Principles of Marketing

Kotler and Armstrong

Chapter 1:

Marketing: Creating Customer

Value and Engagement

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What are the main Business functions?

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Business Functions

Finance &
Operations Marketing
Accounting
Human
Ressources IT
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Operations
• Depending on your product or service, you might need a manufacturing
or operations department.

• This function oversees the physical plant of a manufacturing facility and

its materials needs, work schedule and production processes.

• Example: - At a restaurant, this function might be the kitchen, managed

by the executive chef.
- At some small companies, the administrative executives take
the role of the operations team
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Finance and Accounting
While some people may have a differing opinion, the essential roles and
duties of virtually any accounting department should include the following:

• Money out – making payments and keeping the bills paid

• Money in – processing incoming payments
• Payroll – make sure everyone gets paid (including the government)
• Reporting – preparing financial reports, e.g. income statements, Balance
sheets and budgets
• Financial Controls – to avoid errors, fraud and theft

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Human Ressources
• An efficiently run human resources department can provide your organization with structure and the
ability to meet business needs through managing your company's most valuable resources -- its
employees.
• HR practitioners in each discipline may perform mainly six essential functions, which are:

Recruitment: The success of recruiters and employment specialists generally is measured by the number of
positions they fill and the time it takes to fill those positions. 

Safety: One of the main functions of HR is to support workplace safety training and maintain federally mandated
logs for workplace injury and fatality reporting. In addition, HR safety and risk specialists often work closely with
HR benefits specialists to manage the company's workers compensation issues

Employee relations: Employee relations is the HR discipline concerned with strengthening the employer-
employee relationship through measuring job satisfaction, employee engagement and resolving workplace
conflict

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Compensations and benefits: A comp and benefits specialist also may negotiate group
health coverage rates with insurers and coordinate activities with the retirement
savings fund administrator

Compliance: Compliance with labor and employment laws is a critical HR function.

Noncompliance can result in workplace complaints based on unfair employment
practices, unsafe working conditions and general dissatisfaction with working
conditions that can affect productivity and ultimately, profitability.

Training & development: Employers must provide employees with the tools necessary
for their success which, in many cases, means giving new employees extensive
orientation training to help them transition into a new organizational culture. 

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Information technologies
• Both large and small businesses need a dedicated IT person these days, based on the
amount of technology in today’s offices.

• This department (or person in some cases)must be able to network the company’s
computers, keep them running and safe and ensure employee email functions smoothly.

• The IT function might also include maintenance of the company’s website and phone
system.

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Case study: In-N-Out Burger
• Today, however, In-N-Out is pretty much the exact opposite of
McDonald’s. Whereas McDonald’s now operates more than 32,000
stores worldwide and pulls in more than 24 billion in annual system-
wide sales, In-N-Out has less than 250 stores in four states and
about $400 million in annual sales, how do you explain this

• How do you evaluate In-N-Out hiring and salaries policy?

• What are the success factors of IN-N-Out?

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Marketing

•What is Marketing???
•vidéo

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Main objective of the chapter: Define
marketing and outline the steps in the
marketing process.

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 What Is Marketing?
Marketing Defined

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.

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The marketing process

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Step 1:
Understanding the marketplace and customer needs and wants

• Marketing is all about creating value for customers. So, as the first step in the
marketing process, the company must understand consumers and the
marketplace in which it operates.

• Five core customer and marketplace concepts are to be examined:

Needs, wants, and demands
Market offerings (products, services, and experiences
 Value and satisfaction
 Exchanges and relationships
Markets (potential buyers).
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Step 2:
Design a customer-driven marketing strategy
• To design a winning marketing strategy, the marketing manager must
answer two important questions:

What customers will we serve (what’s our target market)?

and How can we serve these customers best (what’s our
value proposition)?

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Selling Concept VS Marketing concept

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Step 3:
Constructing an integrated marketing plan and program
• The marketing program builds customer relationships by transforming
the marketing strategy into action.

• It consists of the firm’s marketing mix, the set of marketing tools the
firm uses to implement its marketing strategy.

• Marketing programs and the marketing mix are to be explored in

much more detail in later chapters.

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Step 4:
Building profitable customer relationships
• The first three steps in the marketing process—understanding the
marketplace and customer needs, designing a customer-driven marketing
strategy, and constructing a marketing program—all lead up to the fourth
and most important step: building profitable customer relationships.

• Customer relationship management is perhaps the most important concept

of modern marketing. Some marketers define it narrowly as a customer
data management activity (a practice called CRM). By this definition, it
involves managing detailed information about individual customers and
carefully managing customer “touchpoints” to maximize customer loyalty.

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Step 5:
Capturing value from customers

• The first four steps in the marketing process in the marketing process involve
building customer relationships by creating and delivering superior customer
value.

• The final step involves capturing value in return in the form of current and future
sales, market share, and profits.

By creating superior customer value, the firm creates highly satisfied customers
who stay loyal and buy more.

Vidéo
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 The Changing Marketing
Landscape

The Digital Age: Online, Mobile, and Social

Media Marketing

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The digital age
• The recent technology boom has created a digital age.

• The explosive growth in computer, communications, information, and other digital

technologies has had a major impact on the ways companies bring value to their
customers. Now, more than ever before, we are all connected to each other and to
information anywhere in the world.

• Where it once took weeks to correspond with others in distant places, they are
now only moments away by cell phone, e-mail, or Web cam.

 For better or worse, technology has become an indispensable part of our lives
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The uncertain Economic Environment
• Beginning in 2008, the United States and world economies experienced a stunning
economic meltdown, unlike anything since the Great Depression of the 1930s.

• The financial crisis left shell-shocked consumers short of both money and
confidence as they faced losses in income, a severe credit crunch, declining home
values, and rising unemployment.

The so-called Great Recession caused many consumers to rethink their spending
priorities and cut back on their buying.

• After a decade of overspending  “frugality has made a comeback,”.

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Case study: the New era of consumer
frugality

• What is frugality??
• How had frugality affected marketing strategies??

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Rapid Globalization
• Today, almost every company, large or small, is touched in some way by global competition.
• Aneighborhood florist buys its flowers from Mexican nurseries, and a large U.S. electronics manufacturer competes
in its home markets with giant Korean rivals.

• Companies such as Toyota, Nokia, Nestlé, and Samsung have often outperformed their U.S. competitors in
American markets.

• Similarly, U.S. companies in a wide range of industries have developed truly global operations, making and selling
their products worldwide.
Examples:
• McDonald’s now serves 60 million customers daily in more than 32,000 local restaurants in 100 countries
worldwide—65 percent of its corporate revenues come from outside the United States.

• Similarly, Nike markets in more than 180 countries, with non-U.S. sales accounting for 66 percent of its worldwide
sales.

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The Growth of Not-for-Profit Marketing
• In recent years, marketing also has become a major part of the
strategies of many not-for profit organizations, such as colleges,
hospitals, museums, zoos, symphony orchestras, and even churches.

Video

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 Innovative VS Non-innovative Ads
(road accidents prevention)

•Ad 1
•Ad 2

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What is MARKETING?
A more detailed definition

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Chapter’s Key concepts

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Designing a Customer Value-Driven Marketing Strategy
Marketing Management Orientations

Production concept:
Consumers will favor products that are available and highly
affordable.

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Designing a Customer Value-Driven Marketing Strategy
Marketing Management Orientations

Product concept:
Consumers favor products that offer the most quality,
performance, and features.

The focus is on continuous product improvements.

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Designing a Customer Value-Driven Marketing Strategy
Marketing Management Orientations

Selling concept:
Consumers will not buy enough of the firm’s products unless the
firm undertakes a large-scale selling and promotion effort.

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Designing a Customer Value-Driven Marketing Strategy
Marketing Management Orientations

Marketing concept:
Know the needs and wants of the target markets and deliver the
desired satisfactions better than competitors.

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Designing a Customer Value-Driven Marketing Strategy
Marketing Management Orientations

Societal marketing:
The company’s marketing decisions should consider consumers’
wants, the company’s requirements, consumers’ long-run
interests, and society’s long-run interests.

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 Building Customer Relationships
Partner Relationship Management

Partner relationship management involves working closely with

partners in other company departments and outside the
company to jointly bring greater value to customers.

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 Capturing Value from Customers
Creating Customer Loyalty and Retention

Customer lifetime value is the value of the

entire stream of purchases that the
customer would make over a lifetime of
investment.
Example: At Stew Leonard’s profitable four-
store supermarket, the lifetime revenue of a
customer is $50,000. Because his average
customer spends about $100 a week, shops
50 weeks a year, and remains in the area for
about 10 years, losing one customer can be
a significant loss.

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 Capturing Value from Customers
Building Customer Equity

Customer equity is
the total combined
customer lifetime
values of all of the
company’s customers.

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Case study: JetBlue

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