MARKETING MANAGEMENT

14th edition

1 Defining Marketing for the 21st Century

Kotler

Keller

Good Marketing is No Accident

Boston Beer C o m p a n y, maker of S a m u e l A d a m s , constantly innovates

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What is Marketing?

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
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What is Marketing?
Marketing Defined: Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others Marketing is about managing profitable customer relationships Attracting new customers Retaining and growing current customers

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What is Marketing Management?

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.
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Selling is only the tip of the iceberg

There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available. Peter Drucker
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Core Marketing Concepts

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Understanding the Marketplace

Core Concepts
Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets Need State of felt deprivation Example: Need food Wants The form of needs as shaped by culture and the individual Example: Want a Big Mac Demands Wants which are backed by buying CHP: 1&5-8 power

Understanding the Marketplace

Core Concepts
Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets

Marketing offer Combination of products, services, information or experiences that satisfy a need or want Offer may include services, activities, people, places, information or ideas
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Understanding the Marketplace

Core Concepts
Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets

Value Customers form expectations regarding value Marketers must deliver value to consumers Satisfaction A satisfied customer will buy again and tell others about their good experience
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Value and Satisfaction

Perceived Value The customers evaluation of the difference between benefits and costs. Customers often do not judge values and costs accurately or objectively. Customer Satisfaction Products perceived performance relative to customers expectations.
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Understanding the Marketplace

Core Concepts
Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets

Exchange The act of obtaining a desired object from someone by offering something in return One exchange is not the goal, relationships with several exchanges are the goal Relationships are built through delivering value and satisfaction CHP: 1&5-12

For an exchange to occur.

There are at least two parties. Each party has something that might be of value to the other party. Each party is capable of communication and delivery. Each party is free to reject the exchange offer. Each party believes it is appropriate or desirable to deal with the other party.
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Understanding the Marketplace

Core Concepts
Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets

Market Set of actual and potential buyers of a product Marketers seek buyers that are profitable

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What is Marketed?
Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas
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Demand States

Negative

Nonexistent

Latent

Declining

Irregular

Full

Overfull

Unwholesome
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Structure of Flows in a Modern Exchange Economy

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A Simple Marketing System

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The marketplace isnt what it used to be

Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation
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Company Orientations

Production

Product

Selling

Marketing

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Marketing Management Philosophies

Production Concept Product Concept Selling Concept Marketing Concept
Holistic Marketing Concept

Consumers favor products that are

available and highly affordable. Improve production and distribution. Consumers favor products that offer the most quality, performance, and innovative features. Consumers will buy products only if the company promotes/ sells these products. Focuses on needs/ wants of target markets & delivering satisfaction better than competitors. Focuses on needs/ wants of target markets & delivering superior CHP: 1&5-21 value.

The Selling and Marketing Concepts Contrasted

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Holistic Marketing Dimensions

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The Four Ps

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Marketing Mix and the Customer

Four Ps Product Price Place Promotion Four Cs Customer solution Customer cost Convenience Communication

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The New Four Ps

People
Processes Programs Performance

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Marketing-Mix Strategy

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Factors Influencing Marketing Strategy

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Marketing Management Tasks

Developing marketing strategies Capturing marketing insights Connecting with customers Building strong brands Shaping market offerings Delivering value Communicating value Creating long-term growth

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Marketing Debate

Does Marketing Create or Satisfy Needs?

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MARKETING MANAGEMENT
14th edition

5 Creating Customer Value, Satisfaction, and Loyalty

Kotler

Keller

Value and Satisfaction

Perceived Value The customers evaluation of the difference between benefits and costs. Customers often do not judge values and costs accurately or objectively. Customer Satisfaction Products perceived performance relative to customers expectations.
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Determinants of Customer Perceived Value

Total customer benefit Total customer cost

Product benefit

Monetary cost

Services benefit

Time cost

Personal benefit

Energy cost

Image benefit

Psychological cost
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Determinants of Customer-Delivered Value

Total customer value Customerdelivered value Total customer cost Monetary cost Energy cost

Product value

Personal value

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Loyalty

A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.

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The Value Proposition

The whole cluster of benefits the company promises to deliver

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Measuring Satisfaction
Periodic Surveys

Customer Loss Rate

Mystery Shoppers

Monitor competitive performance

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Product and Service Quality

Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

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Total Quality Management

TQM is an organization-wide approach to continuously improving the quality of all the organizations processes, products, and services.

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Maximizing Customer Lifetime Value

Customer Profitability

Customer Equity

Lifetime Value

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Customer-Product Profitability Analysis

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Framework for CRM

Identify prospects and customers
Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer
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CRM Strategies
Reduce the rate of defection Increase longevity Enhance share of wallet Terminate low-profit customers Focus more effort on high-profit customers
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Mass vs. One-to-One Marketing

Mass Average customer Customer anonymity Standard product Mass production Mass distribution Mass advertising One-way message Economies of scale One-to-One Individual customer Customer profile Customized market offering Customized production Economies of scope Share of customer
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Customer Retention
Acquisition of customers can cost 5 times more than retaining current customers. The average company loses 10% of its customers each year. A 5% reduction to the customer defection rate can increase profits by 25% to 85%. The customer profit rate increases over the life of a retained customer.
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The Marketing Funnel

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The Customer-Development Process

Suspects

Prospects First-time customers

Disqualified Repeat customers

Clients

Members

Partners Ex-customers
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Building Loyalty

Partnership

Proactive
Accountable

Reactive
Basic
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Forming Strong Customer Bonds

Add financial benefits
Add social benefits Add structural ties

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