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Marketing Summaries: Chapters 1 - 2
 Phillip Kotler and Kevin Keller 
Key concepts discussed in the preface of the textbook 
 –Companies have shifted gear from managing product portfolios to managing customer portfolios iecompiling databases on individual customers so that they can understand them better and constructindividualised offerings and messages. They are doing less product and service standardisation andmore niching and customisation. They are replacing monologues with customer dialogues. They areimproving their methods of measuring customer profitability and customer lifetime value. They areintent on measuring the return on their marketing investments and its impact on shareholder value.They are also concerned with the social and ethical implications of their marketing decisions. –Marketing should drive the company’s vision, mission and strategic planning. It is no longer adepartment charged with a number of tasks. –Marketing decides:
○
Who the company wants as customers
○
Which needs to satisfy
○
What products and services to offer 
○
What prices to set
○
What communications to send and receive
○
What channels of distribution to use
○
What partnerships to develop
Chapter 1 – Defining marketing for the 21
st
Century
Marketing is everywhere – it is embedded in everything we do. And it has become a key ingredient to businesssuccess. Marketing is both an “art” and a “science” and good marketing is no accident. It takes careful planning and execution.
The importance of marketing
Financial success often depends on marketing ability. Marketing managers need to make big decisions aboutwhat features to design into a new product, what prices to offer and where to sell products.
The scope of marketing – What is marketing?
 –Marketing deals with identifying and meeting human and social needs. It is about “meeting needs profitably”. –Marketing is an organisational function and a set of processes for creating, communicating anddelivering value to customers and for managing customer relationships in ways that benefit theorganisation and its stakeholders. –Marketing management is the art and science of choosing target markets and getting, keeping andgrowing customers through creating, delivering and communicating superior customer value. –The aim of marketing is not selling. It is to know and understand the customer so well that productsand services fits him and sells itself.
Exchanges and Transactions
 Exchange
is a key concept in marketing. It is the process of obtaining a desired product from someone byoffering something in return. It is a value creating process because it leaves both parties better off. 5 conditionsmust be satisfied in this scenario:1.There must be at least 2 parties2.Each party has something of value to the other party3.Each party is capable of communication and delivery
4.
Each party believes it is appropriate and desirable to deal with the other party
Transaction
is a trade of value between 2 or more parties. Transactions need: at least 2 things of value, agreed-upon conditions, a time and a place of agreement. This differs from a transfer where A gives to B withoutanything tangible in return.Marketing consists of actions undertaken to elicit desired responses from a target audience. To be successful inmarketing, marketers need to understand what each party expects from the transaction.
What is marketed?
There are 10 types of entities that can be marketed:1.Goods – physical goods eg cars, fridges, TVs
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Goods / services
 
Money
 
Communication
 
Information
2.Services – eg airlines, hotels, car rental firms3.Events – time-based events such as trade shows, Olympics
4.
Experiences – Walt Disney’s Magic Kingdom is experiential marketing5.Persons – celebrity marketing6.Places – Cities, states & regions are marketed to tourists, business and new residents7.Properties – eg real estate, stocks and bonds8.Organisations – Corporate identity ads and unique images in the market9.Information – eg schools and universities market their information10.Ideas – eg “Friends don’t let friends drive drunk”
Who markets?Marketers – 
somebody who seeks a response from another party, called the prospect. Marketers areresponsible for demand management and there are 8 possible demands states:
1.
Negative demand
– consumers dislike a product
2.
Nonexistent demand
– consumers are unaware or uninterested in a product
3.
Latent demand
– consumers may have a strong need for a product but cannot be satisfied by existing products
4.
Declining demand
– consumers buy less frequently
5.
Irregular demand
– consumers purchase seasonally, monthly etc
6.
Full demand
– consumers are adequately buying the product
7.
Overfull demand
– more consumers want the product than supply can meet
8.
Unwholesome demand
– consumers are attracted to products that have undesirable socialconsequencesIn each case, the marketer needs to understand the demand state and the underlying cause and determine a planof action to shift demand to a more desired state.
Markets
In marketing terms, a market is used to describe the various groupings of customers. Categories of marketsinclude: Product market, demographic market, needs market etc.Sellers and buyers are connected by 4 flows:
 __________________________________ Page 2 of 37
ResourceMarketsGovernmentmarketsIntermediarymarketsConsumer marketsManufacturer markets
ResourcesResourcesGoods and servicesGoods and servicesMoneyMoneyMoneyMoney
Services,Money
TaxesTaxes,GoodsServices,moneyTaxes,GoodsServices
 
Key customer markets
○
Consumer
– selling to the masses
○
Business
– selling to business
○
Global
– selling in the global marketplace
○
Non-profit and government
 – selling to
 
churches, universities etc
New consumer capabilities (as a result of the digital revolution):
 –Substantial increase in buying power  –Greater variety of goods and services –Great amount of information about practically anything –Greater ease of interacting and placing and receiving orders –An ability to compare notes on products and servicesToday we differentiate the
marketplace
(physical) and the
marketspace
(digital). There is also the concept of the
metamarket
: cluster of complementary products and services in the minds of a consumer but spread acrossa diverse industry.
How business and marketing are changing
○
Changing technology – Has created an information age that promises to lead to more accurate levels of  production, more targeted communications and more relevant pricing.
○
Globalisation – Technological advances make it easier for marketing across countries.
○
Deregulation – creates a greater competition and growth opportunities.
○
Privatisation – Increased efficiency of previously public companies.
○
Customer empowerment – Increased expectations of quality and service and some customization.More information available and less brand loyalty
○
Customisation – Company is able to produce individually differentiated goods.
○
Heightened competition – Rising promotion costs and shrinking profit margins.
○
Industry convergence – Blurring industry boundaries create opportunities at the intersection of the twoindustries.
○
Retail transformation
○
Disintermediation
Company orientation towards the marketplace:
There are 5 competing concepts under which organisations conduct marketing activities:
1.
Production concept
– states that consumers prefer products that are widely available and inexpensive.Therefore focus on high production, low cost and mass distribution.
2.
Product concept
 – Consumer favour quality, performance or innovation. Therefore focus on superior  products and constant improvement
3.
Selling concept
 – consumers will not buy enough if left on their own. Therefore focus on aggressiveselling and promotion
4.
Marketing concept
 – consumer-centred philosophy. Therefore focus on being more effective thancompetitors in creating, delivering and communicating superior customer value
5.
Holistic marketing concept
– going beyond traditional applications of marketing to a more completeand cohesive approach. Focus on multiple marketing approaches that work synergistically ie broad andintegrated approach ie relationship, integrated, internal and social responsibility marketing
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InternalMarketingIntegratedMarketing
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