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MARKETING MANAGEMENT
12th edition
1
Defining Marketing
for the 21st Century
Kotler
Keller
Chapter Questions
 Why
is marketing important?
 What is the scope of marketing?
 What are some of the fundamental
marketing concepts?
 How has marketing management
changed?
 What are the tasks necessary for
successful marketing management?
1-2
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.
1-3
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.
1-4
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.
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1-5
What is Marketed?
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Goods
Services
Events
Experiences
Persons
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Places
Properties
Organizations
Information
Ideas
1-6
Demand States
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Negative
Nonexistent
Latent
Declining
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Irregular
Unwholesome
Full
Overfull
1-7
Key Customer Markets
Consumer markets
 Business markets
 Global markets
 Nonprofit/Government markets
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1-8
The marketplace isn’t what it used to be….
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Changing technology
Globalization
Deregulation
Privatization
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Empowerment
Customization
Convergence
Disintermediation
1-9
Company Orientations
Production
 Product
 Selling
 Marketing
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1-10
Marketing Mix and the Customer
Four Ps
 Product
 Price
 Place
 Promotion
Four Cs
 Customer solution
 Customer cost
 Convenience
 Communication
1-11
Core Concepts
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Needs, wants, and
demands
Target markets,
positioning,
segmentation
Offerings and brands
Value and
satisfaction
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Marketing channels
Supply chain
Competition
Marketing
environment
Marketing planning
1-12
I want it, I need it…..
5 Types of Needs
Stated needs
 Real needs
 Unstated needs
 Delight needs
 Secret needs
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1-13
Marketing Management Tasks
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Developing
marketing strategies
Capturing marketing
insights
Connecting with
customers
Building strong
brands
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Shaping market
offerings
Delivering value
Communicating
value
Creating long-term
growth
1-14
MARKETING MANAGEMENT
12th edition
3
Gathering Information
and Scanning the
Environment
Kotler
Keller
Chapter Questions_1
 What
are the components of a
modern marketing information
system?
 What are useful internal records?
 What is involved in a marketing
intelligence system?
1-16
Chapter Questions_2
 What
are the key methods for
tracking and identifying opportunities
in the macroenvironment?
 What are some important
macroenvironment developments?
1-17
MIS Probes for Information
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What decisions do you regularly make?
What information do you need to make these
decisions?
What information do you regularly get?
What special studies do you periodically
request?
What information would you want that you are
not getting now?
What are the four most helpful improvements
that could be made in the present marketing
information system?
1-18
Internal Records
Order-to-Payment Cycle
 Sales Information System
 Databases, Warehousing, Data mining
 Marketing Intelligence System
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1-19
Steps to Improve Marketing Intelligence
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Train and motivate sales force
Motivate channel members to share intelligence
Network externally
Utilize customer advisory panel
Utilize government data resources
Purchase information
Collect customer feedback online
1-20
Needs and Trends
Fad
Trend
Megatrend
1-21
10 Megatrends Shaping the
Consumer Landscape
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Aging boomers
Delayed retirement
Changing nature of
work
Greater educational
attainment
Labor shortages
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Increased immigration
Rising Hispanic
influence
Shifting birth trends
Widening geographic
differences
Changing age
structure
1-22
Environmental Forces
Demographic
 Economic
 Socio-Cultural
 Natural
 Technological
 Political-Legal
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1-23
Population and Demographics
Size
 Growth rate
 Age distribution
 Ethnic mix
 Educational
levels
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Household
patterns
 Regional
characteristics
 Movement
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1-24
Economic Environment
$ Purchasing Power
$ Income Distribution
$ Savings Rate
$ Debt
$ Credit Availability
1-25
Types of Industrial Structures
Industrial economies
 Industrializing economies
 Raw-material exporting economies
 Subsistence economies
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1-26
Social-Cultural Environment
Views of themselves
 Views of others
 Views of organizations
 Views of society
 Views of nature
 Views of the universe
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1-27
Natural Environment
Shortage of raw materials
 Increased energy costs
 Anti-pollution pressures
 Governmental protections
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1-28
Technological Environment
Pace of change
 Opportunities for innovation
 Varying R&D budgets
 Increased regulation of change
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1-29
MARKETING MANAGEMENT
12th edition
4
Conducting
Marketing Research
and Forecasting Demand
Kotler
Keller
Chapter Questions
 What
constitutes good marketing
research?
 What are good metrics for measuring
marketing productivity?
 How can marketers assess their
return on investment of marketing
expenditures?
 How can companies more accurately
measure and forecast demand?
1-31
Marketing Research Defined
Systematic design, collection,
analysis, and reporting of data
and findings relevant to a specific
marketing situation facing a company.
1-32
Types of Marketing Research Firms
Syndicated
 Custom
 Specialty-line
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1-33
The Marketing Research Process
Define the problem
 Develop the research plan
 Collect information
 Analyze information
 Present findings
 Make decision
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1-34
Step 1
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Define the problem
Specify decision alternatives
State research objectives
1-35
Step 2
Data sources
 Research approach
 Research instruments
 Sampling plan
 Contact methods
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1-36
Research Approaches
Observation
 Focus group
 Survey
 Behavioral Data
 Experimentation
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1-37
Research Instruments
Questionnaires
 Qualitative Measures
 Mechanical Devices
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1-38
Questionnaire Do’s and Don’ts
 Ensure
questions are
free of bias
 Make questions simple
 Make questions specific
 Avoid jargon
 Avoid sophisticated
words
 Avoid ambiguous words
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Avoid negatives
Avoid hypotheticals
Avoid words that could
be misheard
Use response bands
Use mutually exclusive
categories
Allow for “other” in fixed
response questions
1-39
Question Types - Dichotomous
In arranging this trip, did you contact American
Airlines?
 Yes  No
1-40
Question Types – Multiple Choice
With whom are you traveling on this trip?
 No one
 Spouse
 Spouse and children
 Children only
 Business associates/friends/relatives
 An organized tour group
1-41
Question Types – Likert Scale
Indicate your level of agreement with the following
statement: Small airlines generally give better
service than large ones.
 Strongly disagree
 Disagree
 Neither agree nor disagree
 Agree
 Strongly agree
1-42
Question Types – Semantic Differential
American Airlines
Large ………………………………...…………….Small
Experienced………………….………….Inexperienced
Modern………………………..………….Old-fashioned
1-43
Question Types – Importance Scale
Airline food service is _____ to me.
 Extremely important
 Very important
 Somewhat important
 Not very important
 Not at all important
1-44
Question Types – Rating Scale
American Airlines’ food service is _____.
 Excellent
 Very good
 Good
 Fair
 Poor
1-45
Question Types –
Intention to Buy Scale
How likely are you to purchase tickets on American
Airlines if in-flight Internet access were available?
 Definitely buy
 Probably buy
 Not sure
 Probably not buy
 Definitely not buy
1-46
Question Types –
Completely Unstructured
What is your opinion of American Airlines?
1-47
Question Types – Word Association
What is the first word that comes to your mind
when you hear the following?
Airline ________________________
American _____________________
Travel ________________________
1-48
Question Types – Sentence Completion
When I choose an airline, the most important
consideration in my decision is:
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________.
1-49
Question Types – Story Completion
“I flew American a few days ago. I noticed that the
exterior and interior of the plane had very bright
colors. This aroused in me the following thoughts
and feelings.” Now complete the story.
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
1-50
Question Types –
Picture (Empty Balloons)
1-51
Qualitative Measures
Shadowing
 Behavior mapping
 Consumer journey
 Camera journals
 Extreme user interviews
 Storytelling
 Unfocused groups
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1-52
Mechanical Devices
Galvanometers
 Tachistoscope
 Eye cameras
 Audiometers
 GPS
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1-53
Sampling Plan
Sampling unit: Who is to be surveyed?
 Sample size: How many people should be
surveyed?
 Sampling procedure: How should the
respondents be chosen?
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1-54
Types of Samples
Probability
 Simple random
 Stratified random
 Cluster
Nonprobability
 Convenience
 Judgment
 Quota
1-55
Contact Methods
Mail questionnaire
 Telephone interview
 Personal interview
 Online interview
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1-56
Characteristics of Good
Marketing Research
 Scientific method
 Research creativity
 Multiple methods
 Interdependence
 Value and cost of information
 Healthy skepticism
 Ethical marketing
1-57
Table 4.4 Marketing Metrics
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External
Awareness
Market share
Relative price
Number of complaints
Customer satisfaction
Distribution
Total number of
customers
Loyalty
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Internal
Awareness of goals
Commitment to goals
Active support
Resource adequacy
Staffing levels
Desire to learn
Willingness to change
Freedom to fail
Autonomy
1-58
Table 4.5 Sample CustomerPerformance Scorecard Measures
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% of new customers to average #
% of lost customers to average #
% of win-back customers to average #
% of customers in various levels of satisfaction
% of customers who would repurchase
% of target market members with brand recall
% of customers who say brand is most preferred
1-59
Tools to Measure Marketing Plan
Performance
Sales analysis
 Market share analysis
 Expense-to-Sales Analysis
 Financial Analysis
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1-60
Sales Analysis
Sales-Variance Analysis
 Micro-Sales Analysis
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1-61
Market Share Analysis
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Overall market share
Served market share
Relative market share
1-62
Marketing-Profitability Analysis
Step 1: Identifying Functional Expenses
Step 2: Assigning Functional Expenses to
Marketing Entities
Step 3: Preparing a Profit-and-Loss Statement
for each Marketing Entity
1-63
Distinguishing Types of Costs
Direct
 Traceable common
 Nontraceable common
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1-64
The Measures of Market Demand
Potential market
 Available market
 Target market
 Penetrated market
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1-65
Estimating Current Demand
Total market potential
 Area market potential
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 Market
buildup method
 Multiple-factor index method
 Brand development index
1-66
Estimating Future Demand
Survey of Buyers’ Intentions
 Composite of Sales Force Opinions
 Expert Opinion
 Past-Sales Analysis
 Market-Test Method
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1-67
Purchase Probability Scale
Do you intend to buy an automobile within
the next 6 months?
0.00 No
0.20 Slight possibility
0.40 Fair possibility
0.60 Good possibility
0.80 High possibility
1.00 Certain
1-68
MARKETING MANAGEMENT
12th edition
6
Analyzing
Consumer Markets
Kotler
Keller
Chapter Questions
How do consumer characteristics influence
buying behavior?
 What major psychological processes
influence consumer responses to the
marketing program?
 How do consumers make purchasing
decisions?
 How do marketers analyze consumer
decision making?

1-70
What Influences Consumer Behavior?
Cultural factors
 Social factors
 Personal factors
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1-71
Culture
The fundamental determinant of
a person’s wants and behaviors
acquired through socialization
processes with family
and other key institutions.
1-72
Subcultures
Nationalities
 Religions
 Racial groups
 Geographic regions
 Special interests
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1-73
Fast Facts About American Culture
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The average American
 chews
300 sticks of gum a year
 goes to the movies 9 times a year
 takes 4 trips per year
 attends a sporting event 7 times each year
1-74
Social Classes
Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers
1-75
Characteristics of Social Classes
Within a class, people tend to behave
alike.
 Social class conveys perceptions of
inferior or superior position.
 Class may be indicated by a cluster of
variables (occupation, income, wealth).
 Class designation is mobile over time.
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1-76
Social Factors
Reference
groups
Family
Social
roles
Statuses
1-77
Reference Groups
Membership
 Primary
 Secondary
 Aspirational
 Dissociative
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1-78
Family
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Family of Orientation
 Religion
 Politics
 Economics
Family of Procreation
 Everyday buying behavior
1-79
Personal Factors
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Age
Life cycle stage
Occupation
Wealth
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Personality
Values
Lifestyle
Self-concept
1-80
Brand Personality
Sincerity
 Excitement
 Competence
 Sophistication
 Ruggedness
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1-81
Key Psychological Processes
Motivation
 Perception
 Learning
 Memory
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1-82
Motivation
Freud’s theory
 Maslow’s hierarchy of needs
 Herzberg’s two-factor theory
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1-83
Perception
Selective attention
 Selective retention
 Selective distortion
 Subliminal perception
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1-84
Figure 6.4 Consumer Buying Process
Problem recognition
 Information search
 Evaluation
 Purchase decision
 Postpurchase behavior
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1-85
Sources of Information
Personal
 Commercial
 Public
 Experiential
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1-86
Non-compensatory Models of Choice
Conjunctive
 Lexicographic
 Elimination-by-aspects
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1-87
Perceived Risk
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Functional
Physical
Financial
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Social
Psychological
Time
1-88
Other Theories of
Consumer Decision Making
Involvement
 Elaboration
Likelihood Model
 Low-involvement
marketing
strategies
 Variety-seeking
buying behavior
Decision Heuristics
 Availability
 Representativeness
 Anchoring and
adjustment
1-89
Mental Accounting

Consumers tend to…
 Segregate
gains
 Integrate losses
 Integrate smaller losses with larger gains
 Segregate small gains from large losses
1-90
MARKETING MANAGEMENT
12th edition
7
Analyzing
Business Markets
Kotler
Keller
Chapter Questions
What is the business market, and how does
it differ from the consumer market?
 What buying situations do organizational
buyers face?
 Who participates in the business-tobusiness buying process?

1-92
Chapter Questions
How do business buyers make their
decisions?
 How can companies build strong
relationships with business customers?
 How do institutional buyers and
government agencies do their buying?

1-93
Organizational Buying
Decision-making process by which
formal organizations establish the
need for purchased products and
services, and identify
evaluate, and choose among
alternative brands and suppliers.
1-94
Characteristics of Business
Markets
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Fewer, larger buyers
Close suppliercustomer
relationships
Professional
purchasing
Many buying
influences
Multiple sales calls
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Derived demand
Inelastic demand
Fluctuating demand
Geographically
concentrated buyers
Direct purchasing
1-95
Buying Situation
Straight rebuy
 Modified rebuy
 New task
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1-96
The Buying Center
Initiators
 Users
 Influencers
 Deciders
 Approvers
 Buyers
 Gatekeepers
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1-97
Of Concern to Business Marketers
Who are the major decision participants?
 What decisions do they influence?
 What is their level of influence?
 What evaluation criteria do they use?
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1-98
Types of Business Customers
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Price-oriented
Solution-oriented
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Gold-standard
Strategic-value
1-99
Handling Price-Oriented Customers
Limit quantity purchased
 Allow no refunds
 Make no adjustments
 Provide no services
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1-100
Purchasing Orientations
Buying
 Procurement
 Supply chain management
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1-101
Product-Related Purchasing Processes
Routine products
 Leverage products
 Strategic products
 Bottleneck products
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1-102
Methods of e-Procurement
Websites organized using vertical hubs
 Websites organized using functional hubs
 Direct extranet links to major suppliers
 Buying alliances
 Company buying sites
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1-103
Forms of Electronic Marketplaces
Catalog sites
 Vertical markets
 Pure play auction sites
 Spot markets
 Private exchanges
 Barter markets
 Buying alliances
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1-104
Assessing Customer Value
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Internal engineering
assessment
Field value-in-use
assessment
Focus-group value
assessment
Direct survey
questions
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Conjoint analysis
Benchmarks
Compositional
approach
Importance ratings
1-105
Order Routine Specification and
Inventory
Stockless purchase plans
 Vendor-managed inventory
 Continuous replenishment
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1-106
Desirable Outcomes of a B2B
transaction: OTIFNE
On time
 In full
 No error
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1-107
Establishing Corporate Credibility
Expertise
 Trustworthiness
 Likeability
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1-108
Factors Affecting
Buyer-Supplier Relationships
Availability of alternatives
 Importance of supply
 Complexity of supply
 Supply market dynamism
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1-109
Categories of Buyer-Seller
Relationships
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Basic buying and
selling
Bare bones
Contractual
transaction
Customer supply
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Cooperative systems
Collaborative
Mutually adaptive
Customer is king
1-110
Opportunism
Some form of cheating or
undersupply relative to an
implicit or explicit contract.
1-111