Chapter 1

Principles of Marketing

FIFTH EUROPEAN EDITIONKotler, Armstrong,Wong, Saunders

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CHAPTER

Principles of Marketing 5e, © Pearson Education 2008 1-2

Previewing concepts (1)

• Define marketing and outline the steps in the marketing process

• Explain the importance of understanding customers and the marketplace and identify the core marketplace concepts

• Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy

Principles of Marketing 5e, © Pearson Education 2008 1-3

Previewing concepts (2)

• Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return

• Describe sustainable marketing and the major trends and forces that are changing the marketing landscape

Principles of Marketing 5e, © Pearson Education 2008 1-4

What is marketing?

Marketing is 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.

Principles of Marketing 5e, © Pearson Education 2008 1-5

Figure 1.1 A simple model of the marketing process

Understand the marketplace and customer needs

Design customer-driven marketing strategy

Construct an integrated marketing programme

Build profitable relationships and create customer delight

Capture value from customers to create profits and customer equity

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Core concepts: Understanding the marketplace and customer needs

• Needs, wants and demands

• Market offering

• Value, satisfaction and quality

• Exchanges, transactions and relationships

• Markets and the marketing system

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Market offerings are not limited to physical products

Principles of Marketing 5e, © Pearson Education 2008 1-8

What is customer value?

Customer value is the consumer’s assessment of the product’s overall capacity to satisfy his or her needs.

Principles of Marketing 5e, © Pearson Education 2008 1-9

What is customer satisfaction?

Customer satisfaction is the extent to which a product’s perceived performance matches expectations. If the product’s performance falls short of expectations, the buyer is dissatisfied, but if performance matches or exceeds expectations, the buyer is satisfied.

Principles of Marketing 5e, © Pearson Education 2008 1-10

Figure 1.2 Elements of a modern marketing system

Principles of Marketing 5e, © Pearson Education 2008 1-11

What is marketing management?

Marketing management is the art and science of choosing target markets and building profitable relationships with them.

Principles of Marketing 5e, © Pearson Education 2008 1-12

Selecting a target market

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Value propositions

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Marketing management orientations

Production concept

Product concept

Selling concept

Marketing concept

Societal marketing concept

Sustainable marketing concept

Principles of Marketing 5e, © Pearson Education 2008 1-15

Figure 1.3 Selling and marketing concepts

Principles of Marketing 5e, © Pearson Education 2008 1-16

Figure 1.4 The societal marketing concept

Principles of Marketing 5e, © Pearson Education 2008 1-17

Figure 1.5 The sustainable marketing concept

Principles of Marketing 5e, © Pearson Education 2008 1-18

Components of an integrated marketing plan

• Determine target customers

• Create value

• Plan marketing mix– Product– Price– Place– Promotion

Principles of Marketing 5e, © Pearson Education 2008 1-19

What is customer relationship management?

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Principles of Marketing 5e, © Pearson Education 2008 1-20

Prius creates customer value

Principles of Marketing 5e, © Pearson Education 2008 1-21

Principles of Marketing 5e, © Pearson Education 2008 1-22

Outcomes of creating customer value

• Customer loyalty and retention

• Share of market

• Share of customer

• Customer equity

Principles of Marketing 5e, © Pearson Education 2008 1-23

? ? ? ? ? ? ? ? ? ?

Principles of Marketing 5e, © Pearson Education 2008 1-24

Figure 1.4 Customer relationship groups

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The new marketing landscape

• Sustainability

• Not-for-profit marketing

• The electronic marketplace

• The global marketplace

Principles of Marketing 5e, © Pearson Education 2008 1-26

The steps in the marketing process

• (1) analysing marketing opportunities

• (2) selecting target markets

• (3) developing the marketing mix

• (4) managing the marketing effort

Principles of Marketing 5e, © Pearson Education 2008 1-27

What’s to come

• Part 1– Marketing– Sustainable market– Strategic marketing

• Part 2– The environment– Markets– Marketing research

• Part 3– Relationship marketing– Segmentation and

positioning – Competitive strategy

• Parts 4-7– The marketing mix

Principles of Marketing 5e, © Pearson Education 2008 1-28

Figure 1.7 Influences on marketing strategy

Principles of Marketing 5e, © Pearson Education 2008 1-29

Market leader strategies

Market leader Market challenger

Market follower Market nicher

Principles of Marketing 5e, © Pearson Education 2008 1-30

Figure 1.8 The four Ps

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Four Ps or Four Cs

• Product

• Price

• Promotion

• Place

• Customer needs/wants

• Cost to the customer

• Communication

• Convenience

Principles of Marketing 5e, © Pearson Education 2008 1-32

Figure 1.9 An expanded model of the marketing process

Principles of Marketing 5e, © Pearson Education 2008 1-33

Discussing the concepts

• Why should we study marketing?• What role does marketing play in

satisfying human desires?• What are the differences between the

marketing management orientations?• What key challenges face businesses today?• Is the societal marketing concept good for

society?