Summary Principles of Marketing, P. Kotler and G. Armstrong, 17th edition, Chapter 1, 2, 7, 16 & 17 (English)
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Course
Marketing & Sales
Institution
Hogeschool Rotterdam (HR)
Book
Principles of Marketing
This is a summary of the book Principles of Marketing by P. Kotler and G. Armstrong. The edition used for this summary is the 17th edition. The chapters sumarised are 1, 2, 7, 16 and 17.
Samenvatting Principles of Marketing, ISBN: 9781292220178
Marketing Fundamentals Notes
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Marketing & Sales Summary
Chapter 1
What is marketing?
Marketing is engaging customers and managing profitable customer relationships.
Marketing defined
Marketing must be understood not in the old sense of making a sale, but in the new
sense of satisfying customer needs. The marketing mix is a set of marketing tools that
work together to engage customers, satisfy customer needs, and build customer
relationships. Marketing is a social and managerial process by which individuals and
organisations obtain what they need and want through creating and exchanging value
with others. It is also a process by which companies engage customers, build strong
relationships, and create customer value in order to capture value from customers in
return.
Marketing process
The marketing mix is divided into 5 steps:
- Understand the marketplace and customer needs and wants
- Design a customer value - driven marketing strategy
- Construct an integrated marketing program that delivers superior value
- Engage customers, build profitable relationships, and create customer delight
- Capture value from customers to create profits and customer equity
Understanding the marketplace and customer needs
We examine five core customer and marketplace concepts
- needs, wants, and demands
- Market offerings (products, services, and experiences)
- Value and satisfaction
- Exchanges and relationships
- Markets
Customer needs, wants, and demands
Human needs are states of felt deprivation. Thet include physical needs, social needs,
and individual needs. Wants are the form human needs take as they are shaped by
culture and individual personality. When backed by buying power, wants become
demands. Given their wants and resources, people demand products and services with
benefits that add up to the most value and satisfaction
Market offerings - products, services, and experiences
Consumers’ needs and wants are fulfilled through market offerings - Some
combination of products, services, information, or experiences offered to a market to
satisfy a need or want. Many sellers make the mistake of paying more attention to the
specific products they offer than to the benefit and experiences produced by there
products they offer that to the benefits and experiences produced by these products.
These sellers suffer from marketing myopia.
Customer value and satisfaction
Costumers 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. Dissatisfied customers often switch to
competitors and disparage the product to others.
,Exchange an relationships
Exchange is the act of obtaining a desired object from someone by offering something
in return.
Markets
A market is the set of actual and potential buyers of a product or service. Marketing
means managing markets to bring about profitable customer relationships. In addition
to customer relationship management today’s marketers must also deal effectively
with customer- managed relationships. Marketers are no longer asking lonely “how
can we influence our customers?” But also “How can our customers influence us?”
Designing a customer value - driven marketing strategy and plan
Customer value - driven marketing strategy
Marketing management is the art and science of choosing target markets and building
profitable relationships with them.
The company must first decide whom it will serve. It divides the market into market
segmentations and select the target marketing. Ultimately, marketing managers must
decide which customers they want to target and on the level, timing, and nature of
their demand. Simply put, marketing management is customer management and
demand management.
The company must also decide how it will serve targeted customers - how it will
differentiate and position itself in the marketplace
There are five alternative concepts under which organisations design and carry out
their marketing strategies:
- The production
- The product
- The selling
- The marketing
- The social marketing
Th production concept holds that consumers will favour products that are available
and highly affordable. Therefore, management should focus on improving production
and distribution efficiency.
The product concept hold that consumers will for products that offer the most in
quality, performance, and innovative features. Under this concept, marketing strategy
focuses on making continuous product improvements.
Many companies follow the selling concept, which holds that consumers will not buy
enough of the firm’s products unless It undertakes a large-scale selling and promotion
effort. The selling concept is typically practiced with unsought goods - those that
buyers do not normally think of buying, such as insurance or blood donations.
The Marketing concept holds that achieving organisational goals depends on knowing
the needs and wants of target market and delivering the desired satisfactions better
than cpmetitors do. Under the marketing concept, customers focus and value are the
pats to sales and profits. Instead of product-centered make-and-sell philosophy, the
marking concept is a customer-centered sense-and-respond philosophy.
The societal marketing concept questions whether the pure marketing concept
overlooks possible conflicts between shot-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 consumer’s and society’s
well-being.
Preparing an integrated marketing plan and program
The company’s marketing strategy outlines which customers it will serve ad ow it will
create value for these customers. Next, the marketer develops an integrated
marketing program that will actually deliver the intended value to target customers. It
consists of the firm’s marketing mix, the set of marketing tools the firm uses to
implement its marketing strategy. It is classified into 4 groups:
, - Product
- Price
- Place
- Promotion
Managing customer relationships and capturing customer value
Engaging customers and managing customer relationships
The four steps in the marketing process:
- Understanding the marketplace and customer needs
- Designing a customer value-driven marketing strategy
- Constructing a marketing program
- Engaging customers and managing profitable customer relationships
The key to building lasting customer relationships is to create superior customer value
and satisfaction. A customer buys from the firm that offers the highest customer-
perceived value - the customer’s evaluation of the difference between all the benefits
and al the costs of a market offering relative to those of competing offers. Customer
satisfaction depends on the product’s perceived performance relative to a buyer’s
expectations.
Customer relationship levels and tools
A company with many low-margin customers may seek to develop basic relationships
with them. At the other side, in markets with few customers and high margins, sellers
want to create full partnership with key customers.
Customer engagement and today’s digital and social media
The old marketing involved marketing brands to consumers. The new marketing is
customer-engagement marketing - fostering direct and continuous customer
involvement in shaping brand conversations, brand experiences, and brand
community.
Consumer-generated marketing
One form of customer-engagement marketing is consumer generated marketing, by
which consumers themselves play role in shaping their own brand experiences and
those of others. This happens via consumer-to-consumer exchange in blogs, video-
sharing sitesn, social media, etc.
Partner Relationship management
These days marketers need to be good at partner relationship management - working
closely with others inside and outside the company to jointly engage and bring more
value to customers.
Capturing value from customer
This is divided in three categories
- customer loyalty and retention
- Share of market and share of customer
- Customer equity
Creating customer loyalty and retention
Customer lifetime value: The value of the entire stream of purchases a customer
makes over a lifetime of patronage.
Growing share of customer
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