Kotler, Armstrong Principles of Marketing 4e

1. 0 Kotler, ArmstrongPrinciples of Marketing 4e Chapter 1 Marketing: Creating Customer Value and Satisfaction, Profitably

2. 0 Chapter Objectives (1) • Define marketing, employing such key elements as value, customer relationships, needs, wants and demands. • Discuss marketing management and elaborate on the basic ideas of demand management and building profitable customer relationships. • List the marketing management philosophies and be able to distinguish between them. • Analyse the key marketing challenges of this century and reflect on the ways these might be overcome.

3. 0 What Is Marketing? • An activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.

4. The Marketing Process

5. Selling and Promotion are: • are synonymous with the term marketing • are only the tip of the marketing iceberg • are the most important marketing functions • are the least important marketing functions • are not part of marketing

6. Understanding the Marketplace and Customer Needs • Marketers need to understand customer needs, wants and demands and the marketplace within which they operate.

7. 0 Needs, Wants and Demands (1) • Human needs arethe most basic concept underlying marketing. • Humans have many complex needs including physical, social and individual needs. • Marketers stimulate rather than create these needs, they are part of human make up. • When a need is not satisfied, a person will either try to reduce the need or look for an object that will satisfy it. • People in less economically developed societies might try to reduce their desires and satisfy them with what is available. • People in industrial societies might try to develop objects that will satisfy their needs.

8. 0 Needs, Wants and Demands (2) • Wants are the form taken by human needs and are shaped by culture and individual personality. • For example, a hungry person in Australia, Singapore or Hong Kong might want something different for lunch from a hungry person in the South Pacific. • As a society evolves, the wants of its members expand. • Marketers try to provide more want-satisfying goods and services.

9. 0 Needs, Wants and Demands (3) • Demands are the human wants that are backed up by buying power. • Customers view products as bundles of benefits and choose the products that give them the best bundle for their money. • Outstanding companies go to great lengths to learn about and understand their customers’ needs, wants and demands. • They conduct customer research, analyse and monitor customer behaviour, complaints, inquiry, warranty and service performance data. • Understanding customer needs, wants, and demands in detail provides important input for designing marketing strategies.

10. Want supported by buying power is best described as a(n): • need • desire • demand • exchange • manifestation of greed

11. Market Offerings: Goods, Services and Experiences • A market offering is a product that is some combination of goods, services and experiences that can be offered to a market to satisfy a need or want. • A product includes physical objects, services, persons, places, ideas and organisations. Anything that satisfies a need can be called a product. • Marketers often use the expression goods and services to distinguish between tangible and intangible ones. However these should be viewed as continuum and not as a basic dichotomy.

12. 0 Customer Perceived Value and Satisfaction • Customer perceived value is the difference between the values the customer gains in owning and using a product and the costs of obtaining the product. • Customer Satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations.

13. 0 Exchange, Transactions and Relationships (1) • Exchange is the act of obtaining a desired object from someone by offering something in return. • Exchange means that people do not need to prey on others, depend on donations or possess the skills to produce every necessity for themselves. • Exchange is the core concept of marketing. For an exchange to take place, several conditions must be satisfied: • At least two parties must participate and each must have something of value to the other. • Each party must want to deal with the other and be free to accept or reject an offer. • Each party must be able to communicate and deliver.

14. 0 Exchange, Transactions and Relationships (2) • A transaction is marketing’s unit of measurement. • A transaction consists of a trade of value between two parties. • In transactions it must be possible to state that what each party is giving and gaining. • Relationship marketing is the process of creating, maintaining and enhancing strong, value-laden relationships with customers and other stakeholders.

15. 0 Markets • Market - A set of all actual and potential buyers of a product

16. 0 A Simple Marketing System

17. Marketing • Marketing means managing markets to bring about exchanges for the purpose of satisfying human needs and wants. • Marketing is carried out by both sellers and buyers, and company purchasing agents.

18. Elements of a Modern Marketing System

19. Designing a Customer-Driven Marketing Strategy • Marketing management is: • The analysis, planning, implementation and control of programs designed to create, communicate and deliver value to customers and facilitate managing customer relationships in ways that enable the organisation to meet its objectives and those of its stakeholders. • A winning marketing strategy asks ‘what customers will we serve?’ and ‘Who is our target market?’

20. 0 Selecting Customers to Serve • Marketers cannot serve all customers in every way with a single market offering. • It is necessary to select customers that can be served well and profitably. • Demarketing is marketing in which the task is to temporarily or permanently reduce demand

21. Selecting Customers to Serve • Managing demand means managing customers who come from two groups: new and repeat customers. • Keeping existing customers is important as the cost to attract new customers is five times as much. • Marketers retain customers by ensuring that branded goods, services and experiences offer intrinsic value and that there is a sense of excitement or enjoyment associated with the marketing offering and communication used. • Context is important - excitement is not always appropriate. • The key to offering excitement is involvement and interactivity.

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23. 0 Emotional Engagement

24. Choosing a Value Proposition • The organisation must decide how it will serve targeted customers - how it will differentiate and position itself in the marketplace. • A value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs.

25. Marketing Management Orientations • The Production Concept • Consumers favour products that are available and highly affordable. • The Product Concept • Consumers favour products that offer the most quality, performance and innovative features. • The SellingConcept • Consumers won’t buy enough of the organisation’s products unless the organisations undertakes a large-scale selling and promotion effort. • The Marketing Concept • Achieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors.

26. Selling and Marketing Concepts

27. 0 Societal Marketing • Organisations should determine the needs, wants and interests of target markets and deliver the desired satisfaction more effectively and efficiently than competitors in a way that maintains or improves the customer’s and society’s well-being.

28. Considerations Underlying the Societal Marketing Concept

29. Preparing an Integrated Marketing Program • The company’s marketing strategy outlines which customers the company will serve and how it will create value. • The integrated marketing program is developed to actually deliver the value to target customers. • The program builds relationships by transforming the strategy into action, it consists of the marketing mix.

30. The Extended Marketing Mix

31. Building Customer Relationships • The first three steps in the marketing process: • Understanding the marketplace and customer needs • Designing a customer-driven strategy • Marketing programs lead to the most important step: building profitable customer relationships.

32. Customer Relationship Management (CRM) • CRM is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. • CRM deals with all aspects of acquiring, keeping and growing customers.

33. Relationship Building Blocks:Customer Value and Satisfaction • The key to building long lasting relations is to create superior customer value and satisfaction. • Customer Perceived Value is the evaluation of the difference between the benefits and all the costs of a market offering relative to those of competing offers. • Customer Satisfaction depends on the product’s perceived performance matches a buyer’s expectations. If the product’s performance falls short of expectations, the buyer is dissatisfied. If the performance matches or exceeds expectations, the buyer is satisfied or delighted.

34. The Changing Nature of Customer Relationships • Companies are building more direct and lasting relationships with more carefully selected customers. • Companies now use customer profitability analysis to identify losing customers and relate to winning customers (selective relationship management). • CRM is used to retain current customers and build long term relationships with them. • Companies aim to connect more deeply with customers and more directly. Direct marketing is booming.

35. Capturing Value from Customers • Creating Customer Loyalty and Retention • Good CRM creates customer delight. Delighted customers remain loyal and talk favourably about the company. • Growing Share of Customer • Good CRM can help marketers to increase their share of customer. • Building Customer Equity • This is the combined discounted customer lifetime values of all the company’s current and potential customers.

36. Building the Right Relationship with the Right Customers

37. The New Marketing Landscape • Marketing operates within a dynamic global environment. Rapid changes can quickly make a winning strategy out of date. • Today’s companies deal with changing customer values and orientations, market maturity in many industries, movement of manufacturing to least cost countries, environmental degradation, increased global competition, and many other economic, political and social problems.

38. The New Marketing Landscape • Problems can also become marketing opportunities. New trends include: growth of not for profit marketing; rapid globalisation; IT, changing world economy and the call for more socially responsible actions.

39. The New Marketing Landscape • The growth of not-for-profit marketing: • Including philanthropic organisations, universities, hospitals, museums, symphony orchestras and even churches. • Rapid Globalisation: • Most marketing organisations are touched by global competition. • Customer Information and Digital Marketing: • The IT explosion is accelerating the rate if change and emergence of global competitors.

40. The New Marketing Landscape • The changing world economy: • Many countries have grown poorer; around the world people’s needs are greater but many lack the means to pay for necessary goods. • The call for more ethical behaviour and social responsibility: • There is an increased call for companies to take responsibility for the social and environmental impact of their actions.

41. Each of the following conditions must be satisfied for an exchange to take place except: • the existence of a monetary system • two parties each possessing something of value to the other • the ability to accept or reject the offer • ability to communicate and deliver • each party wanting to deal with the other