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MARKETING MANAGEMENT
14th edition
1
Defining
Marketing
for the
21st Century
Kotler
Keller
Good Marketing is No Accident
Boston Beer
C o m p a n y,
maker of
S a m u e l
A d a m s ,
constantly
innovates
CHP: 1&5-2
What is Marketing?
Marketing is an organizational function
and a set of processes for creating,
communicating, and delivering value
to customers and for managing
customer relationships
in ways that benefit the
organization and its stakeholders.
CHP: 1&5-3
What is Marketing?
•Marketing 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”
•Marketing is about managing profitable
customer relationships
– Attracting new customers
– Retaining and growing current
customers
CHP: 1&5-4
What is Marketing Management?
Marketing management is the
art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value.
CHP: 1&5-5
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. 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
CHP: 1&5-6
Core Marketing Concepts
CHP: 1&5-7
Understanding the
Marketplace
Core Concepts
• Needs, wants, and
demands
• Marketing offers:
including products,
services and experiences
• Value and satisfaction
• Exchange, transactions
and relationships
• Markets
•Need
– State of felt deprivation
– Example: Need food
•Wants
– The form of needs as
shaped by culture and
the individual
– Example: Want a Big
Mac
•Demands
– Wants which are
backed by buying
CHP: 1&5-8
power
Understanding the
Marketplace
Core Concepts
• Needs, wants, and
demands
• Marketing offers:
including products,
services and experiences
• Value and satisfaction
• Exchange, transactions
and relationships
• Markets
•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
CHP: 1&5-9
Understanding the
Marketplace
Core Concepts
• Needs, wants, and
demands
• Marketing offers:
including products,
services and experiences
• Value and satisfaction
• Exchange, transactions
and relationships
• Markets
•Value
– Customers form
expectations regarding
value
– Marketers must deliver
value to consumers
•Satisfaction
– A satisfied customer
will buy again and tell
others about their good
experience
CHP: 1&5-10
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.
CHP: 1&5-11
Understanding the
Marketplace
Core Concepts
• Needs, wants, and
demands
• Marketing offers:
including products,
services and experiences
• Value and satisfaction
• Exchange, transactions
and relationships
• Markets
•Exchange
– 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
CHP: 1&5-12
For an exchange to occur….
• There are at least two parties.
• Each party has something that might be of
value to the other party.
• Each party is capable of communication
and delivery.
• Each party is free to reject the exchange
offer.
• Each party believes it is appropriate or
desirable to deal with the other party.
CHP: 1&5-13
Understanding the
Marketplace
Core Concepts
• Needs, wants, and
demands
• Marketing offers:
including products,
services and experiences
• Value and satisfaction
• Exchange, transactions
and relationships
• Markets
•Market
– Set of actual and
potential buyers of a
product
– Marketers seek buyers
that are profitable
CHP: 1&5-14
What is Marketed?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
CHP: 1&5-15
Demand States
Negative
Nonexistent
Irregular
Declining
Full
Latent
Overfull
Unwholesome
CHP: 1&5-16
Structure of Flows in a Modern
Exchange Economy
CHP: 1&5-17
A Simple Marketing System
CHP: 1&5-18
The marketplace isn’t what it used to be…
Changing technology
Globalization
Deregulation
Privatization
Empowerment
Customization
Convergence
Disintermediation
CHP: 1&5-19
Company Orientations
Production
Product
Selling
Marketing
CHP: 1&5-20
Marketing Management
Philosophies
Production Concept
•Consumers favor products that are
available and highly affordable.
•Improve production and distribution.
Product Concept
•Consumers favor products that offer
the most quality, performance, and
innovative features.
Selling Concept
•Consumers will buy products only if
the company promotes/ sells these
products.
Marketing Concept
Holistic Marketing Concept
•Focuses on needs/ wants of target
markets & delivering satisfaction
better than competitors.
•Focuses on needs/ wants of target
markets & delivering superior CHP:
value.
1&5-21
The Selling and Marketing
Concepts Contrasted
CHP: 1&5-22
Holistic Marketing Dimensions
CHP: 1&5-23
The Four P’s
CHP: 1&5-24
Marketing Mix and the Customer
Four P’s
• Product
• Price
• Place
• Promotion
Four C’s
• Customer solution
• Customer cost
• Convenience
• Communication
CHP: 1&5-25
The New Four Ps
People
Processes
Programs
Performance
CHP: 1&5-26
Marketing-Mix Strategy
CHP: 1&5-27
Factors Influencing
Marketing Strategy
CHP: 1&5-28
Marketing Management Tasks
• Developing marketing
strategies
• Capturing marketing
insights
• Connecting with
customers
• Building strong
brands
• Shaping market
offerings
• Delivering value
• Communicating
value
• Creating long-term
growth
CHP: 1&5-29
Marketing Debate
Does Marketing
Create or Satisfy Needs?
CHP: 1&5-30
MARKETING MANAGEMENT
14th edition
5
Creating
Customer Value,
Satisfaction, and
Loyalty
Kotler
Keller
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.
CHP: 1&5-32
Determinants of
Customer Perceived Value
Total customer benefit
Total customer cost
Product benefit
Monetary cost
Services benefit
Time cost
Personal benefit
Energy cost
Image benefit
Psychological cost
CHP: 1&5-33
Determinants of Customer-Delivered
Value
Total
customer
value
Product
value
Total
customer
cost
Monetary
cost
Personal
value
Customerdelivered
value
Energy
cost
CHP: 1&5-34
Loyalty
A deeply held commitment to re-buy
or re-patronize a preferred product
or service in the future despite situational
influences and marketing efforts having
the potential to cause switching behavior.
CHP: 1&5-35
The Value Proposition
The whole cluster of benefits the
company promises to deliver
CHP: 1&5-36
Measuring Satisfaction
Periodic Surveys
Customer Loss Rate
Mystery Shoppers
Monitor competitive
performance
CHP: 1&5-37
Product and Service Quality
Quality is the totality of features and
characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.
CHP: 1&5-38
Total Quality Management
TQM is an organization-wide
approach to continuously
improving the quality of
all the organization’s processes,
products, and services.
CHP: 1&5-39
Maximizing Customer Lifetime Value
Customer
Profitability
Customer
Equity
Lifetime
Value
CHP: 1&5-40
Customer-Product Profitability
Analysis
CHP: 1&5-41
Framework for CRM
Identify prospects and customers
Differentiate customers by needs
and value to company
Interact to improve knowledge
Customize for each customer
CHP: 1&5-42
CRM Strategies
Reduce the rate of defection
Increase longevity
Enhance “share of wallet”
Terminate low-profit
customers
Focus more effort on
high-profit customers
CHP: 1&5-43
Mass vs. One-to-One Marketing
Mass
• Average customer
• Customer anonymity
• Standard product
• Mass production
• Mass distribution
• Mass advertising
• One-way message
• Economies of scale
One-to-One
• Individual customer
• Customer profile
• Customized market
offering
• Customized
production
• Economies of scope
• Share of customer
CHP: 1&5-44
Customer Retention
• Acquisition of customers can cost 5 times
more than retaining current customers.
• The average company loses 10% of its
customers each year.
• A 5% reduction to the customer defection
rate can increase profits by 25% to 85%.
• The customer profit rate increases over the
life of a retained customer.
CHP: 1&5-45
The Marketing Funnel
CHP: 1&5-46
The Customer-Development
Process
Suspects
Prospects
First-time
customers
Disqualified
Repeat
customers
Clients
Members
Partners
Ex-customers
CHP: 1&5-47
Building Loyalty
Partnership
Proactive
Accountable
Reactive
Basic
CHP: 1&5-48
Forming Strong Customer Bonds
Add financial
benefits
Add social
benefits
Add structural
ties
CHP: 1&5-49