Chapter 1

Tunis Business School
2022 - 2023
Fundamentals of Marketing
BCOR 210
Chapter 1
Marketing:
Managing Profitable Customer Relationships
Copyright © 2008 Pearson Education Canada 1-1 Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define marketing and outline 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.
4. Discuss customer relationship management and identify
strategies for creating and capturing value from customers.
5. Describe the major trends and forces changing the marketing
landscape.
What Is Marketing?
• Simplest definition
“Marketing is about managing profitable customer
relationships”
– Attracting new customers by promising superior value
– Retaining and growing current customers by delivering
satisfaction
• Broadly defined:
– “Marketing is a social and managerial process by which
individuals and groups obtain what they need and want
through creating and exchanging value with
others”(Philippe Kotler)
The Marketing Process
This figure presents five steps model of the marketing process.

In the first four steps, companies work to understand consumers, create
customers value and build strong customer relationships.
In the final step, companies reap the rewards of creating superior value. By
creating value for consumers, comapnies in turn capture value from their
customers in forms of sales, benefits.
Understanding the
Marketplace
• Core Concepts
– Understand the marketplace
and customer wants and needs
– Design a customer-driven
marketing strategy
– Construct a marketing
program that delivers
superior value
– Build profitable relationships
and create customer delight
– Capture value from customers
to create profits and customer
quality
Core Marketing Concepts
Products
,Needs, wants and
and demands Services
Core
Marketing
Concepts
Markets
,Value, satisfaction
and quality
,Exchange, transactions
and relationships
Understanding the Marketplace : core concepts
• Need
– State of felt deprivation
– Needs can be basically divided into Physical Needs, Social
Needs, and Individual Needs.
• Wants
_ The form of needs as shaped by culture and the individual
_Specific objects to fulfill our needs
Ex: hunger is a need but the type of food is a want
• Demands
– Wants which are backed by buying power
– Willingness and ability to buy Wants and needs
Example
• Marketing offer
– Combination of products, services, information or
experiences that satisfy a need or want
– Offer may include services, activities, people, places,
information or ideas
✔Products can be good, service, people, organizations,

places, or information
✔ Goods : tangible products
✔ Services: Activity or benefit offered for sale that is
essentially intangible and does not result in the
ownership of anything.
• Value
–Value is the benefits buyers receive that meet their needs. In
other words, value is what the customer gets by purchasing and
consuming a company’s offering.
–Customers form expectations regarding value
–Marketers must deliver value to consumers
• Satisfaction
–It is a measure of how products and services supplied by a
company meet or surpass customer expectation
–Customer satisfaction depends on a product‘s perceived
performance in delivering value relative to a buyer‘s
expectations
–A satisfied customer will buy again and tell others about their
good experience
• Exchange
– A marketing exchange is what happens any time
two or more people trade goods or service
– The act of obtaining a desired object from
someone by offering something in return
– One exchange is not the goal, relationships with
several exchanges are the goal
– Relationships are built through delivering value
and satisfaction
• Market
– Set of actual and potential buyers of a product
– Marketers seek buyers that are profitable
Understanding the Marketplace
This figure shows that company and competitors research the market and
interact with consumers to understand their needs. Then, they create and
send their market offerings to consumers either directly or through the
marketing intermediaries. Each party in the system is affected by major
environnemental forces
Design a customer-driven marketing
strategy
Second step
marketing strategy
superior value
quality
Designing a Customer-Driven
Marketing Strategy
• Marketing management is “the art and science
of choosing target markets and building
profitable relationships with them.”
• A winning marketing strategy
– What customers will we serve?
– How can we serve these customers best?
Designing a Customer-Driven
Marketing Strategy
• What customers will we serve?
– Market segmentation and target marketing
– Marketers select customers that can be served profitably
– Known as customer management and demand management
• How can we serve these customers best?
– By defining a value proposition that will differentiate and
position the brand in the marketplace
– Is set of benefits or values a company promises to deliver
to consumers in order to satisfy their needs
Marketing Management
Orientations
• Consumers favor products that are
Production available and highly affordable
Concept Management should focus on improving production
and distribution efficiency
Product Concept •Consumers favor products that offer the most

quality, performance, and innovative features
•Management focus on improving and quality
Selling Concept •Consumers will buy products only if the company

promotes/ sells these product
• management focuses on creating sales
Marketing transactions
rather than on building long-term customer
Concept relationship
Societal Marketing •Focuses on needs/ wants of target markets &

delivering satisfaction better than competitors
Concept
•Focuses on needs/ wants of target
markets & delivering superior value
Copyright © 2008 Pearson Education Canada to customers
1-18
that maintains Principles
or improves
of Marketing, Seventh Canadian Edition
Marketing Management Orientations
• Figure 1.3: The selling and marketing concepts
contrasted
The selling concept takes an inside-out perspective. It starts with the factory, focus on the
company’s existing products and calls for heavy selling and promotionto obtain
profitable sales. In the other hand, the marketing concepty takes an outside-in
perspective as it focus on satisfying customers needs as a path to profits
Marketing Management Orientations
• Figure 1.4: The Societal
Marketing Concept
– The marketing strategy
should deliver value to
customers and other
stakeholders affected by
marketing decisions in a way
that maintains or improves
the consumer’s and the
society’s well-being.
Construct a marketing program that
delivers superior value
Third step
marketing strategy
superior value
quality
Preparing a Marketing Plan
and Program
• Build customer relationships by transforming the
marketing strategy into action
• Includes the marketing mix and the 4Ps of
marketing
– Product (create a need satisfying market offering)
And then decide
– Price ( How much it will charge for the offerings)
– Place (How it will make it available to the target)
– Promotion ( How to communicate with the target and
persuade them of its merit)
Building Customer Relationships
Fourth step
marketing strategy
superior value
quality
Building Customer Relationships
• CRM – Customer relationship management “is the overall process
of building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction. It deals with
all aspects of acquiring, keeping and growing customers.”
• It is about managing detailed information about customers and

carefully managing customers touchpoints to maximize customer
loyalty.
(Touchpointcan be defined as any way a consumer can interact
with a business, whether it be person-to-person, through a website,
an app or any form of communication )
Relationship Building Blocks:
Value and Satisfaction
• Customer Perceived Value
– The customers’ evaluation of the difference
between benefits and costs.
– Customers often do not judge values and costs
accurately or objectively.
• Customer Satisfaction
– Product’s perceived performance relative to
customers’ expectations.
This ad attempts to
change the
perceived value of
Cheerios Cereal
Bar by helping
consumers evaluate
its nutritional value
Customer Relationship
Levels and Tools
Levels
• Basic relationships
– Low margin customers
• Full partnerships
– key customers (High margin)
Tools
• Frequency marketing programs
– Reward customers who buy frequently or in large amounts
• Club marketing programs
– Offer members special discounts and create member
communities ( Apple encourages customers to form local
apple users group.)
The Changing Nature of Customer
Relationships
• Relating with more Carefully Selected Customers
:
Marketers don’t want relationships with every customers but they
target fewer and more profitable.
• Relating more deeply and interactively:
Interactive customer relationship : Not just one way mass media
messgaes but using interactive approches ( email; sms; blogs;
social media)
Consumer generated marketing : brand exchanges created by
consumers themselves. Consumers are playing an increasing role
in shaping their own brand experiences (ex. My starbucks Idea)
Partnership Relationship Management
• Working closely with partners in other company

departments and outside the company to jointly
bring greater value to customers
• Partners Inside the Company
• Partners Outside the Firm
– Strategic partners
– Supply chain management
Construct a marketing program that
delivers superior value
Fifth step
marketing strategy
superior value
– Capture value from
customers to create profits
and customer quality
Capturing Value from Customers
• Creating Customer Loyalty and Retention
– Customer delight leads to emotional relationships and
loyalty.
– Customer lifetime value shows true worth of a
customer
• Growing Share of Customer
– Share of customer’s purchase in a product category
– Achieved through offering greater variety, cross-sell
and up-sell strategies
Upselling is the practice of encouraging customers
to purchase a comparable higher-end product than
the one in question, while cross-selling invites
customers to buy related or complementary items
Capturing Value from Customers
• Building Customer Equity
– The combined customer lifetime values of all
current and potential customers
– Measures a firm’s performance, but in a manner
that looks to the future
(Customer lifetime value is the sum total of the money you

expect to make from a customer )
New Marketing Challenges
New
Marketing
& Landscape
Information Nonprofit
Technology Marketing
Emerging
Ethical Challeng
Globalization
Concerns es
Changing
World
Economy
What Is Marketing?
• The process of building profitable customer
relationships by creating value for customers
and capturing value in return
• ( see textbook page 62)

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Tunis Business School

This figure presents five steps model of the marketing process.

Ex: hunger is a need but the type of food is a want

✔Products can be good, service, people, organizations,

Product Concept •Consumers favor products that offer the most

Selling Concept •Consumers will buy products only if the company

Societal Marketing •Focuses on needs/ wants of target markets &

• It is about managing detailed information about customers and

• Working closely with partners in other company

(Customer lifetime value is the sum total of the money you

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