Marketing Session 1

Principles of Marketing
Tamer Karam
A little bit about Marketing!
Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved
The Curriculum
PART 1: DEFINING MARKETING AND THE MARKETING PROCESS
PART 2: UNDERSTANDING THE MARKETPLACE AND CONSUMER VALUE
PART 3: DESIGNING A CUSTOMER VALUE-DRIVEN STRATEGY AND MIX
The Curriculum
The Curriculum
PART 1
Defining Marketing And The Marketing Process
Marketing: Creating Customer Value And

Engagement
1.Marketing: Creating
Customer Value And
Engagement
First Stop: Amazon’s
Creating Customer Value And
Engagement
Creating Customer Value
And Engagement
And Engagement
• When you think of shopping online, chances are good
that you think first of Amazon.
• The online pioneer first opened its virtual doors in 1995,
selling books out of founder Jeff Bezos’s garage in
suburban Seattle.
• Amazon still sells books—lots and lots of books But it
now sells just about everything else as well, from
music, electronics, tools, housewares, apparel, and
groceries to fashions, loose diamonds, and Maine lobsters.
And Engagement
What has made Amazon such

an amazing success story?
And Engagement
• Founder and CEO Bezos puts it in three simple words:
“Obsess over customers.”
• The company starts with the customer and works
backward. Rather than asking what it can do with its
current capabilities, Amazon first asks:
– Who are our customers?
– What do they need?
– Then, it develops whatever capabilities are required to
meet those customer needs.
And Engagement
• At many Amazon meetings, the most influential figure in
the room is “the empty chair”—literally an empty chair at
the table that represents the all-important customer.
• At times, the empty chair isn’t empty, but is occupied by a

“Customer Experience Bar Raiser,” an employee who is
specially trained to represent customers’ interests.
And Engagement
• Amazon’s obsession with serving the needs of its
customers drives the company to take risks and innovate
in ways that other companies don’t.
• For example, when it noted that its book-buying
customers needed better access to e-books and other
digital content, Amazon developed the Kindle e-reader
• The Kindle is now the company’s number-one selling
product, and Amazon.com now sells more e-books than
hardcovers and paperbacks combined.
And Engagement
Takeaways…
• Amazon.com’s deep-down passion for creating customer

value and relationships has made it the world’s leading
online retailer.
• Amazon has become the model for companies that are
obsessively and successfully focused on delivering
customer value.
Objectives Outline
– Demonstrate basic concepts of marketing and its

values to customers
1.1 What Is Marketing?
Pause here and think about how you’d

answer this question before studying
marketing.
Then see how your address the constant
changes in the world, market and broad
people behavior?
• …is a management process
• …is about giving customers what they want
• …identifies and anticipates customer requirements
• …fulfils customer requirements profitably (but not always!)
• …offers and exchanges ideas, goods and service
Forms of Marketing
Traditional “telling and selling”
• Making a sale
• Abundance of products in the nearby shopping centers
• Television, magazine, and direct-mail ads
Contemporary
• Satisfying customer needs
• Imaginative Web sites and mobile phone apps, blogs,
online videos, and social media
• Reach customers directly, personally, and interactively
Figure 1.1 The
Marketing Process:
Creating and Capturing
Customer Value sales, profits, and
long-term customer
understand, create and build equity.
1.2 Understanding the
Marketplace and Customer
Needs
Marketing is all about creating value for

customers. So, as the first step in the
marketing process, the company must fully
understand consumers and the
marketplace in which it operates.
Agree!
Marketplace and Customer
Needs
• Five core customer and marketplace concepts:
– Needs, wants, and demands
– Market offerings
– Value and satisfaction
– Exchanges and relationships
– Markets
Customer Needs,
Wants, and Demands
(1 of 2)
Needs
• States of felt deprivation
– Physical needs—food, clothing, warmth, and safety
– Social needs—belonging and affection
– Individual needs—knowledge and self-expression
Wants (When backed by buying power, wants become demands)
• Form taken by human needs when shaped by culture
and individual personality
Demands
• Human wants that are backed by buying power
Customer Needs,
Wants, and Demands
(1 of 2)
Staying close to customers:
Target’s energetic new CEO
Target’s energetic new CEO, Brian Cornell,

makes regular unannounced visits to
Target stores, accompanied by local moms
and loyal Target shoppers.
Group Reflection:
Chick-Fil-A: Getting Better before Getting Bigger

Chick-fil-A may not be the biggest fast-food chain. But the up and coming
purveyor of poultry sells more food per store than any of its competition—even
McDonald’s.
Its annual growth rate blows away all other top-10 chains. How does it do it? By
making customers the number one priority. Chick-fil-A has a great product in its
breaded chicken sandwich. But its real secret is the exceptional way all its
employees treat customers.
Beyond the point-of-purchase customer experience, Chick-fil-A also places

customer engagement at the core of its strategy.
Give examples of the anticipated needs, wants, and demands of

Chick-fil-A customers, differentiating these three concepts.
Market Offerings
Marketing experiences
Products, services, information,
More than just a mobile game or experiences offered to satisfy
app, Angry Birds is “a digital a need or want
immersion in addictively
cheerful destruction.” Creator
Rovio plans to expand the
Angry Birds experience through
animated videos, licensed
products, and even Angry
birds–branded playgrounds
and activity parks.
Market Offerings
Why companies have

marketing myopia?
Market Offerings
Market Offerings
Marketing Myopia (Theodore Levitt)
refers to sellers paying more attention to the specific

products a company offers than to the benefits and
experiences produced by these products.
They forget that a product is only a tool to solve a consumer
problem. These sellers will have trouble if a new product comes
along that serves the customer’s needs better or less
expensively.
The customer will have the same need but will want the new
product.
Customer Value and Satisfaction
• Customers form expectations about the value and
satisfaction of market offerings.
– Satisfied customers buy again
– Dissatisfied customers switch to competitors
• Setting the right level of expectations
– Low expectations may fail to attract buyers
– High expectations may disappoint buyers
Exchanges and Relationships
• Exchange is the act of obtaining a desired object by
offering something in return.
• Marketing consists of creating, maintaining, and growing
desirable exchange relationships.
– Strong relationships are built by consistently
delivering superior customer value.
Figure 1.2 A Modern
Marketing System
For example, Carrefour cannot

fulfill its promise of low prices
unless its suppliers provide
merchandise at low costs.
Marketplace and
Customer Needs
Once a company fully understands its

consumers and the marketplace, it must
decide which customers it will serve and
how it will bring them value.
Agree!
1.3 Designing a Customer Value-
Driven Marketing Strategy
1.3 Designing a
Customer Value-Driven
Marketing Strategy
Value propositions:
With Vibram FiveFingers shoes, “You are the technology.”
1.3 Designing a
Marketing Strategy
• Customer value-driven marketing strategy
– Once a company fully understands its consumers
and the marketplace, it must decide which
customers it will serve and how it will bring them
value.”
• Marketing management: Choosing target markets and
building profitable relationships
• Designing a winning marketing strategy
– Target market?
– Value proposition?
1.3 Designing a
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.
1.3 Designing a
Marketing Strategy
A brand’s value
proposition is the set of
benefits or values it
promises to deliver to
consumers to satisfy their
needs.
Choosing a value proposition—the company must decide
how it will differentiate and position itself in the
marketplace.
Facebook helps you “connect and share with the people
in your life.”
1.3 Designing a
Marketing Strategy
Production Product Selling Marketing Societal

concept concept concept concept concept
1.3 Designing a
Marketing Strategy
1.3 Designing a
Marketing Strategy Three Considerations
human and civil rights

as well as animal and
environmental issues. different ethnicities singing
"America Is Beautiful."
Figure 1.3 The
Selling and Marketing
Concepts Contrasted
INSIDE-OUT VIEW
OUTSIDE-IN VIEW
As Southwest Airlines’ colorful founder puts it,

“We don’t have a marketing department, we have a customer department.”
Marketplace and
Customer Needs
The customer-driven marketing Strategy
earlier outlines which customers the company
will serve (the target market) and how it will
serve them (positioning and the value
proposition).
Now, the company develops marketing
plans and programs—a marketing mix—that
will actually deliver the intended customer.
Preparing an Integrated
Marketing Plan and
Program
1.4 Customer
Relationship
Management
Doing a good job with the first three steps in

the marketing process sets the stage for step
four, building and managing customer
relationships.
Agree!
1.4 Customer
Relationship
Management
• Delivering superior customer value and satisfaction to build
and maintain profitable customer relationships
– Customer-perceived value: Customer’s evaluation of
a marketing offer relative to those of competing
offers
– Customer satisfaction: Extent to which a product’s
perceived performance matches a buyer’s
expectations
Customer Relationship
Levels and Tools (1 of 2)
Levels
• Basic relationships
• Low-margin customers
• Full partnerships
• High-margin customers
Tools
• Frequency marketing programs
• Loyalty rewards programs
• Club marketing programs
Customer Relationship
Levels and Tools (2 of 2)
Skywards Loyalty Program: Relationship marketing tools
Customer-Engagement Marketing
• Customer-engagement
marketing makes the brand a
meaningful part of
consumers’ conversations
and lives.
• Greater consumer
empowerment means that
companies must practice
marketing by attraction.
• Marketers must find ways to
enter consumers’
conversations with engaging
and relevant brand messages.
Consumer-Generated Marketing
• Brand exchanges created by consumers
– Consumers play an increasing role in shaping their
own brand experiences and those of other
consumers.
• Uninvited and Invited
– Consumer-to-consumer exchanges e.g. FB
– Consumers invited by companies
§ New product and service ideas PepsiCo’s Doritos
brand has held a
§ Active role in shaping ads “Crash the Super
Bowl”
Partner Relationship Management
• Working closely with partners both inside and outside the
company to jointly bring more value to customers
– Partners inside the firm—cross-functional teams
– Partners outside the firm—suppliers, channel partners
(SUPPLY CHAIN)
Creating Customer
Loyalty and Retention
• Keeping customers loyal makes good economic sense.
• Customer lifetime value is the value of the entire stream
of purchases a customer makes over a lifetime of
patronage.
• Customer defections can be costly
– Can lose that customer’s lifetime value e.g
e.g. C4R KSA: Weekly customer shopping is SAR 250 x 52 =
SAR 13,000 per year LOSS
– May cause other customers to defect (The loss can be
much greater if the disappointed customer shares the bad
experience)
Growing Share of Customer
• Portion of the customer’s purchasing in their product
categories
• Share of Customer is increased by:
– Good customer relationship management
– Offering greater variety to current customers
– Creating programs to cross-sell and up-sell to
existing customers
For example, Amazon is highly skilled at leveraging relationships with

its 244 million customers to increase its share of each customer’s
spending budget.
Building Customer Equity (1 of 2)
• Total combined customer lifetime values of all of the
company’s customers
• Measures the future value of the company’s customer
base
• Increases when the loyalty of the firm’s profitable
customers increases
• Better measure of a firm’s performance than current sales
or market share
Customer Equity (2 of 2)
• Cadillac: Managing Customer Equity
Real Situation
Customer Equity (2 of 2)
• Cadillac: Managing Customer Equity
Cadillac had a huge share of In recent years, Cadillac has
the luxury car market, most struggled to reinvent its
of its buyers were in the target market by focusing on
older age brackets and a younger generation of
average customer lifetime consumers.
value was falling.
To increase customer
Many Cadillac buyers were equity, Cadillac is making
on their last cars. Thus, the classic car cool again
although Cadillac’s market among younger buyers,
share was good, its encouraging consumers to
customer equity was not. “Dare Greatly.”
Figure 1.5 Customer
Relationship Groups
The company will not gain

anything by investing time and
resources in developing
relationships with strangers,
Agree!
Figure 1.5 Customer
Relationship Groups
Figure 1.5 Customer
Relationship Groups
STOCK MARKET INVESTORS Department Stores
smaller bank customers

1.5 The Changing
Marketing Landscape
Marketing doesn’t take place in a vacuum.

Let’s look at how the everchanging
marketplace affects both consumers and
the marketers who serve them.
1.5 The Changing
Marketing Landscape
• Digital Age
• Changing Economic Environment
• Growth of Not-for-Profit Marketing
• Rapid Globalization
• Sustainable Marketing
Details
The Digital Age: Online,
Mobile, and Social Media
Marketing (1 of 2)
• Digital and social media marketing: Engaging

consumers via their digital devices using digital
marketing tools
• Mobile marketing: Using mobile channels to stimulate
immediate buying, make shopping easier, and enrich
the brand experience
• Blending the new digital approaches with traditional
marketing creates a smoothly integrated marketing
strategy and mix.
Social Media Marketing (2 of 2)
• Online social media provide a digital home for people to
connect and share important information and life’s
moments.
• Social media offer an ideal platform for real-time
marketing and engagement.
– Facebook, Twitter, Snapchat, and smaller more
focused sites.
Big Data and Artificial
Intelligence (AI)
• Marketers can now amass mountains of data
• Brands can use big data to:
– gain deep customer insights,
– personalize marketing offers,
– and improve customer engagements and service.
Growth of Not-for-Profit Marketing
Sound marketing can help
not-for-profits attract
membership, funds, and
support.
Rapid Globalization and
Sustainable Marketing
• Managers around the world are taking both local and
global views of the company’s:
– Industry
– Competitors
– Opportunities
• Corporate ethics and social responsibility have become
important for every business.

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Principles of Marketing

PART 1: DEFINING MARKETING AND THE MARKETING PROCESS

PART 2: UNDERSTANDING THE MARKETPLACE AND CONSUMER VALUE

PART 3: DESIGNING A CUSTOMER VALUE-DRIVEN STRATEGY AND MIX

Marketing: Creating Customer Value And

What has made Amazon such

• At times, the empty chair isn’t empty, but is occupied by a

• Amazon.com’s deep-down passion for creating customer

– Demonstrate basic concepts of marketing and its

Pause here and think about how you’d

Marketing is all about creating value for

Target’s energetic new CEO, Brian Cornell,

Chick-Fil-A: Getting Better before Getting Bigger

Beyond the point-of-purchase customer experience, Chick-fil-A also places

Give examples of the anticipated needs, wants, and demands of

Why companies have

Marketing Myopia (Theodore Levitt)

refers to sellers paying more attention to the specific

For example, Carrefour cannot

Once a company fully understands its

Production Product Selling Marketing Societal

human and civil rights

As Southwest Airlines’ colorful founder puts it,

Doing a good job with the first three steps in

For example, Amazon is highly skilled at leveraging relationships with

The company will not gain

smaller bank customers

Marketing doesn’t take place in a vacuum.

• Digital and social media marketing: Engaging

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