1. Principles of Marketing

2. - Philip Kotler
Authentic marketing is not the art of selling what you make but knowing what to make. It is the art of identifying and understanding customer needs and creating solutions that deliver satisfaction to the customers, profits to the producers and benefits for the stakeholders.

3. Marketing: Managing Profitable Customer Relationship
Chapter 1
Marketing: Managing Profitable Customer Relationship

4. Objectives Defined marketing, and marketing process.
Examine five core customer and marketplace concepts.
Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations.
Discuss customer relationship management and creating value for and capturing value from customers
Describe the major trends and forces changing the marketing landscape

5. Wal-Mart “Always low price Always” AT&T “it’s within your reach”
What is Marketing
The simplest definition of marketing is :
“ managing profitable customer relationship”
The two main goals of marketing is:
Attract new customer by promising superior value
To keep and grow current customer by delivering satisfaction.
The key is delivering your promise
Wal-Mart “Always low price Always”
AT&T “it’s within your reach”
Dell “be direct”

6. Marketing Defined Kotler’s definition:
“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others”
Marketing definition in the scope of business:
The process by which companies create value for customers and build a strong customer relationship in order to capture value from customer in return.
In the sense of satisfying customer needs,
Marketers should understand consumer needs, develops products that provide superior value, and price, distributes, and promotes them effectively.

7. The Marketing Process
Understanding the market place and customer needs and wants
Design a customer-driven marketing strategy
Construct marketing program that deliver superior value
Build profitable relationship and create customer delight
Capture value from the customers to create profits
Create value for the customer and
build customer relationship
Capture value
from customer
in return

8. The Marketing Process
Understanding the market place and customer needs and wants
Design a customer-driven marketing strategy
Construct marketing program that deliver superior value
Build profitable relationship and create customer delight
Capture value from the customers to create profits

9. Marketing Core Concepts:
Customer needs, wants, and demands
Market offerings- products, services, and experiences
Customer value and satisfaction
Exchange and relationship
Markets

10. Maslow’s Hierarchy of Needs
Self-
actualization
Personal
growth
and fulfillment
Esteem needs
Self-esteem, confidence, achievement, respect of others, respect by others
Social needs
Belonging, and love needs
Family, friends, affection, relationships
Safety needs
Protection, security, order, law, limits, stability, etc
Physiological needs
Breathing, food, water, sleep

11. Needs, Wants, and Demand Needs Wants Demands
The state of deprivation
Example: Food
Wants
The form human needs take as shaped by culture and individual personality
Example: Want a big Mac
Demands
Human wants that are backed by buying power
To understand customer needs wants and demands marketers conduct consumer research and analyze customer data

12. Marketers
Discover Needs
Influence Wants
Manage Demands

13. Market offerings
Customers’ needs and wants are fulfilled through a market offering
Marketing offering are “Some combination of products, services, information, or experiences offered to a market to satisfy a need or want."
Marketing offers are not limited to physical products, it includes services, activities, or benefits offered for sale that are intangible and do not result in the owner ship of anything“ Example: banking, airline, hotel…”.
Market offers It also includes other entities, such as persons, place, organization, information, and ideas.

14. Market Offers Marketing myopia
“the mistake of paying more attention to the specific product a company offers then to the benefits and experiences produced by these products” (the drill)
Marketers shouldn’t focus only on existing wants and lose sight of underlying customer needs … … … … …... they should create brand meaning and brand experiences (Example: Coca-Cola, Nike)
The product is only a tool to solve a consumer problem.

15. Customer Value and Satisfaction
Customer form expectations about the value of various marketing offers and buy accordingly.
How do buyers form there expectations?
Past buying experience.
The opinions of friends.
market and competitor information and promises
Customer satisfaction depend on how well the product’s performance lives up to the customer’s expectations.
Marketers must be careful to set the right level of expectation.

16. Exchanges and Relationship
The act of obtaining a desired object from someone by offering something in return
The marketer tries to bring about a response to some market offering. The response may be more then buying (example: political candidate wants votes, orchestra wants an audience, and a social action group wants idea acceptance)
One exchange is not the goal, relationships with several exchanges are the goal
Relationships are built through delivering value and satisfaction

17. Markets
The Market is:
“ The set of actual and potential buyers of a product or service, who share a particular need or want.”
Marketers should work to:
understand the needs and wants of specific markets.
Select the market they can serve best.
Developing products and services to satisfy customers in this market.

18. Markets
Markets:
Marketers often use the term markets to cover various grouping of customers.
Need markets (the diet-seeking market)
Product markets (shoe market)
Demographic markets (the youth market)
Geographic markets (the French market)
They view sellers as constituting the industry and the buyers as constituting the market

19. Marketing Means Managing Markets To Bring About Profitable Customer Relationship

20. Elements Of A Modern Marketing System
Marketing involves serving a market of final consumer in the face of competitors
Each party in the system adds value for the next level
All the arrows represent relationship that must be developed and managed, thus a company’s success at building profitable relationship depends not only on its own action but also on how well the entire system serves the needs of final consumer
All the actors in the system are affected by major environmental forces
Suppliers
Marketing intermediaries
Final users
Company (marketer)
Competitors
Major environmental forces

21. The Marketing Process Design a customer-driven marketing strategy
Understanding the market place and customer needs and wants
Design a customer-driven marketing strategy
Construct marketing program that deliver superior value
Build profitable relationship and create customer delight
Capture value from the customers to create profits

22. Designing a Customer-Driven Marketing Strategy
Marketing management
“is the art and science of choosing target markets and building profitable relationships with them.”
This definition must include answer to two questions
What customers will we serve? (segmentation and targeting)
How can we serve these customers best? (value proposition)

23. Select Customer to Serve
Marketers decide who they will serve by dividing the market into segments of customers. And select which segment they will go after (target marketing).
Market segmentation: “ dividing a market into different groups with similar needs, characteristics, or behaviors”
Target marketing: the process of evaluating each market segment’s attractiveness and selecting one or more segment to enter.

24. Select Customer to Serve
Demand management
Marketers must deal with different demand states ranging from no demand to too much demand.
Marketing managers must decide which customer they want to target, and on level, timing, and nature of their demand to meet the organization objectives.
Simply
Marketing management is: customer management and demand management

25. Demand States Negative Demand Nonexistent Demand Latent Demand
Consumer dislike the product and may even pay a price to avoid it (vaccination)
Nonexistent Demand
Consumer may be unaware or uninterested in the product (very advanced technology)
Latent Demand
Consumer may share a strong need that cannot be satisfied by an existing product (cancer medicine)
Declining Demand
Consumer begin to buy the product less frequently or not at all (pocket-calculator)
Irregular Demand
Customer purchase vary on a seasonal, monthly, weekly, daily, or even hourly basis (ACs)
Full Demand
Consumer are adequately buying all products put into the market place (FMCG)
Overfull Demand
More consumer would like to buy the product than can be satisfied (bread – transportation)
Unwholesome Demand
Consumer may be attracted to products that have undesirable social consequences (drugs)

26. Choosing the Value Proposition
The company then must decide how it will serve targeted customer-how it will differentiate and position it self.
Differentiation: the way that you make your business or product more desirable than all the others like it. (Example: Mercedes “Unlike any other” – BMW “Ultimate Driving Machine”)
Positioning: Is the process by which marketers try to create an identity in the minds of their target market for its product, brand, or organization. It is the image their product occupies in a given market as perceived by the target market. (Example: Honda – BMW)

27. Choosing the Value Proposition
“Is the set of benefits or values a company promises to deliver to consumers to satisfy their needs.
It answer the customer’s question:
“why should I buy your brand rather than a competitor’s?” (Red Bull Gives You Wiiings)
Wed.

28. Marketing Management Orientations
The production concept:
The philosophy that consumers will favor products that are available and highly affordable and that management therefore should focus on improving production and distribution efficiency. (Example: Ford, model T )
The product concept:
The idea that consumers will favor products that offer the most quality, performance, and features and that the organization should therefore devote energy to making continuous product improvements. (Example: the mousetrap)

29. Marketing Management Orientations
The selling concept
The idea that consumers will not buy enough of the organization’s products unless the organization undertakes a large scale selling and promotion effort. (Example: unsought products - blood donation)
The marketing concept
The marketing management philosophy that holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively than competitors do.
The job is not to find the right customer for your product, but to fined the right product for your customer. (Example: Dell, Wal-Mart)

30. The Selling And Marketing Concept Contrasted
Starting point
Factory
Existing products
Selling and promoting
Profits throw sales volume
Focus
Means
Ends
The selling concept
“Inside-out”
Make
and sell
Hunting
Finding the right customer for your product
Market
Consumer need
Integrated marketing
Profits throw customer satisfaction
The marketing concept
“Outside-in”
Gardening
Find the right product for your customers
Sense
and respond

31. Marketing Management Orientations
The societal marketing concept
The idea that the organization should determine the needs, wants and interests of target markets and deliver the desired satisfactions more effectively and efficiently than do competitors in a way that maintains or improves the consumer’s and society’s well being.(Example: fast-food industry)
Society
(human welfare)
Societal
marketing
concept
Consumer
(want satisfaction)
company
(profit)

32. The Marketing Process
Understanding the market place and customer needs and wants
Design a customer-driven marketing strategy
Construct marketing program that deliver superior value
Build profitable relationship and create customer delight
Capture value from the customers to create profits

33. Preparing a Marketing Plane and Program
The marketing plane actually deliver the value to the target customer, by transforming the marketing strategy into actions.
The marketing plane consists of the firm’s marketing mix, which called the four Ps
Product: to deliver on it’s value proposition the firm must first create a need-satisfying market offering.
Price: it must decide how much it will charge for the offer.
Place: and how it will make the offer available to target customer.
Promotion: it must communicate with target customer about the offer and persuade them of its merits.

34. Marketing Mix and the Customer
Four P’s
Four C’s
Product
Price
Place
Promotion
Customer solution
Customer cost
Convenience
Communication
Every marketing tool is designed to deliver a customer benefit and value

35. The Marketing Process
Understanding the market place and customer needs and wants
Design a customer-driven marketing strategy
Construct marketing program that deliver superior value
Build profitable relationship and create customer delight
Capture value from the customers to create profits

36. Building Customer Relationships
Customer relationship management CRM
“The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers.”

37. CRM Why the emphasis on retaining and growing customers?
There is fewer customers to go around due to sophisticated competitors, and overcapacity in most industries
costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied.
The lifetime value of the customer. Is “the value of the entire stream of purchases that the customer would make over a life-time of patronage” (Example: Stew Leonard)
The key in building lasting customer relationship is to create superior value, and satisfaction.

38. Everyone is committed to Rock Rule
Customer Rule
Everyone is committed to Rock Rule

39. CRM Attracting, Retaining, And Growing Customers
Customer value
Customer perceived value:
The difference between total customer value and total customer cost.
TCV – TCC = CPV
The customer evaluation of the difference between all the benefits and all the cost of a marketing offer relative to those of competing offers.
Customers often do not judge values and costs accurately or objectively.
Customer often act on perceived value (Example: FedEx)

40. CRM Customer satisfaction:
Depend on the product’s perceived performance relative to buyer’s expectations
Performance matches expectations the customer is satisfied, performance exceeds expectations the customer is delighted.
Satisfied customer repeat purchases, and tell others.

41. The Marketing Process
Understanding the market place and customer needs and wants
Design a customer-driven marketing strategy
Construct marketing program that deliver superior value
Build profitable relationship and create customer delight
Capture value from the customers to create profits

42. Capturing Value From Customer
Customer loyalty and retention:
Loyalty increases as satisfaction levels increase
Customer delight leads to emotional relationships and loyalty
loyal customers are less price sensitive.
Customer Lifetime Value shows true worth of a customer

43. Capturing Value From Customer
Growing share of customer
Share of customer’s purchase in a product category.
Cross-selling and up-selling (Example: Vodafone& mobile phones – TE-Data, the wireless modem)

44. Capturing Value From Customer
Building customer equity
The total combined customer lifetime values of all current and potential customers.
Measures a firm’s performance, but in a manner that looks to the future.
Customer lifetime value and customer equity are the name of the game. (Example: Cadillac and BMW)

45. Customer relationships levels and tools
Target market nature decide the type the relationship
Basic relationship / low-margin customers
Full partnership / high margin customers
Customer loyalty and retention tools
Adding financial benefits – frequency marketing programs (Example: Marie Louis)
Adding social benefits – club marketing programs (Example: Swatch)
Adding structural ties – special equipments (Example: FedEx)

46. Marketing Challenges in the 21st Century
The new digital age
Growth of the Internet
Advances in telecommunications, information, transportation
Customer research and tracking
Product development
Distribution
New advertising tools
24/7 marketing through the Internet
Rapid globalization
Geographical and cultural distances have shrunk
Greater market coverage
More options for purchasing and manufacturing
Increased competition from foreign competitors

47. Marketing Challenges in the 21st Century
The call for more ethics and social responsibility
Marketers need to take great responsibility for the impact of their actions
Caring capitalism is a way to differentiate your company
The growth of not-for-profit marketing
Many organizations are realizing the importance of strategic marketing
Performing arts
Government agencies
Colleges
Hospitals

48. Understanding the market place and customer needs and wants
Design a customer-driven marketing strategy
Construct marketing program that deliver superior value
Build profitable relationship and create customer delight
Capture value from the customers to create profits
Marketing Process
Research customer and the market place
Managing marketing information and customer data
Select customer to serve: market segmentation and targeting
Decide on value proposition: differentiation and positioning
Product and service design: building a strong brand
Price Create real value
Distribution
manage demand and supply chain
Promotion
Communicating the value
Customer relationship management: build strong relationship with chosen customers
Partner relationship management : build a strong relationship with marketing partners
Create satisfied loyal customer
Capture customer life time value
Increase share of market and share of customer

49. What Is Marketing? Pulling It All Together
The process of building profitable customer relationships by creating value for customers and capturing value in return