Principles of MarketingPrinciples of Marketing

“Marketing is managing profitable customer relationship”

The twofold goal of marketing is:

• Attract new customers

• Keep and grow current customers

by promising superior value

by delivering satisfaction

For-Profit FirmFor-Profit FirmACI ACI SQUARESQUAREBATABATAAARONGAARONGAGORAAGORABanglalinkBanglalink

For-Profit FirmFor-Profit FirmACI ACI SQUARESQUAREBATABATAAARONGAARONGAGORAAGORABanglalinkBanglalink

Not-for-Profit FirmNot-for-Profit Firm

CollegeCollege

HospitalHospital

MuseumsMuseums

Religious OrganizationsReligious Organizations

Not-for-Profit FirmNot-for-Profit Firm

CollegeCollege

HospitalHospital

MuseumsMuseums

Religious OrganizationsReligious Organizations

Sound Marketing is critical to the success of every organization

Marketing Defined

Selling and Advertising

Only the tip of the marketing iceberg.

Marketing Defined

Selling and Advertising

Only the tip of the marketing iceberg.

Old sense Making a sale- ”telling and selling”

New sense Satisfying customer needs

Broadly defined“Marketing is a social and managerial process by

which individuals and organizations obtain what they need and want through creating and exchanging value with others.”

Narrower business context“ Marketing involves building profitable, value-

laden exchange relationships with customers”

Broadly defined“Marketing is a social and managerial process by

which individuals and organizations obtain what they need and want through creating and exchanging value with others.”

Narrower business context“ Marketing involves building profitable, value-

laden exchange relationships with customers”

Marketing

“Marketing as the process by which companies create value for customers and building strong customer relationship in order to capture value from customer in return”

The Marketing Process

Understanding the market place and customer needs and

wants

Understanding the market place and customer needs and

wants

Design a customer-

driven marketing strategy

Design a customer-

driven marketing strategy

Construct an integrated marketing

program that delivers

superior value

Construct an integrated marketing

program that delivers

superior value

Build profitable relationships and create customer

delight

Build profitable relationships and create customer

delight

Capture value from customers to create profits

and customer equity

Capture value from customers to create profits

and customer equity

A simple Model of the Marketing Process

Create value for customers and building strong customer relationshipsCreate value for customers and building strong customer relationships

Capture value from customer in returnCapture value from customer in return

Understanding the market place and customer needs and wants

• Customer Needs, Wants, and Demands• Marketing Offerings- Products, Services, and

Experiences• Customer Value and Satisfaction• Exchanges and Relationships• Markets

Customer Needs, Wants, and Demands

Needs: Human needs are state of felt deprivation

Maslow’s Hierarchy of Need

Want Are the form human needs take as they are shaped by culture and personality

When backed by buying power wants become demand.

American Food

Bangladeshi Food

Demand

Market Offerings – Products, Services, and ExperiencesSome combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Services

Persons

Place

Organizations

Information

Ideas

Marketing Myopia

The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products

A qurter-inch holeDrill machine

Smart marketers look beyond the attributes of the product and services they sell.

Hewtett-Packard

Personal Computer A collection of wires and

electrical components

Back-up Brain/ our life/

Autobiography

Customer Value and Satisfaction

Expectations Marketers must be careful to set the right level of expectations.

Too low May satisfy those who buy but fail to attract enough buyers

Too high Buyer will be disappointed

Exchange and Relationships

The act of obtaining a desired object from someone by offering something in return

Marketing consists of actions taken to build and maintain desirable exchange relationships with target audience.

Marketers want to build strong relationships by consistently delivering superior customer value

Exchange

Market A set of all actual and potential buyers of a product or service.

competitors Suppliers

company Marketing Intermediaries

Consumers

Major environmental forces

A Modern Marketing System

Design a customer-driven marketing strategy

Marketing Management : as the science and arts of choosing target markets and building profitable relationships with them.

Two important question:Two important question:

1.1.What customers will we serve?What customers will we serve?2.2.What’s our value proposition?What’s our value proposition?

The marketing manager’s aim is to find, attract, keep, and grow target customers by creating, delivering, and communicating superior value.

Selecting customers to serve

Market segmentation Market segmentation : Dividing the market into segments of customers.: Dividing the market into segments of customers.

Target marketing Target marketing : Selecting which segments it will go after : Selecting which segments it will go after

Choose a value proposition

A company’s value proposition is the set of benefits or values A company’s value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs.it promises to deliver to customers to satisfy their needs.

BMW promises “ the ultimate driving machine”

GrameenPhone – “ Stay connected”

Why should I buy your brand rather than a competitor’s ?Why should I buy your brand rather than a competitor’s ?

Marketing Management Orientations/ Marketing philosophy/ Marketing Concepts

1.1. The production ConceptThe production Concept

2.2. The Product ConceptThe Product Concept

3.3. The Selling ConceptThe Selling Concept

4.4. The Marketing ConceptThe Marketing Concept

5.5. The Societal Marketing ConceptThe Societal Marketing Concept

The production ConceptThe production Concept holds that consumers will favor products that are available and highly affordable.

Management Focus i) Production Efficiency ii) Distribution

Efficiency

Useful philosophy in some situation:

1. When, Demand> Supply (Such as- WASA, DESA)

2. Product’s cost is too high

Although useful in some situation the Production Concept can lead to making myopia

The product ConceptThe idea that consumers will favor products that offer the most The idea that consumers will favor products that offer the most quality, performance, and features and that the organizations should quality, performance, and features and that the organizations should therefore devote its energy to making continuous product therefore devote its energy to making continuous product improvements improvements

Kodak – Photographic Film rather than a way to capture and share memories.

Management focus: making on continuous product improvements.

Marketing myopia

The idea that consumers will not buy enough of the firm’s product unless it undertake a large-scale selling and promotion effort.

The Selling Concept

Management focus: creating sales transaction

Marketing myopia

The marketing management philosophy that holds that achieving The marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and want of target organizational goals depends on knowing the needs and want of target markets and delivering the desires satisfactions better than competitors markets and delivering the desires satisfactions better than competitors do. do.

FactoryFactory Existing Existing productproduct

Selling and Selling and promotingpromoting

Profit through Profit through sales volumesales volume

The Selling The Selling ConceptConcept

Market Market Customer Customer NeedNeed

Integrated Integrated MarketingMarketing

Profit through Profit through customer customer

satisfactionsatisfaction

The Marketing The Marketing ConceptConcept

Starting Point Focus Means Ends

The Marketing Concept

The idea that a company’s marketing decisions should consider The idea that a company’s marketing decisions should consider consumer’s requirements, consumer’s long-run interest consumer’s requirements, consumer’s long-run interest

The societal Marketing Concept

Societal Marketing

Concept

SocietySociety(Human welfare)(Human welfare)

CompanyCompany(Profit)(Profit)

ConsumersConsumers(Want satisfaction)(Want satisfaction)

The considerations underlying the Societal Marketing Concept

Preparing an Integrated Marketing Plan and ProgramPreparing an Integrated Marketing Plan and Program

Actually deliver the intended value to target customersActually deliver the intended value to target customers

Marketing Mix

ProductTo deliver its value proposition, the firm must first create a need-satisfying market offerings

Price It must decide how much it will charge for the offering.

Place How it will make the offering available to target consumers.

Promotion It must communicate with target customers about the offering and persuade them of its merits

Four Ps

Building Customer Relationship

Customer Relationship ManagementThe overall process building and maintaining profitable customer relationships by delivering superior customer value and satisfaction

Relationship Building Block: Customer value and satisfaction

Customer value

Customer Satisfaction

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

The extent to which a product’s perceived performance matches a buyer’s expectations.

Customer Relation Level and Tools

Many Low-Margin Customers Basic Relationships

Few Customers and high margin Create full partnership

The Changing Nature of Customer Relationships

Relating with More Carefully Selected Customers

Relating with Deeply and Interactively

Consumer-generated Marketing

Partner Relationship Management

Partner Inside the Company

Marketing Partner Outside the firm

Capturing Value from CustomersCapturing Value from Customers

Creating Customer Loyalty and Retention

By creating superior customer value, the firm creates highly satisfied customers who stay loyal and buy more. This, in return means greater long-run returns for the firm.

Good customer relationship customer delight

It means losing the entire stream of purchases that the customer would make over a lifetime of patronage.

Losing a customer losing a single sale

Customer lifetime value

The value of the entire stream of purchases that the customer would make over a lifetime of patronage.

A customer spends about Tk.100 a week, shops 50 weeks a year, and remains in the area for about 10 years

Tk100.00 x 50 x 10 = Tk.50,000

Growing Share of Customer

Share of Customer

The portion of the customer’s purchasing that a company gets in its product categories

Bank Share of wallet

Share of stomachRestaurants

Share of garageCar

Share of travelAirlines

Butterflies Good fit between

company’s offerings and customer’s needs ;high

profit potentials

True Friends : Good fit between

company’s offerings and customer’s needs ;highest

profit potentials

StrangersLittle fit between

company’s offerings and customer’s needs ;

lowest profit potentials

BarnaclesLimited fit between

company’s offerings and customer’s needs ;low

profit potentials

High Profitability

Low Profitability

Short-term customer

Long-term customer

Building Customer EquityCustomer Equity :The total combined customer lifetime values

of all of the company’s customers

Building the Right Relationships with the Right Customers

The Changing Marketing LandscapeThe Changing Marketing LandscapeThe Digital Age Computer, Communication, Information and

Other digital technologies

The digital age has provided marketers with exciting new ways to learn about and track customers and to create products and services tailored to individual customer needs

Digital technology has also brought a new wave of communication, advertising , and relationship building tools – ranging from online advertising, video, sharing tools, cell phones and video games to widgets and online social network

Internet : A vast public web of computer networks that connects users of all types all around the world to each other and to an amazingly large information repository.

Rapid Globalization

The Call for More Ethics and Social Responsibility

The Growth of Not-for-Profit Marketing

Global + Local = Glocal

1. Consumerism

2. Environmentalism

Discussion?