PRINCIPLES OF MARKETING
Chapter 1: Marketing: Creating and capturing customer value
What is Marketing?
• Marketing is managing profitable customer relationships.
• Marketing is the process by which companies create value for customers and build strong customer
relationships to capture value from consumers in return.
• “Create, communicate and deliver value to a target market (clients) at a profit (company)
Two -fold goal of marketing
• Attract new customers by promising superior value
• Keep and grow current customers by delivering satisfaction
The Five-Step Marketing Process
• The first four steps are a process to create value for customers and build customer
• The final step is to capture value from customers in return.
1. Understanding the marketplace and customer needs
1. Needs, Wants and Demands
Needs- the most basic concept underlying marketing is that of human needs. Human
needs are states of felt deprivation. They include basic physical needs for food, clothing,
warmth and safety; social needs for belonging and affection; and individual needs for
knowledge and self-expression.
Wants- the form human needs take as they are shaped by culture and individual
personality. For example; an American needs food but wants a Big Mac, French fries and
a soft drink.
Demands- Human wants that are backed by buying power. Given their wants and
resources, people demand products with benefits that add up to the most value and
2. Market Offerings
Some combination of products, services, information or experiences offered to a market
to satisfy a need or want. Consumer needs and wants are fulfil ed through market
offerings; it is not limited to physical products. It also includes services or benefits that is
intangible such as banking, airline, hotel, tax preparation, and home repair services.
Marketing Myopia- The sel ers’ mistake of paying more attention to the specific products
a company offers than to the benefits and experiences produced by the product.
Customer value and satisfactions- The key building blocks for developing and
managing customer relationships. Customer form expectations about the value and
satisfaction that various market offerings wil deliver and buy accordingly. Satisfied
customers buy again and tel others about their good experiences. Dissatisfied customers
often switch to competitors and disparage the products to others.
3. Exchanges and relationships
Exchange is the act of obtaining a desired object from someone by offering
something in return. Marketing consists of actions taken to build and maintain
desirable exchange relationships with target audiences involving a product, a
service, an idea or another object. Marketers want to build strong relationships by
consistently delivering superior customer value to retain the company’s
customers and grow their businesses.
The concepts of exchange and relationships lead to the concept of markets. A market is
a set of al actual and potential buyers of a product or service. These buyers share a
particular need or want that can be satisfied through exchange relationships. Marketing
means managing markets to bring about profitable customer relationships. This takes
work, sel ers must search for buyers, identify their needs, design good market offerings,
set prices for them, promote them, and store and deliver them.
Core Marketing Activities
• Consumer Research
• Product Development
• Pricing and Service
• Each party in the system adds value for the next level. Walmart cannot fulfil its promise
of low prices unless its suppliers provide low costs. Ford cannot deliver unless its
dealers provide outstanding service.
• The arrow represents relationships that must be developed and managed to create
customer value and profitable customer relationships.
• The figure shows the main elements in a marketing system. Marketing involves serving
a market of final consumers in the face of competitors. The company and its competitors
research the market and interact with customers to understand their needs. Then they
create and send their market offerings and messages to customers, either directly or
through marketing intermediaries. Each party in the system is affected by major
Marketing Intermediaries- are the distribution channels and way of
producers of various products and services to indirectly sel to the consumers also
known as middlemen. Four types of intermediaries are agents, distributors,
wholesalers, and retailers.