Principles of Marketing

PRINCIPLES OF MARKETING
Marketing:
Creating and Capturing Customer Value
WHAT IS MARKETING?
Marketing Defined
Marketing is the process by which companies
create value for customers and build strong
customer relationships in order 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.
WHAT IS MARKETING?
The Marketing Process

1. Understand the marketplace and customer
needs and wants
2. Design a customer-driven marketing strategy
3. Construct an integrated marketing program
that delivers superior value
4. Build profitable relationships and create
customer delight (satisfaction)
5. Capture value from customers to create profits
and create customer equity
WHAT IS MARKETING?
A Simple Model of the Marketing Process
Source: Adapted from Kotler et al. (2008:7)

UNDERSTANDING THE MARKETPLACE
AND CUSTOMER NEEDS…
5 Core and Marketplace Concepts
Needs, Wants &

Demands
Market Offerings
Markets (Products, Services &
Experiences)
Exchange, Transactions, &

Value, & Satisfaction
Relationships
Customer Needs, Wants, and Demands
Needs are states of felt deprivation, The states

of mind (The basic human requirements)…
• Physical need—food, clothing, warmth, safety
• Social need—belonging and affection
• Individual need—knowledge and self-
expression, recognition
Wants are described in terms of objectives that

will satisfy needs. And wants are form of
human needs shaped by one’s society,
culture & individual personality.
Demands are human wants backed by buying

power. To be demand the affordability of the
customers and willingness to pay for any
product is important.

Needs: I need Food/ Cloth.
Wants: As a Bangladeshi I want rice and fish as food, Lungi
and Fotua as cloth whereas an American wants sandwich or
burger as food and jeans, t-shirt as cloth.
Demands: As Mr. Haque is a business magnate, & his

demand is having rice and fish from Radisson hotel and
clothes from a designer house. But since Mr. Khan is a
student his demand is having rice and fish from AIUB
canteen or Star Kebab and clothes from New market.
If Mr. Khan 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. 8
Market Offerings—Products, Services, and

Experiences
Market offerings are some combination of
physical goods and service oriented
benefits offered to a market to satisfy a
need or want of the customer.
- So the question is, what are the different

Offerings (Physical goods, Services and
Experiences etc.) 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 Ideas
Ideas
Properties
Properties
Mark
Services Zuckerberg
Goods
Persons
Experiences
Events
Bill Gates 11
Organizations
Places
Ideas
Information
Properties 12
Value and Satisfaction
Value is the inner strength or capability of a
product that can solve the problem of a
consumer.
Customer perceived value is the customer’s
evaluation of the difference between total
customer benefits and total customer costs
of a market offering relative to those of
competing offers.
Satisfaction is the position of consumers’
mind resulted from their expectation and the
actual performance of the product.
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.
Exchanges, Transactions and Relationships
Relationships consist of actions to build

and maintain desirable relationships by
delivering superior value to the customers.
15
Markets
Markets are the set of actual and potential
buyers of a product or service.
- These buyers share a

particular need or
want that can be
satisfied through
exchange relationships.
Marketing System
Marketing System consists of all of the actors

(suppliers, company, competitors, intermediaries,
and end users) in the system who are affected by
the following major environmental forces:
• Demographic
• Economic
• Physical/Geographical
• Technological
• Political–legal
• Socio-cultural
17
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?
Selecting Customers to Serve
De-marketing refers to the set of activities to

reduce demand temporarily or permanently
from one place or specific time to another;
the aim is not to destroy demand but to
reduce or shift it.
- It reduces the extra load from the regular
business operations and make a balance
between peak & off-peak demand situations.
Marketing Management Orientations

(Concepts of Marketing)
Production Concept
Production concept is the idea that
consumers will favor products that are
widely available or highly affordable.
- Large production and effective distribution
Channel is important.
- Price of the products remains relatively low
and they are available almost
everywhere.
Production Concept…
Product Concept
Product concept is the idea that consumers will
favor products that offer the most quality,
performance, and features for which the
organization should therefore dedicate its
energy for making continuous improvements.
- Research & Development activities for new

innovations and putting emphasis on customer
preference is essential.
Product Concept…
Selling Concept
Selling concept is the idea that consumers
will not buy enough of the firm’s products
unless it undertakes attractive
advertisements and large scale of selling and
promotion effort.
- Communicating with the customers properly

and creating strong appeal about the
products or services among them.
Selling Concept…
Marketing Concept
Marketing concept is the idea that achieving
organizational goals depends on knowing
the needs and wants of the target markets
and delivering the desired satisfactions
better than competitors do.
- Customer is the king, So meeting the changing

demand of customer is most important
point for marketers to emphasis.
Marketing Concept…
Societal Marketing Concept

Societal marketing concept is the idea that
a company should make good marketing
decisions by considering consumers’ wants,
the company’s requirements, consumers’
long-term interests, and society’s long-run
interests.
- Thinking and acting as a member or part of
the society and participating in different
Corporate Social Responsibilities [CSR]
activities.
Societal Marketing Concept…
To Society
(Human & Environmental Welfare)
Societal
Marketing
Concept
To Consumers To Company
(Want & Satisfaction) (Profits)
Societal Marketing
Concept …
PREPARING AN INTEGRATED
MARKETING PLAN AND PROGRAM
Integrated Marketing Program
Integrated marketing program is a

comprehensive marketing plan to create,
communicate and deliver the proposed value
to the chosen customers.
- By Combining the tools of marketing mix
(4 P’s: Product, Price, Place, & Promotion),
we can formulate a proper integrated
marketing programs for the customers.
BUILDING CUSTOMER RELATIONSHIPS
Customer Relationship Management (CRM)

Customer Relationship Management is
the overall process of building and
maintaining profitable customer
relationships by delivering superior
customer value and satisfaction.
- It deals with acquiring, keeping and growing
customers.
BUILDING CUSTOMER RELATIONSHIPS
Partner Relationship Management
Supply Chain is a channel that stretches

from raw materials to components to final
products to final buyers.
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 his or her lifetime.
- Estimating Customer Life Time Value:
 Annual customer spending to a company: Taka 1500
 Average number of loyalty of that customers : 20 Years
 Company regular profit margin: 15%
 Customer lifetime value (revenue): Taka ?
 Customer lifetime value (Profit): Taka ?
Creating Customer Loyalty and Retention
Suppose Ms. Zamila visits KFC thrice a week and

consume 1 pkt. of combo 1 every time, and she is
going to consume it for the next/ last 15 years at the
same rate, if other things remain constant, and price
of one pkt. of Combo 1 is 280 tk, Ms. Zamila’s life
time value will be
6,55,200 tk
37
Building Customer Equity

Customer Equity is the total combined
customer lifetime values of all of the
company’s customers.
- This is company’s cumulative sales values for all
kinds of product or services for the time being.
- So, CRM takes a long-term view not only to

create profitable customers but to “own”
(making loyal) them for life and capture
their life time value.
THE NEW MARKETING LANDSCAPE
Major Developments (Changes in Marketing)
• Digital age
• Globalization
• Ethics and social responsibility
• The growth of Not-for-profit marketing
• Changing world economy
THE NEW MARKETING LANDSCAPE
New
Digital Age Non-profit
Marketing
Emerging
Emerging Rapid
Ethical Challenges
Challenges Globalisation
Concerns
Changing
World Economy
END of CHAPTER - 1

Principles of Marketing

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Principles of Marketing

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PRINCIPLES OF MARKETING

Marketing is a social and managerial process

The Marketing Process

A Simple Model of the Marketing Process

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

5 Core and Marketplace Concepts

Needs, Wants &

Exchange, Transactions, &

Customer Needs, Wants, and Demands

Needs are states of felt deprivation, The states

Customer Needs, Wants, and Demands

Wants are described in terms of objectives that

Demands are human wants backed by buying

Customer Needs, Wants, and Demands

Demands: As Mr. Haque is a business magnate, & his

Market Offerings—Products, Services, and

- So the question is, what are the different

Exchanges, Transaction and Relationships

Exchange is the act of obtaining a

Transaction is a trade of values between two

Exchanges, Transactions and Relationships

Relationships consist of actions to build

- These buyers share a

Marketing System consists of all of the actors

Elements of A Modern Marketing System

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

Marketing Management is the art and

Selecting Customers to Serve

De-marketing refers to the set of activities to

Marketing Management Orientations

- Research & Development activities for new

- Communicating with the customers properly

- Customer is the king, So meeting the changing

Societal Marketing Concept

Societal Marketing Concept…

Integrated Marketing Program

Integrated marketing program is a

Customer Relationship Management (CRM)

Partner Relationship Management

Supply Chain is a channel that stretches

Creating Customer Loyalty and Retention

Customer Lifetime Value is the value of the

Creating Customer Loyalty and Retention

Suppose Ms. Zamila visits KFC thrice a week and

Building Customer Equity

- So, CRM takes a long-term view not only to

Major Developments (Changes in Marketing)

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