Kotler, ArmstrongPrinciples of Marketing 0Session 2 and Chapter 1Marketing: Creating Customer Value and Satisfaction, Profitably

AgendaRevision on Session 2Identify core activities, customer base, business values and directionThe marketing processUnderstanding the market and customer needs

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Philip Kotler (the author)Philip Kotler is an American academic focused on marketingThe author of Marketing Management among dozens of other textbooks and books, he is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University*

0ObjectivesDefine marketing, employing such key elements as value, customer relationships, needs, wants and demandsDiscuss marketing management and elaborate on the basic ideas of demand management and building profitable customer relationshipsList 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*

0What 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

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Marketing DefinitionGetting the right goods, to the right people, in the right place, at the right time, at the right price, with the level of communication and at a profit (Chartered Institute of Marketing)

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The Marketing Process*

Selling and Promotion are:are synonymous with the term marketing are only the tip of the marketing icebergare the most important marketing functionsare the least important marketing functionsare not part of marketing*

Understanding the Marketplace and Customer NeedsMarketers need to understand customer needs, wants and demands and the marketplace within which they operate

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0Needs, Wants and Demands (1)Human needs are the most basic concept underlying marketing.Humans have many complex needs including physical, social and individual needsMarketers stimulate rather than create these needs, they are part of human make up

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Needs, Wants and Demands (2)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 availablePeople in industrial societies might try to develop objects that will satisfy their needs*

0Needs, Wants and Demands (3)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

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Needs, Wants and Demands (4)As a society evolves, the wants of its members expandMarketers try to provide more want-satisfying goods and services*

0Needs, Wants and Demands (5)Demands are the human wants that are backed up by buying powerCustomers view products as bundles of benefits and choose the products that give them the best bundle for their moneyOutstanding companies go to great lengths to learn about and understand their customers needs, wants and demands

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Needs, Wants and Demands (6)They conduct customer research, analyse and monitor customer behaviour, complaints, inquiry, warranty and service performance dataUnderstanding customer needs, wants, and demands in detail provides important input for designing marketing strategies*

Wants supported by buying power is best described as a(n):needdesiredemandexchangemanifestation of greed

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Market Offerings: Goods, Services and ExperiencesA 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 wantA product includes physical objects, services, persons, places, ideas and organisationsAnything that satisfies a need can be called a product

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Market Offerings: Goods, Services and Experiences (2)Marketers often use the expression goods and services to distinguish between tangible and intangible onesHowever these should be viewed as continuum and not as a basic dichotomy

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0Customer Perceived Value and SatisfactionCustomer perceived value is the difference between the values the customer gains in owning and using a product and the costs of obtaining the productCustomer Satisfaction is the extent to which a products perceived performance matches a buyers expectations*

0Exchange, 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

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Exchange, Transactions and Relationships (2)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 otherEach party must want to deal with the other and be free to accept or reject an offerEach party must be able to communicate and deliver*

0Exchange, Transactions and Relationships (3)A transaction is marketings unit of measurementA transaction consists of a trade of value between two partiesIn transactions it must be possible to state that what each party is giving and gaining*

Exchange, Transactions and Relationships (3)Relationship marketing is the process of creating, maintaining and enhancing strong, value-laden relationships with customers and other stakeholders

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0MarketsMarket - A set of all actual and potential buyers of a product

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0A Simple Marketing System*

MarketingMarketing means managing markets to bring about exchanges for the purpose of satisfying human needs and wantsMarketing is carried out by both sellers and buyers, and company purchasing agents

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Elements of a Modern Marketing System*

Designing a Customer-Driven Marketing StrategyMarketing 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

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A Customer-Driven Marketing StrategyA winning marketing strategy asks what customers will we serve? and Who is our target market?*

0Selecting Customers to ServeMarketers cannot serve all customers in every way with a single market offeringIt is necessary to select customers that can be served well and profitablyDe-marketing is marketing in which the task is to temporarily or permanently reduce demand

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Selecting Customers to ServeManaging 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

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Selecting Customers to ServeMarketers 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 usedContext is important - excitement is not always appropriateThe key to offering excitement is involvement and interactivity*

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0Emotional Engagement*

Choosing a Value PropositionThe organisation must decide how it will serve targeted customers - how it will differentiate and position itself in the marketplaceA value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs

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Marketing Management Orientations (1)The Production ConceptConsumers favour products that are available and highly affordableThe Product ConceptConsumers favour products that offer the most quality, performance and innovative features

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Marketing Management Orientations (2)The Selling ConceptConsumers wont buy enough of the organisations products unless the organisations undertakes a large-scale selling and promotion effortThe Marketing ConceptAchieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors*

0Societal MarketingOrganisations 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 customers and societys well-being

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Considerations Underlying the Societal Marketing Concept*

Preparing an Integrated Marketing ProgramThe companys marketing strategy outlines which customers the company will serve and how it will create valueThe integrated marketing program is developed to actually deliver the value to target customersThe program builds relationships by transforming the strategy into action, it consists of the marketing mix*

The Extended Marketing Mix*

Building Customer RelationshipsThe first three steps in the marketing process:Understanding the marketplace and customer needs (research)Designing a customer-driven strategy Marketing programs lead to the most important step: Building profitable customer relationships

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

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Relationship Building Blocks:Customer Value and SatisfactionThe 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*

Relationship Building Blocks:Customer Value and Satisfaction (2)2.Customer Satisfaction depends on the products perceived performance matches a buyers expectations3.If the products performance falls short of expectations, the buyer is dissatisfied4.If the performance matches or exceeds expectations, the buyer is satisfied or delighted*

The Changing Nature of Customer RelationshipsCompanies are building more direct and lasting relationships with more carefully selected customersCompanies now use customer profitability analysis to identify losing customers and relate to winning customers (selective relationship management)*

The Changing Nature of Customer Relationships (2)2. CRM is used to retain current customers and build long term relationships with them3. Companies aim to connect more deeply with customers and more directly4. Direct marketing is booming

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Direct MarketingThe practice of delivering promotional messages directly to potential customers on an individual basis as opposed to through a mass medium e.g. telemarketing, emails, texts, online display ads, flyers etcMass media is a means of public communication reaching a large audience *

Capturing Value from CustomersCreating Customer Loyalty and RetentionGood CRM creates customer delight Delighted customers remain loyal and talk favourably about the company.Growing Share of CustomerGood CRM can help marketers to increase their share of customer

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Capturing Value from Customers (2)Building Customer EquityThis is the combined discounted customer lifetime values of all the companys current and potential customers*

Building the Right Relationship with the Right Customers*

The New Marketing LandscapeMarketing operates within a dynamic global environment Rapid changes can quickly make a winning strategy out of date

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The New Marketing Landscape (2)Todays companies deal with changing customer values and orientationsmarket maturity in many industries, movement of manufacturing to least cost countriesenvironmental degradation increased global competition, and many other economic, political and social problems

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The New Marketing Landscape (3)Problems can also become marketing opportunitiesNew trends include: growth of not for profit marketing rapid globalisation ITchanging world economy the call for more socially responsible actions*

The New Marketing LandscapeThe growth of not-for-profit marketing:Including philanthropic organisations, universities, hospitals, museums, symphony orchestras and even churches*

The New Marketing LandscapeRapid 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*

The New Marketing LandscapeThe changing world economy:Many countries have grown poorer; around the world peoples needs are greater but many lack the means to pay for necessary goodsThe 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

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Next session

Revision Q&AStrategic MarketingSee you tomorrow at 5pm*

***This relates to objective 1.*This relates to objective 1.*B. Is the correct answer. The previous slides indicate that marketing is a much more complex activity that just selling and promotion. This tests understanding of objective 1.*This relates to objectives 1 & 2.*This relates to objectives 1 & 2.

*This relates to objectives 1 & 2.

*This relates to objective 2.*C. Is the correct answer. Actual demand can only occur if a want is identified and the potential customer has the means to buy.

This relates to objective 2

*This relates to objective 2*This relates to objectives 1 & 2.

*This relates to objectives 1 & 2.

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*This relates to objectives 2 & 3.*This relates to objectives 1 & 2.

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