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Principles of Marketing: An Asian

Perspective

Instructor Supplements
Created by Geoffrey da Silva

Marketing:
Managing Profitable Customer Relationships

2012 Principles of Marketing: An Asian Perspective

Chapter 1 Outline
1.1
1.2
1.3
1.4
1.5
1.6
1.7

What is Marketing?
Understanding the Marketplace and Customer Needs
Designing a Customer-Driven Marketing Strategy
Preparing an Integrated Marketing Plan and Program
Building Customer Relationships
Capturing Value from Customers
The Changing Marketing Landscape

2012 Principles of Marketing: An Asian Perspective

Opening Case
Jollibee: A Passion for its Customers
At Jollibee, taking care of customers starts with a deep-down,
customer-focused culture. Jollibee emphasizes Filipino cultural values
of respect for elders, patriotism, and loyalty to the family.

2012 Principles of Marketing: An Asian Perspective

What is Marketing?

Defining Marketing
Marketing is a process by
which companies create value
for customers and build strong
customer relationships to capture
value from customers in return.

2012 Principles of Marketing: An Asian Perspective

What is Marketing?

Nintendos Wii surged ahead of


competition by delivering
superior value and customer
satisfaction with its interactive
games.

The Scope of Marketing

Marketing is not restricted to profit-making organizations.

Non-profits (colleges, hospitals, churches, etc.) must also perform


marketing.

Marketing must both attract new customers and build relationships


with current customers.

Most people think of marketing as selling and/or advertising.

Its focus is really on satisfying customer needs.

Marketing is all around you.

Marketing is about delivering superior value

2012 Principles of Marketing: An Asian Perspective

1.1 What is Marketing?

The Marketing Process


A Simple Model of the Marketing Process

2012 Principles of Marketing: An Asian Perspective

1.1 What is Marketing?

The Five Steps in the Marketing Process

In the marketing process, companies work to understand consumers,


create customer value, and build strong customer relationships.
The steps are:
1.Understand
2.Design

a customer-driven marketing strategy.

3.Construct
4.Build

the marketplace and customer needs and wants.

a marketing program that delivers superior value.

profitable relationships and create customer delight.

5.Capture

value from customers to create profits and customer quality.

In the final step, companies reap the rewards of capturing value from
consumers in the form of sales, profits, and long-term customer equity.
8

2012 Principles of Marketing: An Asian Perspective

Wants

Needs

Demands

2012 Principles of Marketing: An Asian Perspective

1.2 Understanding the Marketplace and Customer


Needs
Customer Needs, Wants and Demands

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1.2 Understanding the Marketplace and Customer


Needs
Market Offerings
Market offerings are some combination of products, services,
information, or experiences offered to a market to satisfy a need or
want
Marketing offerings are not just
limited to physical products
The Banyan Tree Resorts provide a sanctuary for the
senses to those who want a peaceful respite from the
hustle and bustle of city life.

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1.2 Understanding the Marketplace and Customer


Needs
Marketing myopia
What are we really selling- dog biscuits or more?
The mistake of paying
more attention to the
specific products a
company offers than
to the benefits and
experiences derived
from these products.
Companies must seek
to avoid the
marketing myopia
trap!

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1.2 Understanding the Marketplace and Customer


Needs
Avoiding Marketing Myopia
Avoid marketing myopia by focusing on product benefits and customer
needs.

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1.2 Understanding the Marketplace and Customer


Needs
Customer Value and Expectations

Consumers usually face a wide variety of products and services that


might satisfy a given need.

How do they choose among these market offerings

Customers form expectations about the value and satisfaction that


various market offerings will deliver and buy accordingly.

Satisfied customers buy again and tell others about their good
experiences; while dissatisfied customers often switch to competitors
and complain about the product to others.

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1.2 Understanding the Marketplace and Customer


Needs
Creating the balance between customer expectations and the
marketers ability to deliver on value

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1.2 Understanding the Marketplace and Customer


Needs
Marketing and Exchange
Exchange is the act of
obtaining a desired object
from someone by offering
something in return

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1.2 Understanding the Marketplace and Customer


Needs
Marketing involves building relationships

Marketing consists of actions taken to build and maintain desirable


exchange relationships with target audiences involving a product,
service, idea, or other object.

Beyond simply attracting new customers and creating transactions,


the goal is to retain customers and grow their business with the
company.

Marketers want to build strong relationships by consistently


delivering superior customer value.

A market is the set of actual and potential buyers of a product


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1.2 Understanding the Marketplace and Customer


Needs
Elements of modern marketing system
The different parties who are involved in the marketing process

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1.3 Designing a Customer-Driven Marketing Strategy

Marketing Management
Marketing management
is defined as the art and
science of choosing target
markets and building
profitable relationships
with them.

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1.3 Designing a Customer-Driven Marketing Strategy

Selecting Customers to Serve


Market segmentation refers to dividing the markets into segments
of customers
Target marketing refers to which segments to go after

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1.3 Designing a Customer-Driven Marketing Strategy

Target Marketing

Target market The Mandarin Oriental


Hotel goes after the affluent
professionals and business market.

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1.3 Designing a Customer-Driven Marketing Strategy

Value Position
What is a Value Proposition?

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1.3 Designing a Customer-Driven Marketing Strategy

Value proposition

Red Bull energy drink vitalizes both


body and mind. It gives you wiiings.

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1.3 Designing a Customer-Driven Marketing Strategy

Marketing Management orientations


Over time five alternative concepts have developed under which
organizations design and carry out their marketing strategies.

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1.3 Designing a Customer-Driven Marketing Strategy

Production Concept
Consumers will favor products that are available and affordable.
Management should focus on improving production and distribution
efficiency.
Product Concept
Consumers will favor products that offer the most in quality,
performance, and innovative features
Organization should therefore devote its
energy to making continuous product
improvements.
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1.3 Designing a Customer-Driven Marketing Strategy


The problem with the Product Concept
Product quality and improvement are important parts of most marketing strategies.
However, focusing only on the companys products can also lead to marketing myopia.
For example, some manufacturers believe that if they can build a better mousetrap, the
world will beat a path to their door.
But buyers may well be looking for a better solution to a mouse problem, not necessarily
for a better mousetrap.
The better solution might be an exterminating service or something that works better
than a mousetrap.
Further, a better mousetrap will not sell
unless the manufacturer designs, packages,
and prices it attractively, places it in
convenient distribution channels, brings it to
the attention of people who need it, and
convinces buyers that it is a better product.

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1.3 Designing a Customer-Driven Marketing Strategy

Selling Concept
Consumers will not buy enough
without a large scale selling and
promotion effort
The

concept is typically practiced with unsought goodsthose that


buyers do not normally think of buying, such as insurance or blood
donations.
These

industries must be good at tracking down prospects and selling


them on product benefits.

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1.3 Designing a Customer-Driven Marketing Strategy


Marketing Concept
Under the marketing concept,
customer focus and value are
the paths to sales and profits.
The job is not to find the right
customers for your product but to
find the right products for your
customers.
Customer-driven marketing is about understanding customer needs
and creating products and services that meet existing and latent
needs.
And delivering the desired satisfactions better than competitors do

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The selling and the marketing concepts contrasted

The selling concept takes an inside-out perspective. It starts with the


factory, focuses on the companys existing products, and calls for heavy
selling and promotion to obtain profitable sales. It focuses primarily on
customer conquestgetting short-term sales with little concern about who
buys or why.
Implementing the marketing concept often means more than responding
to customers stated desires and obvious needs. Customer-driven
companies research deeply on current customers to learn about their
desires, gather new product and service ideas, and test proposed product
improvements
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1.3 Designing a Customer-Driven Marketing Strategy

Customer-driven versus customer driving

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1.3 Designing a Customer-Driven Marketing Strategy


Customer-driven versus customer driving
In many cases, however, customers dont know what they want or
even what is possible. For example, even 20 years ago, how many
consumers would have thought to ask for now-commonplace products
such as mobile phones, notebook computers, iPods, digital cameras,
24-hour online buying, and satellite navigation systems in their cars?
Such situations call for customer-driving marketingunderstanding
customer needs even better than customers themselves do and
creating products and services that meet existing and latent needs,
now and in the future.

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1.3 Designing a Customer-Driven Marketing Strategy

Societal Marketing Concept


Societal marketing
concept is the idea that a
company should make
good marketing decisions
by considering consumers
wants, the companys
requirements, consumers
long-term interests, and
societys long-run
interests.

32 2012 Principles of Marketing: An Asian Perspective

Societal Marketing Concept


The societal marketing concept questions whether the pure marketing
concept overlooks possible conflicts between consumer short-run
wants and consumer long-run welfare.
The societal marketing concept holds that marketing strategy should
deliver value to customers in a way that maintains or improves both
the consumers and the societys well being.
It calls for sustainable marketing, socially and environmentally
responsible marketing that meets the present needs of consumers
and businesses while also preserving or enhancing the ability of
future generations to meet their needs.

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Three considerations underlying the societal marketing


concept
Companies should
balance three considerations
in setting their marketing
strategies: company profits,
consumer wants, and
societys interests.

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1.4 Preparing an Integrated Marketing Plan and


Program
The marketing mix: set of tools (four Ps) the firm uses to implement
its marketing strategy. It includes product, price, promotion, and
place.
Integrated
marketing program:
comprehensive plan
that communicates and
delivers the intended
value to chosen
customers.

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1.5 Building Customer Relationships

Customer Relationship Management (CRM)

The overall process of building and maintaining profitable customer


relationships by delivering superior customer value and satisfaction.

Managing customer touch points


in order to maximize customer loyalty.

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1.5 Building Customer Relationships


Relationship Building Blocks: Customer Value and Satisfaction
Value
Customer Value: the
customers evaluation of
the difference between all
the benefits and all the
costs of a market offering
relative to those of
competing offers
Customers often do not
judge values and
costs accurately or
objectively.
Customers act on customer
perceived value.
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Customer Perceived Value

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1.5 Building Customer Relationships

Customer Satisfaction

Depends on the products perceived performance relative to a


buyers expectations.

If the products performance falls short


of expectations, the customer is
dissatisfied. If performance matches
expectations, the customer is satisfied.
If performance exceeds expectations,
the customer is highly satisfied
or delighted.

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1.5 Building Customer Relationships

Japanese Department Stores and Customer Satisfaction

The recession has seen younger Japanese consumers seeking specialty


instead of department stores as consumers are dissatisfied with the latter.
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Building Customer Relationships


Customer Relationship Levels and Tools
Basic Relationships are often used by a company
with many low-margin customers. For example,
Procter & Gamble does not phone or call on all of its
Tide consumers to get to know them personally.
Instead, P&G creates relationships through brandbuilding advertising, sales promotions, and its Web
site.
Full Partnerships are used in markets with few
customers and high margins, sellers want to
create full partnerships with key customers. For
example, P&G customer teams work closely with
Wal-Mart, Safeway, and other large retailers.
Some companies sponsor club marketing programs
that offer members special benefits and create
member communities.
(For example, Harley-Davidson sponsors the
Harley Owners Group [H.O.G.].)
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The Changing Nature of Customer Relationships

Relating with more carefully selected customers uses selective


relationship management to target fewer, more profitable customers

Relating more deeply and interactively by incorporating more


interactive two way relationships through blogs, Websites, online
communities and social networks

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Two-way Customer Relationships


Many companies now target fewer, more profitable customers using
selective relationship management to relate more deeply and
interactively to carefully selected customers through blogs, Websites,
online communities and social networks.
Companies such as Pepsi
are increasingly using
new Technologies to
involve consumers. On
RefreshEverything.com,
Pepsi lets consumers have
a say on what projects
should benefit from
Pepsis giveback to the
society.

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Use of Social Networks


Sony used its social networking site
Backstage 101 as a way to build a
community of users and influence
attitude and purchase towards Sony
products. It was shut down later
apparently because customers were
increasingly giving feedback that did
not make Sony products look
favorable

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Consumer-Generated Marketing

This is part of the new customer dialogue is consumer-generated


marketing, by which consumers themselves are playing a bigger
role in shaping their own brand experiences and those of others.

This might happen through uninvited consumer-to-consumer


exchanges in blogs, video-sharing sites, and other digital forums.

But increasingly, companies are inviting consumers to play a more


active role in shaping products and brand messages.

45 2012 Principles of Marketing: An Asian Perspective

1.5 Building Customer Relationships

Partner relationship management


Partner relationship management involves working closely
with partners in other company departments and
outside the company to jointly bring
greater value to customers.

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1.5 Building Customer Relationships

Partner Relationship Marketing


Internal and External Partners that Marketers need to work with

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1.6 Capturing Value from Customers


Creating Customer Loyalty and Retention

The aim of customer relationship management is to create not just


customer satisfaction, but customer delight. This means that
companies must aim high in building customer relationships.

Companies are realizing that losing a customer means losing more


than a single sale. It means losing customer lifetime value.
Customer lifetime value is the value of the entire stream of
purchases that the customer would make over a lifetime of
patronage.

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1.6 Capturing Value from Customers

Share of customer
Share of customer is the portion of the customers purchasing that a
company gets in its product categories

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Customer Equity
Customer equity is the total combined customer lifetime values of all
of the companys customers.
Clearly,

the more loyal the firms profitable customers, the higher the
firms customer equity.
Customer

equity may be a better measure of a firms performance


than current sales or market share.
Building

the right relationships with the right customers involves


treating customers as assets
that need to be managed and
maximized

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1.6 Capturing Value from Customers


Customer Relationship Groups
Key point: Different types of customers require different relationship
management strategies (see Real Marketing 1.1 from page 26 of the
textbook: Principles of Marketing: An Asian Perspective)

51 2012 Principles of Marketing: An Asian Perspective

1.7 The Changing Marketing Landscape


Digital age

People are connected continuously to people


and information worldwide

Marketers have great new tools to communicate


with customers

Internet + mobile communication devices


creates environment for online marketing

52 2012 Principles of Marketing: An Asian Perspective

1.7 The Changing Marketing Landscape

Globalization

Almost every company, large or small,


is touched in some way by
global competition.

Today, companies are also buying


more supplies and components abroad.

Companies like McDonalds have developed truly global


operations. This American icon captures 65 per cent of
its revenue outside of the U.S.
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1.7 The Changing Marketing Landscape

Sustainable Marketing
The Call for More Ethics and Social Responsibility

Marketers are being called upon to take greater responsibility for the
social and environmental impact of their actions.

Forward-looking companies view socially responsible actions as an


opportunity to do well by doing good.

54 2012 Principles of Marketing: An Asian Perspective

1.7 The Changing Marketing Landscape


The Growth of Not-for-Profit Marketing

In recent years, marketing has also become a major part of the


strategies of many not-for-profit organizations, such as colleges,
hospitals, museums, zoos, symphony orchestras, and even
churches.

Government agencies have also shown an increased interest in


marketing by designing social marketing campaigns.

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