Kotler Pom18 Ch1 Omaima

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Principles of Marketing
Eighteenth Edition, Global Edition
Chapter 1
Marketing: Creating
Customer Value and
Engagement
By: Dr.Omaima Nazeer
Dr.Omaima Nazeer
Copyright © 2021 Pearson Education Ltd.
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What Is Marketing?
Marketing is a process by which companies create value
for customers and build strong customer relationships in
order to capture value from customers in return.
Dr.Omaima Nazeer
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1- Understanding the Marketplace

and Customer Needs
Needs are states of felt deprivation for basic items such as food and clothing and
complex needs such as for belonging. i.e. I am thirsty
Wants are the form human needs take as they are shaped by culture and
individual personality. i.e. I want a Coca-Cola.
Demands are human wants that are backed by buying power. i.e. I have money
to buy a Coca-Cola.
Staying close to customers: Airbnb’s CEO Brian Chesky and co-founder Joe
Gebbia regularly stay at the company’s host locations, helping them shape new
customer solutions based on real user experiences.
Dr.Omaima Nazeer
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• Market offerings are some combination of products,

services, information, or experiences offered to a market to
satisfy a need or want.
• Marketing myopia—paying more attention to the specific
products than to the benefits and experiences produced.
• -More than just selling products, Apple’s highly successful
retail stores create engaging life-feels-good brand
experiences.
-A market is the set of actual and potential buyers.
Market - buyers Actual
who share a Buyers
particular need
or want that can
be satisfied by a
company’s products Potential
or services. Buyers
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Customer Value - benefit that the customer gains from owning and using a
product compared to the cost of obtaining the product.
Customer Satisfaction - depends on the product’s perceived performance in
delivering value relative to a buyer’s expectations.
• Customer satisfaction levels:
• 1- Unsatisfied Customer: Value < Expectations
• 2- Satisfied Customer : Value = Expectations
• 3- Delighted Customer : Value > Expectations
Dr.Omaima Nazeer
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• Exchanges - act of obtaining a desired object from someone by

offering something in return.
• Transactions - trade of values between parties. Usually involves
money and a response.
• Relationships - building long-term relationships with consumers,

distributors, dealers, and suppliers.
• Marketing actions try to create, maintain, and grow

desirable exchange relationships.
Dr.Omaima Nazeer
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Figure 1.2 A Modern Marketing System
Dr.Omaima Nazeer
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2-3- Designing a Customer Value-

Driven Marketing Strategy
Marketing management is the art and science of choosing
target markets and building profitable relationships with
them.
Value propositions: Sonos positions its Sonos One with Amazon

Alexa as “The smart speaker for music lovers.” It gives you all the
advantages of Alexa but with high-quality Sonos sound.
Dr.Omaima Nazeer
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Marketing Concepts(philosophies):
There are five alternative concepts under which
organizations design and carry out their marketing
strategies:
Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept

Dr.Omaima Nazeer
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After setting The company’s marketing strategy, the marketer develops

an integrated marketing program ,It consists of the firm’s marketing mix.
The marketing mix: the set of marketing tools the firm uses to
implement its marketing strategy.
It is comprised of a set of tools known a the four Ps:

• product
• price
• promotion
• place
Integrated marketing program—a comprehensive plan that

communicates and delivers intended value
Dr.Omaima Nazeer
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4-5- Managing Customer Relationships

and Capturing Customer Value
Customer relationship management—the overall process
of building and maintaining profitable customer relationships
by delivering superior customer value and satisfaction.
Relationship Building Blocks
-Customer-perceived value
The difference between total customer perceived benefits
and customer cost
-Customer satisfaction
The extent to which perceived performance(Customer value)
matches a buyer’s expectations
Dr.Omaima Nazeer
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Customer-Engagement Marketing
Fosters direct and continuous customer involvement in shaping brand
conversations, experiences, and community.
Engaging customers: Rather than using intrusive, hard-sell product pitches,

Innocent Drinks interacts with customers in humorous ways, inspiring
conversations and fostering relationships.
Dr.Omaima Nazeer
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Consumer-Generated Marketing
Brand exchanges created by consumers themselves.
Consumers are playing an increasing role in shaping brand experiences.
Consumer-generated marketing: “Charmingly low-budget” fan made Tesla ads
drew millions of online views and sparked interactions among dedicated Tesla
fans.
Dr.Omaima Nazeer
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Dr.Omaima Nazeer
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Customer equity is the total combined customer lifetime values of all of

the company’s customers.
Managing customer equity: To increase customer equity, Cadillac is
making the classic car cool again among younger buyers. For example,
says GM, “Cadillac will lead the company to an all-electric future.”
Dr.Omaima Nazeer
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Figure 1.5 Customer Relationship Groups
Strangers show low potential

profitability and little projected loyalty.
Butterflies are potentially profitable but

not loyal.
True friends are both profitable and

loyal.
Barnacles are highly loyal but not very

profitable.
Different types of customers require

different engagement and relationship
management strategies. The goal is to
build the right relationships with the right
customers.
Dr.Omaima Nazeer
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Marketing Strategy and the Marketing

Mix
Dr.Omaima Nazeer
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Dr.Omaima Nazeer
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Figure 2.6 Manging Marketing: Analysis, Planning,

Implementation, and Control
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A Company’s Marketing Environment
Includes:
Microenvironment consists of the actors close to the
company that affect its ability to serve its customers—the
company, suppliers, marketing intermediaries, customer
markets, competitors, and publics.
Macroenvironment consists of the larger societal forces
that affect the microenvironment—demographic, economic,
natural, technological, political, and cultural forces.
Dr.Omaima Nazeer
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The Microenvironment and Macroenvironment
Demographic
Company
Cultural Economic
Publics Suppliers
Company
Customers
Competitors
Political Natural
Intermediaries
Technological
Dr.Omaima Nazeer
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Responding to the Marketing

Environment
Environmental Management Perspective
Taking a proactive approach to managing the microenvironment and the

macroenvironment to affect changes that are favorable for the company. How?
Hire lobbyists , file law suits and complaints, and form agreements.
Dr.Omaima Nazeer
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st21t4y
Dr.Omaima Nazeer

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1

By: Dr.Omaima Nazeer

1- Understanding the Marketplace

• Market offerings are some combination of products,

• Customer satisfaction levels:

• 1- Unsatisfied Customer: Value < Expectations

• 2- Satisfied Customer : Value = Expectations

• 3- Delighted Customer : Value > Expectations

• Exchanges - act of obtaining a desired object from someone by

• Relationships - building long-term relationships with consumers,

• Marketing actions try to create, maintain, and grow

Figure 1.2 A Modern Marketing System

2-3- Designing a Customer Value-

Value propositions: Sonos positions its Sonos One with Amazon

Societal Marketing Concept

After setting The company’s marketing strategy, the marketer develops

It is comprised of a set of tools known a the four Ps:

Integrated marketing program—a comprehensive plan that

4-5- Managing Customer Relationships

Engaging customers: Rather than using intrusive, hard-sell product pitches,

Customer equity is the total combined customer lifetime values of all of

Figure 1.5 Customer Relationship Groups

Strangers show low potential

Butterflies are potentially profitable but

True friends are both profitable and

Barnacles are highly loyal but not very

Different types of customers require

Marketing Strategy and the Marketing

Figure 2.6 Manging Marketing: Analysis, Planning,

A Company’s Marketing Environment

The Microenvironment and Macroenvironment

Responding to the Marketing

Environmental Management Perspective

Taking a proactive approach to managing the microenvironment and the

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