PART 1 UNDERSTANDING MARKETING MANAGEMENT Kotler Keller Ang

PART 1 UNDERSTANDING MARKETING MANAGEMENT © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -1

Chapter 1 Defining Marketing for the 21 st Century © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -2

Icons used § Click on icon to go directly to the website § Click on icon to go directly to the attached video © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -3

In this chapter, we address the following questions: § Why is marketing important? § What is the scope of marketing? § What are some fundamental marketing concepts? § How has marketing management changed? § What are the tasks necessary for successful marketing management? Asian © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 1 -4

Marketing is everywhere Asian brands prominently advertised Asian in New York’s Time Square © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 1 -5

The Importance of Marketing § Financial success depends on marketing No demand - no business Marketing decisions tough – What to design – What prices to offer – Where to sell – How much to spend on advertising… © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -6

© Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -7

Scope of Marketing – What is Marketing? “Aim of marketing know & understand customer so well product fits him & sells itself…” Eg: When Sony designed Play. Station Swamped with orders – WHY? “Right” product – marketing © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -8

Scope of Marketing – What is Marketing? Marketing An organizational function & processes to create, communicate & deliver value to customers & manage customer relationships to benefit organization & stakeholders © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -9

Scope of Marketing – Exchange and Transactions Exchange Process to obtain desired product from someone by offering something in return © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -10

Scope of Marketing – Exchange and Transactions For exchange potential to exist, 5 conditions: 1. At least 2 parties 2. Each has thing of value to the other 3. Capable of communication & delivery 4. Free to accept/reject offer 5. Believes it desirable to deal with the other Asian © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 1 -11

Scope of Marketing – Exchange and Transactions © Kotler, Keller, Ang, Leong & Tan Lexus ads & campaign slogan “The Passionate Pursuit of Perfection” express its marketing philosophy: Asian enough for its customers Only the best is good 1 -12 Marketing Management - An 4 th Edition Perspective

Scope of Marketing What is Marketed? experiences persons goods events services 10 entities places ideas information properties organizations © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -13

Scope of Marketing What is Marketed? The Singapore Zoological Gardens offers varied experiences - host wedding reception - jungle breakfast Asian with an orang utan © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 1 -14

Scope of Marketing What is Marketed? Billboard ads from Tourism Thailand Promote Thailand where one can find happiness through shopping, outdoor activities & © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition sightseeing 1 -15

Scope of Marketing – Who Markets? MARKETERS AND PROSPECTS A marketer seeks response from prospect If 2 parties seek to sell something to each other, both are marketers © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -16

Scope of Marketing – Who Markets? MARKETERS AND PROSPECTS 8 demand states of consumers 1 Negative demand Dislike product & pay to avoid it 2 Non-existent Not aware/interested in product demand 3 Latent demand Need not satisfied by existing product 4 Declining demand Buy less often or none 5 Irregular demand Purchase vary on periodic basis 6 Full demand 7 Overfull demand 8 Unwholesome demand © Kotler, Keller, Ang, Leong & Tan Adequately buy all products in market More want product than can be satisfied Attracted to products- undesirable Asian 1 -17 social consequences Marketing Management - An 4 th Edition Perspective

Scope of Marketing – Who Markets? MARKETS § Market – Physical place – buyers, sellers buy & sell goods – To economists: collection of buyers & sellers who transact over a product/product class A traditional dry goods & fruit market in Hanoi Asian targeting local residents © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 1 -18

Five basic markets & their connecting flows Figure 1. 1 Asian Structure of Flows in a Modern Exchange Economy 1 -19 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective

Scope of Marketing – Who Markets? KEY CUSTOMER MARKETS § Consumer Markets Sell mass consumer goods & services § Business Markets Sell business goods & services § Global Markets Sell goods & services in global market § Non-profit & Governmental Markets Sell goods to nonprofit organizations © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -20

Scope of Marketing – Who Markets? KEY CUSTOMER MARKETS Global marketing Wall climbing on Coke ad attract attention & customers at 1 st China International Beverage Festival in Beijing © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -21

Figure 1. 2 A Simple Marketing System © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -22

New Consumer Capabilities § The digital revolution - new capabilities in hands of consumers & businesses. What they have today that they didn’t have yesterday: 1) Substantial increase in buying power 2) Greater variety of goods & services 3) Great amount of information 4) Easier to interact, place & receive orders 5) Able to compare products & services © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -23

Scope of Marketing – Who Markets? MARKETPLACES, MARKETSPACES, & METAMARKETS marketplace a physical place marketspace a digital place metamarket a cluster of related products in consumers’ minds, from diverse industries © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -24

The 10 Rules of Radical Marketing 1. CEO own marketing function 2. Marketing start & stay small & flat 3. Get face-to-face with customers 4. Use market research cautiously 5. Hire passionate missionaries, not marketers 6. Love & respect customers as individuals 7. Create community of consumers 8. Rethink marketing mix 9. Compete with competitors - fresh ideas 10. Be true to the brand © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -25

Scope of Marketing – How Business & Marketing are Changing § Changing technology § Globalization § Deregulation § Privatization § Customer empowerment § Customization § Heightened competition § Industry convergence § Disintermediation © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -26

Scope of Marketing – How Business & Marketing are Changing § Changing technology – An example © Kotler, Keller, Ang, Leong & Tan i-mode (Japan) § Internet over cell phones § Emails, access websites when commuting when waiting for friends § Indispensable service Marketing Management - An Asian Perspective 4 th Edition 1 -27

Scope of Marketing – How Business & Marketing are Changing Customer Empowerment – An example NAM HEONG Traditional Malaysian coffee shop § Advertises website on banner www. oldtownwhitecafe. com § Web visitors - can find out more about Nam Heong’s white coffee brand Old Town Asian 1 -28 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective

Scope of Marketing – How Business & Marketing are Changing Cosmoneuticals: § Dermatology drugs Ad by Shiseido: Japanese cosmetics firm § Cleanser, lotion, medication § Sold in Japan drugstores § Industry convergence – An example © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -29

Company Orientations Toward the Marketplace What philosophy should guide a company’s marketing efforts? What relative weights should be given to the interests of organization, customers & society? Very often these interests conflict © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -30

Company Orientations Toward the Marketplace - The Production Concept § Consumers prefer products – Widely available & inexpensive § Production oriented businesses – Production efficiency, low costs & mass distribution – Huge cheap labor © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -31

Company Orientations Toward the Marketplace - The Product Concept Consumers favor products with most quality, performance or innovative features Focus on making & improving products Might commit “bettermousetrap” fallacy New product may not succeed § Unless priced, distributed, advertised & sold properly © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -32

Company Orientations Toward the Marketplace - The Selling Concept Consumers do not buy enough products, if left alone “Purpose of marketing - sell more - to more people - more often - for more money - to make more profit” § Goods buyers don’t normally buy § Sell what is made not what market wants § Hard selling - high risks © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -33

Company Orientations Toward the Marketplace - The Marketing Concept Customer-centered “Sense-&-respond” philosophy Right products for customers Not right customers for products Better than competitors § Create, deliver & communicate superior value to target markets © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -34

Company Orientations Toward the Marketplace - The Marketing Concept Selling - needs of seller Marketing - needs of buyer Selling - convert product to cash Marketing - satisfy buyer with product © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -35

Company Orientations Toward the Marketplace - The Holistic Marketing Concept Holistic marketing Develop, design & implement marketing programs, processes & activities that recognize breadth & interdependencies Holistic marketing recognizes that “everything matters” © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -36

Figure 1. 3 Holistic Marketing Dimensions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -37

Company Orientations Toward the Marketplace - The Holistic Marketing Concept RELATIONSHIP MARKETING ¥ Relationship marketing Satisfying long-term relationships, with key parties, to earn & retain business ¥ Marketing network § Company & supporting stakeholders § Mutually profitable business relationships © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -38

Company Orientations Toward the Marketplace - The Holistic Marketing Concept RELATIONSHIP MARKETING Company able to deal with customers one at a time due to computers & Internet Eg: § BMW allows buyers to design own model from many variations § 80 % of cars bought in Europe - built to order © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -39

Company Orientations Toward the Marketplace - The Holistic Marketing Concept INTEGRATED MARKETING The marketer’s task devise marketing activities & assemble fully integrated programs to create, communicate, & deliver value for consumers © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -40

Figure 1. 4 The 4 P Components of the Marketing Mix © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -41

Asian Figure 1. 5 Marketing-Mix Strategy © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 1 -42

Company Orientations Toward the Marketplace - The Holistic Marketing Concept INTEGRATED MARKETING Four Cs Four Ps Ø Product Ø Price Ø Place Ø Customer solution Ø Customer cost Ø Convenience Ø Communication Ø Promotion © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -43

Company Orientations Toward the Marketplace - The Holistic Marketing Concept INTEGRATED MARKETING 2 key themes - integrated marketing: Different marketing activities used All marketing coordinated - maximize joint effects Design & implementation of any marketing activity done with all others in mind © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -44

Company Orientations Toward the Marketplace - The Holistic Marketing Concept INTERNAL MARKETING Ensure all in firm embraces marketing principles Hire, train & motivate able employees who want to serve customers well © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -45

Table 1. 1 Assessing which Company Departments are Customer-Minded © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -46

Table 1. 1 Assessing which Company Departments are Customer-Minded © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -47

Table 1. 1 Assessing which Company Departments are Customer-Minded © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -48

Table 1. 1 Assessing which Company Departments are Customer-Minded © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -49

Company Orientations Toward the Marketplace - The Holistic Marketing Concept SOCIAL RESPONSIBILITY MARKETING ü Social responsibility marketing § Understand broader concerns & ethical, environmental, legal & social context of marketing activities § Marketers - role they play in social welfare © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -50

Company Orientations Toward the Marketplace - The Holistic Marketing Concept SOCIAL RESPONSIBILITY MARKETING Are firms that satisfy consumer wants acting in best long-run interests of consumers & society? Fast-food § Tasty but unhealthy § Convenient packaging - leads to waste § Satisfy consumers but hurt health, environment v Eg: Mc. Donald’s – what did they do? ü Add healthier items (salads) ü Environmental initiative (paper wraps replace foam box) © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -51

© Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -52

Company Orientations Toward the Marketplace - The Holistic Marketing Concept SOCIAL RESPONSIBILITY MARKETING To reduce pollution: § Bharat Petroleum India – get drivers to use Pollution Under Control grade petrol - HOW? Asianpollution with smoking § Compare hazards of vehicle 1 -53 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts NEEDS, WANTS, AND DEMANDS Needs are basic human requirements Needs become wants when directed to objects that satisfy the need Demands are wants for products backed by ability to pay © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -54

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts NEEDS, WANTS, AND DEMANDS Stated needs 5 Types Of Needs © Kotler, Keller, Ang, Leong & Tan Real needs Unstated needs Delight needs Secret needs Marketing Management - An Asian Perspective 4 th Edition 1 -55

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts TARGET MARKETS, POSITIONING, AND SEGMENTATION Divide market into segments Greatest opportunity - target markets Target market Ø Market offering positioned in minds of target buyers as beneficial © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -56

Fundamental Marketing Concepts, Trends & Tasks – TARGET MARKETS, POSITIONING & SEGMENTATION Core Concepts Positioning: “The 1 st SUV with Anti-Rollover Technology” A Volvo ad focuses on the company’s central benefit: Safety © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -57

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts OFFERINGS AND BRANDS Intangible value proposition made physical by an A offering, like products, services brand - offering from known source © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -58

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts VALUE AND SATISFACTION Value Perceived tangible & intangible benefits & costs to customers § Value = quality + service + price (QSP) § “customer value triad” Satisfaction § Comparative judgments from perceived performance compared to expectations © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -59

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts MARKETING CHANNELS To reach target market, 3 kinds of marketing channels: Communication channels Distribution channels Service channels © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -60

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts SUPPLY CHAIN Supply chain - channel - raw materials to components to final products Eg: supply chain for women’s purses - from hides – tanning – cutting - manufacturing & channels to customers © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -61

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts COMPETITION Competition All actual & potential rival offerings & substitutes that buyer might consider © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -62

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts MARKETING ENVIRONMENT Task environment - those who produce, distribute & promote offering The broad environment has 1. 2. 3. 4. 5. 6. 6 components: Demographic Economic Physical Technological Political-legal Social-cultural © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -63

Fundamental Marketing Concepts, Trends & Tasks – Core Concepts MARKETING PLANNING The marketing planning process § § § Analyze marketing opportunities Select target markets Design marketing strategies Develop marketing programs & Manage marketing effort © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -64

Figure 1. 6 Factors Influencing Company Marketing Strategy Asian © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 1 -65

Fundamental Marketing Concepts, Trends & Tasks 14 shifts to marketing management in 21 st century 1 marketing does marketing to everyone does marketing 2 organize by product units to organize by customer segments 3 make everything to buy more goods from outside 4 use many suppliers to fewer suppliers in “partnership” 5 rely on old market positions to uncover new ones 6 emphasize tangible assets to emphasize intangible assets 7 build brands through advertising to build brands through performance & integrated communications © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -66

Fundamental Marketing Concepts, Trends & Tasks 14 shifts to marketing management in 21 st century 8 Attract customers to stores & salespeople to make products available online 9 Sell to everyone to be best at serving defined target Focus on profitable 10 transactions to focus on customer lifetime value 11 focus to gain market share to focus to build customer share 12 Being local to being “glocal”- global & local 13 Focus on financial scorecard to focus on marketing scorecard 14 Focus on shareholders to © Kotler, Keller, Ang, Leong & Tan focusing on stakeholders Marketing Management - An Asian Perspective 4 th Edition 1 -67

Fundamental Marketing Concepts, Trends & Tasks – Marketing Management Tasks § § § § Develop marketing strategies & plans Capture marketing insights & performance Connect with customers Build strong brands Shape the market offering Deliver value Communicate value Create successful long-term growth © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -68

Final discussion Marketing Debate — Does Marketing Create or Satisfy Needs? Marketing has often been defined in terms of satisfying customers’ needs and wants. Critics, however, maintain that marketing does much more than that and creates needs and wants that did not exist before. According to these critics, marketers encourage consumers to spend more money than they should on goods and services they really do not need. Take a position: Marketing shapes consumer needs and wants versus Marketing merely reflects the needs and wants of consumers. © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -69

Video Links Secondary Videos to watch: § Song Airlines (8: 50 min) § Marriott (9: 35 min) § Sony Metreon (8: 30 min) § Motorola (14: 28 min) Click here to watch the video clips from the US Website. © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 1 -70