A Global Perspective

Philip Kotler
Gary Armstrong
Swee Hoon Ang
1 Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-Ming
Marketing: Managing PowerPoint slides adapted by

Profitable Customer
Peggy Su

Relationships
 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
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Chapter Concepts
1. What Is Marketing?
2. Understanding the Marketplace and Customer Needs
3. Designing a Customer-Driven Marketing Strategy
4. Preparing an Integrated Marketing Plan and Program
5. Building Customer Relationships
6. Capturing Value from Customers
7. The New Marketing Landscape
8. So, What Is Marketing? Pulling It All Together

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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.

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

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 Understand the
Create customer driven
marketplace and
marketing strategy
customers’ needs/wants

Build profitable Construct a marketing

relationships & create program that delivers
customer delight superior value

Capture value from

customers to create profits
& customer quality

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 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

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 Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
• Wants are the form that needs take as they
are shaped by culture and individual
personality.
• Demands are wants backed by
buying power.

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 Understanding the Marketplace
and Customer Needs
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.

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 Understanding the Marketplace
and Customer Needs
Market Offerings—Products, Services, and
Experiences
• Marketing myopia is focusing only on
existing wants and losing sight of underlying
consumer needs.
• Exchange is the act of obtaining a desired
object from someone by offering something
in return.

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 Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
• Customers
• Value and satisfaction
• Marketers
• Set the right level of expectations
• Not too high or too low

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 Understanding the Marketplace
and Customer Needs
Exchanges and Relationships
• Exchange is the act of obtaining a desired
object from someone by offering something in
return.
• Relationships consist of actions to build and
maintain desirable relationships.

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 Understanding the Marketplace
and Customer Needs
• 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 • Technological
• Economic • Political-legal
• Physical • Socio-cultural
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 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?

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

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 Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
• De-marketing
• Marketing to reduce demand temporarily
or permanently
• The aim is not to destroy demand but to
reduce or shift it.

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 Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
• Marketing management is:
• Customer management
• Demand management

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 Designing a Customer-Driven
Marketing Strategy
Choosing a Value Proposition
• The value proposition is the set of
benefits or values a company promises
to deliver to customers to satisfy their
needs.

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 Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
• Production concept
• Product concept
• Selling concept
• Marketing concept
• Societal concept

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

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 Designing a Customer-Driven
Marketing Strategy
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.

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 Designing a Customer-Driven
Marketing Strategy
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.

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 Designing a Customer-Driven
Marketing Strategy
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.

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 Designing a Customer-Driven
Marketing Strategy
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.

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

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

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 Building Customer Relationships
Customer Relationship Management (CRM)
• Customer perceived value is the difference
between total customer value and total
customer cost.
• Customer satisfaction is the extent to
which a product’s perceived performance
matches a buyer’s expectations.

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 Building Customer Relationships
Customer Relationship Management (CRM)
Customer Relationship Levels and Tools
• Basic relationship
• Full relationships
• Frequency marketing programs
• Club marketing programs

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 Building Customer Relationships
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.

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 Building Customer Relationships
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.

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 Building Customer Relationships
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.

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 Building Customer Relationships
Partner Relationship Management
• The supply chain is a channel that
stretches from raw materials to components
to final products to final buyers.
• Supply management
• Strategic partners
• Strategic alliances

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 Capturing Value from Customers
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.

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

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 Capturing Value from Customers
Building Customer Equity
• Customer equity is the total combined
customer lifetime values of all of the
company’s customers.

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 Capturing Value from Customers
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

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

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 The New Marketing Landscape
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
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 The New Marketing Landscape
The New Digital Age
• Internet—creates marketplaces
and marketspaces
• Information
• Entertainment
• Communication

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

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 The New Marketing Landscape
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.

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 The New Marketing Landscape
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.

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

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