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  • 1. Principles of MarketingbyPhilip Kotler Twelfth Edition Presented by Ms. Ayesha Farooq Bahria Institute Of Management Sciences
  • 2. Chapter 1Marketing: Managing ProfitableCustomer Relationship
  • 3. Chapter Objectives What is marketing? Understanding the market place & customer needs. Designing a customer driven marketing strategy. Prepare a marketing plan & program building customer relationships. Capturing value from customers. The new marketing landscape. So, what is marketing pulling it all together.
  • 4. Marketing Marketing Defined customer.
  • 5. What is Marketing? Marketing is the process by which companies create value for customers & build strong customer relationships in order to capture value from customers in return. Marketing is all about” satisfying customer needs”
  • 6. Goal of Marketing: To attract new customers by promising superior value. To keep & grow current customers by delivering satisfaction
  • 7. A simple model of the marketing process Create value for customers & Capture value from customers build customer relationships in return Construct an Capture value integrated Build profitable fromUnderstand the Design a customer marketing relationships & customers tomarketplace & driven marketing program that create customer create profitscustomer needs & strategy delivers delight & customerwants superior value equity.
  • 8. Core definitions Needs: Needs are the basic human requirements e.g food, water, air, shelter. Wants: Are the form human needs take as shaped by culture and individual responsibility. Demands: Human wants that are backed by buying power. Market offering: Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Eg, banks, airlines.
  • 9.  Marketing Myopia: The mistake of paying more attention to the specific products a company offers than to the benefits & experiences produced by these products. Exchange: Process of obtaining a desired product from someone by offering something in return. Market: The set of all actual & potential buyers of a product or service.
  • 10.  Marketing Management: The art & science of choosing target markets & building profitable relationships with them. Value Proposition: A company’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs.
  • 11. Winning Marketing Strategy What customers will we serve? (what’s our target market)- Divide the market into customer segments.- Select which segments will it go after. How can we serve these customers best? (what’s our value proposition)- Differentiating & positioning the product in minds of consumers.
  • 12. Five Organizational Concepts1. Production Concept2. Product Concept3. Selling Concept4. Marketing Concept5. Societal Marketing Concept
  • 13. Production Concept The idea that consumers will favor products that are available & highly affordable & that the organization should therefore focus on improving production & distribution efficiency.Eg: Lenovo dominates the highly competitive, price sensitive Chinese PC market through low labor costs, high production efficiency & mass distribution. Can produce Marketing Myopia
  • 14. Product Concept The idea that consumers will favor products that offer the most quality, performance, & features thereby devoting a company’s energy to making continuous product improvements. Make & sell concept Focus on making superior products No customer input Less competitor product examination. “ Marketing Myopia”
  • 15. Selling Concept The idea that consumers will not buy enough of the firms products unless it undertakes a large scale selling & promotion effort. Practiced most aggressively with unsought goods eg, insurance, encyclopedias. Focuses on creating sales-transactions rather than long term profitable relationships. “Political Relationships”
  • 16. Marketing Concept The marketing management philosophy that achieving organizational goals depends on knowing the needs & wants of target markets & delivering the desired satisfactions better than competitors. Sense & respond philosophy. Finding right products for customers Customer-driving marketing – understanding customer needs even better than the customers themselves.
  • 17. Contrast between Sales Concept & Marketing ConceptStarting Point Focus Means Ends Factory Products Selling &Promoting Profits through sales volume a. THE SELLING CONCEPT Target Customer Integrated Profits through Market Needs Marketing customer satisfaction b. THE MARKETING CONCEPT
  • 18. Societal Marketing Concept Holds that marketing strategy should deliver value to customers in a way that maintains or improves both consumers & the societies well- being. Society (Human Welfare) Societal marketing concept Consumers Company (Want Satisfaction) (Profits)
  • 19. Customer Relationship Management CRM is the process of building & maintaining profitable customer relationships by delivering superior customer value & satisfaction. Customer Perceived Value: The customers evaluation of the difference between all the benefits & all the costs of a market offering relative to those of competing products.
  • 20.  Customer Satisfaction depends on a product’s perceived performance relative to a buyer’s expectations. Performance = ExpectationCustomer Satisfaction= Customer Loyalty= Better Performance Customer delight- promising only what a company can deliver, & then delivering more than promised. Eg. Lexus
  • 21. Changing Nature of CustomerRelationships Relating with More Carefully selected Customers: - Selective Relationship Management Weeding out losing customers & targeting & pampering winning ones Relating for the Long term: Using CRM to retain current customers & building profitable long-term relationships with them. Relating Directly: Using direct marketing tools such as telephone, mail order catalogs & kiosks. Eg Dell & Amazon.
  • 22. Creating Customer Loyalty & Retention“ losing customers does not mean losing a single sale but infact losing the entire stream of purchases that the customer would make over a lifetime”. Customer lifetime value: The value of the entire stream of purchases that a customer would make over a lifetime of patronage.
  • 23. Customer Equity Companies should not just acquire customers, but keep & grow them as well. The ultimate aim of customer relationship management is to produce high customer equity. Customer Equity is the combined discounted customer lifetime values of all the company’s current & potential customers. It is a better measure of a firms performance than current sales or market share.More Loyal firm’s = Higher firm’sProfitable customers Customer Equity
  • 24. Building Right relationships with Right customers Which customers should the company acquire & retain? The company can classify customers according to their potential profitability & projected loyalty manage its relationships with them accordingly.
  • 25. Customer Relationship Groups Strangers …. Low profitability/ Less Loyal. Butterflies …. Profitable/ not Loyal True Friends …. Profitable/ Loyal Barnacles …. Not Profitable/ Highly Loyal Different types of customers require different relationship strategies, therefore goal is to : “Build right relationships with the right customers”
  • 26. Customer Relationship Groups Butterflies True FriendsHigh Good fit between Good fit between company’s offerings & company’s offerings &Profitabilit customer needs; customer needs;y High profit potential Highest profit potential Strangers BarnaclesLow Little fit between Limited fit betweenProfitabilit company’s offerings & company’s offerings &y customer needs; customer needs; Lowest profit Low profit potential potential Short- term customers Long-term customers Projected Loyalty