CH 1

Defining Marketing

for the New Realities

Marketing Management 15th Edition
Philip Kotler Northwestern University
Kevin Lane Keller Dartmouth College
Learning Goals
 1. Why is marketing important? (p. 25)

 2. What is the scope of marketing? (p. 27)
 3. What are some core marketing concepts? (p. 31)
 4. What forces are defining the new marketing realities? (p. 35)
 5. What new capabilities have these forces given consumers and
 companies? (p. 38)
 6. What does a holistic marketing philosophy include? (p. 42)
 7. What tasks are necessary for successful marketing management? (p. 49)
CH 1 Marketing
 One of the shortest good definitions of marketing is “meeting

needs profitably.”
 Marketing is the activity, set of institutions, and processes for
creating, communicating, delivering, and exchanging offerings
that have value for customers, clients, partners, and society at
large.
The importance of marketing
 The only profitable function in the company

 Finance, operations, accounting, and all other functions
are sufficient Can't exist without profit through
Marketing Management
 Art and science of choosing target markets and

getting, keeping, and growing customers
through creating, delivering, and
communicating superior customer value.
Marketing vs Selling
 Marketing is what makes sales unnecessary (the aim of marketing is to make

selling superfluous) Peter Drucker
 Selling is only the tip of the giant iceberg of marketing iceberg)
 Marketing is not a technique of finding a clever way to dispose of what you
produce
 (Marketing is not the art of finding clever ways to dispose of what you make)
 Marketing is a technology that provides customers with something truly valuable
 Sales is all about disposing of the present products being made by the company).
 Sales start from the moment the product is released. But marketing is before the product
Starts from
 Sales focus on seller's needs, marketing focuses on buyer's needs.
 Everything (Selling focuses on the needs of the seller; marketing on the needs of the
buyer). Theodore Levitt
What Is Marketed?
What Is Marketed?
Goods Places
Services Properties
Events Organizations
Experiences Information
Persons Ideas
Marketer vs Prospect
 Marketer
 Opponent: Prospects
 Response: attention, purchase, vote, donation
Demand
 Marketers seek to influence the level, timing,

and composition of demand to meet the
organization’s objectives.
8 Demand states
 1. Negative demand—Consumers dislike the product and may even pay to avoid it.
 2. Nonexistent demand—Consumers may be unaware of or uninterested in the product.
 3. Latent demand—Consumers may share a strong need that cannot be satisfied by an existing
product.
 4. Declining demand—Consumers begin to buy the product less frequently or not at all.
 5. Irregular demand—Consumer purchases vary on a seasonal, monthly, weekly, daily, or even
hourly basis.
 6. Full demand—Consumers are adequately buying all products put into the marketplace.
 7. Overfull demand—More consumers would like to buy the product than can be satisfied.
 8. Unwholesome demand—Consumers may be attracted to products that have undesirable social
consequences.
Market vs Industry
 Marketers use the term market to cover various
groupings of customers.
 They view sellers as constituting the industry and
buyers as constituting the market.
Key Customer Markets
 Consumer Markets
 Business Markets
 Global Markets
 Nonprofit and Governmental Markets
Secret Needs
Marketplaces Marketspaces
 •Marketplaces: physical
 •Marketspaces: digital
Core Marketing Concept
Needs, Wants, and Demands
 Needs: basic human requirements
 Wants: specific object
 Demands: wants + ability to pay
“Marketers do not create needs: Needs preexist marketers.”

Five Types of Needs
 Stated Needs:
 Real Needs:
 Unstated Needs:
 Delight Needs:
 Secret Needs:
Target Markets, Positioning, and
Segmentation
 To identify market segments

 To decide its target markets.
 To develop a market offering that it positions
Offerings and Brands
 Value proposition: a set of benefits that satisfy those needs.

 The intangible value proposition is made physical by an
“offering”
 A “brand” is an offering from a known source.
Value and Satisfaction
 Value: the sum of the tangible and intangible benefits and costs
 Customer value triad = quality + service + price
 Satisfaction reflects a person’s judgment of a product’s perceived performance in
relationship to expectations.
Marketing Channels
 Communication channels:
 Distribution channels:
 Service channels:
Supply Chain
 The supply chain is a longer channel stretching from raw
materials to components to finished products carried to final
buyers.
Competition
 Competition includes all the actual and

potential rival offerings and substitutes a buyer
might consider.
Marketing Environment
 Task environment:
 Broad environment:
Major Societal Forces
Major Societal Forces

Network information technology Retail transformation
Globalization Disintermediation
Deregulation Consumer buying power
Privatization Information
Heightened competition Consumer information
Industry convergence Consumer participation
Consumer resistance
New Company Capabilities
 Marketers can use the Internet as a powerful information and

sales channel.
 Marketers can collect fuller and richer information about
markets, customers, prospects, and competitors.
 Marketers can tap into social media to amplify their brand
message.
 Marketers can facilitate and speed external communication
among customers.
New Company Capabilities
 Marketers can send ads, coupons, samples, and information to customers who have
requested them or given the company permission to send them.
 Marketers can reach consumers on the move with mobile marketing.
 Companies can make and sell individually differentiated goods.
 Companies can improve purchasing, recruiting, training, and internal and external
communications.
 Companies can facilitate and speed up internal-communication among their
employees by using the Internet as a private intranet.
 Companies can improve their cost efficiency by skillful use of the Internet.
Marketing in Practice
 In practice, in the highly competitive

marketplaces that are more often the norm,
marketing planning is more fluid and is
continually refreshed.
Marketing in the Organization
 Marketing is not done only by the marketing department

 To create a strong marketing organization, marketers must think like executives in
other departments, and executives in other departments must think more like
marketers. (Constantine von Hoffman)
“Marketing is far too important to leave to the marketing department.” -David Packard
The Production Concept
 To concentrate on achieving high production efficiency, low costs, and mass

distribution
 To offer the most quality, performance, or innovative features.
The Selling Concept
 To holds that consumers and businesses, if left alone, won’t buy enough of the
organization’s products.
The Marketing Concept
 Emerged in the mid-1950s

 Customer-centered & sense-and-respond philosophy.
 The right products for your customers (not the right customers for your products)
The Holistic Marketing Concept
A. Relationship Marketing
 “Key members to keep business and profit from business (To build long-term relationships
that satisfy each other
 4 generation members
 Customers
 Employees
 Marketing partners (channels, suppliers, distributors, dealers, agencies
 Members of the financial community (shareholders, investors, analysts)
 The ultimate goal of relationship marketing: building a unique corporate asset called
“Marketing Network”
 If the relationship is built right, I don't need to do everything. I only have great brands And all
the rest is sourced through external relations’
B. Integrated Marketing
 The whole is greater than the sum of its parts”: Synergy

 Some activities for marketing are designed together for integration
with a variety of other activities. And should be executed
 Example: The strategy of extending the warranty period of cell
phone should be integrated with R&D.
C. Internal Marketing
 Marketing only works when all departments work together to achieve customer goals.
 Can be successful
 It should be cooperated vertically with top management and horizontally with other
departments.
 Should be cooperated
D. Performance Marketing
 “The impact of marketing activities and programs is financially or non-financially and you
have to understand what comes back to society
 Financial accountability: marketers are responsible for brand building and
 Market not only in terms of customer base growth, but also in terms of financial and
profitability.
 Should be able to explain the justification for the investment
 Social responsibility marketing: ethical, environmental
 Horn, the role of marketers in legal and social contexts must be carefully considered
Updating the Four Ps
New Four Ps
Marketing Management Tasks
Marketing Management Tasks

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Defining Marketing

for the New Realities

 1. Why is marketing important? (p. 25)

 One of the shortest good definitions of marketing is “meeting

 The only profitable function in the company

 Art and science of choosing target markets and

 Marketing is what makes sales unnecessary (the aim of marketing is to make

 Marketers seek to influence the level, timing,

 Needs: basic human requirements

 Wants: specific object

 Demands: wants + ability to pay

“Marketers do not create needs: Needs preexist marketers.”

 To identify market segments

 Value proposition: a set of benefits that satisfy those needs.

 Competition includes all the actual and

Major Societal Forces

 Marketers can use the Internet as a powerful information and

 In practice, in the highly competitive

 Marketing is not done only by the marketing department

 To concentrate on achieving high production efficiency, low costs, and mass

 Emerged in the mid-1950s

 The whole is greater than the sum of its parts”: Synergy

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