1. Principles of Marketing
Marketing: Creating and Capturing Customer Value

2. Chapter Concepts What Is Marketing?
Understanding the Marketplace and Customer Needs
Designing a Customer-Driven Marketing Strategy
Preparing an Integrated Marketing Plan and Program
Building Customer Relationships
Capturing Value from Customers
The New Marketing Landscape
In today’s competitive environment a lot of emphasis is laid on the marketing, we find every organization carrying out a lot of marketing activities. Hence, it is important for you to understand what market is, what marketing is, and how
is it different from selling. All of us involved in marketing in one-way or the
other.
1-3

3. What Is Marketing? Marketing Defined
Marketing is the process by which companies create value for customers and build strong customer relationships to capture value from customers in return
Sales When a company makes a product and then tries to persuade customers to buy it, that’s Selling.
Marketing
Marketing is a system of business activities designed to plan, price, promote and
distribute want satisfying goods and services to target markets, in order to achieve
organizational objectives.
Sales
When a company makes a product and then tries to persuade customers to buy it,
that’s Selling.
Difference between selling and marketing
Selling
· Emphasis is on the product.
· Company first makes the product and
then figures out how to sell it.
· Management is sales volume oriented.
· Planning is short run oriented, in terms
of today’s products and markets.
· Needs of sellers are stressed.
· Emphasis is on customers’ wants.
· Company first determines customers’ wants
and then figures out how to make and delivers
a product to satisfy those wants.
· Management is profit oriented
· Planning is long run oriented, in terms of new
products, tomorrow’s market, and future
growth.
· Wants of buyers are stressed.
1-4

4. Difference between selling and marketing
Emphasis is on the product.
Company first makes the product and then figures out how to sell it.
Management is sales volume oriented.
Planning is short run oriented, in terms of today’s products and markets.
Needs of sellers are stressed.
Emphasis is on customers’ wants.
Company first determines customers’ wants and then figures out how to make and delivers a product to satisfy those wants.
Management is profit oriented
Planning is long run oriented, in terms of new products, tomorrow’s market, and future
growth.
Wants of buyers are stressed.

5. Marketing process

6. Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands
Needs are the basic human requirements. People need food, air, water, clothing & shelter to survive.
People also have needs for recreation, education and entertainment.
Eg: Hunger food.
1-6

7. Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands
Wants The needs become wants they are directed to specific objects that might satisfy the needs.
Eg: Mercedes
Demands are wants backed by buying power
1-7

8. Understanding the Marketplace and Customer Needs
Market Offerings—Products, Services, and Experiences Consumer’s needs are fulfilled through market offerings Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want
1-8

9. Understanding the Marketplace and Customer Needs
Market Offerings—Products, Services, and Experiences
Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs
Your offer (product, etc.) is only a tool to satisfy a customer need/want, or solve a problem –
customers’ want for your product can be replaced
1-9

10. Understanding the Marketplace and Customer Needs
Customer Value and Satisfaction
Customers usually face broad array of product and services that might satisfy given need. How do they choose among these many market offerings?
Expectations
Customers forms expectation about the
Value and satisfaction that various marketing offers will deliver and buy accordingly.
Marketers
Set the right level of expectations
Not too high or too low
1-10

11. Understanding the Marketplace and Customer Needs
Exchanges and Relationships
Marketing occurs when people decide to satisfy needs and wants through exchange and relationship.
Exchange is the act of obtaining a desired object from someone by offering something in return
Relationships marketing consist of actions to build and maintain desirable relationships with Target audience involving product, service, idea or other object.
1-11

12. Understanding the Marketplace and Customer Needs
The concepts of exchange and relationships lead to the concept of market
Markets are the set of actual and potential buyers of a product
Marketing system consists of all of the actors (suppliers, company, competitors, intermediaries, and end users) in the system who are affected by major environmental forces
Demographic
Economic
Technological
Political–legal
Socio-cultural
1-12

13. Elements of a Modern Marketing System
Figure 1-2:
Elements of a Modern Marketing System

14. Designing a Customer-Driven Marketing Strategy
Marketing Management
Once it fully understands consumers and the marketing place, marketing management can design a customer- driven strategy
Marketing management is the art and science of choosing target markets and building profitable relationships with them
What customers will we serve?
How can we best serve these customers?
1-14

15. Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve Company decide who it will serve and which segment it will go after Market segmentation: Dividing the markets into segments of customers Target marketing: Which segments to go after
1-14

16. Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve De-marketing: Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it.
1-15

17. Designing a Customer-Driven Marketing Strategy
Choosing a Value Proposition
Company must decide how it will serve targeted customers
The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs
1-17

18. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Production concept
Product concept
Selling concept
Marketing concept
Societal concept
1-18

19. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Production concept is the idea that consumers will favor products that are available or highly affordable
1-19

20. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Product concept is the idea that consumers will favor products that offer the most quality, performance, and features for which the organization should therefore devote its energy to making continuous improvements
1-20

21. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Selling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort
1-21

22. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do
1-22

23. Marketing and Selling Concepts Contrasted
The Selling Concept (“inside-out”)
Starting
Point
Focus
Means
Ends
Factory
Existing
products
Selling
and
promoting
Profits
through
sales volume
The Marketing Concept (“outside-in”)
Market
Customer
needs
Integrated
marketing
Profits through
customer
satisfaction

24. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests
1-23

25. Societal Marketing Concept Late 20th Century – Still emerging Recognizes potential conflict
Society
(Long-term consumer & societal welfare)
Societal
Marketing
Concept
Maintain & improve
long-term well-being
Social responsibility
Be ethical
Do good:
customer-oriented,
environment,
innovative (real,
valued) product
improvements
sense-of-higher-
mission, give back
Stop doing bad f
Consumers
(Short-term want satisfaction)
Company
(Profits)

26. Preparing an Integrated Marketing Plan and Program
Integrated Marketing Program Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers
The company’s marketing strategy outlines which customers it will serve and how it will
create value for these customers. Next, the marketer develops an integrated marketing program
that will actually deliver the intended value to target customers. The marketing program
builds customer relationships by transforming the marketing strategy into action. It
consists of the firm’s marketing mix, the set of marketing tools the firm uses to implement its
marketing strategy.
The major marketing mix tools are classified into four broad groups, called the four Ps
of marketing: product, price, place, and promotion. To deliver on its value proposition, the
firm must first create a need-satisfying market offering (product). It must decide how much
it will charge for the offering (price) and how it will make the offering available to target
consumers (place). Finally, it must communicate with target customers about the offering
and persuade them of its merits (promotion). The firm must blend each marketing mix tool
into a comprehensive integrated marketing program that communicates and delivers the intended
value to chosen customers.
1-25

27. Preparing an Integrated Marketing Plan and Program
Marketing Mix
The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy
Product
Price
Promotion
Place
1-24

28. Marketing Strategy g“Marketing Mix” The “4 Ps” (“4 Cs”) = controllable, tactical tools coordinated program
Product (Customer Solution)
Price (Customer Cost)
Goods-and-services
combination the
company offers to
the target market
Amount of money customers have to pay to obtain the product
Target
Customers
Intended
Positioning
Activities that
communicate the
merits of the product
and persuade target
customers to buy it
Activities that make the product available to target customers
Advertising
Personal Selling
Sales Promotion
Public Relations
Place or Distribution
(Convenience)
Promotion (Communication)

29. Building Customer Relationships
Customer Relationship Management (CRM) Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction
1-26

30. Building Customer Relationships
Customer Relationship Management
(CRM)
Customer perceived value is the difference between total customer value and total customer cost
Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations
Satisfaction = Performance (P) – Expectation (E)
Expectations are largely based on marketer information and promises – must create realistically high expectations
Reality = satisfaction has been declining
Performance falls short of expectations
P < E
Customer is dissatisfied
Performance matches expectations
P = E
Customer is satisfied
Performance exceeds expectations
P > E
Customer is highly satisfied
or delited
1-27

31. Customer Satisfaction
Satisfaction = Performance (P) – Expectation (E)
Expectations are largely based on marketer information and promises – must create realistically high expectations
Reality = satisfaction has been declining
Performance exceeds expectations
P > E
Customer is highly satisfied
or delighted !
Performance falls short of expectations
P < E
Customer is dissatisfied
Performance matches expectations
P = E
Customer is satisfied

32. Building Customer Relationships
Companies can build customer relationships at many levels, depending on the
nature of the target
Many, low margin
customers – basic relationships (e.g., provide 800#, web site)
Few, high margin customers – full partnerships

33. Building Customer Relationships
Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers

34. Building Customer Relationships
Partner Relationship Management
Partners inside the company is every function area interacting with customers
Electronically
Cross-functional teams
Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships

35. Capturing Value from Customers
Creating Customer Loyalty and Retention
Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage
losing a customer means losing the entire stream of purchases over a lifetime of patronage (combined customer lifetime value = customer equity or future potential profits)
1-33

36. Capturing Value from Customers
Growing Share of Customer Share of customer is the portion of the customer’s purchasing that a company gets in its product categories
1-34

37. The New Marketing Landscape
Major Developments
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
1-37

38. The New Marketing Landscape
The New Digital Age
Recent technology has had a major impact on the ways marketers connect with and bring value to their customers
Market research
Learning about and tracking customers
Create new customized products
Distribution
Communication
Video conferencing
Online data services
1-38

39. The New Marketing Landscape
The New Digital Age
Internet—creates marketplaces and marketspaces
Information
Entertainment
Communication
1-39

40. The New Marketing Landscape
Rapid Globalization
The world is smaller
Think globally, act locally
1-40

41. The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions in a global economy
1-41

42. The New Marketing Landscape
The Call for More Ethics and Social Responsibility Social marketing campaigns encourage energy conservation and concern for the environment or discourage smoking, excessive drinking, and drug use
1-42

43. The New Marketing Landscape
The Growth for Not-for-Profit Marketing
Colleges
Hospitals
Museums
Zoos
Orchestras
Religious groups
1-43