Marketing Principles - Chapter 1

Principles of Marketing
Chapter I
Creating and Capturing Customer Value

Chapter 1- slide 2Francois Gaucher - Principals of Marketing
Creating
and Capturing Customer Value
 What Is Marketing?
 Why Study Marketing?
 The Marketing Strategy
 The Changing Marketing Landscape
Topic Outline

Creating and
Capturing Customer Value

What Is Marketing?
Peter Drucker
“Marketing is the business as seen from the customer”

What Is Marketing?
• Marketing impact the society as a whole: it has a social
dimension
• Marketing concerns management: the strategies and
tools used to market product and services
Role of Marketing

Principals of Marketing
What is Marketing?

What Is Marketing?

What Is Marketing?
1836: first paid advertising in a newspaper (in France)
1864: earliest recorded use of the telegraph for mass unsolicited
spam
1867: earliest recorded billboard rentals
1880s: early examples of trademarks as branding
1905: the University of Pennsylvania offered a course in "The
Marketing of Products"
1922: radio advertising commences
1940s: electronic computers developed

What Is Marketing?

What Is Marketing?
1940s: electronic computers developed
1941: first recorded use of television advertising
1950s: systematization of telemarketing
1970s: E-commerce invented
1980s: emergence of relationship marketing
1990s : CRM dominance in promotions and marketing
planning
1996: identification of viral marketing

What Is Marketing?
Defining Marketing

What Is Marketing?
Defining Marketing
Marketing is more than
“telling and selling”

What Is Marketing?
So What is Marketing?
The essence of marketing is to
understand your customers' needs and
develop a plan that surrounds those
needs.

What Is Marketing?
Marketing is about making it easy
for the customer to say
“YES”

What Is Marketing?
Peter Drucker :
• “Marketing is the whole business seen from the point
of view of its final result, that is from the customer’s
point of view”
• “The aim of marketing is to know the consumer well
enough to develop products that sell themselves.”

What Is Marketing?
More recent definition (Kotler):
Marketing is a process by which
companies create value for customers
and build strong customer
relationships to capture value from
customers in return.

What Is Marketing?
What is VALUE for the Customer?
Defining Marketing
> 1
GETS
GIVES
BENEFITS
EFFORTS
=VALUE =

What Is Marketing?
What is VALUE captured to Customers?
 Market Share (width)
 Wallet share (Depth)
 Mind share (awareness & image)
 Heart share (emotions)
 Information
 Valuable feedback on products and service
 Recommendations
 Co-production
 Co-innovation
 Co-Marketing (story telling)
 Etc.

What Is Marketing?
Marketing and Sales are two related and often
separated functions in a corporation.

Why Study Marketing?

1. Plays an important role in society
2. Vital to business survival, profits and growth
3. Offers career opportunities
4. Affects your life every day

•Chinese population exceeds 1.3 billion, to feed and clothe
them… we need the help of marketing
•Makes products available at the right time, quantities,
location, price for the right customer with convenient
packages.
•Wealth creation through products innovation
•Avoid head to head competition through differentiation
•Stimulates the economy, make people buy

•Our world is influenced by the action of marketers.
•Ads show us what we should think and how we should
act
– Influence and create:
» Culture (Global consumer culture through advertising)
» Lifestyle (e.g. Starbucks)

•Marketing and Culture
– Marketing fosters a Popular culture: clothes, music, movies,
sports, celebrities, etc. consumed by the mass market
– Marketing is present in private and public life:
» Cultural events: weddings, death, holidays, birthdays
(McDonalds)
» Social issues (NGOs, government policies, etc.)
» Political issues (election campaigns, etc.)
– Marketing affects the way we view the world around us.

2. Vital to business survival, profits and growth
•Business survives in making profits
•Marketing helps reach these profit goals
•All business manager must be familiar with
marketing to survive in today’s competition

3. Offers career opportunities
•1/4th to 1/3rd of the entire civilian workforce in the
U.S. performs marketing activities
– Marketing Research
– Advertising
– Retail Buying
– Distribution Management
– Product Management
– Product Development
– Wholesaling
•Fastest route up the corporate ladder

4. Affect our life every day
•Become a better-informed consumer
•Half of every dollar spent by consumers pays for
marketing costs (USA)

Marketing Philosophies

The Marketing Philosophies
Production
concept
Product
concept
Selling
concept
Marketing
concept
Societal
concept
Marketing Management Orientations

Philosophy Key principles
Production Focus on efficiency of internal operations
Product Focus on product quality and performance
Sales Focus on aggressive techniques for overcoming customer
resistance
Market Focus on satisfying customer needs and wants
Societal Focus on satisfying customer needs and wants while
enhancing individual and societal well-being

• Production concept focuses on
improving production and distribution
efficiency
• Based on the idea that customer will
favor products that are available or
highly affordable
• Appropriate in the following
situations:
– Demand exceeds Supply
– No competition
– Generic products
The Production Concept

“Any customer can have a car painted any colour that he wants
so long as it is black” Henry Ford

• Product concept is the idea that
consumers will favor products that offer
the most quality, performance, and
features.
• Marketing strategy focus on increasing
quality, performances, and features
through continuous improvements.
• The concept can lead to “Marketing
myopia”
Product Concept
Old saying: “Make a better
mousetrap and the world will
beat a path to your door.” if you
just have a good product, your
business will be a success

All instruction is but a
finger pointing to the
moon; and those whose
gaze is fixed upon the
pointer will never see
beyond.

• Focuses on stimulating buyers’ interest
through selling and promotion efforts.
• Based on the idea that people will buy
more goods if aggressive sales
techniques and promotions are used to
overcome customer resistance.
Selling Concept
China Life

• Typically practiced with
unsought goods
– those that buyers do not normally
think of buying, such as insurance
or non-profit areas (blood
donations, NGOs, political
campaigns, etc.)
• Low involvement purchase
– Detergent as Tide, etc.
Selling concept
Passengers in a metro station in Shanghai pass by
a huge advertisement board of Allianz..

• Sales depends on consumers
decision rather than an aggressive
sales force
• Therefore, success depends on
knowing the needs and wants of the
target markets and delivering the
desired satisfactions better than
competitors do.
– Customer focus
– Competitor intelligence
– Customer relationships
Marketing concept

Marketing concept
• Instead of product-centered “make and sell”
philosophy, the marketing concept is a customer-
centered “sense and response” philosophy.
• The job is not to find the right customers for your
product but to find the right products for your
customers.
• The selling concept takes an inside-out perspective.

Customer-driven strategy
companies research current customers deeply to learn about
their desires, gather new product and service ideas, and test
proposed product improvements.
Customer-driving strategy
marketing is understanding customer needs even better
than customers themselves do and creating products and
services that meet existing and latent needs.

Societal Marketing
Societal marketing concept holds that
marketing strategy should deliver value to
customers in a way that maintains or
improves both the consumer’s and the
society’s well being.
Marketing concept considers consumer
short run wants,
Societal concept includes the consumer
long run welfare.

Societal Concept

Production
concept
Product
concept
Selling
concept
Marketing
concept
Societal
concept
Inside-Out Outside-In

What Is Marketing?
“Marketing is too important to be left to the
marketing department.”
David Packard, Hewlett-Packard
Everybody within the company should be concerned by
Marketing = Customer-centric organization
Definition

The Marketing Process

So, What Is Marketing?
Understand
the Customer
and
Marketplace
Design a
Marketing
Strategy
Construct the
Marketing
Plan
Build
Customer
Relationships
Capture Value
1 2 3 4 5
Research
Marketing
Information
System
Segmenting &
Targeting
Value
Proposition:
Differentiating
and Positioning
Product and
Service design
Pricing
Distribution
Promotion:
communicate the
value proposition
Customer
Relationship
Management
Partners
Relationship
Management
Create Satisfied,
Loyal customers
Increase share of
Market and share
of Customer
Analyzing the
Marketing
Environment
Create Value Manage Relationships Capture Value

What Is Marketing?
1. Understand the marketplace and customer needs and wants.
2. Design a customer-driven marketing strategy.
3. Construct a marketing program that delivers superior value.
4. Build profitable relationships and create customer delight.
5. Capture value from customers to create profits and customer equity.
In the first four steps, companies work to understand consumers, create
customer value, and build strong customer relationships.
In the final step, companies reap the rewards of creating superior
customer value. By creating value for consumers, they in turn capture
value from consumers in the form of sales, profits, and long-term
customer equity.

Marketing Principles - Chapter 1

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