Ch.

1 Learning Objectives

 The evolution of marketing

 Basic concepts of marketing

CHAPTER 1  Marketing management

 Building customer relationship
 Capturing value from customers
 Some contemporary issues of marketing

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The Born of Marketing Development of Marketing

Good marketing

Customer relationship
Industrial marketing

and retention
Social & not-for-profit marketing

Conflicts in good Service marketing

trading International & direct
Solution to survive Online marketing
MARKETING
& grow? One-to-one
Development of
industry sector 1900 1950 1960 1970 1980 1990 2000
(Supply > Demand)
ECONOMIC SCIENCE BEHAVIORAL SCIENCE

(Christopher, Payne & Ballantyne, 2002; Tho & Trang, 2007)

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 Basic Concepts of Marketing Marketing

 Some definitions

“Marketing is the process of planning and executing the

Need, Want, Demand conception, pricing, promotion and distribution of ideas, goods
and services to create exchanges that satisfy individual and
organizational objectives”.
--- American Marketing Association, 1985 ---
Market Market
MARKETING offering
“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
Value, Satisfaction the organization and its stakeholders”.
Exchange, Transaction, --- American Marketing Association, 2004 ---
Relationship
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Marketing Marketing

 Some definitions  Marketing process (Kotler & Armstrong, 2012)

Broadly defined,“marketing is a social and managerial process
by which individuals and organizations obtain what they need Create value FOR customers and Capture value
and want through creating and exchanging value with others”. build customer relationships FROM customers
--- Kotler & Armstrong, 2012 ---
Understand Build Capture value
the Design a profitable from
Construct an
marketplace customer- relationships customers to
integrated
In a narrower business context, marketing is “the process by and driven
marketing
and create profits
which companies create value for customers and build strong customer marketing create and
program
needs strategy customer customer
customer relationships in order to capture value from customers
and wants delight equity
in return”.
--- Kotler & Armstrong, 2012 ---

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 Need, Want & Demand Need, Want & Demand

 Need  Demand states

 States of felt deprivation.
Demand states Marketing tasks Actions
Negative demand Disabuse demand Change the market’s beliefs, attitudes.
 Want No demand Create demand Connect product attributes and cus. needs
 The form human needs take as they are shaped by Latent demand Develop demand Develop product
culture and individual personality. Declining demand Revitalize demand Communicate, find new market
Irregular demand Synchronize Flexible pricing, promotion, incentives
Full demand Maintain demand Measure performance
 Demand Overfull demand Reduce demand Demarket
 Human wants that are backed by buying power Unwholesome demand Destroy demand Fear messages, price hikes, reduced availability
(ability to pay).

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Market Offering Value & Satisfaction

 Market offering ~ Product (in marketing context)  Customer value ~ Perceived value
 Anything that can be offered to a market for attention, acquisition, use, or  The customer’s evaluation of the difference
consumption that might satisfy a need or want. between all the benefits and all the costs of a
marketing offer relative to those of competing
 Include: physical product, service, person, place, organization, information, idea.
offers.
 Total customer benefit
 Marketing myopia
 Product, service, people, image
 The mistake of paying more attention to the specific products a company offers
than to the benefits and experiences produced by these products.  Total customer cost
 Monetary, time, energy, psychological costs

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 Value & Satisfaction Exchange, Transaction, Relationship

 Customer satisfaction  Exchange

 The extent to which a product’s perceived performance matches a buyer’s  The act of obtaining a desired object from someone by offering something in
expectations. return.

 Conditions for an exchange to take place

Perceived
performance < Expect-
ation
Perceived
performance = Expect-
ation
Perceived
performance > Expect-
ation 1. At least two parties must participate
2. Each party must have something of value to the other
3. Each party must want to deal with the other
4. Each party must be free to accept or reject the other’s offer
5. Each party must be able to communicate and deliver

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Exchange, Transaction, Relationship Exchange, Transaction, Relationship

 Transaction  Relationship
 A marketing’s unit of measurement.  Frequent and repeated transactions
 A trade between two parties (commercial exchange).

 Relationship marketing
 Conditions for a transaction to take place:
 The process of creating, maintaining and
 At least two things of value are involved enhancing strong, value-laden relationships
 Agreed-upon conditions with customers and other stakeholders
(distributors, dealers, suppliers, etc.).
 A time of agreement
 A place of agreement
 Often supported and restricted by legislation/law.

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 Market Marketing Management

 Market  Marketing management 1

 The set of all actual and potential buyers of a  The analysis, planning, implementation, and control of programs designed to
product or service. create, build, and maintain beneficial exchanges with target buyers for the
purpose of achieving organizational objectives: profit, sales, market share,…
 These buyers share a particular need or want
that can be satisfied through exchange  Marketing management 2
relationships.
 The art and science of choosing target markets and building profitable
relationships with them.
 Aims: to find, attract, keep, and grow target customers by creating, delivering,
and communicating superior customer value.

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Marketing Management Orientations/Philosophies Marketing Management Orientations/Philosophies

PRODUCTION Consumers will favour products that are available and highly
concept affordable.
Starting point Focus Means Ends
Consumers will favour products that offer the most quality,
PRODUCT concept The
performance, and features. Profits through
SELLING Existing Selling and
Factory
Consumers will not buy enough of the firm’s products unless it products promoting sales volume
SELLING concept concept
undertakes a large-scale selling and promotion effort.
Inside-out perspective
Achieving organizational goals depends on knowing the needs
MARKETING
and wants of target markets and delivering the desired
concept
The Integrated Profits through
satisfactions better than competitors do. Customer
MARKETING Market marketing customer
A company’s marketing decisions should consider consumers’ needs
SOCIETAL MAR. concept satisfaction
wants, the company’s requirements, consumers’ long-run
concept Outside-in perspective
interests, and society’s long-run interests

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 Marketing Management Orientations/Philosophies Marketing Strategy

 Marketing strategy
SOCIETY
(Human welfare)

How can we
Customer-
What customers will serve these
Societal driven
we serve (what’s our customers best
marketing marketing
target market)? (what’s our value
philosophy strategy
proposition)?

CONSUMERS COMPANY
(Want satisfaction) (Profits)

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Marketing Mix Customer Relationship Management

 Marketing mix  Customer Relationship Management (CRM)

 The set of controllable tactical marketing tools that the firm blends to implement  In narrow sense: a customer data management
its marketing strategy. activity to maximize customer loyalty.
 In broad sense: The overall process of building
Advertising | Sales
Variety | Quality | Design and maintaining profitable customer
| Features | Brand name
| Packaging | Services
PRODUCT PROMOTION promotion | Public
relations | Direct relationships by delivering superior customer
marketing | Sales force value and satisfaction.
4P  Relationship building blocks
List price | Discounts | Channels | Coverage |
= Value + Satisfaction
Allowances | Payment
period | Credit terms
PRICE PLACE Locations | Inventory |
Transport | Logistics

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 Customer Relationship Management Customer Relationship Management

 Customer relationship levels  Customer relationship tools

Basic Reactive Accountable Proactive Partnership Financial

ties Adding financial benefits
Sell product but Sell product and Phone cus. a Phone cus. from Work Social Increasing social bonds by learning individual cus’s needs and
not follow up in encourage cus. to short time after time to time with continuously with ties wants, then individualizing and personalizing product
any way call whenever the sale to check suggestions cus. to discover
having questions whether they about improved ways to deliver Structural Adding structural ties (special equipment, software or method)
or problems satisfy or new products better value ties

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Partner Relationship Management Customer Loyalty

 Partner Relationship Management (PRM)  Customer loyalty

 Working closely with partners in other company  “A deeply held commitment to rebuy or repatronize a preferred product/service
departments and outside the company to jointly consistently in the future, thereby causing repetitive same-brand or same brand-
bring greater value to customers. set purchasing, despite situational influences and marketing efforts having the
potential to cause switching behavior” (Oliver, 1999, p. 34)
 Partners inside the firm
 All departments
 Dimensions of loyalty
 Partners outside the firm
 Behavioural loyalty
 Suppliers
 Attitudinal loyalty
 Channel partners/supply chain
 Competitors
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 Share of Customer Customer Equity

 Share of customer  Customer lifetime value (CLV)

 The portion of the customer’s purchasing that a  The value of the entire stream of purchases that the
company gets in its product categories. customer would make over a lifetime of patronage.
 Examples:  Customer equity
 Banks: “share of wallet”  The total combined customer lifetime values of all of
 Supermarkets and restaurants: “share of stomach” the company’s current and potential customers.
 Car companies: “share of garage”
 Customer equity vs. Sales, Market share
 Airlines: “share of travel”

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Contemporary Issues in Marketing Summary

Create value for customers and build customer relationships Capture value from cus.
Marketing in the uncertain economic environment
#1 Understand the Design a Construct an Build profitable Capture value from
Marketing to the bottom of the pyramid marketplace; cus. customer-driven integrated relationships and cus. to create profit
needs & wants mar. strategy mar. program create cus. delight & cus equity
#2 Global marketing
Research cus. & Selecting customers Product Customer relationship Create satisfied,
the marketplace to serve management loyal customers
#3 E-marketing: Internet, mobile, social media [CHAPTER 4]
[CHAPTER 2, *] [CHAPTER 3]
Price
Manage mar. Decide on a value Partner relationship Capture customer
Sustainable marketing infor. & cus. data proposition
[CHAPTER 5]
management lifetime value
#4
Social responsibility in marketing [CHAPTER *] [CHAPTER 3]
Place
[CHAPTER 6]
Increase share of
#5 Not-for-profit marketing Promotion market and share
[CHAPTER 7] of customer

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