Part 1: Marketing Strategy &

customer relationships
Chapter 1: An overview
of strategic marketing

Chapter 1 An overview of strategic

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marketing - Pham Khac Thong, MBA
Chapter 1: An overview of strategic
marketing

THE PURPOSE OF A BUSINESS IS TO

CREATE AND RETAIN THE RIGHT
CUSTOMER

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marketing - Pham Khac Thong, MBA
 The role of marketing

A1 What is
Marketing?
the Old and
new Concepts

Conflicting
Management
A.2 Philosophies

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marketing - Pham Khac Thong, MBA
 Warm up

• 1. How would you define the function of

marketing?
• 2. Do you agree with Peter Drucker when
he said, “ the aim of marketing is to
make selling superfluous” ?

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marketing - Pham Khac Thong, MBA
 What is Marketing?

Manufacturer Distributing end-users

goods activities
-

All activities through the process to satisfy

of 4Ps exchanges customer’s
needs& wants

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marketing - Pham Khac Thong, MBA
 Chapter 1: An overview of strategic marketing
Defining Marketing
Marketing is a societal process by
which individuals and groups
obtain what they need and want
through creating, offering, and
exchanging products and value with
others.

Chapter 1 An overview of
strategic marketing - Pham 6
Khac Thong, MBA
Chapter 1 An overview of strategic
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marketing - Pham Khac Thong, MBA
 Marketing Mix: The Four Ps

Marketing
Mix

Place
Product (Distribution)

Price
Promotion

Chapter 1 An overview of
strategic marketing - Pham 8
Khac Thong, MBA
 The Promotional Mix

Promotional
Mix

Advertising
Public
relations

Personal
Sales
selling Promotion

Chapter 1 An overview of
strategic marketing - Pham 9
Khac Thong, MBA
 The Promotional Mix
 Advertising
 Sales promotion
 Packaging
 Personal selling
 Public relations

Chapter 1 An overview of
strategic marketing - Pham 10
Khac Thong, MBA
 Core Marketing Concepts
Needs, wants,
and demands

Markets Products

Exchange,
Value,
transactions,
satisfaction,
and relationships
and quality

Chapter 1 An overview of
strategic marketing - Pham 11
Khac Thong, MBA
 Need, Wants, Demands
• Need. A human need is a state of felt deprivation.
Examples include the need for food, clothing,
warmth and safety.
• Wants. Wants are how people communicate their
needs. A hungry person may want a hamburger,
noodles, or cheese and bread.
• Demands. When backed by buying power, wants
become demands.

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strategic marketing - Pham 12
Khac Thong, MBA
 Product

A product is anything that can be

offered to satisfy a need or a want.

Chapter 1 An overview of
strategic marketing - Pham 13
Khac Thong, MBA
 Value, Satisfaction, and Quality
• Customer value is the difference between the
benefits that the customer gains from owning
and/or using a product and the costs of obtaining
the product.
• Customer satisfaction depends on a product’s
perceived performance in delivering value relative
to a buyer’s expectations.
• Quality begins with customer needs and ends with
customer satisfaction.

Chapter 1 An overview of
strategic marketing - Pham 14
Khac Thong, MBA
 Satisfaction and Customer Behavior

70 63 65
60
50
Percent

40 Definitely Recommend
30
30 25 Definitely Return

20
8 10
10
0
1 2 3
1 = Very Satisfied, 7=Very Dissatisfied
* Even though 3 is still a "positive"
score on the above 7 point scale, few
customers giving that rating will return

Chapter 1 An overview of
strategic marketing - Pham 15
Khac Thong, MBA
 Why Satisfaction May Not Lead To
Customer Loyalty
• Some customers never return to an area – but
they can still recommend
• Some customers shop for the best price -
differentiate your product
• Some customers like to have different purchase
experiences – like to stay or dine at different
places

Chapter 1 An overview of
strategic marketing - Pham 16
Khac Thong, MBA
 Why Managers Should Be Concerned
About Customer Loyalty
• Customer loyalty leads to increased profit

• Customer loyalty leads to increased

partnership

• Lower marketing and sales costs

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strategic marketing - Pham 17
Khac Thong, MBA
Exchange, Transactions, and Relationships

• Exchange is the act of obtaining a desired object

from someone by offering something in return.
• A transaction is marketing’s unit of measurement
and consists of a trade of values between two
parties.
• Relationship marketing builds relationships with
valued customers, distributors, dealers, and
suppliers by promising and consistently delivering
high-quality products, good service, and fair
prices.

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Khac Thong, MBA
 Importance of Customer Retention

5% increase adds 25 - 125% to

bottom line

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strategic marketing - Pham 19
Khac Thong, MBA
 The Life Time Value of the
Customer

 Revenue and profits by average customer

over a lifetime by segment
 Increase average purchase, frequency of
visit, life

Chapter 1 An overview of
strategic marketing - Pham 20
Khac Thong, MBA
 Example
 Corporate business traveler - 4x a year, 2
nights per visit, $200 per visit = $800 a year
 Average life is 4 years
 4 yrs x $800 = $3200 lifetime value

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Khac Thong, MBA
 Markets

A market is a set of actual and potential buyers

who might transact with a seller.

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strategic marketing - Pham 22
Khac Thong, MBA
 The old and new concepts of marketing

OLD Marketing
Concept customer’s
Sales
Needs & wants
Task: figuring out Task: finding out
how to sell the what customer needs/wants
&trying to satisfy them with
product a profit
DIFFERENCES

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marketing - Pham Khac Thong, MBA
 Marketing and Sales Concepts Contrasted
Starting
Focus Means Ends
Point
Selling Profits
Existing
Factory and through
Products Promoting Volume

The Selling Concept

Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction

The Marketing Concept

Chapter 1 An overview of
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Khac Thong, MBA
 Transfer- Discuss
• The days of the traditional salesman are over.
• The eighties enhanced the role of marketing; the
nineties are likely to downgrade it.
• Suggestive ideas
• Figuring out how to sell products by sale and promotion is
now out of date; nowadays goods should be produced only if
it can be bought.
• The eighties focuses on market research; however, the
nineties have seen the globalization and technologies that
lead to satisfy the needs and wants of customers

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marketing - Pham Khac Thong, MBA
 Marketing Management Philosophies-
Warm up

• 1. Do you feel all companies must be

predominantly market-oriented?

• 2. Is there a danger that if a company is too

market-oriented that it will ignore other
ingredients of success such as efficient
production?

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marketing - Pham Khac Thong, MBA
 5 conflicting management philosophies

=> ensure to strengthen Social benefits equal with

5.Societal Marketing other factors
concept =>satisfying customer’s needs and
wants for higher profits
4. Marketing concept
=> efficient selling skills to convince customers
3.Selling concept

2.Product concept =>improved quality + attractive design

1.Production concept=>higher quantity+ low cost

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marketing - Pham Khac Thong, MBA
 Marketing Management
Philosophies/ Consumers’views
•Consumers favor products that are
Production Concept available and highly affordable.
•Improve production and distribution.

•Consumers favor products that offer

Product Concept the most quality, performance, and
innovative features.

Selling Concept •Consumers will buy products only if

the company promotes/ sells these
products.
Marketing Concept •Focuses on needs/ wants of target
markets & delivering satisfaction
better than competitors.
Societal Marketing Concept •Focuses on needs/ wants of target
Chapter 1 An overview of
strategic marketing - Pham 28 markets & delivering superior value.
Khac Thong, MBA
 Marketing’s Future
• “It (marketing) encompasses the entire
business. It is the whole business seen from
the point of view of the final result, that is,
from the customer’s point of view.”
• Peter Drucker
• Marketing has become the job of everyone.

Chapter 1 An overview of
strategic marketing - Pham 29
Khac Thong, MBA
 Transfer Discuss
• * A traditional family-run company
manufacturing machine tools
• * A young, high-tech company operating in
state-of-the-art electronics.
• * A large national utility providing a service
throughout the country

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marketing - Pham Khac Thong, MBA