Chapter 01

Redwan Salam

Principles of Marketing

Topics at a Glance

Defining Marketing

Steps in the marketing process

Understanding the Marketplace and Consumer Needs

Key elements of a customer-driven marketing strategy

Marketing management concepts

Customer relationship management

Integrated Marketing Program

Customer Perceived Value

Customer Satisfaction

Supply Chain

Customer Lifetime Value

Customer Equity

What Is Marketing?

Marketing Defined

Marketing is the process by which companies create value for

customers and build strong customer relationships to capture value

from customers in return.

Marketing is a social and managerial process by which individuals

and groups obtain what they need and want, through creating,

offering and exchanging products (goods and services) of value

with others.

What Is Marketing?

Marketing Defined

To define Marketing, Peter Drucker said, ‘The aim of marketing is to

make selling unnecessary.’

In fact, selling and advertising are only part of larger ‘Marketing

Mix’ (a set of marketing tools that work together to satisfy customer

needs and build customer relationships.

Today, marketing must be understood in the new sense of

satisfying customer needs but not in the old sense of making a

sale (telling and selling).

Steps in marketing process

The Marketing Process:

1. Understand the market place, needs and wants.

2. Design a customer-driven marketing strategy.

3. Construct an integrated marketing programs that deliver superior

customer value.

4. Build profitable relationship and create customer value.

5. Capture value from customers to create profit and customer equity.

Understanding Marketplace & Consumer Needs

Needs, Wants &

Demands

Products, Services &

Experiences

Value & Satisfaction

Markets

Exchange, Transactions &

Relationships

Core Marketing Concept

Understanding Marketplace & Consumer Needs

Customer Needs, Wants and Demands

Needs are states of deprivation, the states of mind

Physical - food, clothing, warmth, safety

Social - belonging and affection

Individual - knowledge and self-expression

Wants are the form that needs take as they are shaped by culture and

individual personality. Wants are shaped by one’s society and are described

in terms of objects that will satisfy needs.

Demands are wants backed by buying power. To fulfill demand the

affordability of the customers and willingness to pay for any product is

important.

Understanding Marketplace & Consumer Needs

Customer Needs, Wants and Demands

Need: I need Food/ Cloth.

Wants: As a Bangladeshi I want rice and fish as food, Lungi and Fotua as cloth

whereas an American wants sandwich or burger as food and jeans, t-shirt as cloth.

Demands: Mr. Emil is a business tycoon and his demand is having rice and fish

from Radisson hotel and clothes from a designer house. On the contrary, Mr.

Reehan is a student and his demand is having rice and fish from AIUB canteen or

Star Kebab and clothes from New market.

If Mr. Reehan demand Food from Radisson and Clothes from designer house that

will be considered as his want as he does not have the ability of buying it, unless

backed by someone.

Understanding Marketplace & Consumer Needs

Market Offerings—Products, Services, and Experiences

Market Offerings are some combination of products, services,

information, or experiences offered to a market to satisfy a need or

want.

Physical Products, Services, Experience, Events, Persons, Places, Ideas,

Information and Properties.

What is Marketed?

Experiences Persons Places

Organizations Ideas Information

Goods Services Events

Properties

What is Marketed?

Goods Services

Events Experiences

Persons

Bill Gates

Mark Zuckerberg

What is Marketed?

Places Organizations

Information

Ideas

Properties

Exchanges, Transactions and Relationships

Exchange is the act of obtaining a desired object from someone by

offering something in return.

Transaction is a trade of values between two or more parties.

Relationships consist of actions to build and maintain desirable

relationships by delivering superior value to the customers.

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 thinks it is appropriate or desirable to deal with the other party.

Understanding Marketplace & Consumer Needs

Markets are the set of actual and potential buyers of a product.

These buyers share a particular need or want that can be satisfied

through exchange relationships.

Marketing System consists of all of the actors (suppliers, company,

competitors, intermediaries, and end users) in the system who are

affected by major environmental forces.

Demographic

Economic

Physical/Geographical

Understanding Marketplace & Consumer Needs

Technological

Political–legal

Socio-cultural

Understanding Marketplace & Consumer Needs

Designing Customer Driven Marketing Strategy

Marketing Management

Marketing Management is the art and science of choosing target

markets and building profitable relationships with them

What customers will we serve? (what’s our target market?)

How can we best serve these customers? (what’s our value

proposition)

How can we increase our profitability through satisfying our target

customers?

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

There are five alternative

concepts under which

organizations design and carry

out their marketing strategies.

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Production Concept is the idea that consumers will favor products that

are available or highly affordable.

Large production and effective distribution channel is important

Price of the products remains relatively low

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Product Concept is the idea that consumers will favor products that

offer the most quality, performance, and features for which the

organization should therefore devote its energy to making continuous

improvements.

Research & Development activities and putting emphasis on customer

advices

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Selling Concept is the idea that consumers will not buy enough of the

firm’s products unless it undertakes a large scale selling and promotion

effort

Communicating with the customers properly and making strong awareness

about the products or services.

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Marketing Concept is the idea that achieving organizational goals

depends on knowing the needs and wants of the target markets and

delivering the desired satisfactions better than competitors do.

Customer is the king or queen, so meeting their demand is most important

point to emphasis

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Selling vs. Marketing Concept

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Societal Marketing Concept is the idea that

a company should make good marketing

decisions by considering consumers’ wants,

the company’s requirements, consumers’ long-

term interests, and society’s long-run interests

Thinking and acting as a member/part of

the society (CSR activities)

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Societal Marketing Concept

Societal

Marketing Concept

Company

(Profits)

Consumers

(Want Satisfaction)

Society

(Human Welfare)

Designing Customer Driven Marketing Strategy

Marketing Management Orientations

Which Concept/s does the following Products/ Brands follow:

1. Lux Soap

2. Pantene Shampoo

3. Blood Donation

4. HSBC Bank

5. Banglalink

6. Arong Dress Material

7. Bashundhara Facial Tissue

8. SMC Orsallaine

9. Monsoon Rain

10. Yellow

Preparing an Integrated Marketing Plan and Program

Integrated Marketing Program

Integrated Marketing Program is a comprehensive plan that

communicates and delivers the intended value to chosen customers

Combination of Advertisement, Sales Promotion, Personal Selling,

Public Relations and Direct Marketing activities

Preparing an Integrated Marketing Plan and Program

Customer Relationship Management (CRM)

Customer Relationship Management is the overall process of

building and maintaining profitable customer relationships by

delivering superior customer value and satisfaction.

Customer Perceived Value is the difference between total customer

value and total customer cost.

Customer Satisfaction is the extent to which a product’s perceived

performance matches a buyer’s expectations.

Building Customer Relationships

Partner Relationship Management

Supply Chain is a channel that stretches from raw materials to

components to final products to final buyers.

Now-a-days we call it Value Chain.

Supplier Manufacturer Distributor Wholesaler Retailer Customer

Capturing Value from Customers

Creating Customer Loyalty and Retention

Customer Lifetime Value is the value of the entire stream of purchases

that the customer would make over a lifetime of patronage (support).

Suppose Ms.Zamila visits KFC thrice a week and consume 1 pkt of combo

1 every time, and she is going to consume it for the next 15 years at the

same rate, if other things remain const and price of one pkt of Combo 1 is

280 tk, Ms. Zamila’s life time value will be = TK. 6,55,200

Capturing Value from Customers

Building Customer Equity

Customer Equity is the total combined customer lifetime values of all

of the company’s customers

Industry cumulative values for any kind of product or services.

Customer equity = Customer life time value of all customers for

all company’s all product.