Principles Of Marketing

PHILIP KOTLER, GARY ARMSTRONG

Chapter One
Marketing: Managing Profitable
Customer Relationships
 Learning Outcomes
• Define marketing and the marketing
processes.
• Explain the importance of understanding
customers and the marketplace.
• Identify the five core marketplace
concepts.
• Identify the key elements of a customer-
driven marketing strategy.
• Discuss customer relationship
management and ways of creating and
obtaining value.
• Describe the major trends and forces
changing today’s marketing landscape.
2
 What is Marketing?

• Attracting new customers by promising

and delivering superior value.
• Building long-term relationships with
customers by delivering continued
customer satisfaction.
• Creating, building and managing these
relationships profitably over time.
• Marketing” is NOT synonymous with
“sales” or “advertising”

3
 • Broad Definition:-
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.
• Narrower Definition:-
The process by which companies create
value for customers and build strong
customer relationships in order to
capture value from customers in
return.

4
The Marketing Process Model
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 equity.

5
1.Understanding The Marketplace
And The Consumer Needs

6
 Needs, Wants and Demands
• Needs are states of felt
deprivation.
– Physical:
• Food, clothing, shelter, safety.
– Social:
• Belonging, affection.
– Individual:
• Learning, knowledge, self-
expression.

7
 Needs, Wants and Demands
• Wants are needs shaped by culture and
individual personality.
– Jeans vs a sari.
– Individual expression vs. collective
good.
• Demands are wants combined with
buying power.
– Hilfiger vs. Giant Tiger.
– Jetta vs. Jaguar.

8
Products, Services, Experiences
• Products.
– Anything that can be offered for.
– Acquisition, attention, use or
consumption.
– That might satisfy a need or want.
• Services.
– Activities or benefits offered.
– Essentially intangible.
– Do not result in ownership of anything.
• Experiences.
– Create, stage and market brand
experiences.
– Attending live theatre, music concert.

9
 Marketing Myopia
• Sellers pay more attention to the
specific products they offer than to
the benefits and experiences
produced by the products.
• They focus on the “wants” and lose
sight of the “needs.”
– The great railroads lost out to the
exploding trucking industry.
– They forgot that their business
was solving transportation
problems, not running railroads.

10
How Do Consumers
Choose Among Offers?

 Customer Value – Difference between the values

the customer gains from owning the product versus
the costs of obtaining it. Customers buy from the firm
that offers the highest customer perceived value

 Customer Satisfaction – Perceived performance

in providing value, relative to expectations – how well
the product lives up to expectations

Important: Perceptions are key

Set the right level of expectation
Mdm Amaliya/AFT1053/FEB2020 11
 Value and Satisfaction
• If the performance and the customer’s
experience is lower than expectations,
than customer satisfaction is low.
• If the performance and the customer’s
experience meets expectations, than the
customer is satisfied.
• If the performance and the customer’s
experience exceeds expectations, than
the customer is delighted.

12
 Exchange and Transactions
• Exchange.
– The act of obtaining a desired object from
someone by offering something in return.
• Transaction.
– A trade between two parties that involves:
• two things of value.
• agreed upon conditions.
• time of agreement.
• place of agreement.

13
 What is a Market?
• The set of actual and potential buyers of
a product.
• These people share a need or want that
can be satisfied through exchange
relationships.

14
 Core Marketplace Concepts
• Customers have needs, wants and
demands.
• Marketers offer products or services.
• Customers seek value and satisfaction
from offers.
• Demands and offers result in
transactions and relationships.
• Markets are all potential customers with a
similar demand.

15
 Customer-Driven Marketing
• Divide markets into segments.
• Choose the right segment to target.
• Offer a unique value proposition.
• Differentiate your offer from competitor
offers.
• Build customer value and satisfaction.
• Nurture long-term customer relationships.

16