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Principles of MarketingPrinciples of Marketing

Spring 2010 - MKTG 220Spring 2010 - MKTG 220 Dr. Abdullah SultanDr. Abdullah Sultan

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What is marketing?

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Old versus New Marketing

OLD Viewof Marketing:

New View of Marketing:

Satisfying customer needs

NEW View of Marketing:

Making a Sale –“Telling & Selling”

Satisfying Customer Needs

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What is Marketing?

AMA defines marketing as 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 shareholders.

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What Is Marketing?

Simple Definition: Marketing is managing profitable customer relationships.

Goals: 1. Attract new customers by satisfying

needs/wants and promising superior value. 2. Keep and grow current customers by

delivering satisfaction.

What do you think of this statement? Seth Godin, an expert in the marketing

field, said “We are living in a society where we have everything we need and hence we are left selling what customers want”.

It is extremely important for us as product managers to clearly understand what our customers are asking for - is it a real need or is it a want?

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Needs, Wants, & Demands

Need: State of felt deprivation including physical, social, and individual needs. Physical needs:

Food, clothing, shelter, safety Social needs:

Belonging, friendship, family, love Individual needs:

Learning, knowledge, self-expression

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Needs, Wants, & Demands

Wants: The form that human needs take, as shaped by culture and individual personality

We need food, but want Mr. Baker Cake We need transportation, but want an expensive car We need water, but want cold Pepsi

Wants + Buying Power = Demand

Marketers change “wants” to “needs”

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Need / Want Fulfillment

Needs and wants are fulfilled through a Marketing Offer: Some combination of products, services,

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

For Next Class, Think about this… Why is it important to truly understand the

customer? Make a list of 3 “wants” that you have. What would have to occur to move each of these from “wants” to “needs?”

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What Is a Market?

The set of actual and potential buyers of a product. Or the place demand (buyers) and supply (sellers) meet.

These people share a need or want that can be satisfied through exchange relationships.

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Modern Marketing Systems

Main elements in a modern marketing system include: Suppliers Company Competitors Marketing intermediaries Final users (customers)

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Marketing Management

The art and science of choosing target markets and building profitable relationships with them. Requires that consumers and the marketplace be

fully understood

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Marketing Management Philosophies

Production Concept Product Concept Selling Concept Marketing Concept (implementation of

market/customer orientation) Societal Marketing Concept

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Marketing Management

Designing a winning marketing strategy requires answers to the following questions:

1. What customers will we serve?What is our target market?

2. How can we best serve these customers?What is our value proposition?

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Segmentation & Target Marketing

Market Segmentation: Divide the market into segments of customers

Target Marketing: Select the segment to cultivate

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Customer Relationship Management (CRM)

The art of using customer databases to build and maintain profitable customer relationships by delivering superior customer value and satisfaction. Acquiring customers (initiate relationship) Keeping customers (maintain relationship) Growing customers (enhance relationship)

That is, market to each customer individually rather than market to a mass of people

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Building Customer Relationships One of the perceived benefits of CRM is that

it enables firms to retain satisfied customers who would be willing to pay.

The four steps in the customer relationship management (CRM): Understanding the marketplace and customer

needs Designing a customer-driven marketing strategy Constructing marketing programs leading to Building profitable customer relationships

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Customer Relationships

Loyalty and retention programs build relationships and may feature: Financial Benefits

EX: Frequency marketing programs (e.g., Sultan Center Card, Watani Rewards Points)

Social Benefits EX: marketing clubs (e.g., Our Marketing Club, National

Union of Kuwaiti Students) Successful marketers focus on relating

directly to profitable customers, for the longterm.

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Customer Satisfaction Satisfied customers are willing to pay

premium price for the product or service that they receive.

Customer satisfaction depends on the product’s perceived performance relative to a buyer’s expectations. Customer satisfaction often leads to consumer loyalty. Some firms seek to DELIGHT customers by

exceeding expectations.

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Customer Satisfaction

Care must be taken when setting expectations: If performance is lower than expectations,

satisfaction is low (dissatisfied customer). If performance is equal expectations, satisfaction

is met (satisfied customer). If performance is higher than expectations,

satisfaction is high (delighted customer).

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The Marketing Process A simple model of the marketing process:

Understand the marketplace and customer needs and wants.

Design a customer-driven marketing strategy. Construct a marketing program that delivers

superior value. Build profitable relationships and create customer

delight. Capture value from customers to create profits

and customer quality.