Copyright © 2003 Prentice-Hall, Inc. 1-1 Chapter 1 Marketing: Managing Profitable Customer Relationships PowerPoint by Kotler & Armstrong (and modified

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Copyright © 2003 Prentice-Hall, Inc.

Chapter 1 Chapter 1 Marketing: Managing Marketing: Managing Profitable Customer Profitable Customer RelationshipsRelationships

PowerPoint byPowerPoint by

Kotler & ArmstrongKotler & Armstrong(and modified by me)(and modified by me)

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Chapter Big Ideas

The Big Ideas in this chapter are:The Big Ideas in this chapter are: Marketing is….Marketing is…. Major concepts and tools of marketingMajor concepts and tools of marketing Market orientations Market orientations CRMCRM

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Marketing So what’s Marketing?So what’s Marketing? Function: Function: nounnoun Etymology: Middle English, from Old Etymology: Middle English, from Old

North French, from Latin North French, from Latin mercatus ---mercatus ---trade or marketplace trade or marketplace

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Marketing

Marketing is the process of planning Marketing is the process of planning and executing the conception, pricing, and executing the conception, pricing, promotion, and distribution of goods, promotion, and distribution of goods, services and ideas to facilitate services and ideas to facilitate satisfying exchange relationships with satisfying exchange relationships with customers in a dynamic environment. customers in a dynamic environment. (AMA)(AMA)

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Marketing Marketing is the process of planning and Marketing is the process of planning and

executing (Management function)executing (Management function) the the conceptionconception, , pricingpricing, , promotionpromotion, and, and

distributiondistribution (4 P’s) (4 P’s) of goodsof goods, , servicesservices and and ideasideas (Product) (Product) to facilitate to facilitate satisfying exchange satisfying exchange

relationshipsrelationships (buying and selling) (buying and selling) with with customerscustomers (Target/Segment) (Target/Segment) in a in a dynamic environmentdynamic environment. (External . (External

factors)factors)

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Factors Influencing Company Marketing

The Four P’s

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Elements of a Modern Marketing System

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Core Marketing Concepts

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Core Marketing ConceptsCore Marketing Concepts1. Target Markets and Segmentation1. Target Markets and Segmentation

2. Marketers and Prospects2. Marketers and Prospects3. Needs, Wants, and Demands3. Needs, Wants, and Demands

Marketing Concepts and Tools

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Marketing Concepts and Tools4. Product, Offering, and Brand4. Product, Offering, and Brand

5. Value and Satisfaction5. Value and Satisfaction ValueValue

Value = Benefits / Costs =Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Functional benefits + Emotional benefits) /

(Monetary costs + Time costs + Energy costs + (Monetary costs + Time costs + Energy costs + Psychic costs)Psychic costs)

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Marketing Concepts and Tools

6. Exchange and Transactions6. Exchange and Transactions7. Relationships and Networks7. Relationships and Networks

Relationship marketingRelationship marketingMarketing networkMarketing network

8. Marketing Channels8. Marketing Channels9. Supply Chain9. Supply Chain10. Competition10. Competition

Brand competitionBrand competition Industry competitionIndustry competition Form competitionForm competition Generic competitionGeneric competition

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Marketing Concepts and Tools11. Marketing Environment11. Marketing Environment

12. Marketing Mix (4 P’s)12. Marketing Mix (4 P’s)

13. Marketing Program13. Marketing Program

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Management Orientations Toward the Marketplace

Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

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CRM

CRM is what?CRM is what? Customer relationship management (also Customer relationship management (also

called CRM) is defined as:called CRM) is defined as: ““the overall process of building and the overall process of building and maintaining profitable customer maintaining profitable customer relationships by delivering superior relationships by delivering superior customer value and satisfaction.”customer value and satisfaction.”

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CRM

It costs 5 to 10 times MORE to attract a new It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer than it does to keep a current customer satisfied.customer satisfied.

Marketers must be concerned with the Marketers must be concerned with the lifetime value of the customerlifetime value of the customer..

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Marketing Challenges

Source of marketplace changes:Source of marketplace changes: Technological advancesTechnological advances Rapid globalization Rapid globalization Continuing social and economic shiftsContinuing social and economic shifts

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Chapter 2 company and Marketing Strategy: Partnering to

Build Customer Relationships

PowerPoint byPowerPoint by

Kotler & ArmstrongKotler & Armstrong(and modified by me)(and modified by me)

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Chapter 2 – Big Ideas

Strategic planningStrategic planning Value creation (in many forms)Value creation (in many forms)

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Strategic Planning

Strategic PlanningStrategic Planning is?is?

The Process of Developing and The Process of Developing and Maintaining a Strategic Fit Maintaining a Strategic Fit Between the Organization’s Goals Between the Organization’s Goals and Capabilities and Its Changing and Capabilities and Its Changing Marketing Opportunities.Marketing Opportunities.

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Steps in Strategic Planning

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The Mission Statement

What’s Mission Statement?What’s Mission Statement? A statement of the organization’s A statement of the organization’s

purposepurpose What it wants to accomplish in the larger What it wants to accomplish in the larger

environmentenvironment

Should be market oriented and defined in Should be market oriented and defined in terms of customer needs.terms of customer needs.

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Questions a Mission Statement Should Answer

What is our Business?

Who is the Customer?

What do Consumers Value?

What Should our Business Be?

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Mission Statements Should:

Be Realistic

Be Specific

Fit the Market Environment

Be Based on Distinctive Competencies

Be Motivating

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Designing the Business Portfolio

A business portfolio is what?A business portfolio is what? The business portfolio is the collection of The business portfolio is the collection of

businesses and products that make up the businesses and products that make up the company.company.

During the strategy process a company must During the strategy process a company must do what?do what? analyze its analyze its currentcurrent business portfolio or Strategic business portfolio or Strategic

Business Units (SBUs),Business Units (SBUs), decide which SBUs should receive more, less, or decide which SBUs should receive more, less, or

no investment,no investment, develop growth strategies for growth or develop growth strategies for growth or

downsizing.downsizing.

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Portfolio Analysis A portfolio analysis is what?A portfolio analysis is what? An An evaluationevaluation of the products and business of the products and business

making up the company.making up the company. Resulting in?Resulting in? Identifying where resources are directed or Identifying where resources are directed or

taken away taken away Invest in to more profitable businesses and Invest in to more profitable businesses and Divest in weaker ones (phased down or dropped).Divest in weaker ones (phased down or dropped).

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Strategic Business Unit

A SBU is what? (hint: )A SBU is what? (hint: ) A unit of the company that has a separate A unit of the company that has a separate

mission and objectives and that can be mission and objectives and that can be planned independently from other company planned independently from other company businesses.businesses.

Can be a company division, a product line Can be a company division, a product line within a division, or sometimes a single within a division, or sometimes a single product or brand.product or brand.

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Strategic Planning Tools

BCG’s growth share matrixBCG’s growth share matrix Ansoff’s product/market expansion gridAnsoff’s product/market expansion grid

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Analyzing Current SBU’s:BCG Growth-Share Matrix

Question Marks

• Low share SBUs in high growth markets• Require cash to hold market share• Build into Stars or phase out

Question Marks

• Low share SBUs in high growth markets• Require cash to hold market share• Build into Stars or phase out

Stars

• High growth & share• May need heavy investment to grow• Eventually, growth will slow

Relative Market Share High Low

Mark

et

Gro

wth

Rate

Low

H

igh ?

Cash Cows

• Low growth, high share• Established, successful SBU’s• Produce cash

Cash Cows

• Low growth, high share• Established, successful SBU’s• Produce cash

Dogs

• Low growth & share • Generate cash to sustain self• Do not promise to be cash sources

Dogs

• Low growth & share • Generate cash to sustain self• Do not promise to be cash sources

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Can be Difficult, Time Consuming, Costly to ImplementCan be Difficult, Time Consuming, Costly to Implement

Difficult to Define SBUs & Measure Market Share/GrowthDifficult to Define SBUs & Measure Market Share/Growth

Focus on Current Businesses, Not Future PlanningFocus on Current Businesses, Not Future Planning

Can Place too Much Emphasis on GrowthCan Place too Much Emphasis on Growth

Problems With Matrix Approaches

Can Lead to Poorly Planned DiversificationCan Lead to Poorly Planned Diversification

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Market Market PenetrationPenetration

ProductProductDevelopmentDevelopment

Market Market DevelopmentDevelopment

ExistingExisting NewNew

P R O D U C TP R O D U C T

NewNewM A

R K

E T

M A

R K

E T

DiversificationDiversification

ExistingExisting

Product/Market Expansion Grid

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Value Value is what? Value is what?

Function: Function: nounnoun Pronunciation: 'val-(")yüPronunciation: 'val-(")yü Etymology: past participle of Latin Etymology: past participle of Latin valEre valEre

– – to be worth, be strong, be powerful, be to be worth, be strong, be powerful, be influential, be healthy influential, be healthy

Meaning: Meaning:

““Relative worth, utility, or importance” Relative worth, utility, or importance”

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Value Proposition

Value Proposition is what?Value Proposition is what? A set of benefits offered by an A set of benefits offered by an

organization to satisfy a customer’s organization to satisfy a customer’s needs, wants and demandsneeds, wants and demands

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Value Chain

So what’s a Value Chain?So what’s a Value Chain? A Michael Porter concept A Michael Porter concept A tool to conceptualize and identify ways to A tool to conceptualize and identify ways to

create more customer valuecreate more customer value 9 Activities9 Activities

5 primary activities5 primary activities Inbound logistics, operations, outbound logistics, Inbound logistics, operations, outbound logistics,

marketing and sales, servicemarketing and sales, service 4 support activities4 support activities

Procurement, technology development, human resources, Procurement, technology development, human resources, firm infrastructurefirm infrastructure

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The Generic Value Chain

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Value Delivery Network

So what’s a value delivery network?So what’s a value delivery network? A network made up of the company, A network made up of the company,

suppliers, distributors, and ultimately suppliers, distributors, and ultimately customers who “partner” with each other customers who “partner” with each other to improve the performance of the entire to improve the performance of the entire systemsystem

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Company’s Value Chain

Distributors Suppliers

Customers

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Market Segmentation

So what’s market segmentation?So what’s market segmentation? The process of dividing a market into The process of dividing a market into

distinct groups of buyers with different distinct groups of buyers with different needs, characteristics, or behavior who needs, characteristics, or behavior who might require separate products of might require separate products of marketing programs.marketing programs.

A market segment consists of consumers who A market segment consists of consumers who respond in a similar way to a given set of respond in a similar way to a given set of marketing efforts.marketing efforts.

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Target Marketing

So what’s target marketing?So what’s target marketing? Involves evaluating each market segment’s Involves evaluating each market segment’s

attractiveness and selecting one or more attractiveness and selecting one or more segments to enter or target.segments to enter or target.

Target segments that can sustain Target segments that can sustain profitability.profitability.

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Market Positioning

Arranging for a product to occupy a clear, Arranging for a product to occupy a clear, distinctive, and desirable place relative to distinctive, and desirable place relative to competing products in the minds of target competing products in the minds of target consumers (e.g., Chevy Blazer: “Like a rock”)consumers (e.g., Chevy Blazer: “Like a rock”)

Process begins with differentiating the Process begins with differentiating the company’s marketing offer so it gives consumers company’s marketing offer so it gives consumers more value.more value.

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The Marketing Mix

The set of The set of controllable, controllable, tactical marketing tactical marketing toolstools that the firm that the firm blends to produce blends to produce the response it the response it wants in the wants in the target market.target market.

Consists of the 4 P’sConsists of the 4 P’s1.1. ProductProduct

2.2. PricePrice

3.3. PlacePlace

4.4. PromotionPromotion

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The 4 P’s of the Marketing Mix

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Managing the Marketing Effort

Tactical Strategic

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Major Sections of Product/Brand Plan

Executive Summary

Current Marketing Situation

Analysis of Threats and Opportunities

Objectives for the Brand

Marketing Strategy

Action Programs

Marketing Budget

Controls

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Marketing Control Process

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Marketing Concept

Value Creation

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Value and Value Proposition ValueValue

The relative worth, utility or importanceThe relative worth, utility or importance ValueValue

Value = Benefits / Costs =Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Functional benefits + Emotional benefits) /

(Monetary costs + Time costs + Energy costs + Psychic costs)(Monetary costs + Time costs + Energy costs + Psychic costs)

Value PropositionValue Proposition A set of benefits offered by an organization to satisfy a A set of benefits offered by an organization to satisfy a

customer’s needs, wants and demandscustomer’s needs, wants and demands

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Value Chain

A tool to conceptualize and identify ways A tool to conceptualize and identify ways to create more customer valueto create more customer value

9 Activities9 Activities 5 primary activities5 primary activities

Inbound logistics, operations, outbound logistics, Inbound logistics, operations, outbound logistics, marketing and sales, servicemarketing and sales, service

4 support activities4 support activities Procurement, technology development, human Procurement, technology development, human

resources, firm infrastructureresources, firm infrastructure

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The Generic Value Chain

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A network made up of the company, A network made up of the company, suppliers, distributors, and ultimately suppliers, distributors, and ultimately customers who “partner” with each other customers who “partner” with each other to improve the performance of the entire to improve the performance of the entire systemsystem

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Company’s Value Chain

Distributors Suppliers

Customers

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Market Segmentation

The process of dividing a market into The process of dividing a market into distinct groups of buyers with different distinct groups of buyers with different needs, characteristics, or behavior who needs, characteristics, or behavior who might require separate products of might require separate products of marketing programs.marketing programs.

A market segment consists of consumers A market segment consists of consumers who respond in a similar way to a given set who respond in a similar way to a given set of marketing efforts.of marketing efforts.

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Target Marketing So what’s target marketing?So what’s target marketing? Involves evaluating each market segment’s Involves evaluating each market segment’s

attractiveness and selecting one or more attractiveness and selecting one or more segments to enter.segments to enter.

Target segments that can sustain profitability.Target segments that can sustain profitability.

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Market Positioning

Arranging for a product to occupy a clear, Arranging for a product to occupy a clear, distinctive, and desirable place relative to distinctive, and desirable place relative to competing products in the minds of target competing products in the minds of target consumers (e.g., Chevy Blazer: “Like a rock”)consumers (e.g., Chevy Blazer: “Like a rock”)

Process begins with differentiating the Process begins with differentiating the company’s marketing offer so it gives consumers company’s marketing offer so it gives consumers more value.more value.

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The Marketing Mix

The set of The set of controllable, controllable, tactical marketing tactical marketing tools that the firm tools that the firm blends to produce blends to produce the response it the response it wants in the wants in the target market.target market.

Consists of the 4 P’sConsists of the 4 P’s1.1. ProductProduct

2.2. PricePrice

3.3. PlacePlace

4.4. PromotionPromotion

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The 4 P’s of the Marketing Mix

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Copyright © 2003 Prentice-Hall, Inc. 1-1 Chapter 1 Marketing: Managing Profitable Customer Relationships PowerPoint by Kotler & Armstrong (and modified