wife might influence the clothing choices of her husband, or a child might influence the family’s choice of a holiday destination.

    Customer needs and wants.

    Obviously the terms customer and consumer are often interchanged. So with a definition of marketing, we will aim to anticipate the needs and wants of consumers and/or customers. Needs and wants may differ. So let’s return to our mother and her child, since a mother may wish to feed her child nutritious food at mealtimes, the child may wish to eat sugary and less healthy food. The mother is the customer and she purchases based upon her need, whereas the child is the final consumer and he or she may focus on what they want. So needs and wants may differ between customers and consumers.


    LESSON 20

    What is Marketing?

    Definitions of marketing

    There are many definitions of marketing. The better definitions are focused upon customer orientation and the satisfaction of customer needs.
    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. (Approved October 2007)
    American Marketing Association Board of Directors. Accessed 2012.
    Again, in common with Kotler and Armstrong above, the AMA focuses its definition on value creation and delivery, and the longer-term retained customer.
    The enigma of marketing is that it is one of man’s oldest activities and yet it is regarded as the most recent of business disciplines.
    Baker (1976).
    Baker introduces the elephant in the room. Marketing has always been part of business, and it is a myth that it is purely a contemporary idea.
    Also see the Philosophy and Theory of Marketing
    Marketing is the social process by which individuals and organizations obtain what they need and want through creating and exchanging value with others.
    Kotler and Armstrong (2010).
    The definiton is based upon an a basic marketing exchange process, and recognises the importance of value to the customer.
    The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.
    Kotler and Armstrong (2010).
    Kotler and Armstrong develop their orginal definition to recognise the importance of the longer-term relationship with the customer. This is achieved by relationship marketing and Customer Relationship Management (CRM).
    Marketing is the management process for identifying, anticipating and satisfying customer requirements profitably.
    The Chartered Institute of Marketing (CIM). Accessed 2012.
    The CIM definition looks not only at identifying customer needs, but also satisfying them (short-term) and anticipating them in the future (long-term retention). The definition also states the importance of a process of marketing, with marketing objectives and outcomes. CIM is recognised as being one of the most influential marketing
    bodies in the world. It is the professional body for marketing in the United Kingdom.

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