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Summary Principles of marketing, Kotler - Midterm - chapter

1-3, 7, 18 and 5
Marketing for E&BE (Rijksuniversiteit Groningen)

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Chapter 1 Marketing in a changing world

Marketing: a social and managerial process whereby individuals and groups obtain what they
need and want through creating and exchanging products and value with others.
Thus: deliver customer satisfaction at a profit, by: attracting new customers by promising
superior value, and keep current customers by delivering satisfaction.

Marketing consists of five core concepts

1) Needs, wants and demands
Needs: states of felt deprivation, physical and social needs. E.g. food
Wants: the form needs take. E.g. hamburger
Demands: when wants are backed by buying power
2) Products and services
Products: anything that can be offered to satisfy a need or a want. Physical products, services,
experiences, persons, places, organizations, information, ideas. Other word: satisfier, resource or
marketing offer.
Service: one kind of a product
3) Value, satisfaction and quality
Value: difference between ‘value gained by owning and using a product’ and ‘cost of obtaining
the product’. Value gained not necessarily monetary.
Satisfaction: perceived performance relative to expectations.
Quality: closely related to satisfaction. No defects. Ability to satisfy customer needs.
4) Exchanges, transactions and relationships
Exchange: obtaining a desired object from someone by offering something in return. Offerings
could be money, product, serice.
Transation: a trade of value between parties. Marketing’s unit of measurement. Monetary
transactions and barter transactions.
Relationship: going beyond short term transactions. Partners, marketing network etc.
5) Markets
Economist’s definition: place where buyers and sellers meet.
Marketer’s definition: set of actual and potential buyers of a product.
Industry: the sellers of a product.

Marketing management
Definition: analysis, planning, implementation, and control of programs designed to create,
build, and maintain beneficial exchanges with target buyers for the purpose of achieving
organizational objectives. Thus: finding and increasing demand.
Demarketing: to shift or reduce demand (NOT destroy it).

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Marketing concepts
There are five marketing concepts:

1) Production concept
Customer: favor products that are available and affordable.
Goal: improve production and distribution efficiency.
Usefulness: demand exceeds supply, product cost is too high, pressure to decrease.
Risk: what to do when situation changes?

2) Product concept
Consumer: favor products with best quality, performance, innovative features.
Goal: improve product features in a continuous fashion.
Usefulness: if market is stable, no competing technologies in sight.
Risk: competing technology enters market.

3) Selling concept
Consumer: will not buy enough products unless seller undertake large-scale promotion and
selling effort.
Goal: promote product, coax people into buying.
Usefulness: unwelcome goods.
Risk: dissatisfied customers, will not buy again.

4) Marketing concept
Customer: buys product that best satisfies needs and wants.
Goal: determine needs and wants of target markets. Deliver the desired satisfction more
effectively and efficiently than cometitors.
Risk: short term focus wrt larger social and ethical issues. Overlooks long term customer
welfare.
Customer driven marketing: customers know what they want.
Customer driving marketing: customers do not yet know they even need something

5) Social marketing concept

Balance consumer satisfaction in short and long term, society and company profits.

Chapter 2 Strategic planning and the marketing process

Strategic planning process

Define the company’s mission: mission statement. What do we want to accomplish.
Requirements: market oriented, realistic, specific, fit the market environment, base on distinctive
competences, motivating.
Set company objectives and goal: mission turned into detailed supporting objectives and goals
for each level of company management. E.g.: increase market share by 20% at the end of third
year.

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Design business portfolio: analyze current portfolio (strategic business unit). Choose porfolio
that best fits the company’s strengths and weaknesses, to threats and opportunities in the
environment. Methods: BCG (Boston Consulting Group) matrix:

High Low

Star Question mark High

Market growth rate
Cash cow Dog Low

Relative market share

Product market expansion matrix:

Existing New

Market penetration Product development Existing

Market emphasis
Market development Diversification New

Product emphasis

Marketing analysis
Internal: strengths, weaknesses.
External: oportunities, threats.
Marketing planning
Strategic planning: marketing planning: how to achieve goals and thus strategic goals.
Marketing implementation
Who, where, when and how. Doing things right. Depends on: blending people, culture, structure,
decision and reward systems, cohesive action programs that support strategies, skills. Marketing
department organization:
Functional, geographic, product management, market management.
Marketing control: feedback loop, marketing audit.

Chapter 3 The marketing environment

Actors and forces outside marketing that affect marketing management’s ability to develop and
maintain successful transactions with its target customers. All external forces affecting the result
of a company’s marketing efforts. Includes opportunities and threats.

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Microenvironment: forces close to the company- affects its ability to serve its customers. The
company itself, suppliers, marking channel firms, customer markets, competitors, public.

Macroenvironment: larger societal forces affecting the microenvironment. Demographic,

economic, natural, technological, political, cultural.

Microenvironment
The company itself: other company groups than marketing. Top management, finance, R&D.
Suppliers: must watch supply availability. Must monitor prices of key inputs.
Marketing intermediaries: help the company promote, sell and distribute its goods to final
buyers. Types of intermediaries: resellers, physical distribution firms, marketing service
agencies, financial intermediaries.
Competitors: company must provide greater customer value than competitors.
Publics: any group that has an actual or potential interest in or impact on an organization’s
ability to achieve its objectives: media, government, local, financial, citizin action, etc.
Customers: five types of customer markets: consumer markets (individuals and households),
business markets, government markets, reseller markets, international markets.

Macroenvironment
Demographic: human population in terms of size, density, location, age, gender, race,
occupation, and other statistcs. Changing family, higher education, greying wealthy baby
boomers, more diversity.
Economic: factors that affect purchasing power and spending patterns. Changes in income,
changing spending patterns.
Natural environment: trends in natural environment. Growin shortages of raw materials,
increased pollution, increased government intervention.
Technological: creates new markets and opportunities, concern for the safety of new products.
Political: laws, government agencies, prsesure groups that influence and limit how a company
may operate.
Cultural: institutions and other forces that affect society’s basic values, perceptions, preferences,
and behaviors.

Responding to marketing environment

Uncontrollable: react and adapt to forces in the environment.
Proactive: aggressive actions to affect forces in the environment.
Reactive: watching and reacting to forces in the environment

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Chapter 7 Creating value for target customers

Market segmentation
Dividing the world market into distinct subsets of customers that have similar needs. Market
segments must me: measurable, accessible, substantial, differentiable, actionable. Types of
consumer market segmentation:
Geographic segmentation: nations, regions, states, counties, cieties, neighborhoods.
Demographic segmentaton: based on demographic variables. Age/life-cycle, gender, income.
Physchographic segmentation: social class, lifestyle or personality characteristics.
Behavioral segmentation: knowledge, attitudes, uses, or responses to a product. Usage rates,
benefits sought, user status.
Use of multiple segmentations is normal. Start with one base, and then expand to others.
(Benefit segmentation: effect seekers, status seekers, weight conscious)

Market targeting
How companies evaluate and select target segments.
1) Evaluating market segments: segment size, segment growth.
2) Selecting target market segments:
Undifferentiated marketing: mass marketing. Focus on what is common in all buyers.
Differentiated marketing: target several segments and design seperate offers for each.
Concentrated marketing: niche marketing: firm goes after a large share of one or a few segments.
Micromarketing: the practice of tailoring products and marketing programs to suit the tastes of
specific individuals and locations. Local (local customer segments) and individual
(needs/preferences of individual customers).

Socially responsible target marketing: targeting vulnerable or disadvantaged consumers with

controversial or potentially harmful products: consumer outcry.

Market positioning
Product position: the way the product is defined by consumers on important attributes. Choose a
positioning strategy: choose right competitive advantages, selecting an overall positioning
strategy.

Chapter 18 Competitive strategies

Strategies that strongly position the company against competitors and that give the company the
strongest possible strategic advance.

Mchael Porter, basic competitive strategies:

Overall cost leadership: low cost win a large market share.
Differentiation: company concentrates on creating differentiated products.
Focus: serving a few market segments rather than going after the whole market

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Treacy and Wiersema, competitive marketing strategies:

Operational excellence: company provides superior vaue by leading its industry in price and
convenience. Reduce cost, create an efficient valuedelivery system.
Customer intimacy: precisely segmenting its markets and tailoring its products to exactly match
the needs of targeted customers.
Product leadership: offering a continuous stream of leading-edge products or services.

Strategies
Market leader strategies: firm in an industry with largest market share. Expand total market,
protect market share, expand market share.
Market challenger strategies: a runner-up firm that is fighting hard to increase its market share in
an industry. Full frontal attack, indirect attack.
Market follower: a runner-up firm that wants to hold its share in an industry without making
trouble. Follow closely, follow at distance.
Market nicher strategies: a firm that serves small segments that the other firms in an industry
overlook or ignore.

Balancing customer and competitor orientations

Competitor orientation: moves are mainly based on competitors’ actions and reactions.
Customer orientatien: focuses on customer developments in designing its marketing strategies
and on delivering superior value of its target customers.
Market orientation: balanced attention to both customers and competitors in designing its
marketing strategies.

No Yes

Product orientation Customer orientation No

Competitor centered
Competitor orientation Market orientation Yes

Customer centered

Chapter 5 Consumer markets and consumer buyer behavior

Buyer characteristics affecting consumer behavior

Cultural: culture, subculture, social class.
Social: reference groups, family, roles and status.
Personal: age and life-cycle, occupation, economic situation, lifestyle, personality and self-
concept.
Psychological: motivation, perception, learning, beliefs and attitudes.

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Types of buying decision behavior

High involvement Low involvement

Significant differences
Complex Variety-seeking
between brands

Few differences between

Dissonance reducing Habitual
brands

Complex: expensive, risky, purchased infrequently, high self-expressive. E.g. computer.

Dissonance reducing: customer not really sure what is the best price. E.g. carpet.
Habitual: customers do not search or evaluate excessively. They recognize what to buy. E.g. salt.
Variety-seeking: brand switching for variety. Not necessarily because of dissatisfaction. E.g.
cookies.

Buyer decision process

Need recognition
Information search
Evaluation of alternatives
Purchase decision
Postpurchase behavior

Buyer decision process for new produts

Awareness
Interest
Evaluation
Trial
Adoption

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