Marketing: An Introduction

Armstrong, Kotler
Chapter One
Marketing: Managing Profitable
Customer Relationships
Looking Ahead
Define marketing and the marketing processes.
Explain the importance of understanding
customers and the marketplace.
Identify the five core marketplace concepts.
Identify the key elements of a customer-driven
marketing strategy.
Discuss customer relationship management and
ways of creating and obtaining value.
Describe the major trends and forces changing
todays marketing landscape.
What is marketing?
Marketing is building profitable customer relationships.
The aim of marketing is to create value for customers
and to capture value in return. Companies know if they
take care of their customers ( delivering on their
promises) , market share and profits will follow.
Definition:
We define marketing as a social and managerial process
by which individuals and groups obtain what they need
and want through creating and exchanging value with
others.
The Marketing Process
Understand the marketplace and customer
needs and wants.
Design a customer-driven marketing strategy.
Construct a marketing program that delivers
superior value.
Build profitable relationships and create
customer delight.
Capture value from customers to create
profits and customer equity. Figure 1
Marketing process
Figure 1

Understand
The marketplace
And customer needs
And wants
Design a
Customer-driven
Marketing strategy
Construct a
Marketing program
That delivers
Superior value
Build profitable
Relationships and
Create customer
delight
Capture value from
Customers to
Create profits and
Customer quality
Understanding the marketplace and consumer needs:
There are five core marketplace concepts;
1- Needs, wants, and demands;
Needs are states of felt deprivation. All
humanity have the same needs;
Physical needs:
Food, clothing, shelter, safety.
Social needs:
Belonging, affection.
Individual needs:
Learning, knowledge, self-expression


Understanding the marketplace and consumer needs:
There are five core marketplace concepts;
Wants; are needs shaped by culture and
individual personality. Example; An American
needs for food but wants a Big Mac. A Chinese
needs for food but wants frog legs.
Demands are wants combined with buying
power. Example; Porsche or Kia.

Marketers spends time and money for a market
research to understand the customers needs,
wants, and demands.

Understanding the marketplace and consumer needs:
There are five core marketplace concepts;
2- Products, Services, Experiences
consumer needs and wants are fulfilled through
a marketing offer, which is some combination of
products, services, or experiences offered to a
market to satisfy a need.
Products; tangible, like food, goodsetc.
Services; intangible, banking, telecometc.
Experiences; Brand experiences, like theater.


Understanding the marketplace and consumer needs:
Marketing Myopia
Sellers pay more attention to the specific products
they offer than to the benefits and experiences
produced by the products. They focus on the wants
and lose sight of the needs.
An article published by Harvard Business school
defined the term marketing Myopia;
- Marketing myopia is true for all companies who define
their markets too narrowly. urging organizations to
define their industries broadly to take advantage of
growth opportunities. Experience shows that when a
business has redefined its market, it has continued to
grow as new targets are set .

Understanding the marketplace and consumer needs:
There are five core marketplace concepts;
3- Value and Satisfaction
If the performance and the customers
experience is lower than expectations, then
customer satisfaction is low.
If the performance and the customers
experience meets expectations, then the
customer is satisfied.
If the performance and the customers
experience exceeds expectations, then the
customer is delighted.


Understanding the marketplace and consumer needs:
There are five core marketplace concepts;
4- Exchange, transactions, and
relationships
Exchange.
The act of obtaining a desired object from someone
by offering something in return.
Transaction
- consists of a trade values between two parties.
The goal of marketers is to build solid relationship
with customers and retaining them by delivering
superior value.
Understanding the marketplace and consumer needs:
There are five core marketplace concepts;
5- Markets
The set of all actual and potential buyers of a
product. Sellers must search for buyers, both
buyers and sellers are carried out by marketing.
- Elements of a Modern Marketing systems
Figure 2


Elements of a Modern Marketing systems
Supplier
Company

Competitors
Marketing
Intermediaries
Final
Consumers
Figure 2
Designing a customer- driven marketing strategy
Once it fully understands consumers and the
marketplace, marketing management can design a
customer-driven marketing strategy.
Customer-Driven Marketing;
Divide markets into segments.
Choose the right segment to target.
Offer a unique value proposition.
Differentiate your offer from competitor offers.
Build customer value and satisfaction.
Building long-term customer relationships

Designing a customer- driven marketing strategy
Marketing Management
The art and science of choosing target markets
and building profitable relationships with them.

Twoquestionsshouldbeaskedhere;

_Whatcustomerswillweserve?(ourtarget)
_Howcanweservethembest?(Value)
Designing a customer- driven marketing strategy
Segmentation and Targeting
Selecting customer to serve; first dividing the
market into segments, Second select the segment to
be our target market. Porsche company target
customers with high income.
Deciding on a value proposition; A set of
benefits or values it promises to deliver to
consumers to satisfy their needs. means the
company must decide how it will differentiate itself
from other competitors. Porsche promises driving
performance and excitement. They say what a dog
feels when the leash breaks.

A philosophy should guide the marketing strategy
to any company.
The philosophy could be one or more of the
following;
1. Production; affordability and availability.
2. Product -- quality and innovation.
3. Selling -- promotion and hard selling.
4. Marketing -- customer satisfaction and
relationships.
5. Societal long-term value to both customer
and society.


1- Production philosophy;
it holds that consumers will favor products that
are available and highly affordable. Its effective
strategy in two situations:
-When a demand for a product exceeds the supply.
-When the product cost is too high, and improve
productivity is needed to reduce the cost, to gain
market share.
Example; Evian water, McDonalds.
2- Product philosophy;
holds that consumers will favor a products that
offer the most in quality, performance, and
innovative features.
In this case the company should focus on the
continuous improving.
Examples; Nokia Mobile, Motorola, Sony..


3- Selling philosophy;
Holds that the customer will not buy enough of
the firms products unless it under-takes a large-
scale selling and promotion effort.
Example; Life-Insurance
4- Marketing philosophy;
Holds that achieving organizational goals
depends on knowing the needs and wants of
target markets and deliver value to compete in
the marketplace. The job is not to find the
right customers for your product, but the
right products for your customers.
Dell, Marriott, Disney Figure 3.


5-Societal marketing philosophy;
Balances human welfare, company profits and
consumer satisfaction
Example; Johnson & Johnson Credo honesty,
integrity, and people before profit. Figure 4
Many calls from the Healthy Associations warn
people form the consequences results from
Fast Food chains.








Factory
Starting
point
Market
Focus
Existing
products
Means Ends
Selling
Promoting
Profits
Through
Sales volume
Customer
needs
Integrated
Marketing
Profits
Through
Customer
Satisfaction
Selling
philosophy
Marketing
philosophy
Figure 3








Social Marketing philosophy
Figure 4
Company
(profits)
Consumers
Want satisfaction
Society
(Human being)
Building Relationships
Relationships span from the basic to tight
integrated relationships.
Successful relationships are built on:
Financial benefits; like VIP, Airline frequent miles
Social benefits; like member of clubs, magazines
Structural ties; like tracking orders online.
Partner Relationship Marketing
Every department in an organization contributes to
customer satisfaction.
Suppliers are carefully controlled through supply chain
management.
Strategic alliances create new opportunities to delight
customers.

Outcomes of creating customer value;
1- Customer loyalty and retention; delighted
customers remain loyal and talk favorably to others
about the company and its products, and turn to be
life-time value.
2- share of market and share of customer; many
companies are increasing their variety of products and
services to increase their profits form existing
customers. Amazon offer videos, toys, electronics,
beside books.
3- customer equity; is the total combined customer life-
time values of all the companys customers. They view
customers as an assets need to be maximized. Figure 5
Figure 5


less loyalty high loyalty

High
Profitability



Low
profitability

Butterflies
Good fit between companys
Offerings and customers
Needs. High profit potential
True friends
Good fit between companys
Offerings and customers
Needs, highest profit potential
Strangers
Little fit between companys
Offerings and customers
Needs, lowest profit potential
Barnacles
Limited fit between company's
Offerings and customers
Needs, low profit potential
New Marketing Technologies
Technology has changed how marketers
build value.
Internet and e-commerce/e-business.
Fast and global communications.
Wireless technologies.
International trade is the new frontier.
Globalization
Capitalism

Ethics and Responsibility
Worldwide consumerism and
environmentalism movements exert.
pressure for greater responsibility
Seeking ways to make a profit by serving
the best long-run interests of customers
and communities.