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Principles of Marketing

Fall 2015-16
Faculty: Shama Islam

Chapter #1

Marketing:
Managing Profitable Customer Relationships

SOWHAT IS MARKETING?
Marketing is the process by which companies create value for customers and
build strong customer relationships to capture value from customers in return.
Marketing is a social and managerial process by which individuals and groups
obtain what they need and want, through creating, offering and exchanging
products (goods and services) of value with others.

SOWHAT IS MARKETING?
To define Marketing, Peter Drucker said,
The aim of marketing is to make selling unnecessary.

In fact, selling and advertising are only part of larger Marketing Mix (a set of marketing tools that work together to satisfy customer needs and build customer
relationships).

Today, marketing must be understood in the new sense of satisfying customer needs but not in the old sense of making a sale (telling and selling).

THE MARKETING PROCESS


1.

Understand the marketplace and customer wants and


needs

2.

Design a customer-driven marketing strategy

3.

Construct an integrated marketing program that delivers


superior value

4.

Build profitable relationships and create customer


satisfaction

5.

Capture value from customers to create profit and


customer equity

THE MARKETING PROCESS


A Simple Model of the Marketing
Process

Source: Adapted from Kotler et al. (2008:7)

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS
Needs, Wants &
Demands

Market Offerings
(Products, Services
& Experiences)

Markets

Exchange, Transactions &


Relationships

Value & Satisfaction

Core Marketing Concepts

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Customer Needs, Wants, and Demands


Needs are the states of felt deprivation in the mind of consumers.
(The basic human requirements)
Physical needfood, clothing, warmth, safety
Social needbelonging and affection
Individual needknowledge and self-expression, recognition
Wants are the form that needs take, shaped by culture and
individual personality. Wants are described in terms of objects that
will satisfy needs. When we can define or understand the physical
object that can make solution to our needs, it is considered a want.

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Customer Needs, Wants, and Demands


Demands are wants backed by buying power, where the
affordability and willingness to pay of the customers is important.

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Customer Needs, Wants, and Demands


Need: I need Food/ Clothes.
Wants: As a Bangladeshi, I want rice and fish as food, Lungi and Fotua as clothes, whereas an American wants sandwich or burger as food and jeans, t-shirt as clothes.
Demands: Mr. Emil is a business tycoon and his demand is having rice and fish from Radisson hotel and clothes from a designer house. On the contrary, Mr. Reehan is a student and his demand is having rice and fish from AIUB canteen or Star Kebab and clothes from New market.

If Mr. Reehan demand Food from Radisson and Clothes from designer house
that will be considered as his want as he does not have the ability of
buying it, unless backed by someone.

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Market Offerings - Products,


Services, and Experiences
Market offerings are some
combination of physical goods and
services offered to a market to satisfy
a need or want of the customer.
So the question is, what are the
different Offerings that can be
marketed as Product?

WHAT CAN BE MARKETED?

Physical
Physical Goods
Goods

Services
Services

Events
Events

Experiences
Experiences

Persons
Persons

Places
Places

Organizations
Organizations

Information
Information

Properties
Properties

Ideas
Ideas

WHAT CAN BE MARKETED?

Goods

Events

Services

Experiences
Persons

WHAT CAN BE MARKETED?

Organizations

Places

Ideas
Information
Properties

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Exchanges, Transaction and Relationships


Exchange is the act of obtaining a
desired object from someone by
offering something in return.
Transaction is a trade of values
between two or more parties. This is actually
exchange of something in between two or more
parties by setting the monetary value of their object.

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Exchanges, Transaction and Relationships


Relationships consist of actions to build and maintain desirable relationships
by delivering superior value to the customers.
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 thinks it is appropriate or desirable to deal with the other party.

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Markets & the Marketing System


Markets are the set of actual and potential buyers of a product.
These buyers share a particular need or want that
can be satisfied through exchange relationships.
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, geographic, technological, political-legal, socio-cultural).

UNDERSTANDING THE MARKETPLACE &


CUSTOMER NEEDS

Elements of A Modern Marketing System

Source: Adapted from Kotler et al. (2008:13)

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.
For managing customers properly we need think about:
- What customers will we serve?
- How can we best serve these customers?
- How can we increase our profitability through satisfying our
target customers?

Designing a Customer-Driven Marketing Strategy


SEGMENTATION | TARGETING | POSITION