Principles of Marketing Chapter 2

1. Chapter 2
MARKETING AND MARKETING
MANAGEMENT: CREATING CUSTOMER VALUE
AND SATISFACTION

2. REVIEWING PREVIOUS CHAPTER
• We learned from Chapter 1 that from its mother science,
economics, marketing has emerged as a distinct action
discipline enriched by borrowings from related disciplines such
as management, accounting, political science and the
behavioral sciences.
• We also learned that history and stages of marketing thought
are surveyed to the point to the growth and development of
marketing.
• To be successful in business, each company should deal with
customers on a daily basis, not only be customer-driven, but be
customer-obsessed. The best way to achieve this objective is to
develop a sound marketing function within the organization.

3. CHAPTER OBJECTIVES
At the end of the chapter, you should be able to:
• Define what marketing is and discuss its core concepts.
• Explain the relationships between customer value, satisfaction,
and quality.
• Define marketing management and understand how marketers
manage demand and build profitable customer relationships.
• Compare the five marketing management philosophies.
• Analyze the major challenges facing marketers heading into the
new “connected” millennium.

4. 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.

5. 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.
OLD View
of Marketing:
Making a Sale –
“Telling & Selling”
New View
of Marketing:
Satisfying
NEW View
of Marketing:
Satisfying
Customer Needs

6. Core Marketing Concepts

7. Marketing Defined
Process by which individuals and groups
obtain what they need and want through
creating and exchanging products and
value with others.

8. What are Consumers’ Needs, Wants,
and Demands?
NeedsNeeds - state of felt deprivation
including physical, social, and
individual needs i.e hunger
WantsWants - form that a human need
takes as shaped by culture and
individual personality i.e. bread
DemandsDemands - human wants backed by
buying power i.e. money

9. ExperiencesExperiences PersonsPersons
Products
Anything that can be Offered to a Market to Satisfy a Need or Want
Products
Anything that can be Offered to a Market to Satisfy a Need or Want
PlacesPlaces
OrganizationsOrganizations IdeasIdeasActivitiesActivities
What Will Satisfy Consumers’ Needs and
Wants?
Services
Activity or Benefit Offered for Sale That is Essentially
Intangible and Doesn’t Result in the Ownership of Anything
Services
Activity or Benefit Offered for Sale That is Essentially
Intangible and Doesn’t Result in the Ownership of Anything

10. How Do Consumers Choose
Among Products and Services?
Total Quality Management Involves Improving the
Quality of Products, Services, and
Business Processes
Product’s Perceived Performance in Delivering
Value Relative to Buyer’s Expectations is
Customer Satisfaction
Value Gained From Owning a Product and
Costs of Obtaining the Product is
Customer Value

11. ExchangesExchanges TransactionsTransactions
RelationshipsRelationships
Building a Marketing
Network by Adding:
•Financial Benefits
•Social Benefits
•Structural Ties
•Profitable Customers
How Do Consumers Obtain Products
and Services?

12. Modern Marketing System

13. Marketing Management
Attracting new customers and
retaining and building
relationships with current
customers
Profitable
Customer
Relationships
Finding and increasing demand, also
changing or reducing demand such as
in Demarketing
Demand
Management
Involves managing demand, which
involves managing customer
relationshipsMarketing
Management

14. Stage 1. Entrepreneurial MarketingStage 1. Entrepreneurial Marketing
Stage 2. Formulated MarketingStage 2. Formulated Marketing
Stage 3. Intrepreneurial MarketingStage 3. Intrepreneurial Marketing
Marketing Management Practice

15. Production ConceptProduction Concept
Product ConceptProduct Concept
Selling ConceptSelling Concept
Marketing ConceptMarketing Concept
Societal Marketing ConceptSocietal Marketing Concept
Marketing Management Philosophies

16. Difference between Marketing and Sales
Concepts

17. Societal Marketing Concept

18. The New Marketing Landscape

19. Learn About &
Track Customers
With Databases
Communicate With
Customers in Groups
Or One-on-One
Create Products &
Services Tailored to
Meet Customer Needs
Distribute Products
More Efficiently &
Effectively
Connecting Technologies in
Computers,
Telecommunications,
Information, & Transportation
Help To:
Technologies for Connecting

20. The Internet
• The Internet has been hailed as the technology behind a New
Economy.
• New applications include:
• “click-and-mortar” companies
• “click-only” companies
• Business-to-business e-commerce
• Business-to-business transactions online are expected to reach
$3.6 trillion in 2003.
• By 2005, 500,000 companies will use the Internet to do
business.

21. Connections With Customers
• Most marketers are targeting fewer,
potentially more profitable
customers.
• Asking:
• What value does the customer bring
to the organization?
• Are they worth pursuing?
• Connecting for a customer’s lifetime.

22. Direct Connections With Customers
• Many companies use technologies to let them connect more
directly with their customers.
• Products available via telephone, mail-order catalogs, kiosks and e-
commerce.
• Some firms sell only via direct channels (i.e. Dell Computer,
http://www.amazon.com/), others use a combination.
• Direct marketing is redefining the buyer’s role in connecting
with sellers.
• Buyers are active participants in shaping the marketing offer and
process; some buyers design their own products online such as at
http://www.us.levis.com/.

23. Connections With Marketing’s Partners
• Connecting Inside the
Company
• Every employee must be
customer-focused
• Teams coordinate efforts
toward customers
• Connecting With
Outside Partners
• Supply Chain
Management
• Strategic Alliances

24. Connections With the World Around
Us
Global
Connections
Value
Connections
Social Responsibility
Connections
Broadening
Connections