This document provides an overview of key marketing concepts including definitions of marketing, the marketing concept, customer value and satisfaction, and relationship marketing. It discusses the evolution of philosophies from a production to a more customer-oriented approach. The marketing concept is defined as determining customer needs and satisfying them more effectively than competitors. Relationship marketing aims to develop long-term relationships through mutual value creation. Customer loyalty is the goal, achieved through satisfaction and different types of loyalty.
2. LEARNING OBJECTIVES
After comprehensive studying of this chapter, learners will be able to:
ī§ Definition of Marketing,
ī§ Core Marketing Concept,
ī§ Company Orientation Towards the Market Place,
ī§ Customer Value Satisfaction and Creating Long-term Loyalty Relationship,
ī§ Concept of Marketing Management and Process.
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3. MARKETING OF MARKETING
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ī§ Marketing refers to the entire activities ranging from developing the ideas to the
after-sales services. It means the market incorporates the activities of developing
ideas, implementing the ideas, pricing, promotion, distribution, and providing
after-sales services where necessary.
ī§ âMarketing consists of those efforts which effect transfers in the ownership of goods and
services and which provide for physical distribution.â ī Tousely, Clark and Clark
ī§ âMarketing is a total system of business activities designed to plan, price, promote and
distribute want satisfying goods, services and ideas to target markets in order to achieve
organizational objectives.â ī W. J. Stanton Etzel and Walker
4. CORE CONCEPTS OF MARKETING
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ī§ The core concept of marketing refers to the
essential components that constitute the
whole marketing system.
ī§ Marketing is a social and managerial
process by which individuals and groups
obtain what they need and want through
creating, offering, and exchanging
products of value with others.
Product/Offering
Value, Satisfaction and
Expectation
Exchange,
Transactions
and Transfer
Market
Need, Want, and
Demand
5. COMPANY ORIENTATION TOWARDS THE MARKET PLACE
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ī§ This gradual change can be traced
under various periods and captions
namely; production-oriented period,
product-oriented period, selling
oriented period, marketing oriented
period, societal marketing oriented
period, and holistic marketing period.
ī§ Following is a brief explanation of each
philosophy and corresponding period.
Various
Marketing Concept
Marketing philosophy has undergone gradual change since the great
industrial revolution that took place during the latter-half of the 18th and the
first-half of the 19th century.
6. PRODUCTION CONCEPT
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It is one of the oldest and most favored concepts of marketing that was popular in
1920 A.D. The production concept holds that consumers will favor products that
are available and highly affordable.
ī§ The theme of the production concept can be presented in the following diagram:
Starting Point Focus Means Ends
Factory
Mass
Production
īˇ Low Price
īˇ Mass Distribution
Profit through Production
Efficiency
âProduction concept is a management orientation that assumes consumers will favor those
products which are widely available and affordable, and therefore, the major task of
management is to improve production and distribution efficiency.â
ī Philip Kotler
7. PRODUCT CONCEPT
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The concept of the product was popular from 1920-1930 A.D. The product concept
holds that consumers will favor products that offer the most in quality,
performance, and innovative features. The business philosophy known as âthe
product conceptâ is based on the perception that the consumer or customers are
interested more in the quality and performance of the product or the service
rather than its volume of production or price.
âThe product concept is a management orientation that assumes consumers will favor those
products that offer the most quality for the price, and therefore the organization should devote
its energy in improving product quality.â
ī Philip Kotler
Starting Point Focus Means Ends
Factory Product Quality
īˇ High Quality
īˇ Innovation
īˇ Performance Guarantee
Profit through well-made
products
8. SELLING CONCEPT
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ī§ The selling concept believes that consumers if left alone will ordinarily not buy
enough of the organizationâs product. The organizations must therefore
undertake an aggressive selling and promotion effort. The selling concept can be
presented in the following diagram:
"The selling concept is a management orientation that assumes consumers will either buy or
not buy enough of the organization's products unless the organization makes substantial
effort to stimulate their interest in its products."
ī Philip Kotler and Gray Armstrong
Starting Point Focus Means Ends
Factory
Existing
Products
īˇ Aggressive Selling
īˇ Heavy Promotion
Profit through High Sales
Volume
9. MARKETING CONCEPT
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ī§ The marketing concept is the key to achieving organizational goals which consist
in determining the needs and wants of target markets and delivering the desired
satisfaction more effectively and efficiently than the competitors. The marketing
concept can be presented in the following diagram:
âThe marketing concept is a management orientation that assumes the key task of the
organization is to determine the needs and wants of target markets and to adopt the
organization to deliver the desired satisfaction more effectively and efficiently than its
competitorsâ. ī Philip Kotler and Gray Armstrong
Starting Point Focus Means Ends
Target Market
Consumer
needs
Integrated marketing
Profit through Customer
Satisfaction
10. PRINCIPLES OF THE MARKETING CONCEPT
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Target Market: A marketer has to define the market to
which it will direct its efforts. The specification and
identification of the market would enable the marketer to
design specific marketing strategies.
Customer Oriented: It is an approach which regards the
customer or consumer as the king or queen and is
oriented towards customer needs, wants, and
satisfaction.
Integrated Marketing: The marketing concept must emphasize a coordinated and
integrated program of marketing. It requires coordination and cooperation within
the department.
Profitability: Business organizations are set up to earn a profit. Huge funds are
invested in them, some of which are borrowed and are to be repaid.
11. SOCIETAL MARKETING CONCEPT
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ī§ The societal marketing concept assumes that generating customer satisfaction and
long-run societal well-being are the keys to achieve both the organizational goals
and responsibilities.
ī§ The considerations underlying the societal marketing concept can be depicted in
the following diagram:
âThe societal marketing concept holds that the organization's task is to determine needs,
wants and interests of the target market and to deliver the desired satisfactions more
effectively and efficiently than competitors in a way that preserves or enhances the
consumer's and the society's well being.â ī Philip Kotler and Gray Armstrong
Starting Point Focus Means Ends
Target Market Social Needs
Protecting and Supporting
Consumer and Social
Well-being
Profit through Customer's
needs and Social
Well-being
12. HOLISTIC MARKETING CONCEPT
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ī§ Holistic Marketing is essential to make marketing plans and programs in a
coordinated manner which is known as holistic marketing. The holistic marketing
concept can be presented in the following diagram:
âThe holistic marketing concept is based on the development, design, and implementation of
marketing programs, processes, ad activities that recognizes their breadth and
interdependencies.â ī Philip Kotler and Kavin Lane Keller
Starting Point Focus Means Ends
Target Market
All
Marketing
Matters
Integrated marketing; Relationship
marketing; Internal marketing;
Societal marketing; Performance
marketing
Goals achievement
through marketing
think
13. COMPONENTS OF HOLISTIC MARKETING
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ī§ Holistic marketing
focuses on marketing
strategies that are
designed to market the
brand to every person
associated with it,
whether they are
employees, existing
customers, or potential
customers, and to
communicate it in a
unified manner while
keeping the business's
social responsibility in
mind.
Holistic
Marketing
Internal
Marketing
Integrated
Marketing
Societal
Marketing
Relationship
Marketing
Marketing
Department
Senior
Management
Other
Departments Communications
Products &
Services Channels
Sales
Ethics
Social
welfare
Environment Legal
Community
Customers Channel Partners
Performance
Marketing
Financial
Accountability
Value of
Marketing Efforts
14. CONTDâĻ
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ī§ Relationship Marketing: Increasingly, a key goal of marketing is to develop deep,
enduring relationships with all people or organizations that could directly or
indirectly affect the success of the firm's marketing activities. Relationship
marketing has the aim of building mutually satisfying long-term relationships
with key parties â customers, suppliers, distributors and other marketing partners
in order to earn and retain their business (Gummesson, 1999). Relationship
marketing builds strong economic, technical, and social ties among the parties.
ī§ Integrated Marketing: With integrated marketing, the marketer's task is to devise
marketing activities and assemble marketing programs that maximize the ability
to create, communicate and deliver value for consumers. Marketing activities
come in all forms. One traditional depiction of marketing activities is in terms of
the marketing mix, which has been defined as the set of marketing tools the firm
uses to pursue its marketing objectives (Borden).
15. CONTDâĻ
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ī§ Internal Marketing: Holistic marketing incorporates internal marketing, ensuring
that everyone in the organization embraces appropriate marketing principles,
especially senior management.
ī§ Social Responsibility Marketing: As per Kotler and Keller, "Holistic marketing
incorporates social responsibility marketing and understanding broader concerns
and the ethical, environmental, legal, and social context beyond the company and
the consumer to society as a whole.
ī§ Performance Marketing: Performance Marketing focuses on the returns to the
business from the marketing activities undertaken as well as the effects of the
same on the society as a whole. It emphasizes the value of marketing efforts.
16. CUSTOMER VALUE
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ī§ Customer delivered value is the difference between total customer value and total
customer cost. When a product or offering delivers value or satisfaction to the
target group of buyer, marketing is successful. A target group or buyer will
choose different offering or product based on the perceived value or satisfaction.
Value is the ratio between what the customer pays and what he receives. Value
can be shown as follows:
Product Value
Service Value
Personnel Value
Image Value
Monetary Cost
Time Cost
Energy Cost
Psychic Cost
Total
Customer Value
Total
Customer Cost
Customer
Delivery Value
Total Customer Value = Product Value +
Service Value + Personnel Value + Image
Value
17. CONTDâĻ
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ī§ Total Customer Value: Total customer value is the perceived monetary value of
the bundle of economic functional and psychological benefits consumers expect
from a given market offering. This can be clear from the following formula:
Total Customer Value = Product Value + Service Value + Personnel Value +
Image Value
ī§ Total Customer Cost: Total customer cost is the bundle of costs that customers
expect to incur in evaluating, obtaining, using, and disposing of the given market
offering (product or service). It includes money cost, time cost, energy cost and
psychic cost to get expected benefits.
Total Customer Cost = Money Cost + Time Cost + Energy Cost + Psychic Cost
18. CUSTOMER SATISFACTION
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ī§ Satisfaction is a person's feeling of pleasure or being adequately rewarded in a
situation.
ī§ Customer satisfaction is a post- purchase outcome where a customer compares
the expected benefit with the actual benefit received from the use of product. If
the performance of the product fails short of expectation; the customer is
dissatisfied.
ī§ "Satisfaction is a person's feelings of pleasure or disappointment resulting from comparing
a product's percieved performance (or outcome) in relation to his/her expectations."
ī Philip Kotler
Satisfied customers īŽ Customer's expectation = Product performance
Highly satisfied customers īŽ Customer's expectation < Product performance
Dissatisfied customers īŽ Customer's expectation > Product performance
19. METHODS OF DETERMINING CUSTOMER SATISFACTION
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Complaint and
Suggestion System
A customer-centered
organization would
make it easy for
customers to deliver
suggestions and
complaints.
Suggestion and
complaint boxes are
common sights now.
Customer
Satisfaction
Surveys
Companies cannot use
complaint levels alone
as a measure of
customer satisfaction.
Responsive companies
obtain a direct
measure of customer
satisfaction by
periodic surveys.
Ghost Shopping
Companies can hire
people to pose as
potential buyers to
report on strong and
weak points
experienced in buying
the company's and
competitor's products.
Cost of Lost
Customer Analysis
Companies should
contact customer
who have stopped
buying or who have
switched over to
another supplier to
learn why this has
happened.
20. CREATING LONG-TERM LOYALTY RELATIONSHIP
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ī§ Creating loyal customers is a key function of any business organization.
Therefore, the main goal of marketing is to establish strong relationships with
loyal customers.
ī§ At the same time, such a relationship is crucial for the marketing manager for
long-term success. Because no business organization can survive without
customers.
ī§ Therefore, successful marketing managers must always strive to establish strong
and long-term loyal relationships with customers.
ī§ Customer loyalty refers to a situation where a customer develops a long standing
preference or loyalty towards a particular product or service.
ī§ Customer loyalty is reflected in the repeated purchases the customer makes of a
particular product and his favorable nature towards a product or service.
ī§ Customer loyalty also helps to market the product positively in the customer's
close friend and family circle.
21. TYPES OF LOYALTY
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âĸ Behavioral loyalty refers to customers who are loyal out of
habit. Sometimes switching from one brand to another causes
more of a problem for the customer so they struggle with
leaving a brand for another and/or are too lazy to transfer so
they stay with a brand despite how unsatisfied they are with
the customer experience.
Behavioral
Loyalty
âĸ Attitudinal loyalty is loyalty due to the customerâs attitude
towards the brand. When customers trust and depend on the
brand, and there is no substitute for that brand they are
happy to continue in their relationship with the company.
Attitudinal
Loyalty
22. CUSTOMER RELATIONSHIP MANAGEMENT
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ī§ Customer relationship management
programs are developed to identify the most
valuable customer, to design special
programs for different set of customers and
to train customer relationship employees to
take care of the customer.
Customer Relationship Management
Marketing
Information System
Customer
Service System
Sales-force
Management
Marketing Information System provides information about the business environment,
including competitors, industry trends, and macro environmental variables.
Sales Force Management automates some of the company's sales and sales force
management functions.
Relationship Marketing is the ongoing process of engaging in cooperative and
collaborative activities an programme with immediate and end - user customers to create or
enhance mutual economic value at reduced cost.
Customer Service System automates some service requests, complaints, product returns,
and information requests.
23. RELATIONSHIP MARKETING
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ī§ âRelationship marketing is the process of creating, maintaining and enhancing strong
value laden relationship with customers and other stakeholders.â ī Philip Kotler
ī§ âRelationship marketing is process of building mutually satisfying long-term
relationships with key parties, in order to retain their business.â
ī Dictionary of Marketing
From the above definitions, relationship marketing is the process of building
long-term mutual satisfying relationship with the concerned parties. It includes
increasing strong relations with customers, keeping contact and enhancing it.
Relationship marketing focuses on establishing valuable relationship and creating
delivery network with them rather than personal dealing. It's main objective is to
continue long-term delivery to the customers and measure their satisfaction.
24. IMPORTANCE OF RELATIONSHIP MARKETING
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Long-term Relation
Customer Satisfaction
Loyal Customers
Development of New Partnership
Importance of
Relationship Marketing
Long-term Profit
Identification of Strength and Weakness
25. CONTDâĻ
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ī§ Long-term Relation: Firm can maintain the long-term relation with customers
through relationship marketing.
ī§ Customer Satisfaction: Customer satisfaction can be delivered through the
relationship marketing. Approaches of relationship marketing are based on
company interaction.
ī§ Loyal Customers: Relationship marketing focuses on building economic,
technological and social relations with the related parties.
ī§ Development of New Partnership: Relationship marketing involves partnership
marketing.
ī§ Long-term Profit: Relationship marketing helps in earning long term profit.
Relationship marketing involves the interaction with different stakeholders for
solving the problems faced by the company.
ī§ Identification of Strength and Weakness: Relationship marketing involves the
satisfied and loyal customers.
26. CUSTOMER RELATIONSHIP BUILDING PROCESS
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Suspects Prospects First time customer
Members
Advocates
Partners
Disqualified Prospects
Repeat customer
Clients
Inactive or
Ex-customer
27. CUSTOMER RELATIONSHIP BUILDING PROCESS
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ī§ Suspects: Relationship marketing starts from identifying and attracting the suspects.
ī§ Prospects: Prospects are the people who have a strong potential interest in the product and
their ability to pay for it. They are likely to buy the product.
ī§ First Time Users: Prospects who buy the product for the first time are called first time
users.
ī§ Repeat Customers: Repeat customers are those groups of customers who had positive
experience with the first time purchase and have purchased the firm's product second and
third time.
ī§ Clients: If repeat customers are fully satisfied with the company and its products, they
become clients.
ī§ Members: Members are those groups of clients who join membership programme to take
benefits.
ī§ Advocates: Advocates are the groups of members who recommend the firm's product to
others.
ī§ Partners: The ultimate goal of relationship marketing is to convert some of the advocates
into firms' partners.
28. LEVELS OF INVESTMENT IN CUSTOMER RELATIONSHIP BUILDING
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ī§ Basic Marketing: The salesperson simply sells the product.
ī§ Reactive Marketing: The salesperson sells the product and encourages the customer to call if he or
she has questions, comments or complaints.
High Margin Medium Margin Low Margin
Many customers/ Distributors Accountable Reactive Basic or Reactive
Medium Number of Customers/
Distributors
Proactive Accountable Reactive
Few Customers/ Distributors Partnership Proactive Accountable
âĸ Accountable Marketing: The
salesperson phones the
customer to check whether the
product is meeting
expectations.
âĸ Proactive Marketing: The salesperson contacts the customer from time to time with suggestions
about improved product uses or new products.
âĸ Partnership Marketing: The company works continuously with its large customers to help
improve their performance.
29. MEANING OF MARKETING MANAGEMENT
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ī§ âIt is the analysis, planning, implementation and control of programmes designed to bring
about desired exchanges with larger audiences for the purpose of personal or mutual gain.
It relies heavily on the adaptation and coordination of product-price-promotion and place
for achieving effective responseâ ī Philip Kotler
ī§ As per the above definitions, marketing management is concerned with the
direction of purposeful activities towards the attainment of marketing goals. The
basic goals of marketing are satisfaction of needs of customers and generation of
revenue for the business.
ī§ Most of the big business enterprises organize the marketing activities separately
under the charge of a marketing manager. The marketing manager looks after
various aspects of marketing to achieve the objectives of marketing, viz., creation
of customers and satisfaction of their wants and earning of profits.
30. DIMENSIONS OF MARKETING MANAGEMENT
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1. Demand Management: Marketing management is concerned with demand
management for customer satisfaction. It affects the level of demand, time, and
nature for achieving the objectives of the organization.
2. Building Profitable Customer Relationship: Marketing management is also
concerned with building and developing profitable relationships with customers.
It emphasizes building a long-term mutual and satisfying relationship with them.
Marketing management through customer relationships can create loyal
customers for a lifetime.
31. TASK OF MARKETING MANAGEMENT
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Developing Marketing Strategy
Capturing Marketing Insights
Connecting with Customers
Building Strong Brands
Task of Marketing
Management
Shaping the Market Offering
Delivering Value
Communicating Value
Creating Long-term Growth
32. CONTDâĻ
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ī§ Developing Marketing Strategy: The main task of a marketing manager is to
identify the long - term opportunities on the basis of his/her experiences and
capabilities.
ī§ Capturing Marketing Insights: Reliable marketing information system should be
established to have information about internal and externl environment of a
company.
ī§ Connecting with Customers: Marketing manager should consider how to create
best value for customer on the target market segments to develop strong,
profitable and long - term relationship.
ī§ Building Strong Brands: Brand is a name, term, design, logo/symbol or any
other feature that distinguishes products and services from those of competitors.
It creates certain image of the product in the minds of the customers.
33. CONTDâĻ
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ī§ Shaping the Market Offering: Product is the centre of marketing activities. It
includes both tangible and intangible offering. Tangible offering includes quality,
design, features, packaging color, size, etc. Important facilities of product offering
are learning, delivery, repair, training, etc.
ī§ Delivering Value: This marketing task aims at deciding and implementing the
ways and means of delivering the value of their products and services to the
customers.
ī§ Communicating Value: It is the value of the products and services that customers
want and ultimately feel satisfied with. Therefore, marketing management should
communicate as to what kind of value proposition they are offering to the
customers via their products and services.
ī§ Creating Long-term Growth: The entire businessman should have long term
thoughts. They should be careful in developing new product, product testing and
launching.
34. MARKETING MANAGEMENT PROCESS
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Marketing
Control
Program
Implementation
Formulation of Marketing
Plan and Program
Situational
Analysis
Marketing Management Process
35. CONTDâĻ
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ī§ Situational Analysis: The first step of the management process is a thorough
analysis of the situation in which the firm finds it serving as the basis for
identifying opportunities to satisfy unfulfilled customer needs.
ī§ Formulation of Marketing Plan and Program: Once the best opportunity to
satisfy unfulfilled customers' needs is identified, a strategic marketing plan and
program for pursuing the opportunities can be developed.
ī§ Program Implementation: The marketing management process is meaningless
unless it is carried out successfully. The implementation phase is a critical part of
the planning process.
ī§ Marketing Control: The marketing control phase of the marketing management
process is to keep planned activities on target with goals and objectives. There is
no planning without control. Marketing control is the process of monitoring the
proposed plans as they proceed and adjusting where necessary.