kotler 1 al 5

1Defining Marketing for the 21st

Century

1

Chapter Questions

Why is marketing important? What is the scope of marketing? What are some fundamental marketing

concepts? How has marketing management changed? What are the tasks necessary for successful

marketing management?

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-2

What is Marketing?


Marketing is an organizational function and a set of processes for creating,

communicating, and delivering value to customers and for managing

customer relationships in ways that benefit the organization and its

stakeholders.

What is Marketing Management?


Marketing management is theart and science

of choosing target markets and getting, keeping, and growing

customers throughcreating, delivering, and communicating

superior customer value.

What is Marketed?


• Goods

• Services

• Events

• Experiences

• Persons

What is Marketed?


• Places

• Properties

• Organizations

• Information

• Ideas


Demand States

Negative Nonexistent Latent Declining

Irregular Unwholesome Full Overfull

Figure 1.1 Structure of Flows in Modern Exchange Economy


Figure 1.2 A Simple Marketing System



Key Customer Markets

Consumer markets Business markets Global markets Nonprofit/Government markets

Core Concepts

Needs, wants, and demands

Target markets, positioning, segmentation

Offerings and brands

Value and satisfaction

Marketing channels Supply chain Competition Marketing

environment Marketing planning


Types of Needs


Stated

Real

Unstated

Delight

Secret

Target Markets, Positioning & Segmentation


Offerings and Brands


Value and Satisfaction


Marketing Channels


Communication

Distribution

Service

Marketing Environment


Demographic Economic

Socio-cultural

NaturalTechnological

Political-legal

Major Societal Forces

Network information technology

Globalization Deregulation Privatization Heightened competition

Industry convergence Retail transformation Disintermediation Consumer buying power Consumer participation Consumer resistance


Company Orientations


Production

Product

Selling

Marketing

Holistic Marketing


Relationship Marketing


Customers

Employees

Marketing Partners

Financial Community

Integrated Marketing


Internal Marketing

Internal marketing is the task of hiring, training, and motivating able employees

who want to serve customers well.


Performance Marketing


Financial Accountability

Social Responsibility Marketing

Types of Corporate Social Initiatives

Corporate social marketing Cause marketing Cause-related marketing Corporate philanthropy Corporate community involvement Socially responsible business practices


The Marketing Mix


The New Four Ps


Processes

People

Programs

Performance

Marketing Management Tasks

Develop market strategies and plans Capture marketing insights Connect with customers Build strong brands Shape market offerings Deliver value Communicate value Create long-term growth


For Review

Why is marketing important? What is the scope of marketing? What are some fundamental marketing

concepts? How has marketing management changed? What are the tasks necessary for successful

marketing management?


2Developing Marketing

Strategies and Plans

1

Chapter Questions

How does marketing affect customer value? How is strategic planning carried out at

different levels of the organization? What does a marketing plan include?


Phases of Value Creation and Delivery


Choosing the value

Providing the value

Communicating the value


What is the Value Chain?

The value chain is a tool for identifying was to create more customer value because every firm is a synthesis of primary and support activities performed to design,

produce, market, deliver, and support its product.

Core Business Processes

Market-sensing process New-offering realization process Customer acquisition process Customer relationship management process Fulfillment management process


Characteristics of Core Competencies

A source of competitive advantage Applications in a wide variety of markets Difficult to imitate


Maximizing Core Competencies

(Re)define the business concept (Re)shaping the business scope (Re)positioning the company’s brand identity



What is Holistic Marketing?

Holistic marketing sees itself as integrating the value exploration, value creation, and

value delivery activities with the purpose of building long-term, mutually satisfying

relationships and co-prosperity among key stakeholders.

Questions to Address in Holistic Marketing


What value opportunities are available?

How can we create new value offerings efficiently?

How can we delivery the new offerings efficiently?

Figure 2.1 The Strategic Planning, Implementation, and Control Processes


Table 2.1 Master Marketers



What is a Marketing Plan?

A marketing plan is the central instrument for

directing and coordinating the marketing effort.

It operates at a strategic and tactical level.


Levels of a Marketing Plan

Strategic Target marketing

decisions Value proposition Analysis of

marketing opportunities

Tactical Product features Promotion Merchandising Pricing Sales channels Service

Corporate Headquarters’ Planning Activities

Define the corporate mission Establish strategic business units (SBUs) Assign resources to each SBU Assess growth opportunities


Good Mission Statements

Focus on a limited number of goals Stress major policies and values Define major competitive spheres Take a long-term view Short, memorable, meaningful


Google


Table 2.2 Major Competitive Spheres

Industry Products Competence Market segment Vertical channels Geographic


Product Orientation vs. Market Orientation

Company Product Market

Missouri-Pacific Railroad

We run a railroad We are a people-and-goods mover

Xerox We make copying equipment

We improve office productivity

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We entertain people



Dimensions Define a Business

Customer Groups

Customer Needs

Technology

Characteristics of SBUs

It is a single business or collection of related businesses

It has its own set of competitors It has a leader responsible for strategic

planning and profitability


Figure 2.2 The Strategic Planning Gap


What is Corporate Culture?

Corporate culture is the shared experiences, stories, beliefs,

and norms that characterize an organization.


Figure 2.3 The Business Unit Strategic Planning Process


SWOT Analysis


Strengths

Weaknesses

Opportunities

Threats

Market Opportunity Analysis (MOA)

Can the benefits involved in the opportunity be articulated convincingly to a defined target market?

Can the target market be located and reached with cost-effective media and trade channels?

Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?


Market Opportunity Analysis (MOA)

Can the company deliver the benefits better than any actual or potential competitors?

Will the financial rate of return meet or exceed the company’s required threshold for investment?


Figure 2.4 Opportunity and Threat Matrices


Goal Formulation and MBO

Unit’s objectives must be hierarchical Objectives should be quantitative Goals should be realistic Objectives must be consistent


Porter’s Generic Strategies


Overall cost leadership

Differentiation

Focus

Categories of Marketing Alliances

Product or service alliance Promotional alliance Logistics alliances Pricing collaborations


McKinsey’s Elements of Success


Strategy

Structure

SystemsStyle

Shared values

Staff

Skills

Marketing Plan Contents


Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls


Evaluating a Marketing Plan

Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete?

For Review

How does marketing affect customer value? How is strategic planning carried out at

different levels of the organization? What does a marketing plan include?


3Collecting

Information and Forecasting

Demand

1


Chapter Questions What are the components of a modern

marketing information system? What are useful internal records? What makes up a marketing intelligence

system? What are some influential macro

environment developments? How can companies accurately measure

and forecast demand?

What is a Marketing Information System?

A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.


Case Study: MEDC



Table 3.2 Information Needs Probes What decisions do you regularly make? What information do you need to make these

decisions? What information do you regularly get? What studies do you periodically request? What information would you want that you are not

getting now? What are the four most helpful improvements that

could be made in the present marketing information system?


Internal Records and Marketing Intelligence

Order-to-payment cycle Sales information system Databases, warehousing, data mining Marketing intelligence system

Database Management


What is a Marketing Intelligence System?

A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment.



Steps to Quality Marketing Intelligence

Train sales force to scan for new developments Motivate channel members to share intelligence Hire external experts to collect intelligence Network externally Utilize a customer advisory panel Utilize government data sources Purchase information


Sources of Competitive Information

Independent customer goods and service review forums

Distributor or sales agent feedback sites Combination sites offering customer reviews

and expert opinions Customer complaint sites Public blogs

Needs and Trends


Fad

Trend

Megatrend

Major Forces in the Environment


Demographic

Economic

Socio-cultural

Natural

Technological

Political-legal

Population and Demographics

Population growth Population age mix Ethnic markets Educational groups Household patterns


Perspective on the Global Demographic Environment


Economic Environment


Consumer Psychology

Income Distribution

Income, Savings, Debt, Credit

Economic Environment and Consumer Psychology


Income Distribution

Subsistence economies Raw-material-exporting economies Industrializing economies Industrial economies



Social-Cultural Environment

Views of themselves Views of others Views of organizations Views of society Views of nature Views of the universe


Table 3.4 Most Popular American Leisure Activities Reading TV Watching Spending time with

family Going to movies Fishing

Computer activities Gardening Renting movies Walking Exercise

Socio-Cultural Influences



Natural Environment

Shortage of raw materials Increased energy costs Anti-pollution pressures Governmental protections


Keys to Avoiding Green Marketing Myopia Consumer Value Positioning Calibration of Consumer Knowledge Credibility of Product Claims

Consumer Environmental Segments

Genuine Greens Not Me Greens Go-with-the-Flow Greens Dream Greens Business First Greens Mean Greens



Technological Environment

Pace of change Opportunities for innovation Varying R&D budgets Increased regulation of change

The Political-Legal Environment


Business Legislation

Growth of Special Interest Groups

Forecasting and Demand Measurement

How can we measure market demand? Potential market Available market Target market Penetrated market


A Vocabulary for Demand Measurement


Market Demand

Market Forecast

Market Potential

Company Demand

Company Sales Forecast

Company Sales Potential

Market Demand Functions


Estimating Current Demand: Total Market Potential

Calculations Multiple potential

number of buyers by average quantity each purchases times price

Chain-ratio method


Estimating Current Demand: Area Market Potential

Market-Buildup


Estimating Current Demand: Area Market Potential

Multiple-Factor Index


Estimating Future Demand

Survey of Buyers’ Intentions Composite of Sales Force Opinions Expert Opinion Past-Sales Analysis Market-Test Method


For Review

What are the components of a modern marketing information system?

What are useful internal records? What makes up a marketing intelligence

system? What are some influential macroenvironment

developments? How can companies accurately measure and

forecast demand?


4Conducting Marketing Research

1

Chapter Questions

What constitutes good marketing research? What are the best metrics for measuring

marketing productivity? How can marketers assess their return on

investment of marketing expenditures?


Venus Razor


What is Marketing Research?

Marketing research is the systematic design, collection, analysis, and reporting of data

and findings relevant to a specific marketing situation facing the company.



Types of Marketing Research Firms

Syndicated

Custom

Specialty-line


The Marketing Research Process

Define the problem Develop research plan Collect information Analyze information Present findings Make decision


Step 1: Define the Problem

Define the problem Specify decision alternatives State research objectives

Types of Research


Exploratory

Descriptive

Causal


Step 2: Develop the Research Plan

Data sources Research approach Research instruments Sampling plan Contact methods

Data sources



Research Approaches

Observational and ethnographic Focus group Survey Behavioral Experimental

Focus Groups



Research Instruments

Questionnaires Qualitative Measures Technological Devices

Qualitative Techniques


Word Associations

Visualization

Projective Techniques

Laddering

Questionnaire Do’s and Don’ts

Ensure questions are free of bias

Make questions simple Make questions specific Avoid jargon Avoid sophisticated

words Avoid ambiguous words

Avoid negatives Avoid hypotheticals Avoid words that could

be misheard Use response bands Use mutually exclusive

categories Allow for “other” in fixed

response questions



Question Types - Dichotomous

In arranging this trip, did you contact American Airlines?

Yes No

Question Types – Multiple Choice


With whom are you traveling on this trip?

No one

Spouse

Spouse and children

Children only

Business associates/friends/relatives

An organized tour group

Question Types – Likert Scale


Indicate your level of agreement with the following statement: Small airlines generally give better service than large ones.

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly agree

Question Types – Semantic Differential


American Airlines

Large ………………………………...…….Small

Experienced………………….….Inexperienced

Modern……………………….…..Old-fashioned

Question Types – Importance Scale


Airline food service is _____ to me.

Extremely important

Very important

Somewhat important

Not very important

Not at all important

Question Types – Rating Scale


American Airlines’ food service is _____.

Excellent

Very good

Good

Fair

Poor

Question Types –Intention to Buy Scale


How likely are you to purchase tickets on American Airlines if in-flight Internet access were available?

Definitely buy

Probably buy

Not sure

Probably not buy

Definitely not buy

Question Types –Completely Unstructured


What is your opinion of American Airlines?

Question Types –Word Association


What is the first word that comes to your mind when you hear the following?

Airline ________________________

American _____________________

Travel ________________________

Question Types –Sentence Completion


When I choose an airline, the most important consideration in my decision is: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

Question Types –Story Completion


“I flew American a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings.” Now complete the story. _______________________________________________________________________________________________________________________________________________________________________________

Technological Devices

Galvanometers Tachistoscope Eye cameras Audiometers GPS


Sampling Plan

Sampling unit: Who is to be surveyed? Sample size: How many people should be

surveyed? Sampling procedure: How should the

respondents be chosen?


Contact Methods


Pros and Cons of Online ResearchAdvantages Inexpensive Fast Accuracy of data Versatility

Disadvantages Small samples Skewed samples Technological

problems Inconsistencies


What is a Marketing Decision Support System (MDSS)?

A marketing decision support system is a coordinated collection of data, systems, tools, and techniques with supporting hardware and software by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.


Barriers Limiting the Use of Marketing Research

A narrow conception of the research Uneven caliber of researchers Poor framing of the problem Late and occasionally erroneous findings Personality and presentational differences


Market Research Can Fail



Table 4.3 Characteristics of Good Marketing Research

Scientific method Research creativity Multiple methods Interdependence Value and cost of information Healthy skepticism Ethical marketing


What are Marketing Metrics?

Marketing metrics are the set of measures that helps marketers quantify, compare, and

interpret marketing performance.


Table 4.4 Marketing MetricsExternal Awareness Market share Relative price Number of complaints Customer satisfaction Distribution Total number of

customers Loyalty

Internal Awareness of goals Commitment to goals Active support Resource adequacy Staffing levels Desire to learn Willingness to change Freedom to fail Autonomy


What is Marketing-Mix Modeling?

Marketing-mix models analyze data from a variety of sources, such as retailer scanner

data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of

specific marketing activities.

Figure 4.2 Marketing Measurement Pathway


Figure 4.3 Marketing Dashboard



Table 4.4 Sample Customer-Performance Scorecard Measures

% of new customers to average # % of lost customers to average # % of win-back customers to average # % of customers in various levels of satisfaction % of customers who would repurchase % of target market members with brand recall % of customers who say brand is most preferred

For Review

What constitutes good marketing research? What are the best metrics for measuring

marketing productivity? How can marketers assess their return on

investment of marketing expenditures?


140140

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Copyright © 2012 Pearson Education, Inc. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

5Creating Long-Term Loyalty Relationships

1

Chapter Questions

What are customer value, satisfaction, and loyalty, and how can companies deliver them?

What is the lifetime value of customers and how can marketers maximize it?

How can companies attract and retain customers and cultivate strong customer relationships?

What are the pros and cons of database marketing?


Harrah’s Builds Relationships


Figure 5.1 Customer-Orientations


Dell Reestablished Its Commitment to Value


What is Customer Perceived Value?

Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.


Figure 5.2 Determinants of Customer Perceived Value


Image benefit Psychological cost

Personal benefit Energy cost

Services benefit Time cost

Product benefit Monetary cost

Total customer benefit Total customer cost

Caterpillar Maximizes Customer Value


Steps in a Customer Value Analysis

Identify major attributes and benefits that customers value

Assess the qualitative importance of different attributes and benefits

Assess the company’s and competitor’s performances on the different customer values against rated importance

Examine ratings of specific segments Monitor customer values over time



What is Loyalty?

Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or

service in the future despite situational influences and marketing efforts having the

potential to cause switching behavior.


Top Brands in Customer Loyalty

Apple iPhone Clairol Samsung Mary Kay Grey Goose Clinique Avis Wal-Mart

Google Amazon Bing J.Crew AT&T Wireless Discover Card Verizon Wireless Cheerios

Establishing Value



Measuring Satisfaction

Periodic surveys Customer loss rate Mystery shoppers Monitor competitive performance

Managing Customers



What is Quality?

Quality is the totality of features andcharacteristics of a product or

service that bear on its ability to satisfy

stated or implied needs.


Maximizing Customer Lifetime Value

Customer Profitability

Customer Equity

Lifetime Value

Figure 5.3 Customer-Product Profitability Analysis



Estimating Lifetime Value

Annual customer revenue: $500 Average number of loyal years: 20 Company profit margin: 10 Customer lifetime value: $1000


What is Customer Relationship Management?

CRM is the process of carefully managing detailed information about individual

customers and all customer touch points to maximize customer loyalty.


Framework for CRM

Identify prospects and customers Differentiate customers by needs and value to

company Interact to improve knowledge Customize for each customer

Amy’s Maximized Word of Mouth



Attracting and Retaining Customers

Reduce the rate of defection Increase longevity Enhance share of wallet Terminate low-profit customers Focus more effort on high-profit customers

Figure 5.4 The Marketing Funnel


Loyalty Programs


Database Key Concepts

Customer database Database marketing Mailing list

Business database Data warehouse Data mining



Using the Database

To identify prospects To target offers To deepen loyalty To reactivate customers To avoid mistakes


Don’t Build a Database When

The product is a once-in-a-lifetime purchase Customers do not show loyalty The unit sale is very small The cost of gathering information is too high

For Review

What are customer value, satisfaction, and loyalty, and how can companies deliver them?

What is the lifetime value of customers and how can marketers maximize it?

How can companies attract and retain customers and cultivate strong customer relationships?

What are the pros and cons of database marketing?
