Marketing Principles - Chapter 1

Principles of Marketing

Chapter I

Creating and Capturing Customer Value

Chapter 1- slide 2 Francois Gaucher - Principals of Marketing

Creating

and Capturing Customer Value

What Is Marketing?

Why Study Marketing?

The Marketing Strategy

The Changing Marketing Landscape

Topic Outline

Creating and

Capturing Customer Value

What Is Marketing?

Peter Drucker

“Marketing is the business as seen from the customer”

What Is Marketing?

• Marketing impact the society as a whole: it has a social dimension

• Marketing concerns management: the strategies and tools used to market product and services

Role of Marketing

Principals of Marketing

What is Marketing?

What Is Marketing?

1836: first paid advertising in a newspaper (in France)

1864: earliest recorded use of the telegraph for mass unsolicited spam

1867: earliest recorded billboard rentals

1880s: early examples of trademarks as branding

1905: the University of Pennsylvania offered a course in "The Marketing of Products"

1922: radio advertising commences

1940s: electronic computers developed

What Is Marketing?

1940s: electronic computers developed

1941: first recorded use of television advertising

1950s: systematization of telemarketing

1970s: E-commerce invented

1980s: emergence of relationship marketing

1990s : CRM dominance in promotions and marketing

planning

1996: identification of viral marketing

What Is Marketing? Defining Marketing

What Is Marketing?

Defining Marketing

Marketing is more than

“telling and selling”

What Is Marketing?

So What is Marketing?

The essence of marketing is to understand your customers' needs and develop a plan that surrounds those needs.

What Is Marketing?

Marketing is about making it easy for the customer to say

“YES”

What Is Marketing?

Peter Drucker :

• “Marketing is the whole business seen from the point of view of its final result, that is from the customer’s point of view”

• “The aim of marketing is to know the consumer well enough to develop products that sell themselves.”

What Is Marketing?

More recent definition (Kotler):

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

What Is Marketing?

What is VALUE for the Customer?

Defining Marketing

BENEFITS

EFFORTS

= VALUE =

What Is Marketing?

What is VALUE captured to Customers? Market Share (width) Wallet share (Depth) Mind share (awareness & image) Heart share (emotions) Information Valuable feedback on products and service Recommendations Co-production Co-innovation Co-Marketing (story telling) Etc.

What Is Marketing?

Marketing and Sales are two related and often

separated functions in a corporation.

1. Plays an important role in society

2. Vital to business survival, profits and growth

3. Offers career opportunities

4. Affects your life every day

•Chinese population exceeds 1.3 billion, to feed and clothe them… we need the help of marketing

•Makes products available at the right time, quantities, location, price for the right customer with convenient packages.

•Wealth creation through products innovation

•Avoid head to head competition through differentiation

•Stimulates the economy, make people buy

•Our world is influenced by the action of marketers.

•Ads show us what we should think and how we should act

– Influence and create:

» Culture (Global consumer culture through advertising)

» Lifestyle (e.g. Starbucks)

•Marketing and Culture

– Marketing fosters a Popular culture: clothes, music, movies, sports, celebrities, etc. consumed by the mass market

– Marketing is present in private and public life:

» Cultural events: weddings, death, holidays, birthdays (McDonalds)

» Social issues (NGOs, government policies, etc.)

» Political issues (election campaigns, etc.)

– Marketing affects the way we view the world around us.

2. Vital to business survival, profits and growth

•Business survives in making profits

•Marketing helps reach these profit goals

•All business manager must be familiar with

marketing to survive in today’s competition

3. Offers career opportunities

•1/4th to 1/3rd of the entire civilian workforce in the U.S. performs marketing activities

– Marketing Research

– Advertising

– Retail Buying

– Distribution Management

– Product Management

– Product Development

– Wholesaling

•Fastest route up the corporate ladder

4. Affect our life every day

•Become a better-informed consumer

•Half of every dollar spent by consumers pays for

marketing costs (USA)

Marketing Philosophies

The Marketing Philosophies

Production concept

Product concept

Selling concept

Marketing concept

Societal concept

Marketing Management Orientations

Philosophy Key principles

Production

Focus on efficiency of internal operations

Product Focus on product quality and performance

Sales Focus on aggressive techniques for overcoming customer

resistance

Market Focus on satisfying customer needs and wants

Societal Focus on satisfying customer needs and wants while

enhancing individual and societal well-being

• Production concept focuses on improving production and distribution efficiency

• Based on the idea that customer will favor products that are available or highly affordable

• Appropriate in the following situations:

– Demand exceeds Supply

– No competition

– Generic products

The Production Concept

“Any customer can have a car painted any colour that he wants so long as it is black” Henry Ford

• Product concept is the idea that

consumers will favor products that offer the most quality, performance, and features.

• Marketing strategy focus on increasing quality, performances, and features through continuous improvements.

• The concept can lead to “Marketing myopia”

Product Concept

Old saying: “Make a better

mousetrap and the world will

beat a path to your door.” if you

just have a good product, your

business will be a success

All instruction is but a

finger pointing to the

moon; and those whose

gaze is fixed upon the

pointer will never see

beyond.

• Focuses on stimulating buyers’ interest

through selling and promotion efforts.

• Based on the idea that people will buy

more goods if aggressive sales

techniques and promotions are used to

overcome customer resistance.

Selling Concept

China Life

• Typically practiced with

unsought goods

– those that buyers do not normally

think of buying, such as insurance

or non-profit areas (blood

donations, NGOs, political

campaigns, etc.)

• Low involvement purchase

– Detergent as Tide, etc.

Selling concept

Passengers in a metro station in Shanghai pass by

a huge advertisement board of Allianz..

• Sales depends on consumers decision rather than an aggressive sales force

• Therefore, success depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do.

– Customer focus

– Competitor intelligence

– Customer relationships

Marketing concept

• Instead of product-centered “make and sell”

philosophy, the marketing concept is a customer-centered “sense and response” philosophy.

• The job is not to find the right customers for your product but to find the right products for your customers.

• The selling concept takes an inside-out perspective.

Customer-driven strategy

companies research current customers deeply to learn about their desires, gather new product and service ideas, and test proposed product improvements.

Customer-driving strategy

marketing is understanding customer needs even better than customers themselves do and creating products and services that meet existing and latent needs.

Societal Marketing

Societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and the society’s well being. Marketing concept considers consumer short run wants, Societal concept includes the consumer long run welfare.

Societal Concept

Production concept

Product concept

Selling concept

Marketing concept

Societal concept

Inside-Out Outside-In

What Is Marketing?

“Marketing is too important to be left to the

marketing department.” David Packard, Hewlett-Packard

Everybody within the company should be concerned by

Marketing = Customer-centric organization

Definition

The Marketing Process

So, What Is Marketing?

Understand the Customer

and Marketplace

Design a Marketing Strategy

Construct the Marketing

Build Customer

Relationships Capture Value

1 2 3 4 5

Research

Marketing

Information

System

Segmenting &

Targeting

Proposition:

Differentiating

and Positioning

Product and

Service design

Pricing

Distribution

Promotion:

communicate the

value proposition

Customer

Relationship

Management

Partners

Relationship

Management

Create Satisfied,

Loyal customers

Increase share of

Market and share

of Customer

Analyzing the

Marketing

Environment

Create Value Manage Relationships Capture Value

What Is Marketing?

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.

In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships.

In the final step, companies reap the rewards of creating superior customer value. By creating value for consumers, they in turn capture value from consumers in the form of sales, profits, and long-term customer equity.

Marketing Principles - Chapter 1

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