Chapter 1:

Marketing: engaging customers and managing profitable customer relationships; create value for
customers so that firms can capture value from them (in the form of sales, profits, and long term
customer equity).
Goals: Attract new customers by promising value, and keep old by satisfying
Amazon.com
Started just selling books, now has expanded to just about everything; revenue keeps
increasing
Obsess over customers
Tracks performance against nearly 400 measurable customer-related goals
Book buying customers wanted e-books, amazon created Kindle
Customized homepages; first company to sift through customer purchases and browsing
history to personalize shopping experience.
Marketing must be understood in the new sense of satisfying customer needs. If the marketer
engages consumers effectively, understands their needs, develops products that provide superior
customer value, and prices, distributes, and promotes them well, these products will sell easily.

Marketing mix: a set of marketing tools that work together to engage customers, satisfy
customer needs, and build customer relationships.

Step 1: Understanding the Marketplace and Customer Needs

Customer Needs, Wants, and Demands
o Needs: states of felt deprivation; include basic physical needs for food, clothing,
warmth, and safety; social needs for belonging and affection; and individual needs for
knowledge and self-expression. Part of human make-up
o Wants: the form needs take as they are shaped by culture and individual personality.
EX: Americans need food, but wants a Big Mac
o Demands: when wants are backed by buying power
o Outstanding companies put a lot of effort into researching and analyzing what their
customers need, want and demand.
Market Offerings- Products, Services, and Experience
o Market offering: some combination of products, services, information, or experience
offered to a market to satisfy a need or a want.
o Marketing myopia: Many sellers make the mistake of paying more attention to the
specific products they offer than to the benefits and experiences produced by these
products. They focus only on existing wants and lose sight of underlying customer
needs. EX: quarter-inch drill, firm thinks they need a drill, but they need a quarter-inch
hole. If a new product can satisfy that need better and cheaper, customer will want that
o Brand Experience: having several services and products to create an experience
Customer Value and Satisfaction

o Customers form expectations about the value and the satisfaction that various markets
offer and buy accordingly
o Expectations too low- may satisfy but fail to attract enough; too high-disappoint buyers
Exchange and Relationships
o Exchange: the act of obtaining a desired object from someone by offering something in
return.
o Marketing consists of actions taken to create, maintain and grow desirable exchange
relationships
Markets
o
Market: the set
of actual and
potential buyers
of a product or
service

Each party in the system adds value for the next level; each relationship needs to be developed and
managed. Profitable relationship depends on how the whole system serves the needs of the final
consumer.
Step 2: Designing a Customer Value-Driven Marketing Strategy
Marketing management: the art and science of choosing target markets and building profitable
relationships with them.
o Selecting a target market
Market segmentation: dividing the market into segments of customers
Target marketing: selecting which segment to go after
o Choosing a value proposition
Value proposition: the set of benefits or values it promises to deliver to
consumers to satisfy their needs.
Marketing management orientations
o 5 concepts under which organizations design and carry our their marketing strategies
o Production concept: consumers will favor products that are available and highly
affordable. Management should focus on improving production and distribution
efficiency. Subject to marketing myopia
o Product Concept: consumers will favor products that offer the most in quality,
performance, and innovative features. Management should focus on making continuous
product improvements. Subject to marketing myopia.
o Selling Concept: consumers will not buy enough of the firms product unless it
undertakes a large-scale selling and promotion effort. Focuses on creating sales
transactions rather than building relationships.
o Marketing Concept: achieving organizational goals depends on knowing the needs and
wants of target markets and delivering the desired satisfactions better than competitors
do. *find the right product for the customer, not the other way around.

Customer driven: companies research

customers deeply and learn their desires
Customer driving: create things they dont even
know they want *horse
o Societal Marketing Concept: companys marketing
decisions should consider consumers wants, the
companys requirements, consumers long run
interests, and societys long run interests.
*Sustainable marketing

Step 3: Preparing an Integrated Marketing Plan and Program

Product: create a need-satisfying market offering
Price: how much will it charge for the offering
Place: how will it be available
Promotion: communicate about the offering, persuade consumers of the merit
Step 4: Building Customer Relationships
Customer relationship management: the overall process of building and maintaining profitable
customer relationship by delivering superior customer value and satisfaction
o Customer-perceived Value: the customers evaluation of the difference between all the
benefits and all the costs of a marketing offering relative to those of competing offers.
o Customer Satisfaction: products perceived performance vs buyers expectations
Basic relationship vs full partnership
Frequency marketing programs: reward customers who buy frequently or in large amounts
Club Marketing Programs: offer members special benefits and create member communites.
Customer-engagement marketing: fostering direct and continuous customer involvement in
shaping brand conversations, brand experiences, and brand community.
Consumer-generated marketing: brand exchanges created by consumers themselves
Partner relationship management: working closely with other inside and outside the company
to jointly engage and bring more value to customers
Step 5: Capturing Value from Customers
Customer lifetime value: the value of the entire stream of purchases a customer makes over a
lifetime of patronage
Share of Customer: the portion of the customers purchasing that a company gets in its product
categories.
Customer Equity: the total combined customer lifetime values of all the companys customers.
Companies can classify customers according to their potential profitability
o Strangers: low potential profitability and little
projected loyalty; strategy: dont invest anything in
them, make money on every transaction
o Butterflies: potentially profitable but not loyal
o True friends: both profitable and loyal.
o Barnacles: highly loyal but not profitable. Limited
fit between their needs and the companys
offering.
Changing Marketing Landscape
The digital age: Online, Mobile, and Social Media Marketing

o Digital and social media marketing: involves using digital marketing tools such as
websites, social media, mobile ads and apps, online video, email, blogs and other digital
platforms that engage consumers anywhere, anytime.
Chapter 2: Company and Marketing Strategy
Nike- all the advertising; becomes the establishment, not innovative anymore. Fixes that by bringing
more products and better customer relationships.
Company-Wide Strategic Planning
Strategic Planning: the process of developing and maintaining a strategic fit between the
organizations goals and capabilities and its changing marketing opportunities.
Market Oriented Mission: answers- What is our business? How is the customer? What does
the consumers value?
Mission Statement: a statement of the organizations purpose- what it wants to accomplish in
the larger environment. Shouldnt be product based, but should aim to satisfy customer needs.
Each marketing strategy must be defined in greater detail
Business Portfolio: the collection of businesses and products that make up the company; the
best portfolio is one that works with the strengths and weaknesses of the firm
Portfolio analysis: deciding which products are good for the company (invest more in the good
ones)
Strategic business units: key businesses that make up the company; can be a company
division, a product line, or a specific product.
o Attractiveness of the SBUs market or industry
o Strength of the SBUs in the market or industry.
Growth Share Matrix: portfolio planning method that evaluates the SBU in terms of market
growth and share.
o Stars: high growth, high share, need heavy
investment to finance.
o Cash Cows: low growth, high business shares.
Need less investment, produces a lot of cash
o Question marks: low share business units in
high growth market; require a lot of cash, need
to
decide If can be turned into star or phase out
o Dogs: low growth and low share. May generate
enough cash for themselves, but do not hold
promise.
Build the share- invest more
Hold the share- invest enough to keep it at the current place
Harvest: milk it for the short term cash
Divest: sell it or phase it out
Product/market expansion grid: tool for identifying company growth opportunities through
market penetration, market development, product development, or diversification.
o Market penetration: making more sales to current customers without changing the
original product
o Market development: identifying and developing new markets for its current products.
Encouraging new people to go to the firm

o Product development: offering modified or new

products to the current market
o Diversification: starting up or acquiring businesses
outside the companys current products and
markets.
Planning Marketing: Partnering to Build Customer Relationship
Philosophy: suggests what the company strategy should
revolve around
Inputs: identify attractive market opportunities
Strategies: designs strategies to reach units objectives
Value Chain: the series of internal departments that carry out value creating activities to
design, produce, market, deliver, and support a firms products
o Every part needs to be doing well
o Firms need to look beyond its own internal value chain
Value Delivery Network: The network made up of the company, its supplies, its distributors,
and ultimately its customers who partner with each other to improve the performance of the
entire system. Competition takes place between entire value delivery network.
Position: arranging for a product to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers. If a product is perceived to be exactly
like others, people have no reason to buy it
Differentiation: actually differentiating the market offering to create superior customer value.
Marketing Control: measuring and evaluating the results of marketing strategies and plans and
taking corrective action to ensure that the objectives are achieved.
Marketing return on investment: measures the profits generated by investments in marketing
activities. (doesnt properly measure everything)
Chapter 3: Analyzing the Marketing Environment
Marketing environment: consists of the actors and forces outside marketing that affect
marketing managements ability to build and maintain successful relationships with target
customers.
Microenvironment: actors close to the company that affect its ability to serve its customers;
company, supplies, marketing intermediaries, customer markets etc
o Intermediaries: firms that help the company promote, sell and distribute its goods to the
final buyer
Macroenviornment: Larger societal forces that affect the microenvironment; demographic,
economic, natural technological, political and cultural forces.
Public: any group that has an actual or potential interest in or impact on an organizations ability
to achieve its objectives.
Demographic
o Study of human population in terms of size, density, location, age, gender, race,
occupation etc.
o Changes in demographics have major implication for businesses because people make
up the market
o Baby Boomers (50-60) still young and big part of market
o Generation X: less materialistic, homeowners
o Millennial: most financially strapped, comfort with digital technology
o Generation Z: born after 2000, specific lines just for the kids,
o Shift in family composition

o People are moving around more; south and west have grown, Midwest and northeast
have shrunk
o More white-collar jobs, buy different things
o Diversity: ethnicity, LGBT community, disabilities
Economic
o Economic factors that affect consumer purchasing power and spending patters.
o Consumers are spending less, and they want more value for their products.
o Income distribution: rich getting richer, poor getting poorer, have a price for everyone
Natural
o Physical environment and the natural resources that are needed as inputs by marketers
or that are affected by marketing activities.
o Ex: winter decreases business for florist, or airlines and tourist destination
o Marketers should be aware of the trends in the natural environment
o Environmental sustainability: developing strategies and practices that create a world
economy that the planet can support indefinitely.
Technological
o Forces that create new technologies, creating new product and market opportunities
o Having marketers track the product through its life
Political and Social
o Political: consists of laws, government agencies, and pressure groups that influence or
limit various organizations and individuals in a given society.
o Regulation for big businesses
o Emphasis on socially responsible behavior; campaigns to stop texting and driving, firms
like warby parker and toms
Cultural
o Institutions and other forces that affect a societys basic values, perceptions,
preferences, and behaviors
o View of themselves and view of others; trends, distrust in firms
o Religious values: family, community, earth, faith

Chapter 4: Managing Marketing Information

Big data: the huge and complex data sets generated by todays sophisticated information
generation, collection, storage, and analysis technologies.
A lot of information gathered, but it can be difficult to sort through; firms dont need more data,
they need better data
Customer insights: fresh marketing information-based understandings of customers and the
marketplace that become the basis for creating customer value, engagement and
relationships
Find, collect, and analyze big data to improve customer experience
Marketing Information System: consists of people and procedures dedicated to assessing
information needs, developing the needed information, and helping decision makers to use
the information to generate and validate actionable customer and market insights.
Developing Marketing Information
o Internal Data
Collections of consumer and market information obtained from data sources
within the company network
Gather info from in store and online sales, website and social media

Problems: maybe collected for other purposes to incomplete or not in the right
form to help make marketing decisions; data also ages quickly, so needs to be
updated
o Competitive marketing intelligence
Systematic monitoring, collection, and analysis of publicly available information
about consumers, competitors, and developments in the marketing environment
Observing customers first hand to quizzing the companys employees,
benchmarking competitors products, researching on the internet, and monitoring
social media buzz

o Marketing Research
Systematic design, collection, analysis, and reporting of data relevant to a
specific marketing situation facing an organization.
Exploratory Research: marketing research to gather preliminary information that
will help define problems and suggest hypotheses
Descriptive Research: Marketing research to better describe marketing
problems, situations, or markets, such as the market potential for a product or
the demographics and attitudes of consumers
Causal Research: marketing research to test hypotheses about cause-and-effect
relationships.
Research plan: outlines existing sources of existing data, and spells out the
specific research approaches, contact methods, sampling plans, and insruments
that researchers will use to gather new data
Secondary data: consists of information that already exists somewhere, having
been collected for another purpose
Start by gathering secondary data
Use internal firm data or buy from outside source, general databases
Primary data: consists of information collected for the specific purpose at hand.
Research approaches
o Observational Research: involves gathering primary data by
observing relevant people, actions, and situations; asking
questions, observing behavior, watching what they say on media
o Ethnographic Research: a form of observational research that
involved sending trained observers to watch and interact with
customers in their natural environments
o Survey Research: gathering primary data by asking people
questions about their knowledge, attitudes, preferences, and
buying behavior.
o Experimental Research: gathering primary data by selecting
matched groups of subjects, giving them different treatments,
controlling related factors, and checking for difference in group
responses.
Contact Methods
o Mail, telephone, personal interviewing
o Focus group interviewing

o Online marketing research: internet and mobile surveys, online

panels, experiments
o Behavioral targeting: using online consumer tracking data to target
advertisements and marketing offer to specific consumers

Sampling Plan
o Sample: segment of the population selected for marketing
research to represent the population as a whole
Sample unit: who is to be studied
Sample size: how many should be studied
Sampling procedure: how should they be studied
Research Instruments
o Questionnaires: in person, by phone, by email, online, ask closed
or open ended questions
o Mechanical: instruments to monitor behavior
Customer Relationship Management (CRM): managing detailed info about customers and
managing customer touch points to maximize loyalty.

Chapter 5: Consumer Markets and Buyer Behavior

Consumer Buyer behavior: buying behavior of final consumers- individuals and households
that buy goods and services for personal consumption
Consumer market: all the individuals and households that buy or acquire goods and services
for personal consumption
Characters Affecting Consumer Behavior
o Cultural
Culture: set of basic values, perceptions, wants and behaviors learned by a
member of society from family and other important institutions
Subculture: each culture contains a smaller culture; a group of people with
shared value systems based on common life experiences and situations. Ex:
Hispanic, African and Asian Americans
Cross-cultural marketing: including ethnic themes and cross cultural
perspectives within a brands mainstream marketing, appealing to
consumers similarities across subcultural segments rather difference.
Social Class: relatively permanent and order divisions in a society whose
members share similar values, interests, and behaviors
Measured as a combo of occupation, income, education, wealth, and
other variables.
o Social
Groups and Social Networks: groups influence peoples behavior
Word of mouth: impact of personal words and recommendations of trusted
friends, family, associates, and other consumers on buying behavior

Opinion leader: a person within a reference group who, because of special

skills, knowledge, personality, or other characteristics, exerts social
influence on others.
Family: family members can strongly influence buyer behavior.
Roles husband and wives play in a family
Roles and Status: a persons position in each group that they are involved in can
affect buying behavior.
o Personal
Age and life cycle stage: tastes and preferences change over time
Occupation: type of clothes bought for work
Economic situation: economic position affects what people buy
Lifestyle: based on what you do (habits, hobbies)
Personality and Self-Concept: unique psychological characteristics that define a
person, and how they perceive themselves
o Psychological Factors
Motivation: a need that is sufficiently pressing to direct the person to satisfy the
need
Perception: the process by which people select, organize, and interpret
information to form a meaningful picture of the world

Learning: changes in an individuals behavior arising from experience

Belief and attitudes: things people believe and they way they act towards it affect
what they buy
Types of buying Decision Behavior
o Complex buying behavior: high consumer involvement in a purchase and significant
perceived differences among brands. Usually
happens when the product is expensive, risky,
purchased infrequently Ex: new car
o Dissonance-reducing buying behavior: high
involvement but few perceived differences among
brands. Usually consumers dont see a difference (ex:
buying carpet). Can experience post purchase
dissonance (dont like the product after they buy it)
o Habitual buying behavior: low customer involvement and few significant perceived
brand differences. Low cost, frequently purchased products. Go to the store, always
reaching for the same brand because loyal to it, but not because of the product just
because of habit.
o Variety seeking: low consumer involvement but significant perceived brand difference. a
lot of bran switching, and evaluation during consumption
Buyer Decision Process:

Buyer Decisions process for New products

o New product: good or service or idea that is perceived by some potential customer as
new; doesnt have to be new to the market, just new to the consumer.

o Adoption process: mental process through which an individual passes from first learning
about an innovation to final adoption.
Awareness: consumer becomes aware of the new product
Interest: consumer seeks info about new product
Evaluation: the consumer considers whether trying the new product makes sense
Trial: consumer tries the new product on a small scale to improve his or her
estimate of its value
Adoption: consumer decides to make full and regular use of the new product.
o Five adopter groups:
Innovators: try new ideas at some risk
Early adopter: guided by respect; they are the opinion leaders in their
communities
Early mainstream: adopter are deliberate; rarely are leaders, but they adopt new
ideas before the average person does
Late mainstream: adopters are skeptical; adopt only after a majority has tried it
Lagging adopters: tradition bound; only when the thing becomes tradition do they
accept it
o Things that affect rate of adoption

Relative advantage: the degree to which the innovation appears superior to existing products.
Compatibility: the degree to which the innovation fits the values and experiences of potential
consumers.
Complexity: the degree to which the innovation is difficult to understand and use
Divisibility: the degree to which the innovation may be tried on limited basis (HDTVs were really
expensive to have, not many people want to try it)
Communicability: the degree to which the results of using the innovation can be observed or
described to others