MARKETING MANAGEMENT

14th edition

1
Defining
Marketing
for the
21st Century

Kotler

Keller

Good Marketing is No Accident

Boston Beer
Company,
maker of
Samuel
Adams,
constantly
innovates

CHP: 1&5-2

What is Marketing?

Marketing is an organizational function

and a set of processes for creating,
communicating, and delivering value
to customers and for managing
customer relationships
in ways that benefit the
organization and its stakeholders.
CHP: 1&5-3

What is Marketing?
Marketing Defined:
Marketing is a social and managerial
process by which individuals and groups
obtain what they need and want through
creating and exchanging value with
others
Marketing is about managing profitable
customer relationships
Attracting new customers
Retaining and growing current
customers
CHP: 1&5-4

What is Marketing Management?

Marketing management is the

art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value.
CHP: 1&5-5

Selling is only the tip of the iceberg

There will always be need for

some selling. But the aim of marketing is to
make selling superfluous. The aim of
marketing is to know and understand the
customer so well that the product or
service fits him and sells itself. Ideally,
marketing should result in a customer who
is ready to buy. All that should be needed
is to make the product or service
available.
Peter Drucker
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Core Marketing Concepts

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Understanding the
Marketplace
Core Concepts
Needs, wants, and
demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets

Need
State of felt deprivation
Example: Need food
Wants
The form of needs as
shaped by culture and the
individual
Example: Want a Big Mac
Demands
Wants which are backed by
buying power

CHP: 1&5-8

Understanding the
Marketplace
Core Concepts Marketing offer
Needs, wants, and
demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets

Combination of
products, services,
information or
experiences that
satisfy a need or
want
Offer may include
services, activities,
people, places,
information or ideas
CHP: 1&5-9

Understanding the
Marketplace
Core Concepts Value
Needs, wants, and
demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets

Customers form
expectations regarding
value
Marketers must deliver
value to consumers
Satisfaction
A satisfied customer will
buy again and tell others
about their good
experience
CHP: 1&5-10

Value and Satisfaction

Perceived Value
The customers evaluation of the
difference between benefits and costs.
Customers often do not judge values and
costs accurately or objectively.
Customer Satisfaction
Products perceived performance relative
to customers expectations.
CHP: 1&5-11

Understanding the
Marketplace
Core Concepts Exchange
Needs, wants, and
demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets

The act of obtaining a

desired object from
someone by offering
something in return
One exchange is not the
goal, relationships with
several exchanges are the
goal
Relationships are built
through delivering value
and satisfaction
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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 believes it is appropriate or
desirable to deal with the other party.
CHP: 1&5-13

Understanding the
Marketplace
Core Concepts Market
Needs, wants, and
demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets

Set of actual and

potential buyers of a
product
Marketers seek buyers
that are profitable

CHP: 1&5-14

What is Marketed?
Goods
Goods
Services
Services
Events
Events &
& Experiences
Experiences
Persons
Persons
Places
Places &
& Properties
Properties
Organizations
Organizations
Information
Information
Ideas
Ideas
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Demand States

Negative

Nonexistent

Irregular

Declining

Full

Latent

Overfull

Unwholesome
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Structure of Flows in a Modern

Exchange Economy

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A Simple Marketing System

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The marketplace isnt what it used to be

Changing
Changing technology
technology
Globalization
Globalization
Deregulation
Deregulation
Privatization
Privatization
Empowerment
Empowerment
Customization
Customization
Convergence
Convergence
Disintermediation
Disintermediation
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Company Orientations

Production

Product

Selling

Marketing

CHP: 1&5-20

Marketing Management
Philosophies
Production Concept

Consumers favor products that are

available and highly affordable.

Improve production and distribution.

Product Concept

Consumers favor products that offer

the most quality, performance, and
innovative features.

Selling Concept

Consumers will buy products only if

the company promotes/ sells these
products.

Marketing Concept
Holistic Marketing Concept

Focuses on needs/ wants of target

markets & delivering satisfaction
better than competitors.
Focuses on needs/ wants of target
markets & delivering superior
value.
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The Selling and Marketing

Concepts Contrasted

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Holistic Marketing Dimensions

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The Four Ps

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Marketing Mix and the Customer

Four Ps
Product
Price
Place
Promotion

Four Cs
Customer solution
Customer cost
Convenience
Communication

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The New Four Ps

People
Processes
Programs
Performance

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Marketing-Mix Strategy

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Factors Influencing
Marketing Strategy

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Marketing Management Tasks

Developing marketing
strategies
Capturing marketing
insights
Connecting with
customers
Building strong
brands

Shaping market
offerings
Delivering value
Communicating
value
Creating long-term
growth

CHP: 1&5-29

Marketing Debate

Does Marketing
Create or Satisfy Needs?

CHP: 1&5-30

MARKETING MANAGEMENT
14th edition

5
Creating
Customer Value,
Satisfaction, and
Loyalty

Kotler

Keller

Value and Satisfaction

Perceived Value
The customers evaluation of the
difference between benefits and costs.
Customers often do not judge values and
costs accurately or objectively.
Customer Satisfaction
Products perceived performance relative
to customers expectations.
CHP: 1&5-32

Determinants of
Customer Perceived Value
Total customer benefit

Total customer cost

Product benefit

Monetary cost

Services benefit

Time cost

Personal benefit

Energy cost

Image benefit

Psychological cost
CHP: 1&5-33

Determinants of Customer-Delivered
Value

Customerdelivered
value

Total
customer
value

Product
value

Total
customer
cost

Monetary
cost

Personal
value

Energy
cost

CHP: 1&5-34

Loyalty

A deeply held commitment to re-buy

or re-patronize a preferred product
or service in the future despite situational
influences and marketing efforts having
the potential to cause switching behavior.

CHP: 1&5-35

The Value Proposition

The whole cluster of benefits the

company promises to deliver
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Measuring Satisfaction
Periodic
Periodic Surveys
Surveys
Customer
Customer Loss
Loss Rate
Rate

Mystery
Mystery Shoppers
Shoppers
Monitor
Monitor competitive
competitive
performance
performance

CHP: 1&5-37

Product and Service Quality

Quality is the totality of features and

characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.

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Total Quality Management

TQM is an organization-wide
approach to continuously
improving the quality of
all the organizations processes,
products, and services.

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Maximizing Customer Lifetime Value

Customer
Profitability

Customer
Equity

Lifetime
Value

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Customer-Product Profitability
Analysis

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Framework for CRM

Identify prospects and customers
Differentiate customers by needs
and value to company
Interact to improve knowledge
Customize for each customer
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CRM Strategies
Reduce
Reduce the
the rate
rate of
of defection
defection
Increase
Increase longevity
longevity
Enhance
Enhance share
share of
of wallet
wallet
Terminate
Terminate low-profit
low-profit
customers
customers
Focus
Focus more
more effort
effort on
on
high-profit
high-profit customers
customers
CHP: 1&5-43

Mass vs. One-to-One Marketing

Mass
Average customer
Customer anonymity
Standard product
Mass production
Mass distribution
Mass advertising
One-way message
Economies of scale

One-to-One
Individual customer
Customer profile
Customized market
offering
Customized
production
Economies of scope
Share of customer
CHP: 1&5-44

Customer Retention
Acquisition of customers can cost 5 times
more than retaining current customers.
The average company loses 10% of its
customers each year.
A 5% reduction to the customer defection
rate can increase profits by 25% to 85%.
The customer profit rate increases over the
life of a retained customer.
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The Marketing Funnel

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The Customer-Development
Process
Suspects

Prospects
First-time
customers

Disqualified
Repeat
customers

Ex-customers

Clients

Members

Partners

CHP: 1&5-47

Building Loyalty

Partnership
Proactive
Accountable
Reactive
Basic
CHP: 1&5-48

Forming Strong Customer Bonds

Add financial
benefits
Add social
benefits

Add structural
ties

CHP: 1&5-49