Chapter 1- slide 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Course title: Principles of Marketing Course code: MKT 104 Reference book: Principles of Marketing Written by: Philip Kotler and Gary Armstrong

Chapter 1- slide 2 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter One Creating and Capturing Customer Value

Chapter 1- slide 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Creating and Capturing Customer Value Define marketing and outline the steps in the marketing process Understanding the Marketplace and Customer Needs Designing a Customer-Driven Marketing Strategy Preparing an Integrated Marketing Plan and Program Building Customer Relationships Capturing Value from Customers The Changing Marketing Landscape Topic Outline

Chapter 1- slide 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall What Is Marketing? Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return “Marketing means managing markets to bring about profitable exchange relationships by creating value and satisfying needs and wants.” –By Kotler and Armstrong

Chapter 1- slide 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall How Exactly Does Marketing Create Value? If you had never seen a CD player before, how much would you guess it was worth? You would have no idea without information about the product. What it does and how it works and most importantly the benefits to you of owning the product. Armed with this information you can decide whether the product or service is worth the asking price.

Chapter 1- slide 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Understanding the Marketplace and Customer Needs Customer needs, wants, and demands Market offerings Customer Value and satisfaction Exchanges and relationships Markets Core Concepts

Chapter 1- slide 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 1- slide 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Understanding the Marketplace and Customer Needs States of deprivation Physical—food, clothing, warmth, safety Social—belonging and affection Individual—knowledge and self-expression Needs Form that human needs take as they are shaped by culture and individual personality. Wants are shaped by one’s society and are described in terms of objects that will satisfy needs.Example: American needs food but ham Berger and Bangladeshi also needs food but rice. Wants When Human wants backed by buying power, wants become demands. Demands Customer Needs, Wants, and Demands

Chapter 1- slide 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market offerings 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 also essential intangible : example: banking, airlines, hotels, tax preparation and home repair service. Understanding the Marketplace and Customer Needs

Chapter 1- slide 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs. Thus smart marketers look beyond the attributes of the products and services they sell. They create brand meaning and brand experiences for consumers. For example: coca cola means much more to consumers than just something to drink.

Chapter 1- slide 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Understanding the Marketplace and Customer Needs Customer Value and Satisfaction Expectations Customers Value and satisfaction Marketers Set the right level of expectations Not too high or low

Chapter 1- slide 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer value is the difference between the values the customer gains from owning and using a product and the costs of obtaining the product. Customer satisfaction with a purchase depends on how well the products performance lives up to the customer’s expectations.

Chapter 1- slide 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Exchange is the act of obtaining a desired object from someone by offering something in return Understanding the Marketplace and Customer Needs

Chapter 1- slide 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Markets are the set of actual and potential buyers of a product or service Understanding the Marketplace and Customer Needs

Chapter 1- slide 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Marketing management is the art and science of choosing target markets and building profitable relationships with them –What customers will we serve? –How can we best serve these customers?

Chapter 1- slide 16 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Market segmentation refers to dividing the markets into segments of customers Target marketing refers to which segments to go after segmentation Selecting Customers to Serve

Chapter 1- slide 17 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it Selecting Customers to Serve

Chapter 1- slide 18 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs Choosing a Value Proposition

Chapter 1- slide 19 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Production concept Product concept Selling concept Marketing concept Societal concept Marketing Management Orientations

Chapter 1- slide 20 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy  Production concept is the idea that consumers will favor products that are available or highly affordable.  Therefore management should focus on improving production and distribution efficiency. Marketing Management Orientations

Chapter 1- slide 21 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Product concept is the idea that consumers will favor products that offer the most quality, performance, and features. Organizations should therefore devote its energy to making continuous product improvements. Marketing Management Orientations

Chapter 1- slide 22 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Selling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort. Example: insurance, blood donations Marketing Management Orientations

Chapter 1- slide 23 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do Marketing Management Orientations

Chapter 1- slide 24 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests Marketing Management Orientations

Chapter 1- slide 25 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion, and place. –(i) Product. Product is anything that is offered to the consumer which can satisfy a need and has some value. –(j) Price. Price is the amount of money one must pay to obtain the right to use the product. –(k) Distribution (Place). The goods can be distributed by many channels. These could be retailers, wholesalers, agents or by direct selling. Distribution outlets play an important role in reaching the goods to the consumer. –(l) Promotion. Promotion is the means of changing the attitudes of the consumer, so that it becomes favorable towards the company’s products. Various means of promotion are advertising, personal selling, sales promotion and publicity. Preparing an Integrated Marketing Plan and Program

Chapter 1- slide 26 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers.

Chapter 1- slide 27 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Building Customer Relationships CRM has been defined narrowly as a customer database management activity. The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction Customer Relationship Management (CRM)

Chapter 1- slide 28 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Building Customer Relationships Relationship Building Blocks: Customer Value and Satisfaction Customer perceived value The difference between total customer value and total customer cost Customer satisfaction The extent to which a product’s perceived performance matches a buyer’s expectations

Chapter 1- slide 29 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Building Customer Relationships Customer Relationship Levels and Tools Basic Relationships Full Partnerships

Chapter 1- slide 30 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Building Customer Relationships Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers Relating more deeply and interactively by incorporating more interactive two way relationships through blogs, Websites, online communities and social networks The Changing Nature of Customer Relationships

Chapter 1- slide 31 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Building Customer Relationships Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers

Chapter 1- slide 32 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Building Customer Relationships Partners inside the company is every function area interacting with customers –Electronically –Cross-functional teams Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships Partner Relationship Management

Chapter 1- slide 33 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Building Customer Relationships Supply chain is a channel that stretches from raw materials to components to final products to final buyers Supply management Strategic partners Strategic alliances Partner Relationship Management

Chapter 1- slide 34 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Capturing Value from Customers Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of support Creating Customer Loyalty (faithfulness) and Retention (Preservation)

Chapter 1- slide 35 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Capturing Value from Customers Share of customer is the portion of the customer’s purchasing that a company gets in its product categories Most important ways to increase share of customers through cross selling. Its means getting more business from current customers of one product by selling them additional offerings. Growing Share of Customer

Chapter 1- slide 36 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Capturing Value from Customers Customer equity is the total combined customer lifetime values of all of the company’s customers

Chapter 1- slide 37 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Capturing Value from Customers Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized Different types of customers require different relationship management strategies –Build the right relationship with the right customers Building Customer Equity

Chapter 1- slide 38 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall The New Marketing Landscape Digital age Rapid globalization Ethics and social responsibility Not-for-profit marketing Major Developments