Chapter 01

1
Principles of Marketing
Marketing: Managing
Profitable Customer
Relationships
1
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
2
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
3
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
4
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
5
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
6
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
7
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, Economic, Physical, Technological,
Political–legal, Socio-cultural
8
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
10
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.
11
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
13
Marketing Strategy
Marketing Management Orientations
• Production concept
• Product concept
• Selling concept
• Marketing concept
• Societal concept
14
Marketing Strategy
Production concept is the idea that

consumers will favor products that are
available or highly affordable
15
Marketing Strategy
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
16
Marketing Strategy
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
17
Marketing Strategy
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
18
Marketing Strategy
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
19
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
20
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
21
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
22
Partner Relationship Management
Supply chain is a channel that stretches from

raw materials to components to final
products to final buyers
• Supply management
• Strategic partners
• Strategic alliances
23
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
24
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
25
The New Marketing Landscape
Major Developments
• Digital age
• Globalization
• Ethics and social responsibility
• Not-for-profit marketing
26
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
27
The New Digital Age
Internet—creates marketplaces and

marketspaces
• Information
• Entertainment
• Communication
28
Rapid Globalization
• The world is smaller

• Think globally, act locally
29
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
30
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
31
The Growth for Not-for-Profit Marketing
• Colleges
• Hospitals
• Museums
• Zoos
• Orchestras
• Religious groups
32

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1

Marketing is the process by which companies

Customer Needs, Wants, and Demands

• Needs are states of deprivation

Customer Needs, Wants, and Demands

Wants are the form that needs take as they

Demands are wants backed by buying power

Market Offerings—Products, Services, and

Market offerings are some combination of

Exchanges and Relationships

Exchange is the act of obtaining a desired

Relationships consist of actions to build

Marketing system consists of all of the actors

Selecting Customers to Serve

Market segmentation: Dividing the markets

Target marketing: Which segments to go

Selecting Customers to Serve

De-marketing: Marketing to reduce demand

Choosing a Value Proposition

The value proposition is the set of

Marketing Management Orientations

Marketing Management Orientations

Production concept is the idea that

Marketing Management Orientations

Product concept is the idea that consumers

Marketing Management Orientations

Selling concept is the idea that consumers will

Marketing Management Orientations

Marketing concept is the idea that achieving

Societal marketing concept is the idea that

The marketing mix is the set of tools (four

Customer Relationship Management

Customer relationship management is the

Customer Relationship Management

Customer perceived value is the difference between

Customer satisfaction is the extent to which a

Partner Relationship Management

Supply chain is a channel that stretches from

Creating Customer Loyalty and Retention

Customer lifetime value is the value of

Growing Share of Customer

Share of customer is the portion of the

The New Digital Age

Internet—creates marketplaces and

• The world is smaller

The Call for More Ethics and Social Responsibility

Marketers are being called upon to take greater

The Call for More Ethics and Social Responsibility

Social marketing campaigns encourage

The Growth for Not-for-Profit Marketing

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