1. Principles of Marketing1
Principles of Marketing
Marketing: Managing Profitable Customer Relationships

2. Learning Objectives
After studying this chapter, you should be able to:
Define marketing and outline the steps in the marketing process
Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts
Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy
Discuss customer relationship management, and identify strategies for creating value for customers and capturing value from customers in return
Describe the major trends and forces that are changing the marketing landscape in this age of relationships
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3. Chapter Concepts What Is Marketing?
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 New Marketing Landscape
So, What Is Marketing? Pulling It All Together
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4. What Is Marketing? Marketing Defined
Marketing is the process by which companies create value for customers and build strong customer relationships to capture value from customers in return
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5. What Is Marketing? The Marketing Process
Understand the marketplace and customer wants and needs
Design a customer-driven marketing strategy
Construct a marketing plan that delivers superior value
Build profitable relationships and create customer satisfaction
Capture value from customers to create profit and customer equity
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6. Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands
Needs are states of deprivation
Physical—food, clothing, warmth, safety
Social—belonging and affection
Individual—knowledge and self-expression
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7. Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands
Wants are the form that needs take as they are shaped by culture and individual personality
Demands are wants backed by buying power
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8. Understanding the Marketplace and Customer Needs
Market Offerings—Products, Services, and Experiences
Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want
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9. Understanding the Marketplace and Customer Needs
Market Offerings—Products, Services, and Experiences
Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs
Exchange is the act of obtaining a desired object from someone by offering something in return
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10. 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 too low
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11. Understanding the Marketplace and Customer Needs
Exchanges and Relationships
Exchange is the act of obtaining a desired object from someone by offering something in return
Relationships consist of actions to build and maintain desirable relationships
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12. Understanding the Marketplace and Customer Needs
Markets are the set of actual and potential buyers of a product
Marketing system consists of all of the actors (suppliers, company, competitors, intermediaries, and end users) in the system who are affected by major environmental forces
Demographic
Economic
Physical
Technological
Political–legal
Socio-cultural
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13. Designing a Customer-Driven Marketing Strategy
Marketing Management
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?
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14. Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve
Market segmentation: Dividing the markets into segments of customers
Target marketing: Which segments to go after
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15. Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve
De-marketing: Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it.
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16. Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve
Marketing management is:
Customer management
Demand management
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17. Designing a Customer-Driven Marketing Strategy
Choosing a Value Proposition
The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs
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18. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Production concept
Product concept
Selling concept
Marketing concept
Societal concept
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19. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Production concept is the idea that consumers will favor products that are available or highly affordable
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20. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Product concept is the idea that consumers will favor products that offer the most quality, performance, and features for which the organization should therefore devote its energy to making continuous improvements
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21. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
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
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22. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
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
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23. Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
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
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24. Preparing an Integrated Marketing Plan and Program
Marketing Mix
The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy
Product
Price
Promotion
Place
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25. Preparing an Integrated Marketing Plan and Program
Integrated Marketing Program
Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers
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26. Building Customer Relationships
Customer Relationship Management
(CRM)
Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction
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27. Building Customer Relationships
Customer Relationship Management
(CRM)
Customer perceived value is the difference between total customer value and total customer cost
Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations
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28. Building Customer Relationships
Customer Relationship Management
(CRM)
Customer Relationship Levels and Tools
Basic relationship
Full relationships
Frequency marketing programs
Club marketing programs
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29. Building Customer Relationships
The Changing Nature of Customer Relationships
Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers
Relating for the long term uses customer relationship management to retain current customers and build profitable, long-term relationships
Relating directly uses direct marketing tools (telephone, mail order, kiosks, Internet) to make direct connections with customers
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30. Building Customer Relationships
Partner Relationship Management
Partner relationship management refers to working closely with partners in other company departments and outside the company to jointly bring greater value to customers
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31. Building Customer Relationships
Partner Relationship Management
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
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32. Building Customer Relationships
Partner Relationship Management
Supply chain is a channel that stretches from raw materials to components to final products to final buyers
Supply management
Strategic partners
Strategic alliances
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33. Capturing Value from Customers
Creating Customer Loyalty and Retention
Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage
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34. Capturing Value from Customers
Growing Share of Customer
Share of customer is the portion of the customer’s purchasing that a company gets in its product categories
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35. Capturing Value from Customers
Building Customer Equity
Customer equity is the total combined customer lifetime values of all of the company’s customers
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36. Capturing Value from Customers
Building Customer Equity
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
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37. The New Marketing Landscape
Major Developments
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
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38. The New Marketing Landscape
The New Digital Age
Recent technology has had a major impact on the ways marketers connect with and bring value to their customers
Market research
Learning about and tracking customers
Create new customized products
Distribution
Communication
Video conferencing
Online data services
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39. The New Marketing Landscape
The New Digital Age
Internet—creates marketplaces and marketspaces
Information
Entertainment
Communication
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40. The New Marketing Landscape
Rapid Globalization
The world is smaller
Think globally, act locally
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41. The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions in a global economy
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42. The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Social marketing campaigns encourage energy conservation and concern for the environment or discourage smoking, excessive drinking, and drug use
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43. The New Marketing Landscape
The Growth for Not-for-Profit Marketing
Colleges
Hospitals
Museums
Zoos
Orchestras
Religious groups
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44. PowerPoint created by:
Ronald Heimler
Dowling College, MBA
Georgetown University, BS Business Administration
Adjunct Professor, LIM College, NY
Adjunct Professor, Long Island University, NY
Lecturer, California Polytechnic State University, Pomona, CA
President, Walter Heimler, Inc.