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Principles of Marketing
Defining Marketing and
the Marketing Process:
Managing Profitable
Customer Relationships
Learning Objectives
After studying this chapter, you should be able to:
1. Define marketing and outline the steps in the marketing
process
2. Explain the importance of understanding customers and
the marketplace, and identify the five core marketplace
concepts
3. Identify the key elements of a customer-driven
marketing strategy and discuss the marketing
management orientations that guide marketing strategy
4. Discuss customer relationship management, and
identify strategies for creating value for customers and
capturing value from customers in return
5. Describe the major trends and forces that are changing
the marketing landscape in this age of relationships
1. 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
The Marketing Process
1. Understand the marketplace and customer
wants and needs
2. Design a customer-driven marketing strategy
3. Construct a marketing plan that delivers
superior value
4. Build profitable relationships and create
customer satisfaction
5. Capture value from customers to create
profit and customer equity
2. 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
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
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
Understanding the Marketplace
and Customer Needs
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
Relationships consist of actions to build
and maintain desirable relationships
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
Understanding the Marketplace
and Customer Needs
Marketplace: The marketplace is physical, as when you
shop in a store
Marketspace: Marketspace is digital, as when you shop on
the internet) and
Metamarket: a cluster of complementary products and
services that are closely related in the minds of consumers
but are spread across a diverse set of industries.
The automobile metamarket consists of automobile
manufacturers, new car and used car dealers, financial
companies, insurance companies, mechanics, spare parts
dealers, service shops, auto magazines, auto ads in
newspapers, and auto sites on the internet)
Understanding the Marketplace
and Customer Needs
Marketers: a marketer is someone
who seeks a response from
another party, called the prospect.
Prospect: A prospect is someone
whom the marketer identifies as
potentially willing and able to
engage in an exchange of values.
Modern Marketing
System
Suppliers
Suppliers
Company
Company
Competitors
Competitors (Marketer)
(Marketer)
Environment
Environment
Marketing
Marketing
Intermediaries
Intermediaries
End
End User
User
Market
Market
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3. 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?
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
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
Marketing Management
Philosophies
Production Concept
Product Concept
Selling Concept
Marketing Concept Customer Concept
Societal Marketing Concept Green Marketing
Societal MarketingConcept
Concept
Relationship Marketing
Societal Marketing Concept
Concept 16
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
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
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
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
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
4. Relationship Marketing Concept
Focus on long term relationships with
customers based on consistent value
and customer satisfaction
An attempt to build personal, long-term
bonds with customers.
Relationship marketing has expanded to
include all groups an organisation
interacts with: suppliers, employees,
unions, government, and even
competitors.
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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
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
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
Building Customer Relationships
Customer Relationship Management
(CRM)
Customer satisfaction is the extent to which a
product’s perceived performance matches a
buyer’s expectations
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
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
Building Customer Relationships
Partner Relationship Management
Supply chain is a channel that stretches
from raw materials to components to
final products to final buyers
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
5. The New Marketing
Landscape
Major Developments
Digital age
Globalization
Ethics and social responsibility
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
The New Marketing Landscape
The New Digital Age
Internet—creates marketplaces
and marketspaces
The New Marketing Landscape
Rapid Globalization
The world is smaller
Think globally, act locally
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
