MARKETING MANAGEMENT

4th edition

1
Defining
Marketing
for the
21st Century

Kotler Keller
Chapter Questions
• Why is marketing important?
• What is the scope of marketing?
• What are some of the fundamental
marketing concepts?
• How has marketing management
changed?
• What are the tasks necessary for
successful marketing management?
1-2
Marketing Management at Starbucks
• As Starbucks knows, good marketing has
become an increasingly vital ingredient for
business success. There’s a constant
tension between the formulated side and its
creative side.
1. Formulated side:
 Marketing concept, tools, frameworks,
and issues. (easier to learn)
2. Creative side:
 Real innovation, creativity, and passion.
1-3
The importance of marketing
• Financial success often depends on marketing ability.
Finance, operations, accounting, and other business functions
will not really matter if there isn’t sufficient demand for goods
and services so the company can make a profit.

• Marketing is tricky, because companies have confronted

newly empowered customers and new competitors, and have
had to rethink their business models. Even market leaders
recognize that they cannot afford to relax as their leadership is
challenged.

• The companies at greatest risk are those that fail to carefully

monitor their customer and competitors and continuously
improve their value offerings. 1-4
What is Marketing?

Marketing is about identifying and meeting

human and social needs.

One of the shorter good definitions of

marketing is “meeting needs profitably”

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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.

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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.

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Selling is only the tip of the iceberg

Managers sometimes think of marketing

as “the art of selling products,” but
selling is not the most important part
of marketing. There will always be
need for some selling. But the aim of
marketing is to make selling
superfluous.

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Selling is only the tip of the iceberg

“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,
and design the “right product” based on
carefully marketing homework.”
Peter Drucker
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Designing the “Right” Product

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Only the best is good enough for Lexus customers

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Exchange and Transactions
For an exchange to occur….
• Exchange is the process of obtaining a desired product from
someone by offering something in return. For exchange potential to
exist, the following conditions must be satisfied:
A. There are at least two parties.
B. Each party has something that might be of value to the other party.
C. Each party is capable of communication and delivery.
D. Each party is free to accept or reject the exchange offer.
E. Each party believes it is appropriate or desirable to deal with the other party.
F. Exchange is a value-creating process because it normally leaves both parties
better off.
G. Marketers seek to elicit a behavioral response from another party.
H. A transaction is a trade of values between two or more parties and involves
several dimensions:
1. At least two things of value.
2. Agreed upon conditions.
3. A time of agreement.
4. A place of agreement.
I. A transaction differs from a transfer. In a transfer, A gives X to B but does not
receive anything tangible in return. 1-12
Are both forms of exchange?

Transactions Transfers

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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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Marketing Goods
A. Goods
• Physical goods constitute the bulk of production and
marketing efforts.

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Marketing Services, Events, and Experiences

B. Services
• A growing portion of business activities are focused on
the production of services.
C. Events
• Marketers promote time-based events such as trade
shows, artistic performances, and the Olympics.
D. Experiences
• By orchestrating several services and goods, a firm can
create and market experiences such as Walt Disney
World’s Magic Kingdom.

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Marketing Persons, Places, and Properties

E. Persons
• Celebrity marketing is a major business.
F. Places
• Cities, states, regions, and whole nations compete
actively to attract tourists, factories, and new residents.
G. Properties
• Are intangible rights of ownership of either real property
(real estate) or financial property (stocks and bonds).

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Marketing Organizations, and Information

H. Organizations
• Actively work to build a strong, favorable, and unique
image in the minds of their target publics.
I. Information
• Can be produced and marketed as a product. Schools,
universities, and others produce information and then
market it.

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Marketing Ideas
Marketing Ideas:
J. Ideas Friends Don’t Let Friends
Every market offering Drive Drunk
includes a basic
idea. Products and This is the watch
services are Stephen Hollingshead, Jr.
platforms for was wearing when he
delivering some encountered a drunk driver.
idea or benefit. Time of death 6:55 p.m.

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What is a Market?
• Traditionally, a market was a physical place where buyers and
sellers gathered to buy and sell goods.
• Marketers often use the term market to cover groupings of
customers. They view the sellers as constituting the industry and
buyers as constituting the market.
• They talk about:
 Need markets (the diet-seeking market)
 Product markets (the shoe market)
 Demographic markets (the youth market)
 Geographic market (the Egyptian market)
 Or other types of markets, such as voter markets, labor markets..etc
• Marketers may serve consumer markets, business markets, global
markets, nonprofit markets, government markets, or some
combination of these.
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Key Customer Markets
• Consumer Markets
Consumer goods and services such as soft drinks and cosmetics, spend
a great deal of time trying to establish a superior brand image.
• Business Markets
Companies selling business goods and services often face well-trained
and well-informed professional buyers who are skilled in evaluating
competitive offerings.
• Global Markets
Companies face challenges and decisions regarding which countries to
enter, how to enter the country, how to adapt their products/services to
the country, and how to price their products.
• Nonprofit and Governmental Markets
Companies selling to these markets have to price carefully because these
organizations have limited purchasing power.

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Key Customer Markets
Consumer Markets Global Markets

Business Markets Nonprofit/ Government

Markets

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Global Markets

Coke is
represented at the
first China
International
Beverage Festival
in Beijing in 2003

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Figure 1.1 A Simple Marketing System

• The figure illustrate the relationship between the industry and the
market. Seller send goods, services, and communications (ads, direct
mail) to the market; in return they receive money and information
(customer attitudes, sales data). The inner loop shows an exchange
of money for goods and services; the outer loop shows an exchange
of information.
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What is Market?
• The marketplace is physical, such as store you shop
in.
• The marketspace is digital, as when you shop on the
Internet.
• The concept of a metamarket describes a cluster of
complementary goods and services that are closely
related in the mind of consumers but are spread across
a diverse set of industries. (the automobile metamarket
consists of automobile manufacturers, new car and
used car dealers, financing companies, insurance
companies, spare parts dealers, service shop, auto
magazine, and auto site on the Internet).
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Who Markets?
Marketers and Prospects
• A marketer is someone seeking a response
(attention, purchase, vote, donation, etc.) from
another party called the prospect.
• Marketers are responsible for stimulating demand
for a company’s product.
• Marketers must have diverse quantitative and
qualitative skills, entrepreneurial attitudes, and keen
understanding of how marketing can create value
within their organizations.

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Who Markets?
Marketers and Prospects
• Marketing managers seek to influence the level, timing,
and composition of demand to meet the organization’s
objectives.
• Eight demand states are possible:
1. Negative demand—consumers dislike the product and may even pay a price to avoid it.
2. Non-existent demand—consumers may be unaware or uninterested in the product.
3. Latent demand—consumers may share a strong need that cannot be satisfied by an
existing product.
4. Declining demand—consumers begin to buy the product less frequently or not at all.
5. Irregular demand—consumer purchases vary on a seasonal, monthly, daily, or even an
hourly basis.
6. Full demand—consumers are adequately buying all product put into the marketplace.
7. Overfull demand—too many consumers would like to buy the product that can be
satisfied.
8. Unwholesome demand—consumers may be attracted to products that have undesirable
social consequences.

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Demand States

Negative Nonexistent Latent

Declining Irregular

Full Overfull Unwholesome

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How is Marketing Done?
• In practice, marketing follows a logical
process.
• The marketing planning process consists of:
1. Analyzing marketing opportunities
2. Selecting target markets
3. Designing market strategies
4. Developing marketing programs
5. Managing the marketing effort

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How is Marketing Done?
• Marketing is not done only by the marketing department.

• Marketing needs to affect every aspect of the customer

experience, all possible touch points:
o Store layouts
o Package designs
o Product functions
o Employee training

• Marketing must also be heavily involved in key

management activities such as product innovation and
new business development.

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Core Concepts

• Needs, wants, and • Marketing

demands channels
• Target markets, • Supply chain
positioning, • Competition
segmentation • Marketing
• Offerings and environment
brands • Marketing
• Value and planning
satisfaction 1-31
 are backed
32 by buying
• The
powerform
• human
Given their
needs
wants, take
as shaped
people
by
demandculture
Demands
and
products
individual
with
personality
benefits
• States of felt
(An
thatEgyptian
add up
deprivation
needs
the food
most
• Basic
but
valuewant anda
Physical
Big Mac,
satisfaction
Needs—food,
French
. fries,
Wants
clothing,
and
warmth, soft
drink).
safety
•• Wants
Social— are
shaped
belonging by
one’s
and society
affection
and
• Individual— are
described in
needs for
Needs
terms
knowledge of
and
objects self-
that
expression
will satisfy
• These
needs. needs
were not
created by
marketers;
Needs, Wants, and Demands
they are a
basic part of
Core Marketing Concepts
the human
I want it, I need it…

5 Types of Needs
• Stated needs
• Real needs
• Unstated needs
• Delight needs
• Secret needs

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5 Types of Needs
1. Stated needs: The customer wants an
inexpensive car.
2. Real needs: The customer wants a car with a low
operating cost, not a low initial price.
3. Unstated needs: The customer expects good
service from the dealer.
4. Delight needs: The customer wants the dealer to
include an onboard navigation system.
5. Secret need: The customer wants to be seen by
friends as confidence consumer.

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Core Marketing Concepts
Target Markets, Positioning, and Segmentation
• A marketer can rarely satisfy everyone in a market, therefore the
marketers must divide the market into segments. Therefore, marketers
identify and profile distinct groups of buyers who might prefer or require
varying product and service mixes by examining demographic,
psychographic, and behavioral differences among buyers.

• The marketer then decides which segment presents the greatest

opportunity—which are its target markets.

• For each chosen target market, the firm develops a market offering that
is positions in the minds of the target buyers as delivering some central
benefit(s). For example, Volvo develops its cars for buyers who are
concerned about automobile safety. Volvo therefore, positions its car as
the safest a customer can buy.

1-35
Core Marketing Concepts
Offerings and Brands
• Companies address needs by putting forth a value
proposition, a set of benefits they offer to customers to
satisfy their needs.
• The intangible value proposition is made physical by an
offering that can be a combination of products, services,
information, and experiences.
• A brand is an offering from a known source. A brand such as
McDonald’s carries many associations in people’s minds that
make up the brand image (hamburgers, fun, children, fast
food, and convenience).
• All companies strive to build a strong, favorable and unique
brand image.

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Core Marketing Concepts
Value and Satisfaction
• The offering will be successful if it delivers value and satisfaction
to the target buyer.
A. The buyer chooses between different offerings based on which is
perceived to deliver the most value.
B. Value reflects the perceived tangible and intangible benefits and
costs to customers.
C. Value can be a combination of quality, service, and price called
the customer value triad.
D. Value increases with quality and service and decreases with price,
although other factors can also play an important role in perception
of value.
E. Value is a central marketing concept.
F. Marketing can be seen as the identification, creation,
communication, delivery, and monitoring of customer value.

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Core Marketing Concepts
Value and Satisfaction
• Satisfaction reflects a person’s comparative
judgment resulting from a product’s perceived
performance (or outcome) in relation to his or her
expectations.
1. If product performance fall short of
expectations, the customer is dissatisfied and
disappointed.
2. If it match expectations, the customer is
satisfied.
3. If it exceeds expectations, the customer is
delighted.
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Core Marketing Concepts
Marketing Channels
• To reach the target market, the marketers uses three
kinds of marketing channels:
1. Communication channels which deliver and receive messages
from target buyers, include newspapers, magazines, radio,
television, mail telephone, billboard, posters, CD’s, and Internet.
2. Distribution channels to display, sell, or deliver the physical
product or service(s) to the buyer or user. These include
distributors, wholesalers, retailers and agents.
3. Service channels such as warehouses, transportation firms,
banks, and insurance companies to carry out transactions with
potential buyers.
• Marketers clearly face a design problem in choosing the
best mix of communication, distribution, and service
channels for their offerings.
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Core Marketing Concepts
Supply Chain
• Describes a longer channel stretching from
raw materials to components to final
products that are carried to final buyers.
• Represents a value delivery system.
• When a company acquires a competitors
or moves upstream or downstream, its
aim is to capture a higher percentage of
supply chain value.

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Core Marketing Concepts
Competition

• Includes all the actual and potential

rival offering and substitutes that a
buyer might consider.

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Core Marketing Concepts
Marketing Environment
• Consists of the task environment and the broad
environment.
• Task environment includes the immediate actors involved in
producing, distributing, and promoting the offering such as:
suppliers, company, distributors, dealers, and target
customers.
• The broad environment consists of six components:
– Demographic environment.
– Economic environment.
– Natural environment.
– Technological environment.
– Political-legal environment.
– Social-cultural environment.
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Core Marketing Concepts
Marketing Planning
Consists of:
• Analyzing marketing opportunities.
• Selecting target markets.
• Designing marketing strategies.
• Developing marketing programs.
• Managing the marketing effort.

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Company Orientation Toward the
Marketplace

Production Product

Selling Marketing

1-44
Company Orientation Toward The
Marketplace
• Production Concept
– The production concept holds that consumers will prefer
products that are widely available and inexpensive.
Managers of production-oriented business concentrate on
achieving high production efficiency, low cost, and
mass distribution.
• Product Concept
– The product concept holds that consumers will favor those
products that offer the most quality, performance, or
innovative features. Managers in these organizations
focus on making superior products and improving them
overtime.
1-45
Company Orientation Toward The
Marketplace
• Selling Concept
– The selling concept holds that consumers and businesses, will
ordinarily not buy enough of the organization’s products, therefore, the
organization must undertake aggressive selling and promotion effort.
– Such aggressive selling, however, carries high risk. It focuses on
creating sales transactions rather than on building long-term,
profitable customer relationships.
– The aim often is to sell what the company makes rather than making
what the market wants.

rs
Selling concept
• Inside-out approach
me
st o
• Company-centric
cu

1-46
Company Orientation Toward The
Marketplace
• Marketing Concept
– The marketing concept holds that the key to achieving organizational goals consists of
the company being more effective than competitors in creating, delivering, and
communicating superior customer value to its chosen target markets.
– 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.
– The job is not to find the right customers for your product, but to find the right products

rs
for your customers.

me
st o
Marketing concept
• Outside-in approach

cu
• Satisfaction and relationships are customer-centric

 Reactive market orientation—understanding and meeting consumers’ expressed needs.

 Proactive marketing orientation—researching or imagining latent consumers’ needs through a
“probe-and-learn” process.
 Companies that practice both reactive and proactive marketing orientation are implementing a
total market orientation.
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The Holistic Marketing Concept
• Today’s best marketers recognize the need for a more
complete, cohesive approach that goes beyond traditional
applications of the marketing concept.
1. Holistic marketing can be seen as the development, design, and
implementation of marketing programs, processes, and activities
that recognizes the breadth and interdependencies of their efforts.
2. Holistic marketing recognizes that “everything matters” with
marketing—the consumer, employees, other companies,
competition, as well as society as a whole.
3. Holistic marketing is thus an approach to marketing that attempts
to recognize and reconcile the scope and complexities of marketing
activities.
• Successful companies apply holistic marketing to keep their
programs and activities changing with the changes in their
marketplace and marketspace.
1-48
 Figure 1.3 Holistic Marketing Dimensions

Sales Revenue

Performance
Marketing
Brand &
Customer Equity

1-49
The Holistic Marketing Concept
Relationship Marketing
• Relationship marketing has the aim of building mutually satisfying long-
term relationships with key parties—customers, suppliers, distributors,
and other marketing partners in order to earn and retain their business.
Relationship marketing builds strong economic, technical, and social ties
among the parties.
 Four key constituents for relationship marketing are:
 Customers.
 Employees.
 Marketing partners (channels, suppliers, distributors, dealers, agencies).
 Members of the financial community (shareholders, investors, analysts).
 The ultimate outcome of relationship marketing is the building of a unique
company asset called a marketing network.
 A marketing network consists of the company and its supporting
stakeholders (customers, suppliers, distributors, retailers, ad agencies,
university scientists, and others) with whom it has built mutually profitable
business relationships.

1-50
The Holistic Marketing Concept
Integrated Marketing
A. The marketer’s task is to devise marketing activities and assemble fully integrated
marketing programs to create, communicate, and deliver value for consumers.
B. McCarthy classified these activities as marketing mix tools which he called the four Ps.
C. The 4Ps of marketing: product, price, place, and promotion.
 Marketing—mix decisions must be made for influencing the trade channels as
well as the final consumers.
 The firm can change its price, and advertising expenditures in the short run.
 The firm can develop new products and modify its distribution channels only in
the long run.
• The 4Ps represent the sellers’ view of the marketing tools available for influencing
buyers.
• From a buyer’s point of view, each marketing tools is designed to deliver a
customer benefit.
• Robert Lauterborn suggests that the sellers 4Ps correspond to the customers’ 4Cs:
– 4Ps 4Cs
– Product Customer solution
– Price Customer cost
– Place Convenience
– Promotion Communication
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Figure 1.4 The Four P’s

1-52
Marketing Mix and the Customer

Four P’s Four C’s

• Product • Customer
• Price solution
• Place • Customer cost
• Promotion • Convenience
• Communication

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Figure 1.5 Marketing-Mix Strategy

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The Holistic Marketing Concept
Integrated Marketing
• A complementary breakdown of marketing activities has
been proposed, centering on the customer questions that
the four dimensions (SIVA) are designed to answer:
1. Solution: How can I solve my problem? (Product)
2. Information: Where can I learn more about it? (Promotion)
3. Value: What is my total sacrifice to get this solution? (Price)
4. Access: Where can I find it? (Place)
D. Two key themes of integrated marketing are:
1. Many different marketing activities are employed to
communicate and deliver value.
2. All marketing activities are coordinated to maximize their
joint efforts.
– In other words, marketers should design and implement any
one marketing activity (4P’s) with all other activities in mind.
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The Holistic Marketing Concept
Internal Marketing
– Holistic marketing incorporate internal marketing,
ensuring that everyone in the organization embrace
appropriate marketing principles, specially senior
management.
– Internal marketing is the task of hiring, training, and
motivating employees who want to serve customers well.
– Internal marketing must take place on two levels:
 At one level, the various marketing functions (sales force,
advertising, customer services, product management, and
marketing research) must work together and be coordinated
from the customer’s point of view.
 Secondly, other departments must be embraced marketing—
they must “think customer”. Marketing is not a department
so much as a company orientation.
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The Holistic Marketing Concept
Performance Marketing
• Holistic marketing incorporate performance marketing and
understanding the business returns from marketing objectives and
programs, as well as addressing broader concerns and their legal,
ethical, social, and environmental effects.
• Top management is going beyond sales revenue to examine the
marketing scorecard and interpret what is happening to market share,
customer loss rate, customer satisfaction, product quality, and other
measures.
 Financial accountability. Marketers are increasingly asked to justify their
investment to top management in financial and profitability terms, as well as in
terms of building the brand and growing the customer base.
 Social responsibility marketing. Marketers must consider the ethical,
environmental, legal, and social context of their activities. Under the societal
marketing concept, the company’s task is to determine the needs, wants, and
interests of target markets so it can satisfy customers more effectively and
efficiently than competitors. Some firms use social responsibility to differentiate
themselves, build consumer performance, and improve sales and profits.
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 Figure 1.3 Holistic Marketing Dimensions

Sales Revenue

Performance
Marketing
Brand &
Customer Equity

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Corporate Social Initiatives

1-59
Corporate Social Initiatives

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Marketing Management Tasks
1. Developing marketing strategies and plans. The first task is to identify
the organization’s potential long-run opportunities.
2. Capturing marketing insights and performance. Marketers must
understand what is happening inside and outside the organization by
monitoring the marketing environment and conducting marketing
research to assess buyer needs and behavior, as well as the actual and
potential market size.
3. Connecting with customers. The firm must determine how to best
create value for its chosen target markets and how to develop strong,
profitable, long term relationships with customers. Next marketers identify
major market segments, evaluate each, and target those that the firm can
serve most effectively.
4. Building strong brands. Now marketers need to understand how
customers perceive their brands’ strengths and weaknesses. Marketers
must not only deal with the competitive situation, they must develop and
communicate appropriate positioning.
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Marketing Management Tasks
5. Shaping the market offerings. At the heart of the marketing program is the
product–the firm’s tangible offering to the market, which includes the product
quality, design, features, and packaging. Marketers may also include service
as part of the market offering; in addition pricing is a key element.
6. Delivering value. Here, marketers determine how to deliver the offering’s
value to the target market by identifying, recruiting, and linking with marketing
facilitators such as retailers, wholesalers, and physical-distribution firms.
7. Communicating value. Now the firm must convey the value embodied by
the offering to the target market through an integrated marketing
communication program that maximizes the individual and collective
contribution of all communication activities.
8. Creating successful long-term growth. The company’s marketing strategy
must take into account changing global opportunities and challenges.
Moreover, management must put in place a marketing organization capable
of implementing the marketing plan.

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Marketing Debate

Does Marketing
Create or Satisfy Needs?

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Any Questions?

Thank you
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