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1-1Visit UMT online at www.umtweb.edu© UMT 2004 MKT100Version: 11-10-04
PRINCIPLES OF PRINCIPLES OF MARKETINGMARKETING
University of Management and Technology1901 N. Fort Myer Drive
Arlington, VA 22209 USAPhone: (703) 516-0035
Fax: (703) 516-0985Website: www.umtweb.edu
1-2Visit UMT online at www.umtweb.edu© UMT 2004 MKT100Version: 11-10-04
CHAPTER 1:CHAPTER 1:Marketing in a Changing Marketing in a Changing World: Creating Customer World: Creating Customer Value and SatisfactionValue and Satisfaction
Armstrong, G. & Kotler, P. Marketing: An Armstrong, G. & Kotler, P. Marketing: An IntroductionIntroduction
(6th ed.) Prentice Hall © 2003.(6th ed.) Prentice Hall © 2003.
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Road Map: Previewing the ConceptsRoad Map: Previewing the Concepts
Define what marketing is and discuss its core concepts.
Explain the relationships between customer value, satisfaction, and quality.
Define marketing management and understand how marketers manage demand and build profitable customer relationships.
Compare the five marketing management philosophies.
Analyze the major challenges facing marketers heading into the new “connected” millennium.
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What is Marketing?What is Marketing?
Simply put: Marketing is the delivery of customer satisfaction at a profit.
Goals: Attract new customers by promising superior value and
keep and grow current customers by delivering satisfaction.
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Core Marketing Concepts Core Marketing Concepts (Fig. 1-1)(Fig. 1-1)
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Marketing DefinedMarketing Defined
Process by which individuals and groups obtain what they needneed and want want through creating and
exchanging products exchanging products and value with others.
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What are Consumers’ Needs, Wants, What are Consumers’ Needs, Wants, and Demands?and Demands?
Needs Needs - state of felt deprivation including physical, social, and individual needs i.e hunger
WantsWants - form that a human need takes as shaped by culture and individual personality i.e. bread
DemandsDemands - human wants backed by buying power i.e. money
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ExperiencesExperiences PersonsPersons
ProductsAnything that can be Offered to a Market to Satisfy a Need or Want
ProductsAnything that can be Offered to a Market to Satisfy a Need or Want
PlacesPlaces
OrganizationsOrganizations IdeasIdeasActivitiesActivities
What Will Satisfy Consumers’ Needs What Will Satisfy Consumers’ Needs and Wants?and Wants?
ServicesActivity or Benefit Offered for Sale That is Essentially
Intangible and Doesn’t Result in the Ownership of Anything
ServicesActivity or Benefit Offered for Sale That is Essentially
Intangible and Doesn’t Result in the Ownership of Anything
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How Do Consumers ChooseHow Do Consumers ChooseAmong Products and Services?Among Products and Services?
Total Quality Management Involves Improving the Quality of Products, Services, and
Business Processes
Product’s Perceived Performance in Delivering Value Relative to Buyer’s
Expectations is Customer Satisfaction
Value Gained From Owning a Product and Costs of Obtaining the Product is
Customer Value
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ExchangesExchanges TransactionsTransactions
Relationships Relationships Building a MarketingNetwork by Adding:•Financial Benefits
•Social Benefits•Structural Ties
•Profitable Customers
How Do Consumers Obtain Products How Do Consumers Obtain Products and Services?and Services?
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Modern Marketing System Modern Marketing System (Fig. 1-2)(Fig. 1-2)
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Marketing ManagementMarketing Management
Attracting new customers and retaining and building relationships with current customers
ProfitableCustomer
Relationships
Finding and increasing demand, also changing or reducing demand such as in Demarketing
DemandManagement
Involves managing demand, which involves managing customer relationships
MarketingManagement
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Stage 1. Entrepreneurial MarketingStage 1. Entrepreneurial Marketing
Stage 2. Formulated MarketingStage 2. Formulated Marketing
Stage 3. Intrepreneurial MarketingStage 3. Intrepreneurial Marketing
Marketing Management PracticeMarketing Management Practice
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Production ConceptProduction Concept
Product ConceptProduct Concept
Selling ConceptSelling Concept
Marketing ConceptMarketing Concept
Societal Marketing ConceptSocietal Marketing Concept
Marketing Management PhilosophiesMarketing Management Philosophies
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Marketing and Sales Concepts Marketing and Sales Concepts Contrasted (Fig. 1-3)Contrasted (Fig. 1-3)
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Societal Marketing Concept (Fig. 1-4)Societal Marketing Concept (Fig. 1-4)
http://www.johnsonandjohnson.com/
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Marketing Challenges in the New Marketing Challenges in the New “Connected” Millennium (Fig. 1-5)“Connected” Millennium (Fig. 1-5)
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Learn About &Track CustomersWith Databases
Communicate WithCustomers in Groups
Or One-on-One
Create Products &Services Tailored to
Meet Customer Needs
Distribute Products More Efficiently &
Effectively
Connecting Technologies in Computers,
Telecommunications,Information, & Transportation
Help To:
Technologies for ConnectingTechnologies for Connecting
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The InternetThe Internet
The Internet has been hailed as the technology behind a New Economy.
New applications include:“click-and-mortar” companies
“click-only” companies
Business-to-business e-commerce
Business-to-business transactions online are expected to reach $3.6 trillion in 2003.
By 2005, 500,000 companies will use the Internet to do business.
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Connections With CustomersConnections With Customers
Most marketers are targeting fewer, potentially more profitable customers.
Asking:What value does the customer bring to the organization?
Are they worth pursuing?
Connecting for a customer’s lifetime.
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BankOne (Marketing at Work BankOne (Marketing at Work 1-3)1-3)
BankOne focuses on connecting with customers they can serve profitably.
Premier One customers know that they are “special, exclusive, privileged, valued.”
http://www.bankone.com/
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Direct Connections With CustomersDirect Connections With Customers
Many companies use technologies to let them connect more directly with their customers.
Products available via telephone, mail-order catalogs, kiosks and e-commerce.
Some firms sell only via direct channels (i.e. Dell Computer, http://www.amazon.com/), others use a combination.
Direct marketing is redefining the buyer’s role in connecting with sellers.
Buyers are active participants in shaping the marketing offer and process; some buyers design their own products online such as at http://www.landsend.com/.
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Connections With Marketing’s PartnersConnections With Marketing’s Partners
Connecting Inside the Company
Every employee must be customer-focused
Teams coordinate efforts toward customers
Connecting With Outside Partners
Supply Chain Management
Strategic Alliances
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Connections With the World Around UsConnections With the World Around Us
Global Connections
Value Connections
Social Responsibility Connections
Broadening Connections
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Rest Stop: Reviewing the ConceptsRest Stop: Reviewing the Concepts
Define what marketing is and discuss its core concepts.
Explain the relationships between customer value, satisfaction, and quality.
Define marketing management and examine how marketers manage demand and build profitable customer relationships.
Compare the five marketing management philosophies.
Analyze the major challenges facing marketers heading into the next millennium.