Principles of Marketing,

Arab World Edition

Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed
Tolba
Presentation prepared by Annelie Moukaddem Baalbaki

CHAPTER ONE
Marketing: Creating and
Capturing Customer Value

Lecturer: Tayyiba Khalil

Ch 1 -0 Copyright © 2011 Pearson Education

 Creating and Capturing Customer Value
Topic Outline

1.1 What Is Marketing?

1.2 Understand the Marketplace and Customer Needs
1.3 Designing a Customer-Driven Marketing Strategy
1.4 Preparing an Integrated Marketing Plan and Program
1.5 Building Customer Relationships
1.6 Capturing Value from Customers
1.7 The Changing Marketing Landscape
1.8 So, What is Marketing? Pulling It All Together

Ch 1 -1 Copyright © 2011 Pearson Education

 Marketing and the Marketing Process

Marketing is a process by which companies create value

for customers and build strong customer relationships to
capture value from customers in return.

1 2 3 4 5

In the first four steps, companies work to understand

consumers, create customer value, and build strong
customer relationships.
In the final step, companies reap the rewards of creating
superior customer value.

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 1) Understanding the Marketplace and
Customer Needs (Slides 3-5)

• States of deprivation
• Physical—food, clothing, warmth, safety
Needs • Social—belonging and affection
• Individual—knowledge and self-expression

• Form that needs take as they are shaped by

Wants culture and individual personality

Demands • Wants backed by buying power

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 Market offerings are some combination of products,
services, information, or experiences offered to a market
to satisfy its needs or wants.

Marketing myopia is focusing only on existing wants and

losing sight of underlying consumer needs.

Exchange is the act of obtaining a desired object from

someone by offering something in return.

Marketers aim at building strong relationships by

consistently delivering superior customer value.
Customers
Value and
satisfaction Expectations too high
à buyers = disappointed.
Marketers
• Set Expectations too low
expectations à Can’t attract new buyers.
not too
high/low
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 A market is the set of actual + potential buyers of a product
or service.

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 2) Designing a Customer-Driven Marketing
Strategy (Slides 6-
Marketing management is the art and science of choosing
target markets and building profitable relationships with them.
1. What customers will we serve?
Market segmentation refers to dividing the markets into
segments of customers.

Target marketing refers to which segments to go after.

Demarketing is marketing to reduce demand temporarily
or permanently; the aim is not to destroy demand but to
reduce or shift it.
2. How can we best serve these customers and
differentiate ourselves from other competitors?
choosing The value proposition the set of values a
company promises to deliver to satisfy customer needs.
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Marketing Management Orientations (Slides 7-8)

Production Product Selling Marketing Societal

concept concept concept concept concept

1) Production concept is the idea that consumers will

favor products that are available and highly affordable.
2) Product concept is the idea that consumers will
favor products that offer the most quality, performance,
and features. An organization should therefore devote its
energy to making continuous product improvements.

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 3) 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.
4) 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.

5) Societal marketing concept is the idea that a company’s

marketing decisions should consider consumers’ wants, the
company’s requirements, consumers’ long-term interests, and
society’s long-term interests.

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 3) Preparing an Integrated Marketing Plan and
Program

The marketing mix is the set of tools (four Ps: product, price,
promotion, and place) the firm uses to implement its
marketing strategy.

Integrated marketing program is a comprehensive plan

that communicates and delivers the intended value to chosen
customers.

Ch 1 -9 Copyright © 2011 Pearson Education

4) Building Customer Relationships (Slides 10-11)

Customer relationship management (CRM): The overall

process of building and maintaining profitable customer
relationships by delivering superior customer value and
satisfaction.
− Customer value & satisfaction are the relationship
building blocks.
− Customer-perceived value the difference between
total customer value and total customer cost.
− Customer satisfaction The extent to which a product’s
perceived performance matches a buyer’s expectations
Full − Relating with more carefully selected customers uses
Partnerships
selective relationship management to target fewer,
more profitable customers.
Basic
Relationships− Relating more deeply and interactively by incorporating

more interactive, two-way relationships through blogs,

websites, online communities and social networks.

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 Partner relationship management involves working closely
with partners in other company departments and outside the
company to jointly bring greater value to customers.
Partners inside the company refer to every function area
interacting with customers:
• electronically
• cross-functional teams
Partners outside the company refer to how marketers
connect with their suppliers, channel partners, and
competitors by developing partnerships.
Supply chain is a channel that stretches from raw materials
to components to final products to final buyers:
• Supply management
• Strategic partners
• Strategic alliances
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 5) Capturing Value from Customers

Customer lifetime value is the value of the entire stream

of purchases that the customer would make over a lifetime
of patronage.
Share of Customer is the portion of the customer’s
purchasing that a company gets in its product categories.
Customer equity is the total combined customer lifetime
values of all of the company’s customers.

• Building the right relationships with the right customers

involves treating customers as assets that need to be
managed and maximized.
• Different types of customers require different relationship
management strategies.

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 The Changing Marketing Landscape
Major Developments

Rapid
Digital age
globalization

Ethics and
Not-for-profit
social
marketing
responsibility

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 So, What Is Marketing? Pulling It All Together

Ch 1 -14 Copyright © 2011 Pearson Education