Chapter 1 MKG Kotler
Chapter 1 MKG Kotler
Chapter 1 MKG Kotler
What is marketing?
The process by which companies create value for customers and build strong customer relationships in
order to capture value from customers in return.
Identify and discuss the five core marketing concepts and the links between them
Needs: are the states of felt deprivation – physical, social and individual. When a need is not satisfied, a
person will try either to reduce the need or look for an object that can satisfy it.
Wants: are the form taken by human needs as they are shaped by culture and individual
personality wants are described in terms that will satisfy needs. People choose products that provide
the most value and satisfaction for their money. When backed by buying power, wants become
demands.
A market offering is a product that is some combination of goods, services and experiences that can be
offered to a market to satisfy a need or want.
The concept of a product is not limited to tangible objects as experiences and services are intangible but
consumers still obtain benefits. Anything that satisfies a need can be called a product. In the broadest
sense, marketing offerings also include other entities, such as a person, places, organizations,
information and ideas. Exchanges, transactions and relationships
Exchange: is the act of obtaining a desired object from someone by offering something in
return – the marketer tires to bring about a response to some marketing offering. The
response may be more than simply buying or trading products and services.
Transactions: is marketing’s unit of measurement. A transaction is a trade between two parties that
involves at least two things of value, agreed-upon conditions, and a time and place of agreement.
Generally perceived as a classic monetary transaction of money for a good/service.
Marketing consists of building and maintaining desirable exchange relationships with target audiences
involving a product, service, idea or other object. They do this by delivering superior customer value
consistency.
Markets
A market is the set of actual and potential buyers of a product. Marketing involves serving a market of
final consumers in the face of competitors. They research the market and interact with consumers to
understand their needs. All of the parties in the system are affected by
major environmental forces. Each party in the system adds value for the next level. Thus a company’s
success at building profitable relationships depends not only on its own actions
but also on how well the entire system serves the needs of final consumers.
Explain how value is created for customers and how value is captured from customers
by organizations:
The aim of customer relationship management is to create not only customer satisfaction but also
customer delight. Companies are realizing that losing a customer means losing more than a single sale. It
means losing the entire stream of purchases that the customer would make over a lifetime of
patronage.
If a customer is unhappy the loss in revenue can be much greater if the disappointed customer shares
the bad experiences with other customers and causes them to defect. In fact, a company can lose
money on a specific transaction but still benefit greatly from a long-term relationship. This means that
companies
must aim high in building customer relationships.
Customer delight creates an emotional relationship with a brand, not just a rational preference
– this keeps customers coming back.
There are five alternative concepts under which organizations design and carry out their marketing
strategies: the production, product, selling, marketing, and societal marketing concepts.
Marketing management wants to design strategies that will build profitable relationships with target
consumers.
Production concept: Consumers will favor products that are available and highly affordable.
The production concept is still a useful philosophy in some situations. For example, in the highly
competitive, price-sensitive Chinese market, both personal computer maker Lenovo and home appliance
maker Haier dominate through low labor costs, high production efficiency, and mass distribution.
However, although useful in some situations, the production concept can lead to marketing myopia and
losing sight of the real objective—satisfying customer needs and building customer relationships.
Product concept: Consumers favor products that offer the most quality, performance, and features.
The focus is on continuous product improvements. Product quality and improvement are important
parts of most marketing strategies. However, focusing only on the company’s products can also lead to
marketing myopia. For example, some manufacturers believe that if they can “build a better mousetrap,
the world will beat a path to their doors.”
But they are often rudely shocked. Buyers may be looking for a better solution to a mouse problem but
not necessarily for a better mousetrap. The better solution might be a chemical spray, an exterminating
service, a house cat, or something else that suits their needs even better than a mousetrap.
Selling concept: Consumers will not buy enough of the firm’s products unless the firm undertakes a
large-scale selling and promotion effort.
The selling concept is typically practiced with unsought goods—those that buyers do not normally think
of buying, such as life insurance or blood donations. These industries must be good at tracking down
prospects and selling them on a product’s benefits.
Such aggressive selling, however, carries high risks. It focuses on creating sales transactions rather than
on building long-term, profitable customer relationships.
Marketing concept: Know the needs and wants of the target markets and deliver the desired
satisfactions better than competitors.
Under the marketing concept, customer focus and value are the paths to sales and profits.
Instead of a product-centered make-and-sell philosophy, the marketing concept is a customer-centered
sense-and-respond philosophy. The job is not to find the right customers for your product but to find the
right products for your customers.
Societal marketing concept: Questions whether the pure marketing concept overlooks possible conflicts
between consumer short-run wants and consumer long-run welfare.
The societal marketing concept holds “marketing strategy should deliver value to customers in a way
that maintains or improves both the consumer’s and society’s well-being.”
It calls for sustainable marketing, socially and environmentally responsible marketing that meets
consumers’ and businesses’ present needs while also preserving or enhancing future generations’ ability
to meet their needs.
The Societal Marketing Concept puts human welfare on top before profits and satisfying the wants.
1 undertakes a large-scale selling and undertakes activities such as; market research,
promotion effort
2 The Selling Concept is suitable with The Marketing Concept is suitable for almost
unsought goods—those that buyers do any type of product and market.
not normally think of buying, such as
insurance or blood donations.
3 Focus on the selling concept starts at the Focus on the marketing concept starts at
production level. understanding the market.
4 Any company following the selling Companies that are following the marketing
concept undertakes a high-risk concept require to bare less risk and
uncertainty.
6 The Selling Concept makes poor The marketing concept works on facts
assumptions. gathered by its “market and customer first”
approach.
The marketing mix can be divided into four groups of variables commonly known as the four Ps:
Marketing tools:
Each of the four Ps has its own tools to contribute to the marketing mix:
Marketing strategy:
An effective marketing strategy combines the 4 Ps of the marketing mix. It is designed to meet
the company’s marketing objectives by providing its customers with value. The 4 Ps of the
marketing mix are related, and combine to establish the product’s position within its target
markets.
Weaknesses of the marketing mix:
The four Ps of the marketing mix have a number of weaknesses in that they omit or
underemphasize some important marketing activities. For example, services are not explicitly
mentioned, although they can be categorized as products (that is, service products). As well,
other important marketing activities (such as packaging) are not specifically addressed but are
placed within one of the four P groups.
Another key problem is that the four Ps focus on the seller’s view of the market. The buyer’s view should
be marketing’s main concern.
Describe the major trends & forces that are changing the marketing landscape in this age of
relationships.
Every day and every time, the market has big changes. It's now a good thing to be able to
change, Richard says.
Marketers should change their ways to deal with these big changes.
There are five big trends and forces that are changing the marketing landscape and making it
hard for businesses to figure out how to market.
These five changes are:
3. Rapid Globalization:
Marketers are always want to grow customer all over the world. Every large & small company
faces global competition. So companies select their managers who can work for globally not
locally for using opportunities & compete with competitors.
classifies customers into one of four relationship groups, according to their profitability and
projected loyalty. Each group requires a different relationship management strategy.
True Friends: True Friends are the loyalist of loyal customers. They are the customers
that not only bring in profit, but also speak highly of your products and promote your
business to others. An example of “True Friends” would be the so called “Apple Fan
boys” that buy whatever product Apple releases simply because they think so highly of
the company.
Butterflies: Butterflies are not particularly loyal, but have spent money on your products
and brought in good revenue. An example of a butterfly would be someone that
supports Microsoft in general, but buys the iPhone since it happened to be the best
available phone on the market.
Barnacles: Here is where some companies, especially B2B companies, find a surprising
amount of their customer base falls into. Barnacles are loyal customers, but they are
loyal customers that rarely make a purchase, and may not bring in much of a profit. A
great example would be a customer that buys one cup of coffee at your coffee shop, and
then comes in every day for the next month to use your free Wi-Fi without making a
purchase.
Strangers: Strangers are those that barely bring in any revenue and are not necessarily
loyal to your company. An example would be an individual that occasionally stops into a
drug store to buy a stick of gum, but otherwise never uses the store.
The point here is an important one: Different types of customers require different engagement
and relationship management strategies. The goal is to build the right relationships with the
right customers.
MKTG CHAP03
Marketing management’s job is to build relationships with customers by creating customer
value and satisfaction. However, marketing managers cannot do this alone.
Microenvironment consists of the actors close to the company that affect its ability to serve its
customers—the company, suppliers, marketing intermediaries, customer markets, competitors, and
publics.
• The Company: Marketing management considers other company groups when creating
marketing plans, such as top management, finance, R&D, purchasing, manufacturing, and
accounting.
The company's departments are all responsible for understanding and meeting the buyer's
needs. They form the company's internal environment.
• Customers: Consumer, business, reseller, government, and international markets are the five
types of customer markets.
Consumer, business, reseller, government, or global markets are all possible.
Selling in each market type requires careful research.
Business, consumer, reseller, global and government markets all depend on this factor.
Macro environment is the remote environment of the firm, i.e. the external environment in
which it exists. As a rule, this environment is not controllable by the firm, it is to huge and too
unpredictable to control.
Hence the success of the company, to a large extent will depend on the company’s ability to
adapt and react to the changes in the macro environment.
2- Economic factors: The economic environment can impact both the organization’s production
and the consumer’s decision-making process.
The economic conditions of the economy and the performance of a business have a very close
relationship. A business depends on the economy for all its inputs and factors of production. It
also sells its products and services in the same market.
A market is never in one stable condition. It is always in a flux. If there is a boom in the market,
then all businesses will benefit from the favorable conditions. The income will be higher, rate of
interests will be low, new capital will be available etc. Also, the opposite is also true in case of a
bust.
3- Natural/physical forces: The Earth’s renewal of its natural resources such as forests,
agricultural products, marine products, etc. must be taken into account. There are also natural
non-renewable resources such as oil, coal, minerals, etc. that may also impact the
organization’s production.
4- Technological factors: The skills and knowledge applied to the production, and the
technology and materials needed for the production of products and services can also impact
the smooth running of the business and must be considered.
In the times we live in, technology is constantly changing it is important that the business can
keep up with the changes. Technology does not only confine to computers and IT services. It
includes products, manufacturing processes, techniques etc.
The technological developments can be a huge advantage for a firm. But at the same time of
the technology used by the firm becomes obsolete due to such developments, then it can also
be a threat to the firm.
5- Political and legal forces: Sound marketing decisions should always take into account
political and/or legal developments relating to the organization and its markets.
The political environment of a country is the combination of three branches of the government
– legislature, executive and the judiciary. The political environment of a country will mainly
depend on the political beliefs and ideologies of the party in power at the state and central
levels.
The legal environment refers to the rules, laws, regulations, and judgments etc. that affect the
functioning of a business. And this will also include the taxation laws and the Budget for the
given year. So stable legal and political government is really important if the business and the
economy as a whole has to succeed.
6- Social and cultural forces: The impact the products and services your organizations bring to
market have on society must be considered. Any elements of the production process or any
products/services that are harmful to society should be eliminated to show your organization is
taking social responsibility. A recent example of this is the environment and how many sectors
are being forced to review their products and services in order to become more
environmentally friendly. The social values and culture of an environment play a huge role in
the functioning of the company. So when the social environment changes it can have a direct or
indirect effect on the company. For example, in recent time society has seen a shift, and people
no longer retire at 60. They work five to ten years more after sixty. So this has had a huge
impact on companies. Cultural forces also have a significant impact on the success of a
company in the long run. Especially in a country like India where the cultural influences are
strong and complicated.
Wrap Up
Micro and macro environments have a significant impact on the success of marketing activities,
and therefore such environmental factors must be considered in-depth during the process of
creating a strategic marketing plan. Considering these factors will improve the success of your
organization’s marketing campaign and the reputation of the brand in the long term.