Introduction to Marketing Management

1. Marketing: Managing
Profitable Customer
Relationships
A Global Perspective
1
Philip Kotler
Gary Armstrong
Swee Hoon Ang
Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-Ming
PowerPoint slides adapted by
Peggy Su

2. 1-2
Learning Objectives
After studying this chapter, you should be able to:
1. Define marketing and outline the steps in the marketing
process
2. Explain the importance of understanding customers and the
marketplace, and identify the five core marketplace concepts
3. Identify the key elements of a customer-driven marketing
strategy and discuss the marketing management
orientations that guide marketing strategy
4. Discuss customer relationship management, and identify
strategies for creating value for customers and capturing
value from customers in return
5. Describe the major trends and forces that are changing the
marketing landscape in this age of relationships

3. 1-3
What Is Marketing?
Marketing Defined
• Marketing is the process by
which companies create value
for customers and build strong
customer relationships to
capture value from customers
in return.

4. 1-4
What Is Marketing?
The Marketing Process
1. Understand the marketplace and customer
wants and needs
2. Design a customer-driven marketing strategy
3. Construct a marketing plan that delivers
superior value
4. Build profitable relationships and create
customer satisfaction
5. Capture value from customers to create
profit and customer equity

5. 1-5
Create customer driven
marketing strategy
Construct a marketing
program that delivers
superior value
Build profitable
relationships & create
customer delight
Capture value from
customers to create profits
& customer quality
Understand the
marketplace and
customers’ needs/wants

6. 1-6
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
Needs are states of deprivation:
• Physical—food, clothing, warmth, safety
• Social—belonging and affection
• Individual—knowledge and self-
expression

7. 1-7
Customer Needs, Wants, and Demands
• Wants are the form that needs take as they
are shaped by culture and individual
personality.( is a product desired by a customer that is not required for us to survive. So, want
is the complete of opposite of need, which is essential for our survival.
• Demands are wants backed by
buying power. – If a Customer is willing and able to buy a need or a want , it means that
they have a demand for that need or a want
Understanding the Marketplace
and Customer Needs

8. 1-8
Market Offerings—Products, Services, and
Experiences
• Market offerings are some combination of
products, services, information, or
experiences offered to a market to satisfy a
need or want.
Understanding the Marketplace
and Customer Needs

9. 1-9
Market Offerings—Products, Services, and
Experiences
• Marketing myopia is focusing only on
existing wants and losing sight of underlying
consumer needs. (What usually gets emphasized is selling, not marketing. This is
a mistake, since selling focuses on the needs of the seller, while marketing concentrates on the needs of
the buyer.
• Exchange is the act of obtaining a desired
object from someone by offering something
in return.
Understanding the Marketplace
and Customer Needs

10. 1-12
• Markets are the set of actual and potential
buyers of a product.
• Marketing system consists of all of the actors
(suppliers, company, competitors,
intermediaries, and end users) in the system
who are affected by major environmental
forces.
• Demographic
• Economic
• Physical
Understanding the Marketplace
and Customer Needs
• Technological
• Political-legal
• Socio-cultural

11. 1-13
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.
• What customers will we serve?
• How can we best serve these customers?

12. 1-14
Selecting Customers to Serve
• Market segmentation: Dividing the
markets into segments of customers
• Target marketing: Which segments to
go after
Designing a Customer-Driven
Marketing Strategy

13. 1-15
Marketing Management Orientations
• Production concept
• Product concept
• Selling concept
• Marketing concept
• Societal concept Society (Human
Welfare)
Companies must make sure the products, services, actions, investments innovations servers the society first.
• Consumers (Satisfaction)
Products and services should be satisfying the consumer’s needs.
• Company (Profits)
Building long-term customer relationship, being socially responsible, and providing satisfactory products are important
Designing a Customer-Driven
Marketing Strategy

14. 1-16
Marketing Management
Orientations
• The production concept is
the idea that consumers will
favor products that are
available or highly
affordable.
Designing a Customer-Driven
Marketing Strategy

15. 1-17
Marketing Management Orientations
• The product concept is the idea that
consumers will favor products that offer
the most quality, performance, and
features for which the organization
should therefore devote its energy to
making continuous improvements.
Designing a Customer-Driven
Marketing Strategy

16. 1-18
Marketing Management Orientations
• The selling concept is the idea that
consumers will not buy enough of the
firm’s products unless it undertakes a
large scale selling and promotion
effort.
Designing a Customer-Driven
Marketing Strategy

17. 1-19
Marketing Management Orientations
• The 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.
Designing a Customer-Driven
Marketing Strategy

18. 1-20
Marketing Management Orientations
• The 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. Companies must make sure the products, services, actions, investments
innovations servers the society first.
• Consumers (Satisfaction)
Products and services should be satisfying the consumer’s needs.
• Company (Profits)
Building long-term customer relationship, being socially responsible, and providing satisfactory products are important
for profit-making and wealth maximization.
Designing a Customer-Driven
Marketing Strategy

19. 1-21
Preparing an Integrated
Marketing Plan and Program
Marketing Mix
• The marketing mix is the set of tools
(four Ps) the firm uses to implement its
marketing strategy:
• Product
• Price
• Promotion
• Place

20. 1-22
Integrated Marketing Program
• An integrated marketing program is
a comprehensive plan that
communicates and delivers the
intended value to chosen customers.
Preparing an Integrated
Marketing Plan and Program

21. 1-23

22. 1-24
Customer Relationship Management
(CRM)
• Customer relationship management
is the overall process of building and
maintaining profitable customer
relationships by delivering superior
value and satisfaction.
Building Customer Relationships

23. 1-25
Customer Relationship Management (CRM)
• Customer perceived value is the difference
between total customer value and total
customer cost. - Customer Perceived Value = Total
Perceived Benefits – Total Perceived Costs
• The CPV is kind of an evaluation done by customer on what value a
product or a service would be able to provide if he/she buys it by paying
money.
• Customer satisfaction is the extent to
which a product’s perceived performance
matches a buyer’s expectations.
Building Customer Relationships

24. 1-26
The Changing Nature of Customer
Relationships
• Relating with more carefully selected customers
uses selective relationship management to target
fewer, more profitable customers.
• Relating for the long term uses customer relationship
management to retain current customers and build
profitable, long-term relationships.
• Relating directly uses direct marketing tools
(telephone, mail order, kiosks, Internet) to make
direct connections with customers.
Building Customer Relationships

25. 1-27
Partner Relationship Management
• Partner relationship management refers
to working closely with partners in other
company departments and outside the
company to jointly bring greater value to
customers.
Building Customer Relationships

26. 1-28
Partner Relationship Management
• Partners inside the company is every
function area interacting with customers.
• Electronically
• Cross-functional teams
• Partners outside the company is how
marketers connect with their suppliers, channel
partners, and competitors by developing
partnerships.
Building Customer Relationships

27. 1-29
Partner Relationship Management
• The supply chain is a channel that
stretches from raw materials to components
to final products to final buyers.
• Supply management 4 main stages 1. Coffee plantation, 2roasting and
packaging, 3global delivery and distritbution, 4, In- store preparation
• Strategic partners
• Strategic alliances
Building Customer Relationships

28. 1-30
Creating Customer Loyalty and
Retention
• Customer lifetime value is the value of
the entire stream of purchases that the
customer would make over a lifetime of
patronage.
Capturing Value from Customers

29. 1-31
Growing Share of Customer
• Share of customer is the portion
of the customer’s purchasing that
a company gets in its product
categories.
Capturing Value from Customers

30. 1-32
Building Customer Equity
• Customer equity is the total
combined customer lifetime values of
all of the company’s current and
potential customers.
• The more loyal the firm’s profitable
customers, the higher the firm’s
customer equity.
• Value Equity – customer’s objective evaluation of the firm offerings.
• Brand Equity – customer’s subjective view of the firm and its offerings
• Retention Equity – customer’s view of the strength of the relationship between
customer and the firm.
Capturing Value from Customers

31. 1-33
Building Customer Equity
• Building the right relationships with the
right customers involves treating
customers as assets that need to be
managed and maximized.
• Different types of customers require different
relationship management strategies
• Build the right relationship with the right
customers
Capturing Value from Customers

32. Different relationship management
strategy
1-34
“TRUE
FRIENDS”
Both Profitable
and Loyal
“BUTTERFLIES”
are profitable but
not loyal
“STRANGERS”
show low
profitability and
little projected
loyalty
“BARNACLES”
Highly Loyal but
not very
Profitable

33. 1-35
Major Developments
• Digital age
• Globalization
• Ethics and social responsibility
• Not-for-profit marketing
The New Marketing Landscape

34. 1-36
The New Digital Age
• Recent technology has had a major impact on the
ways marketers connect with and bring value to their
customers
• Market research
• Learning about and tracking customers
• Create new customized products
• Distribution
• Communication
• Video conferencing
• Online data services
The New Marketing Landscape

35. 1-37
The New Digital Age
• Internet—creates marketplaces
and marketspaces
• Information
• Entertainment
• Communication
The New Marketing Landscape

36. 1-38
Rapid Globalization
• The world is smaller.
• Think globally, act locally.
The New Marketing Landscape

37. 1-39
The Call for More Ethics and Social
Responsibility
• Marketers are being called upon to take
greater responsibility for the social and
environmental impact of their actions in a
global economy.
The New Marketing Landscape

38. 1-40
The Call for More Ethics and Social
Responsibility
• Social marketing campaigns encourage
energy conservation and concern for the
environment or discourage smoking,
excessive drinking, and drug use.
The New Marketing Landscape

39. 1-41
The Growth for Not-for-Profit Marketing
• Colleges
• Hospitals
• Museums
• Zoos
• Orchestras
• Religious groups
The New Marketing Landscape