THE UNIVERSITY OF LARKANO

Principles Of Marketing: 1
Managing Profitable
Customer Relationships

By Philip Kotller
11th Edition

Course Instructor: Shagufta Saleem Shaiikh

 MARKETING
• The word market has been derived
from Latin word Marcatus which refers to
place of trade or a place where business is
carried on.

Definition:
• According to William J. Stanton “ Marketing is a
total system of interacting business activities
designed to plan, price, promote and distribute
want satisfying products and services to
present and potential customers”.
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 MARKETING

• Marketing is human activity directed

at satisffying needs and wants
through exchange processes.
Philip Kotler 1976

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 MARKETING
• Marketing is the process
by which companies
create value for customers
and build strong customer
relationships in order to
capture value from
customers in return.

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 What Is Marketing?

• Simple Definition: Marketing is

managing profitable customer
relationships.
Goals:
1. Attract new customers by promising
superior value.
2. Keep and grow current customers
by delivering satisfaction.

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 There are varying perceptions and
viewpoints on the meaning and content of
marketing. Some important definitions are:
 Marketing is the art of creating and
satisfying customers at a profit.

Marketing is getting
the right goods and
services to the right
people at the right
places at the right
time at the right price
with the right
communication and
promotion. 1-6
 Features of Marketing

 Marketing is consumer oriented

 Marketing succeeds production

 Marketing starts and ends with the buyer

 Marketing guides business

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 Marketing Old vs. New

Old view of marketing:

Making a sale -- “Telling and Selling”

New view of marketing:

Satisfying customer needs

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 Marketing Defined

A social and managerial

process by which individuals
and groups obtain what they
need and want through
creating and exchanging
products and value with
others.
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 A Simple Model of the Marketing Process

Create value for customers and

build customer relationships

Understand the Construct a

Design a customer-
marketplace and marketing program
driven marketing
customer needs that delivers superior
strategy
and wants value

Capture value from

customers in return

Capture value from

Build profitable
customers to create
relationships and create
profits and customer
customer delight
equity
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What are Consumers’
Needs, Wants, and
Demands?
This Is a Need

Needs - state of felt

deprivation
including physical,
social, and
individual needs.

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Types of Needs

• Physical:
– Food, clothing, shelter, safety
• Social:
– Belonging, affection
• Individual:
– Learning, knowledge, self-expression

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This Is a Want

Wants - form that

a human need
takes, as
shaped by
culture and
individual
personality.
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 This Is Demand

Wants Buying Power

“Demand” 1-15
 Need / Want Fulfillment

• Needs and Wants

Fulfilled through a
Marketing Offer :
– Some combination of
products, services,
information, or
experiences offered to a
market to satisfy a need
or want.

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 What Satisfies Consumers’
Needs and Wants?
Products
Anything that can be Offered to a Market to Satisfy a Need or Want

Persons Places Organizations

Information Ideas

Services
Activity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything

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 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.”

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 Value and Satisfaction

Expectation Performance Expectation Performance

8 10 10 8

If performance is lower than expectations, satisfaction is low.

If performance is higher than expectations, satisfaction is high.

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 Exchange vs. Transaction

• Exchange:
– Act of obtaining a desired object from
someone by offering something in return.

• Transaction:
– A trade of values between two parties.
– One party gives X to another party and
gets Y in return. Can include cash, credit,
check, or barter.

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 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.

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Elements of a Modern Marketing
System

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 Marketing Management
• The art and science of choosing target
markets and building profitable
relationships with them.

Questions to ask:
1. What customers will we serve?
What is our target market?
2. How can we best serve these customers?
What is our value proposition?

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Segmentation and Target Marketing
#1 #2
Market Segmentation:
Divide the market into
segments of customers

Target Marketing:
Select the segment to
cultivate

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Interactive Student
Assignment

• Pair up with another student and share

your thoughts with one another on the
following items:
– To what market segments do you think you
belong?
– What personal traits, variables, or factors
characterize you as belonging to those
segments? 1-25
 Marketing Management

Finding and increasing

Demand demand, also changing or
Management reducing demand, such as in
demarketing.

Temporarily or permanently
Demarketing reducing the number of
customers or shifting their
demand.

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 Value Proposition

• The set of benefits

or values a company
promises to deliver
to consumers to
satisfy their needs.
It cleans and freshens like
sunshine!
www.gainlaundry.com

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Marketing Management Philosophies

Societal Marketing Concept

Marketing Concept

Selling Concept

Product Concept

Production Concept
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Marketing and Sales Concepts Contrasted

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 Customer-Driven Marketing

How many of us would

have thought to ask for
a “wearable” PC?
Marketers must often
understand customer
needs even better than
customers themselves
do.

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Societal Marketing Concept

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Interactive Student
Assignment

• Pair up with another student and share

your thoughts with one another on the
following topic:
– Based on your personal experience, discuss
with your partner ways you have seen
organizations implement the societal
marketing concept.
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 MARKETING MIX
The marketing mix refers
to the set of actions, or
tactics, that a company
uses to promote its brand
or product in the market.

The 4Ps make up a typical

marketing mix - Price,
Product, Promotion and
Place.

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 MARKETING MIX
The term 'marketing mix' is a foundation model
for businesses, historically centered around
product, price, place, and promotion (also known
as the "4 Ps").

The marketing mix has been defined as the "set

of marketing tools that the firm uses to pursue its
marketing objectives in the market”.

Thus the marketing mix refers to four broad

levels of marketing decision: product, price,
place, and promotion
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MARKETING MIX

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 MARKETING MIX
The marketing mix refers
to the set of actions, or
tactics, that a company
uses to promote its brand
or product in the market.

The 4Ps make up a typical

marketing mix - Price,
Product, Promotion and
Place.

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 MARKETING MIX
The term 'marketing mix' is a foundation model
for businesses, historically centered around
product, price, place, and promotion (also known
as the "4 Ps").

The marketing mix has been defined as the "set

of marketing tools that the firm uses to pursue its
marketing objectives in the market”.

Thus the marketing mix refers to four broad

levels of marketing decision: product, price,
place, and promotion
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Customer Relationship Management

• The process of
building and
maintaining
profitable customer
relationships by
delivering superior
customer value and
satisfaction.

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Customer Perceived Value

• Customer’s evaluation
of the difference
between all the
benefits and all the
costs of a marketing
offer relative to those
of competing offers.

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 Customer Satisfaction

• Dependent on the
product’s perceived
performance relative
to a buyer’s
expectations.

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 Customer Relationship Levels

Basic Continuum Full

Relationship Partnership

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Loyalty and Retention

Financial Social
Benefits Benefits

Structural
Ties

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Partner Relationship Marketing

Partners Inside the Firm

1. All employees customer
focused
2. Teams coordinate efforts
toward customers
Partners Outside the Firm
1. Supply chain management
2. Strategic alliances

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Customer Loyalty & Retention
• Customer Lifetime Value
– The entire stream of
purchases that the customer
would make over a lifetime of
patronage.

• Share of Customer
– The share a company
gets of the customers
purchasing in their
product categories.

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Customer Lifetime Value

To keep customers coming back, Stew Leonard’s has created the

“Disneyland of dairy stores.” Rule #1—the customer is always
right. Rule #2—if the customer is ever wrong, reread Rule #1.
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 Customer Equity

• Customer equity
is the total
combined
customer lifetime
values of all the
company’s
customers.

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 Customer Relationship Groups

Butterflies True Friends

Good fit between Good fit between
High company’s offerings and company’s offerings and
customer’s needs; high customer’s needs; highest
profit potential profit potential
Profitability
Strangers Barnacles
Little fit between company’s Limited fit between
Low offerings and customer’s company’s offerings and
needs; lowest profit customer’s needs; low
potential profit potential

Short-term Long-term
customers customers
Projected loyalty
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 The New Digital Age

The recent technology

boom has had a major
impact on the ways
marketers connect
with and bring value
to their customers.

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 New Marketing Landscape

Rapid Globalization

Not-for-Profit Ethics & Social

Marketing Responsibility

New World of Marketing

Relationships

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 Rest Stop: Reviewing the Concepts
1. Define marketing and outline the steps in the
marketing process.
2. Explain the importance of understanding customers and
the marketplace, and identify the five core marketplace
concepts.
3. Identify the key elements of a customer-driven
marketing strategy and discuss marketing management
orientations that guide marketing strategy.
4. Discuss customer relationship management and
strategies for building lasting customer relationships.
5. Describe the major trends and forces that are changing
the marketing landscape in this new age of
relationships.
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