MARKETING MANAGEMENT

1
Defining Marketing
for the
21st Century
 Marketing: Creating and
Capturing Customer Value

Chapter 1
 Objectives
• Be able to define marketing
and discuss its core concepts.
• Be able to define marketing
management and compare the five
marketing management
orientations.
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 Objectives
• Understand customer
relationship management and
strategies.
• Realize the major challenges
facing marketers in the new
“connected” millennium.
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 1. Introduction
• a. Today’s successful companies at all
levels have one thing in common.
• 1). All successful companies are:
• a). Strongly customer focused.
• b). Heavily committed to marketing.

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• b- To be successful an organization motivates
everyone in the organization to produce
superior value for their customers, leading to
high levels of customer satisfaction.

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 What is Marketing?
• Marketing is managing profitable
customer relationships
 Attracting new customers
 Retaining and growing current
customers
• “Marketing” is NOT synonymous with
“sales” or “advertising”
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 2. What is Marketing?
• a. Creating customer value and
satisfaction are at the very heart of
modern marketing thinking and
practice

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 2. What is Marketing?
• A very simple definition of
marketing is managing profitable
customer relationships.

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 2. What is Marketing?
• 1). The twofold goal of marketing
is to attract new customers by
promising superior value and to
keep and grow current customers
by delivering
satisfaction.
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• 2). Sound marketing is critical to
the success of every organization.

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• c. You already know a lot about
marketing—it’s all around you.

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 Marketing Defined
• d. Many people think of marketing
only as selling and advertising.
• 1). Marketing is no longer “telling
and selling.”
• 2). Today, marketing’s new sense is
concerned with satisfying customer
needs.

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 What is Marketing?
• Kotler’s social definition:
“Marketing is a social and
managerial process by which
individuals and groups obtain
what they need and want through
creating and exchanging products
and value with others.”

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 Selling is only the tip of the iceberg

“There will always be need for

some selling. But the aim of marketing is to
make selling superfluous.
superfluous The aim of
marketing is to know and understand the
customer so well that the product or
service fits him and sells itself. Ideally,
marketing should result in a customer who
is ready to buy. All that should be needed
is to make the product or service
available.”
Peter Drucker
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 Needs, Wants, and Demands

• -Human needs are the most basic

concept underlying marketing.
• - human need is a state of felt
deprivation

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 1). Humans have many complex needs.

• a). Basic, physical needs for food,

clothing, warmth, and safety.
• b). Social needs for belonging and
affection.
• c). Individual needs for knowledge
and self-expression.

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• 2). These needs are part of the basic
human makeup.

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 Human Wants
• g. Another concept in marketing is
human wants. A human want is the
form that a human need takes as
shaped by culture and individual
personality.
• h. Demands are human wants that
are backed by buying power.

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• 1). Consumers view products as
bundles of benefits and choose products
that give them the best bundle for their
money .
Examples:
An American needs food but wants a hamburger, French fries and soft
drink.
Many people want a Mercedes, only a few are able and willing to buy
one.

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• i. Outstanding marketing
companies go to great lengths to
learn about and understand their
customer’s needs, wants, and
demands.

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 Many Things Can Be Marketed!
Goods
Goods
Services
Services
Events
Events &
& Experiences
Experiences
Persons
Persons
Places
Places &
& Properties
Properties
Organizations
Organizations
Information
Information
Ideas
Ideas
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 Marketing Offers—Products, Services, and
Experiences

• j. Companies address needs by

putting forth a value proposition, a set
of benefits that they promise to
consumers to satisfy their needs.

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 Marketing Offers—Products, Services, and
Experiences

• 1). The value proposition is fulfilled

through a marketing offer—some
combination of products, services,
information, or experiences offered to a
market to satisfy a need or want.

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 Marketing Offers—Products, Services, and
Experiences

• 2). The concept of product is not

limited to physical objects and can
include experiences, persons,
places, organizations, information,
and ideas.

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 Marketing Offers—Products, Services, and
Experiences

• 3). Be careful of paying attention to

the product and not the benefit being
satisfied.
• 4). “Marketing myopia” is caused by
shortsightedness or losing sight of
underlying customer needs by only
focusing on existing wants

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 Marketing Offers—Products, Services, and
Experiences

• 5). Smart marketers create brand

meaning and brand experiences
for consumers.

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 What is Marketing?

Core Marketing Concepts

• Needs, wants, • Value and
and demands satisfaction
• Marketing offers: • Exchange,
including transactions and
products, services
and experiences relationships
• Markets
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 Value and Satisfaction
• k. Customer value is the difference
between the values that the customer
gains from owning and using a
product and the costs of obtaining the
product. Customers
form expectations about the value of
various marketing offers and buy
accordingly.

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 Value and Satisfaction
• l. Customer satisfaction depends on a
product’s perceived performance in
delivering value relative to a buyer’s
expectations. Customer satisfaction is
a key influence
on future buying behavior

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 Value and Satisfaction
• 1). Marketers must be careful to set the
right level of expectations.

• 2). Customer value and customer

satisfaction are key building blocks for
developing and managing customer
relationships.

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 Exchanges, Transactions, and
Relationships
• -Marketing occurs when people
decide to satisfy needs and wants
through exchange. Exchange is
the act of obtaining a desired
object from someone by offering
something in return.

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 Exchanges, Transactions, and
Relationships
• n. Whereas exchange is a core
concept of marketing, a
transaction (a trade of values
between two parties) is
marketing’s unit of measurement.
Most involve money, a response,
and action.
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 Exchanges, Transactions, and
Relationships
• o. Marketing consists of actions
taken to build and maintain desirable
exchange relationships with target
audiences involving a product,
service, idea, or other
object.

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 Markets
• p. The concepts of exchange and
relationships lead to the concept
of a market. market is the
set of actual and potential buyers
of a product.

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 Markets
• 1). Originally a “market” was a place
where buyers and sellers gathered to
exchange goods (such as a village square).
• 2). Economists use the term to designate a
collection of buyers and sellers who
transact in a particular product class (as in
the grain or housing market).

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 Markets
• 3). Marketers see buyers as
constituting a market and sellers
constituting an industry.
• 4). Marketers are keenly
interested in markets

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 Marketing
• q. The concept of markets brings
one full circle to the concept of
marketing.

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 Marketing
• 1). Sellers must search for buyers, identify their
needs, design good products and services, set
prices for them, promote them, and store and
deliver them.
• 2). A modern marketing system includes all of
the elements necessary to bring buyers
and sellers together. This might include such
activities as product development, research,
communication, distribution, pricing, and service.

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• 3). Each of the major actors in a
marketing system adds value for the
next level of the system. There is
often critical interdependency among
network members.

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 Marketing Management
• Marketing management is “the art
and science of choosing target markets
and building profitable relationships
with them.”
 Creating, delivering and
communicating superior customer
value is key.

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• 1). Marketing management involves
managing demand, which in turn
involves managing customer
relationships

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 Marketing Management
• Customer Management:
 Marketers select customers that can
be served well and profitably.
• Demand Management:
 Marketers must deal with different
demand states ranging from no
demand to too much demand.

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 Customer and Demand
Management
• b. Marketing management is
concerned not only with finding
and increasing demand, but also
with changing or even reducing it.

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• 1). Demarketing’s aim is to reduce
demand temporarily or permanently (move
traffic away from a popular tourist
attraction during peak demand times).
• 2). In reality, marketing anagement is
customer management and demand
management

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 Marketing Management
Marketing Management
Management Orientations
• Production • Selling concept
concept • Marketing
• Product concept concept
• Societal marketing concept

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4. Marketing Management
Orientations
• a. There are five alternative concepts
under which organizations conduct
their marketing activities: the
production, product, selling,
marketing, and societal marketing
concepts.

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 The Production Concept
• b. The production concept holds that
consumers will favor products that are
available and highly affordable and that
management should, therefore, focus on
improving production and distribution
efficiency. This is one of the oldest
philosophies that guides sellers

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 The Production Concept
• c. The production concept is useful
when:
• 1). Demand for a product exceeds the
supply.
• 2). The product’s cost is too high and
improved productivity is needed to
bring it down.

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 The Production Concept
• d. The risk with this concept is in
focusing too narrowly on company
operations. Do not ignore the desires
of the market. This concept can lead
to “marketing myopia.”

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 The Product Concept
• e. The product concept states that
consumers will favor products that
offer the most quality, performance,
and features, and that the organization
should, therefore devote its energy to
making continuous product
improvements.
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 The Product Concept
• 1). Some manufacturers mistakenly
believe that if they “build a better
mousetrap,”consumers will beat a path to
their door just for their product.
• 2). The product concept can also lead to
“marketing myopia,” the failure to see the
challenges being presented by other
products.

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 The Selling Concept
• f. Many organizations follow the
selling concept. The selling concept is
the idea that consumers will not buy
enough of the organization’s products
unless the organization undertakes a
large-scale selling and promotion
effort.

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 The Selling Concept
• 1). This concept is typically practiced
with unsought goods (those that buyers do
not normally think of buying).

• 2). To be successful with this concept,

the organization must be good at tracking
down the interested buyer and selling them
on the product benefits.

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 The Selling Concept
• 3). Industries that use this concept usually
have overcapacity. Their aim is to sell
what they make rather than make what will
sell in the market
• 4). There are not only high risks with this
approach but low satisfaction by
customers.

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 The Marketing Concept
• g. The marketing concept holds that
achieving organizational goals
depends on determining the needs and
wants of target markets and delivering
the desired satisfactions more
effectively and efficiently than
competitors do.

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 The Marketing Concept
• 1). Under the marketing concept,
customer focus and value are paths to
sales and profits

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• h. The marketing and selling concepts are often
confused. The primary differences are:
• 1). The selling concept takes an “inside-
out” perspective (focuses on existing
products and uses heavy promotion and selling
efforts).
• 2). The marketing concept takes an
“outside-in” perspective (focuses on customer
needs, values, and satisfactions).

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• i. Many companies claim to adopt the marketing
concept but really do not unless
they commit to market-focused and customer-
driven philosophies.
• 1). Customer-driven companies research current
customers to learn about their desires, gather new
product and service ideas, and test proposed
product improvements

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• 2). Such customer-driven marketing usually
works well when there exists a clear need and
when customers know what they want.
• 3). When customers do not know what they
want, marketers can try customer- driving
marketing—understanding customer needs even
better than customers themselves do, and creating
products and services that will meet existing and
latent needs now and in the future.

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 The Societal Marketing Concept
• j. The societal marketing concept holds
that the organization should determine the
needs, wants, and interests of target
markets. It should then deliver the desired
satisfactions more effectively and
efficiently than competitors in a way that
maintains or improves the consumer’s and
the society’s well-being.

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• 1). The societal marketing concept is the newest
of the marketing philosophies.

• 2). It questions whether the pure marketing

concept is adequate given the wide variety of
societal problems and ills.
• 3). According to the societal marketing
concept, the pure marketing concept overlooks
possible conflicts between short-run consumer
wants and long- run consumer welfare.

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• 4). The societal concept calls upon
marketers to balance three
considerations in setting their
marketing policies:
a). Company profits.
b). Customer wants.
c). Society’s interests.

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• 5). It has become good business to
consider and think of society’s
interests when the organization makes
marketing decisions.

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 CRM
• CRM – Customer relationship
management . . .
“is the overall process of building
and maintaining profitable customer
relationships by delivering superior
customer
value and satisfaction.”
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 CRM
• It costs 5 to 10 times MORE to
attract a new customer than it
does to keep a current customer
satisfied.
• Marketers must be concerned
with the lifetime value of the
customer.
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 CRM
• Customer value/satisfaction
Key Concepts  Perceptions are key
 Meeting/exceeding expectations
creates satisfaction
• Attracting, • Loyalty and retention
 Benefits of loyalty
retaining and  Loyalty increases as satisfaction
growing customers levels increase
 Delighting consumers should be
• Building customer the goal
• Growing share of customer
relationships and  Cross-selling
customer equity
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 CRM
• Customer equity
Key Concepts
 The total combined
customer lifetime
• Attracting, values of all
retaining and customers.
growing customers  Measures a firm’s
performance, but in a
• Building customer manner that looks to
relationships and the future.
customer equity
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 CRM
• Customer relationship
Key Concepts levels and tools
 Target market typically
dictates type of relationship
• Attracting,  Basic relationships
retaining and  Full relationships

growing customers  Customer loyalty and

retention programs
• Building customer  Adding financial benefits
 Adding social benefits
relationships and  Adding structural ties

customer equity
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 Marketing Challenges
• Technological advances, rapid
globalization, and continuing social
and economic shifts are causing
marketplace changes.
• Major marketing developments can be
grouped under the theme of
Connecting.

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 Marketing Challenges
Connecting • Advances in computers,
telecommunications, video-
conferencing, etc. are major
forces.
• Via technology  Databases allow for
customization of products,
• With customers messages and analysis of
needs.
• With marketing • The Internet
 Facilitates anytime,
partners anywhere connections
 Facilitates CRM
• With the world  Creates marketspaces

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 Marketing Challenges
Connecting • Selective relationship
management is key.
 Customer profitability
• Via technology analysis separates winners
from losers.
• With customers • Growing “share of
customer”
• With marketing  Cross-selling and up-
selling are helpful.
partners
• Direct sales to buyers are
• With the world growing.
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 Marketing Challenges
Connecting • Partner relationship
management involves:
• Via technology  Connecting inside the
company
• With customers  Connecting with
outside partners
• With marketing  Supply chain
partners management
 Strategic alliances
• With the world
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 Marketing Challenges
• Globalization
Connecting  Competition
 New opportunities
• Via technology • Greater concern for
environmental and social
• With customers responsibility
• Increased marketing by
• With marketing nonprofit and public-
sector entities
partners  Social marketing
campaigns
• With the world
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