marketing management 14 th edition 1 defining marketing for the 21 st century kotlerkeller
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MARKETING MANAGEMENT14th edition
1 Defining
Marketing for the
21st Century
Kotler Keller
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Good Marketing is No Accident
Boston Beer Company, maker of Samuel Adams, constantly innovates
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What is Marketing?
Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders.
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What is Marketing?
•Marketing Defined: “Marketing is a social and managerial
process by which individuals and groups obtain what they need and want through creating and exchanging value with others”
•Marketing is about managing profitable customer relationships
– Attracting new customers– Retaining and growing current
customers
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What is Marketing Management?
Marketing management is theart and science
of choosing target markets and getting, keeping, and growing
customers throughcreating, delivering, and communicating
superior customer value.
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Selling is only the tip of the iceberg
“There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be
needed is to make the product or service available.”
Peter Drucker
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Core Marketing Concepts
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Understanding the Marketplace
• Needs, wants, and demands
• Marketing offers: including products, services and experiences
• Value and satisfaction • Exchange, transactions
and relationships• Markets
•Need– State of felt deprivation– Example: Need food
•Wants– The form of needs as
shaped by culture and the individual
– Example: Want a Big Mac•Demands
– Wants which are backed by buying power
Core Concepts
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Understanding the Marketplace
• Needs, wants, and demands
• Marketing offers: including products, services and experiences
• Value and satisfaction • Exchange, transactions
and relationships• Markets
Core Concepts •Marketing offer– Combination of
products, services, information or experiences that satisfy a need or want
– Offer may include services, activities, people, places, information or ideas
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Understanding the Marketplace
• Needs, wants, and demands
• Marketing offers: including products, services and experiences
• Value and satisfaction • Exchange, transactions
and relationships• Markets
•Value– Customers form
expectations regarding value
– Marketers must deliver value to consumers
•Satisfaction– A satisfied customer will
buy again and tell others about their good experience
Core Concepts
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Value and Satisfaction
•Perceived Value
– The customer’s evaluation of the difference between benefits and costs.
– Customers often do not judge values and costs accurately or objectively.
•Customer Satisfaction
– Product’s perceived performance relative to customer’s expectations.
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Understanding the Marketplace
• Needs, wants, and demands
• Marketing offers: including products, services and experiences
• Value and satisfaction • Exchange, transactions
and relationships• Markets
•Exchange– The act of obtaining a
desired object from someone by offering something in return
– One exchange is not the goal, relationships with several exchanges are the goal
– Relationships are built through delivering value and satisfaction
Core Concepts
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For an exchange to occur….
• There are at least two parties.
• Each party has something that might be of value to the other party.
• Each party is capable of communication and delivery.
• Each party is free to reject the exchange offer.
• Each party believes it is appropriate or desirable to deal with the other party.
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Understanding the Marketplace
• Needs, wants, and demands
• Marketing offers: including products, services and experiences
• Value and satisfaction • Exchange, transactions
and relationships• Markets
•Market– Set of actual and
potential buyers of a product
– Marketers seek buyers that are profitable
Core Concepts
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What is Marketed?
GoodsGoods
ServicesServices
Events & ExperiencesEvents & Experiences
PersonsPersons
Places & PropertiesPlaces & Properties
OrganizationsOrganizations
InformationInformation
IdeasIdeas
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Demand States
Nonexistent Latent
Declining Irregular
Full UnwholesomeOverfull
Negative
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Structure of Flows in a Modern Exchange Economy
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A Simple Marketing System
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The marketplace isn’t what it used to be…
Changing technologyChanging technology
GlobalizationGlobalization
DeregulationDeregulation
PrivatizationPrivatization
EmpowermentEmpowerment
CustomizationCustomization
ConvergenceConvergence
DisintermediationDisintermediation
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Company Orientations
Production
Selling Marketing
Product
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Production Concept
Product Concept
Selling Concept
Marketing Concept
Holistic Marketing Concept
•Consumers favor products that are available and highly affordable.•Improve production and distribution.
•Consumers favor products that offer the most quality, performance, and innovative features.
•Consumers will buy products only if the company promotes/ sells these products.
•Focuses on needs/ wants of target markets & delivering satisfaction better than competitors.
•Focuses on needs/ wants of target markets & delivering superior value.
Marketing Management Philosophies
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The Selling and Marketing Concepts Contrasted
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Holistic Marketing Dimensions
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The Four P’s
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Marketing Mix and the Customer
Four P’s• Product• Price• Place• Promotion
Four C’s• Customer solution• Customer cost• Convenience• Communication
The New Four Ps
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Processes
People
Programs
Performance
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Marketing-Mix Strategy
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Factors Influencing Marketing Strategy
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Marketing Management Tasks
• Developing marketing strategies
• Capturing marketing insights
• Connecting with customers
• Building strong brands
• Shaping market offerings
• Delivering value• Communicating
value• Creating long-term
growth
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Marketing Debate
Does Marketing Create or Satisfy Needs?
MARKETING MANAGEMENT14th edition
5 Creating
Customer Value, Satisfaction, and
Loyalty
Kotler Keller
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Value and Satisfaction
•Perceived Value
– The customer’s evaluation of the difference between benefits and costs.
– Customers often do not judge values and costs accurately or objectively.
•Customer Satisfaction
– Product’s perceived performance relative to customer’s expectations.
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Determinants of Customer Perceived Value
Image benefit Psychological cost
Personal benefit Energy cost
Services benefit Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost
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Determinants of Customer-Delivered Value
Customer-delivered
value
Total customer
value
Total customer
cost
Product value
Monetarycost
Personalvalue
Energycost
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Loyalty
A deeply held commitment to re-buyor re-patronize a preferred product
or service in the future despite situationalinfluences and marketing efforts having
the potential to cause switching behavior.
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The Value Proposition
The whole cluster of benefits thecompany promises to deliver
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Measuring Satisfaction
Periodic SurveysPeriodic Surveys
Customer Loss RateCustomer Loss Rate
Mystery ShoppersMystery Shoppers
Monitor competitive performance
Monitor competitive performance
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Product and Service Quality
Quality is the totality of features andcharacteristics of a product or
service that bear on its ability to satisfy
stated or implied needs.
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Total Quality Management
TQM is an organization-wide approach to continuously improving the quality of
all the organization’s processes, products, and services.
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Maximizing Customer Lifetime Value
Customer Profitability
Customer Equity
LifetimeValue
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Customer-Product Profitability Analysis
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Framework for CRM
Identify prospects and customers
Differentiate customers by needs and value to company
Interact to improve knowledge
Customize for each customer
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CRM Strategies
Reduce the rate of defectionReduce the rate of defection
Increase longevityIncrease longevity
Enhance “share of wallet”Enhance “share of wallet”
Terminate low-profit customers
Terminate low-profit customers
Focus more effort on high-profit customersFocus more effort on high-profit customers
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Mass vs. One-to-One Marketing
Mass• Average customer• Customer anonymity• Standard product• Mass production• Mass distribution• Mass advertising• One-way message• Economies of scale
One-to-One• Individual customer• Customer profile• Customized market
offering• Customized
production• Economies of scope• Share of customer
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Customer Retention
• Acquisition of customers can cost 5 times more than retaining current customers.
• The average company loses 10% of its customers each year.
• A 5% reduction to the customer defection rate can increase profits by 25% to 85%.
• The customer profit rate increases over the life of a retained customer.
The Marketing Funnel
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The Customer-Development Process
Prospects
Suspects
Disqualified
First-timecustomers
Repeatcustomers Clients Members
PartnersEx-customers
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Building Loyalty
Partnership
Proactive
Accountable
Reactive
Basic
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Forming Strong Customer Bonds
Add financialbenefits
Add socialbenefits
Add structuralties