Principles of Marketing

Philip Kotler and Gary Armstrong

Creating and Capturing Customer

Value

J.R. Esguerra
 Pinoy Marketing

What do they have in common…

 ▪ Jollibee is owned by the Jollibee Foods Corporation

▪ JFC owns other fast food brands such as Greenwich,

Chowking, Red Ribbon Bakeshop, Mang Inasal, and
Burger King Philippines.

▪ Jollibee Milestone/History:
https://www.jollibee.com.ph/about-us/milestones-
history/

J.R. Esguerra
What Marketing is Not
Company to customers – “We can’t do it, it’s company
policy!”

Company to sales force – “Just push this item because we

are overstocked.”

Sales manager to sales force – “You can sell a lot by

manipulating the customers, just tell them they have
been chosen as a winner in a lucky draw. Anyway, they
won’t really know!”

Sago supplier to franchise applicant – “Never mind the long

lines of customers waiting, it will make it appear as
though we are doing so well.”
 What Marketing is Not

Telephone operator to customer – “It’s lunch break. Please

call back!”

Cellphone technician to client – “Of course we can repair it,

you just have to come back in 2 to 3 weeks! Give us a
call first, okay?”

Dry Cleaner to customer – “Sori po, nadistroy ko ang barong

nyo, pasensya na po sir. Sir, huwag nyo naman ako
isumbong, pasensya na lang po. Anyway, may ibang
barong pa naman kanyo.”
 What is Marketing?
Marketing
- The process by which companies engage
customers, build strong customer relationships,
and create customer value in order to capture
value from customers in return.
- The process of continuously and profitably
satisfying the target customer’s needs, wants and
expectations superior to competition.

J.R. Esguerra
 3 C’s of Marketing and its objectives

3 CS KEY OBJECTIVES

1. Customer To satisfy the needs, wants and

expectations of target customers.

2. Competition To outperform competition

3. Company To ensure corporate health and

profit
 The Marketing Process

Create value for customers and Capture value from

build customer relationships customers in return

Construct an
Engage customers,
Understand the Design a integrated Capture value
build profitable
marketplace and customer-driven marketing from customers to
relationships and
customer needs marketing strategy program that create profits and
create customer
and wants delivers superior customer equity
delight
value
I. Understand the marketplace and
customer needs and wants

Five core customer and marketplace concepts:

1. Needs, wants and demands

2. Marketing offerings (products, services, and
experiences)
3. Value and satisfaction
4. Exchange and relationships
5. Markets
Needs – states of felt deprivation
Wants – the form human needs take as shaped by
culture and individual personality
Demands – human wants that are backed by buying
power.
Market Offerings – some combination of products,
services, information, or experiences offered to a market
to satisfy a need or want.
 Product – anything that can be offered to a market for
attention, acquisition, use of consumption that might
satisfy a want or need. It includes physical objects,
services, persons, place, organizations, and ideas.

Service – any activity or benefit that one party can offer to

another that is essentially intangible and does not result
in the ownership of anything.

Marketing Myopia – the mistake of paying more attention

to the specific products a company offers than to the
benefits and experiences produced by these products.

J.R. Esguerra
Customer value - the difference between the values the
customer gains from owning and using a product and
the costs of obtaining the product.
Customer satisfaction – the extent to which a product’s
perceived performance matches a buyer’s expectations.

Features, advantages and benefits satisfies customers expectations:

Features – product attributes; distinguishing characteristic
Advantages – what the features can do; superiority
Benefits – advantages that meet the needs and wants of
the customers.
Ex. A businessman suffering from colds and nasal
congestion while about to leave for an important foreign
trip may be served by a saleslady of a nearby Mercury
Drug outlet this way:

“Vicks inhaler is a pocket-size inhalation device with

soothing vapors (features) which provide immediate
relief (advantage) of nasal congestion, thus, removing
distractions from your work (benefit) while you are
abroad.
Exchange – the act of obtaining a desired object from someone
by offering something in return.
Market – the set of all actual and potential buyers of a product
or service.

A Modern Marketing System:

COMPANY
(marketer)
Marketing Final
SUPPLIERS
Intermediaries Consumers

COMPETITORS
Customer Value-Driven Marketing Strategy

Marketing Management – the art and science of choosing

target markets and building profitable relationships with
them.
1. What customers will we serve (what’s our target
market)?
2. How can we serve these customers best (what’s our
value proposition)?

Value proposition – is the set of benefits or values it

promises to deliver to consumers to satisfy their needs.
 Marketing Management Orientations

Production Concept – the idea that consumers will favor products

that are available and highly affordable and that the organization
should therefore focus on improving production and distribution
efficiency.

Product Concept – the idea that consumers will favor products that
offer the most quality, performance, and features and that the
organization should therefore devote its energy to making
continuous product improvements.

Selling Concept – the idea that consumers will not buy enough of
the firm’s products unless it undertakes a large-scale selling and
promotion effort
Marketing Concept – the marketing management philosophy
that achieving organizational goals depends on knowing
the needs and wants of target markets and delivering the
desired satisfactions better than competitors do.

Starting pt Focus Means Ends

Selling Existing Selling and Profits through

Concept Factory products promoting sales volume

Marketing Customer Integrated Profits through

Concept Market needs marketing customer satis-
faction
 Two ways to respond to
customer’s needs and want

1. Customer-Driven Marketing – researching current

customers desires, gather new product and service
ideas, and test proposed product improvements.

2. Customer-Driving Marketing – understanding customer

needs even better than customers themselves do and
creating products and services that meet existing and
latent needs, now and in the future.

J.R. Esguerra
Societal Marketing Concept – a principle of enlightened
marketing that holds that a company should make good
marketing decisions by considering consumers’ wants,
the company’s requirements, consumers’ long-run
interests, and society’s long-run interests.

Society
(Human Welfare)

Consumers Company
Societal
(want satisfaction) (Profits)
Marketing
Concept
Integrated marketing Plan and Program

Marketing Mix – the set of marketing tools the firm

uses to implement its marketing strategy.
Product, Price, Place, and Promotion

Marketing Plan – addresses the what and why of

marketing activities.
Building Customer Relationships and Capturing
Customer Value

Customer relationship management – the overall process of

building and maintaining profitable customer relationships
by delivering superior customer value and satisfaction.
Customer-perceived value – the customer’s evaluation of the
difference between all the benefits and all the costs of a
market offering relative to those of competing offers.
Customer satisfaction – the extent to which a product’s
perceived performance matches a buyer’s expectations.
Consumer-generated marketing – brand exchanges
created by consumers themselves—both invited
and uninvited—by which consumers are playing
an increasing role in shaping their own brand
experiences and those of other consumers.
Partner Relationship Management – working closely with
partners in other company departments and outside the
company to jointly bring greater value to customers.

Capturing Value from Customer

Outcomes of creating customer value:
1. Creating customer loyalty and retention
Customer lifetime value – the value of the entire stream of
purchases that a customer would make over a lifetime of
patronage.
2. Growing share of customer
3. Building Customer Equity
Customer Equity – the total combined customer lifetime
values of all of the company’s customers.
 Building the right relationships with the right customer

Butterflies True Friends

Good fit between com- Good fit between

High pany’s offerings and company’s offerings
Potential profitability

Customer’s need; high and customer’s needs;

Profitability Profit potential highest profit potential

Strangers Barnacles
Low Little fit between Limited fit between
Profitability Company’s offerings and company’s offerings
Customer’s needs; lowest and customer’s needs
Profit potential low profit potential

short-term long-term
customers customers
Projected loyalty
Marketing Landscape

The Digital Age

- Social Media Marketing
- Mobile Marketing
The Changing Economic Environment
The Growth of Not-for-Profit Marketing
Rapid Globalization
Sustainable Marketing
 End of chapter 1

Keep Safe!

J.R. Esguerra
Next Topic:

Partnering to Build
Customer
Relationships