CHAPTER

one

Marketing\

Principles of Marketing
FIFTH EUROPEAN EDITION
Kotler, Armstrong,
Wong, Saunders
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 1-2

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 1-3

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 1-4

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

Principles of Marketing 5e, © Pearson Education 2008 1-6

Market offerings are not limited
to physical products

Principles of Marketing 5e, © Pearson Education 2008 1-7

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 1-8

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 1-9

Figure 1.2 Elements of a
modern marketing system

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

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 1-11

Selecting a target market

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

Value propositions

Principles of Marketing 5e, © Pearson Education 2008 1-13

Marketing management orientations
Production concept

Product concept

Selling concept

Marketing concept

Societal marketing concept

Sustainable marketing concept

Principles of Marketing 5e, © Pearson Education 2008 1-14

Figure 1.3
Selling and marketing concepts

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

Figure 1.4
The societal marketing concept

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

Figure 1.5
The sustainable marketing concept

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

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 1-18

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 1-19

Prius creates customer value

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

Principles of Marketing 5e, © Pearson Education 2008 1-21
Outcomes of
creating customer value

• Customer loyalty and retention

• Share of market
• Share of customer
• Customer equity

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

 ??????????

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

Figure 1.4
Customer relationship groups

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

The new marketing landscape

• Sustainability
• Not-for-profit
marketing
• The electronic
marketplace
• The global
marketplace

Principles of Marketing 5e, © Pearson Education 2008 1-25

 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 1-26

What’s to come
• Part 1 • Part 2
– Marketing – The environment
– Sustainable market – Markets
– Strategic marketing – Marketing research

• Part 3 • Parts 4-7

– Relationship marketing – The marketing mix
– Segmentation and
positioning
– Competitive strategy

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

Figure 1.7
Influences on marketing strategy

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

Market leader strategies

Market leader Market challenger

Market follower Market nicher

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

Figure 1.8 The four Ps

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

Four Ps or Four Cs

• Product • Customer
• Price needs/wants
• Promotion • Cost to the
• customer
Place
• Communication
• Convenience

Principles of Marketing 5e, © Pearson Education 2008 1-31

Figure 1.9 An expanded model
of the marketing process

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

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?

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