MARKETING MANAGEMENT

Philip Kotler
 Learning Goals
1. Define marketing and the marketing process.
2. Explain the importance of understanding custo
mers and identify the five core marketplace co
ncepts
3. Identify the elements of a customer-driven mar
keting strategy and discuss the marketing man
agement orientations.
4. Discuss customer relationship management an
d creating value for and capturing value from c
ustomers
5. Describe the major trends and forces changing
the marketing landscape
 What is Marketing?
 Marketing is not only much broader than
selling, it is not specialized activity at all.
Marketing encompasses the entire
business. It is the whole business seen from
the point of view of its final result, that is,
from the customer point of view. (Drucker,
1959)

 Marketing is a way of doing business by

satisfying customers’ needs better than
competitors (Levitt, 1960)
 Marketing is social and managerial process
by which individuals and groups obtain what
they need and want through creating and
exchanging products and value with others
(Kotler & Amstrong, 2001)

 Marketing is to establish, develop and

commercialize long-term customer
relationships, so that the objectives of the
parties involved are met. This is done by a
mutual exchange and keeping of promises
(Gronroos, 1989)
 Some Causes of the Trapping of
Marketing
 Management does not fully understand the
marketing concept
 Management understands the implication of
marketing concept but does not committed
itself to the actions and decisions needed to
reinforce it
 Management fails to install the
administrative mechanism necessary for
effective implementation of the concept
Some Critics on the Implementation of
Marketing Concept
 Many businessmen use their knowledge of
customer as a mean to persuade or even to
manipulate them
 The information of new product
development may not come from the
customer due to their inability to express
the new needs and wants. The real
information for NPD just come from the
engineers or production people
 The implementation of marketing concept
has hampered the product innovation
 Three Dimension Of Marketing Concept
(Webster, 1992, 1997) :

 Marketing as culture

 Marketing as strategy

 Marketing as tactic
The Strategic Roles of Marketing in the
Organizations (Webster, 1992, 1997)
 At Corporate level: put the customer as the main factor in
every business decision and to communicate this value as part
of organizational culture to the entire organization, internally
and externally.

 At SBU level: determine market segment, target market, and

product positioning based on the customer and competitor’s
analysis, and organization competence’s analysis.

 At operational level: implement the business strategy with

marketing mix that are decisions relating to the product,
pricing, distribution, marketing communications strategies to
provide the best values for the customers.
Proporsi Dimensi Pemasaran pada
Tingkatan Organisasi

Tingkat Tingkat Tingkat

Korporat Unit Bisnis Operasional

Pemasaran sebagai Budaya Pemasaran sebagai Taktik

Pemasaran sebagai
Strategi
 The Marketing Process
A Five-Step Process
1. Understand the marketplace and
customer needs and wants
2. Design a customer-driven marketing
strategy
3. Construct a marketing program that
delivers superior value
4. Build profitable relationships and
create customer delight
5. Capture value from customers to create
profits and customer quality
 Understanding the Marketplace

Core Concepts  Need

– State of felt deprivation
 Needs, wants, and
demands – Example: Need food
 Marketing offers:  Wants
including products, – The form of needs as
services and experiences shaped by culture and the
 Value and satisfaction individual
 Exchange, transactions – Example: Want a Big Mac
and relationships  Demands
 Markets – Wants which are backed
by buying power
 Understanding the Marketplace

Core Concepts  Marketing offer

 Needs, wants, and
demands
 Marketing offers:
including products,
services and experiences
 Value and satisfaction
 Exchange, transactions
and relationships
 Markets
– Combination of
products, services,
information or
experiences that
satisfy a need or want
– Offer may include
services, activities,
people, places,
information or ideas
 Understanding the Marketplace

Core Concepts  Value

 Needs, wants, and
demands
 Marketing offers:
including products,
services and experiences
 Value and satisfaction  Satisfaction
 Exchange, transactions
and relationships
 Markets
– Customers form
expectations regarding
value
– Marketers must deliver
value to consumers
– A satisfied customer will
buy again and tell others
about their good
experience
 Understanding the Marketplace

Core Concepts  Exchange

 Needs, wants, and
demands
 Marketing offers:
including products,
services and experiences
 Value and satisfaction
 Exchange, transactions
and relationships
 Markets
– 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
 Understanding the Marketplace

Core Concepts  Market

– Set of actual and potential
 Needs, wants, and
buyers of a product
demands
– Marketers seek buyers
 Marketing offers:
that are profitable
including products,
services and experiences
 Value and satisfaction
 Exchange, transactions
and relationships
 Markets
 Marketing Management
 Marketing management is the art
and science of choosing target
markets and building profitable
relationships with them.
– This definition must include answers
to two questions:
• What customers will we serve?
• How can we serve these customers best?
 Selecting Customers and
Creating Value
 Customer Management
– What customers will we serve?
– Marketers select customers that can be
served profitably
 Value Proposition
– How can we serve these customers best?
– Includes the set of benefits or values a
company promises to deliver to consumers
to satisfy their needs
 Marketing Orientations
 The Production Concept
– Management focus on production and
distribution efficiency
– Consumers favour
• Readily available products
• Affordable products
 The Product Concept
– Consumers favour products offering
• Highest quality
• Best performance
• Most innovative features
 The Selling Concept
– Sell what you make
– Typically for unsought goods
– Focus on sales transactions
– Driven by excess capacity
– Assumes hard sell customers are
satisfied
 The Marketing Concept
– Focus on customer wants and needs
– Delivering satisfaction
• More effectively than competitors
• More efficiently than competitors
Comparison between Selling
and Marketing Concepts
Starting Focus Means Ends
point
Existing Selling and Profits through
Factory products promoting sales volume
The selling concept

Customer Integrated Profits through

Marke needs marketing satisfaction
t
The marketing concept
 The Societal Marketing Concept
– Maintain or improve well-being of
consumers and society
• Focus on customer wants and needs
– Delivering satisfaction
• More effectively than competitors
• More efficiently than competitors
– Maintains or improves consumers’ and
society’s well-being
Relationships among Company,
Customer, and Society
Society (human welfare)

Societal
marketing
concept

Consumers Company
(want satisfaction) (profits)
 Building Customer
Relationships
 CRM – Customer relationship
management
 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.
 Value and Satisfaction
 Perceived Value
– The customer’s 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 customer’s expectations.
 Not All Customers
are Equal
 Basic Relationships
– Low-margin customers
 Full Partnerships
– Key customers
 Selective relationship management
– Weeding out unprofitable customers
 Capturing Value from
Customers
Key Concepts  Customer delight
leads to emotional
 Customer relationships and
Loyalty and loyalty
Retention  Customer Lifetime
 Share of Value shows true
Customer worth of a
 Customer Equity customer
 Capturing Value from
Customers
Key Concepts  Share of customer’s
purchase in a
 Customer product category.
Loyalty and  Achieved through
Retention offering greater
 Share of variety, cross-sell
Customer and up-sell
strategies.
 Customer Equity
 Capturing Value from
Customers
Key Concepts  The combined customer
lifetime values of all
current and potential
 Customer customers.
Loyalty and  Measures a firm’s
Retention performance, but in a
manner that looks to the
 Share of future.
Customer  Choosing the “best”
customers is key
 Customer Equity
 Marketing Landscape

Challenges  Growth of the Internet

 Advances in
 Digital age telecommunications,
 Globalization information,
transportation
 Ethics and social – Customer research and
responsibility tracking
– Product development
 Not-for-profit – Distribution
marketing – New advertising tools
– 24/7 marketing through the
 Marketing Internet
relationships
 Marketing Landscape

Challenges  Geographical and

 Digital age cultural distances
have shrunk
 Globalization
– Greater market
 Ethics and social coverage
responsibility – More options for
purchasing and
 Not-for-profit manufacturing
marketing – Increased competition
 Marketing from foreign
competitors
relationships
 Marketing Landscape

Challenges  Marketers need to

 Digital age take great
responsibility for
 Globalization
the impact of their
 Ethics and social
actions
responsibility – Caring capitalism is a
 Not-for-profit way to differentiate your
marketing company

 Marketing
relationships
 Marketing Landscape

Challenges  Many organizations

 Digital age are realizing the
importance of
 Globalization
strategic marketing
 Ethics and social – Performing arts
responsibility – Government agencies
 Not-for-profit – Colleges
marketing – Hospitals
 Marketing – Churches
relationships
 Marketing Landscape

Challenges  Profits through

 Digital age managing long-
term customer
 Globalization
equity
 Ethics and social – Improve customer
responsibility knowledge
 Not-for-profit – Target profitable
customers
marketing
– Keep profitable
 Marketing customers
relationships