1 1 Principles of Marketing Spring MKTG 220 Spring MKTG 220 Dr. Abdullah Sultan Dr. Abdullah Sultan

2 What is marketing?

Prentice Hall, Inc. Copyright Old versus New Marketing OLD View of Marketing: New View of Marketing: Satisfying customer needs NEW View of Marketing: Making a Sale – “Telling & Selling” Satisfying Customer Needs

4 What is Marketing? AMA defines marketing as an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its shareholders.

Prentice Hall, Inc. Copyright What Is Marketing? Simple Definition: Marketing is managing profitable customer relationships. Goals: 1. Attract new customers by satisfying needs/wants and promising superior value. 2. Keep and grow current customers by delivering satisfaction.

What do you think of this statement? Seth Godin, an expert in the marketing field, said “We are living in a society where we have everything we need and hence we are left selling what customers want”. It is extremely important for us as product managers to clearly understand what our customers are asking for - is it a real need or is it a want?

Prentice Hall, Inc. Copyright Needs, Wants, & Demands Need: State of felt deprivation including physical, social, and individual needs.  Physical needs: Food, clothing, shelter, safety  Social needs: Belonging, friendship, family, love  Individual needs: Learning, knowledge, self-expression

8 Needs, Wants, & Demands Wants: The form that human needs take, as shaped by culture and individual personality We need food, but want Mr. Baker Cake We need transportation, but want an expensive car We need water, but want cold Pepsi Wants + Buying Power = Demand Marketers change “wants” to “needs”

Prentice Hall, Inc. Copyright Need / Want Fulfillment Needs and wants are fulfilled through a Marketing Offer:  Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

For Next Class, Think about this… Why is it important to truly understand the customer? Make a list of 3 “wants” that you have. What would have to occur to move each of these from “wants” to “needs?” 10

Prentice Hall, Inc. Copyright What Is a Market? The set of actual and potential buyers of a product. Or the place demand (buyers) and supply (sellers) meet. These people share a need or want that can be satisfied through exchange relationships.

Prentice Hall, Inc. Copyright Modern Marketing Systems Main elements in a modern marketing system include:  Suppliers  Company  Competitors  Marketing intermediaries  Final users (customers)

Prentice Hall, Inc. Copyright Marketing Management The art and science of choosing target markets and building profitable relationships with them.  Requires that consumers and the marketplace be fully understood

Prentice Hall, Inc. Copyright Marketing Management Philosophies Production Concept Product Concept Selling Concept Marketing Concept (implementation of market/customer orientation) Societal Marketing Concept

Prentice Hall, Inc. Copyright Marketing Management Designing a winning marketing strategy requires answers to the following questions: 1. What customers will we serve? What is our target market? 2. How can we best serve these customers? What is our value proposition?

Prentice Hall, Inc. Copyright Segmentation & Target Marketing Market Segmentation:  Divide the market into segments of customers Target Marketing:  Select the segment to cultivate

17 Customer Relationship Management (CRM) The art of using customer databases to build and maintain profitable customer relationships by delivering superior customer value and satisfaction.  Acquiring customers (initiate relationship)  Keeping customers (maintain relationship)  Growing customers (enhance relationship) That is, market to each customer individually rather than market to a mass of people

Prentice Hall, Inc. Copyright Building Customer Relationships One of the perceived benefits of CRM is that it enables firms to retain satisfied customers who would be willing to pay. The four steps in the customer relationship management (CRM):  Understanding the marketplace and customer needs  Designing a customer-driven marketing strategy  Constructing marketing programs leading to  Building profitable customer relationships

Prentice Hall, Inc. Copyright Customer Relationships Loyalty and retention programs build relationships and may feature:  Financial Benefits EX: Frequency marketing programs (e.g., Sultan Center Card, Watani Rewards Points)  Social Benefits EX: marketing clubs (e.g., Our Marketing Club, National Union of Kuwaiti Students) Successful marketers focus on relating directly to profitable customers, for the longterm.

20 Customer Satisfaction Satisfied customers are willing to pay premium price for the product or service that they receive. Customer satisfaction depends on the product’s perceived performance relative to a buyer’s expectations.  Customer satisfaction often leads to consumer loyalty.  Some firms seek to DELIGHT customers by exceeding expectations.

21 Customer Satisfaction Care must be taken when setting expectations:  If performance is lower than expectations, satisfaction is low (dissatisfied customer).  If performance is equal expectations, satisfaction is met (satisfied customer).  If performance is higher than expectations, satisfaction is high (delighted customer).

22 The Marketing Process A simple model of the marketing process:  Understand the marketplace and customer needs and wants.  Design a customer-driven marketing strategy.  Construct a marketing program that delivers superior value.  Build profitable relationships and create customer delight.  Capture value from customers to create profits and customer quality.