Philip Kotler is one of the world's leading authorities on market- ing. He is the S. C. Johnson & Son Distinguished Professor of International. Marketing at the. PDF Drive is your search engine for PDF files. As of today we have Principles of marketing / Philip Kotler, Gary Armstrong. -- 14th ed. p. cm. Includes Principles . riamemamohelp.cf Global edition Principles of Marketing sixteenth edition Philip Kotler • Gary Armstrong riamemamohelp.cf Principles of Marketing.
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T From Phil Kotler: My colleagues and associates at the Kellogg School of Management at Northwestern University continue to have an important impact on my. See Philip Kotler, Irving J. Rein, and Donald Haider, Marketing Places: Attracting Investment,. Industry, and Tourism to Cities, States, and Nations (New York. PDF | On Jan 1, , Philip Kotler and others published Marketing Management : The Millennium Edition.
He collects information from advertising media, salesmen, dealers, current users, or directly from company.
Philip Kotler Books
He tries to know about qualities, features, functions, risk, producers, brand, colour, shape, price, incentives, availability, services, and other relevant aspects.
Simply, he collects as much information as he can. Now, accumulated information is used to evaluate the innovation. The consumer considers all the significant aspects to judge the worth of innovation. He compares different aspects of innovation like qualities, features, performance, price, after-sales services, etc. Consumer is ready to try or test the new product. He practically examines it. He tries out the innovation in a small scale to get self-experience. He can download the product, or can use free samples.
This is an important stage as it determines whether to download it. During the oil crisis of , the price of oil shot up and people were exhorted to reduce their driving. Today, I have returned to this theme and I believe that we are moving from an Age of Marketing to an Age of Demarketing.
Table 1. The Basic Marketing Tasks. We decided to test this challenge with a survey of the profession and found that the overwhelming number of academic marketers favored the broadened concept of marketing. My next move was to test whether social causes one of the new broadened areas could be usefully analyzed through the lens of marketing.
Social marketing has remained one of my favorite areas of research. I remember the foolishness of the U. The newsprint industry made a lot of money, but I doubt if anyone read the brochure or changed his or her behavior.
I subsequently wrote a number of books on social marketing. Social marketing has now become an established branch of marketing with a Social Marketing Association with members from around the world The Second World Social Marketing Conference took place in Dublin, April 11—12, In the group of articles on Marketing Theory and Orientations, I wrote or co-wrote a few other articles that contained some new ideas.
The downloader will have to turn on his charms: In any negotiation, both the downloader and the seller can be seen as marketing to each other. I comment how the downloader is affected by visual color, size, shape, and brightness , auditory volume, pitch , olfactory scent and freshness , tactile softness, smoothness, and temperature , and other sensory factors in the immediate environment. Recently, there has been a resurgence of interest in the role played by sensory factors in consumer choice behavior Lindstrom, Selling a good working telephone to customers would satisfy their need; creating an iPhone or iPad would enhance their lives.
The fact that customers did not know that an iPhone is possible should not stop Steve Jobs for making one and promoting it to customers. Suppose the health minister in a country refuses to let a certain drug be sold in this country that is really needed by patients.
I detail examples such as Levi Jeans offering a tailored jean for each individual, a Japanese bicycle company customizing the bicycle for individuals, Dell computer customizing the computer, and other examples. I note how technology has brought down the cost of mass customization and that in many product categories the customer can get precisely what he or she wants.
Volume 2: Improving the Role and Practice of Marketing I have published 18 articles on improving the role and practice of marketing. I will describe the more important articles. One of my major interests lies in convincing companies to implement the marketing concept, to become customer-driven if not customer-driving. I designed an instrument that a company could use to answer whether it possessed marketing effectiveness.
This article was a best seller as many companies wanted to assess whether they exhibited a strong marketing orientation. We distinguished between four levels of relationship between marketing and sales: Marketing thinks that sales is primarily responsible for executing the marketing plan whether or not sales had participated in developing the plan. But sales may function poorly because sales think that marketing set prices too high, developed too bland a value proposition, or gave them poor leads.
We offered several recommen- dations for improving the joint performance of marketing and sales and the article achieved a wide distribution. Many CEOs, especially of smaller companies and B2B type companies, come from engineering, law, or accounting and have a limited understanding of the marketing discipline and its demand-producing power.
We presented the most current view about how CEOs should view marketing, and we included some instruments to help them rate and improve the marketing management process. Analyzing Marketing I have had a long-standing interest in applying mathematical analysis to marketing processes and problems, much stemming from my Harvard training in the Ford Foundation program to encourage more mathematical analysis in business decision making.
This volume includes 18 articles. I will just highlight a few of them. I reviewed and illustrated matrix algebra, calculus, probability theory, and simulation and showed how they applied in areas such as allocation models, competitive strategy models, brand switching models, waiting line models, and critical path scheduling models.
I went on later to write a whole book, Marketing Decision Making: A Model-Building Approach Kotler, a, b, c to show how we can move toward optimizing marketing decision making with the use of these tools. I developed a particular interest in optimizing the selection of advertising media using the computer. I published two articles on computerized media selection Kotler, ; Kotler, a, b.
Another strong interest of mine was in using computer simulation for modeling complex competitive situations. Volume 4: The Social and Ethical Side of Marketing I have a strong interest in the social and ethical aspects of marketing and I included 17 of my articles in this volume.
I will review a few of them here. As an economist and a trained social scientist, I became interested in the theory of social action. It distinguished three types of causes, namely, helping causes, protest causes, and revolutionary causes and what made them effective.
The change agent could use one of three strategies to produce change, namely, a power strategy, a persuasive strategy, and a re-educative strategy.
Each social movement had a life cycle moving through a crusading stage, popular movement stage, managerial stage, and ending up in a bureaucratic stage. This article was my effort to theorize about how social movements get started and the factors that affect their success or failure. One of the social movements that I researched was consumerism.
Consumerism is a social movement seeking to augment the rights of downloaders in relation to sellers. It happens when a growing number of consumers get angry in reaction to unsafe products, price gouging, poor information, and other abuses in the marketplace that put them at a disadvantage.
A social movement such as consumerism does not start unless certain structural conditions exist, such as an advanced economy, education, and communication. Even then, little happens until widespread discontent occurs. It helps then if a generalized belief system emerges to justify legitimate protest.
Then it moves further if some triggering events and personalities appear to support the protest. Much depends on whether the mass media publicizes these events and some politicians and consumer interest groups organize for action. And the course of the social movement then depends on whether business people and legislators resist or support the protest.
This model can explain many social movements. I also have a deep interest in the ethical questions connected with marketing decision making. Factors Contributing to the Rise of Consumerism in the s. My article commented on the following four questions: Without answering the questions here, the article did explore the implications of different ethical systems when applied to marketing decision making.
Volume 5: Competition is now global and we can learn from much other countries. I published 15 articles on global matters. We saw Japanese companies taking over industries such as automobiles, motorcycles, radio and TV, and other electronics.
The Japanese were beginning to download American companies and seemed unbeatable. They were not creating new things as much as improving on everything that we made and bringing down the costs. In these articles, I probed into their special gifts, including lean production, just in time production, total quality management, continuous product improvement, and other practices, and I argued that our automobile and other industries must take note and adopt these best practices.
I was surprised that Ted would favor standardization when he was an early proponent of recognizing different needs requiring different solutions. In those few countries where it sold the strict American version of its hamburger, it lost market share to competitors who localized more. I devoted two articles to the question of economic development and the problem of global stagnation. As more poor were brought into the working and middle class with comparable increases in their incomes, this would provide larger markets for the products of the developed countries.
Volume 6: Marketing in the New Economy The rapid advances in technology leading to the computer; Internet; cell phone; social media such as Facebook, My Space, Twitter, and Linkedin; video viewing such as YouTube; and new devices such as compact cameras, electronic book readers, iPads, and others are bound to change the marketing world as we know it. I wrote seven articles to envision the implications of the new economy for marketing theory and practice.
Drucker saw the future economy as a networked economy with knowledge workers at the helm. He saw the old hierarchical structures of companies giving way to disaggregated networks. In our article, we observe that companies do not compete; their strategic networks compete. We distinguished four types of networks: We described how networks have put power into the hands of consumers to become producers and sellers as well.
They do not need to exert physical effort to consummate a download y the information-rich regime empowers customers with a new set of capabilities. Marketers must move from opaque- ness to transparency.
We argue for a change in the view of marketers from operating as hunters to being seen as gardeners. We describe the new roles of consumers in initiating reverse promotion, reverse advertising, reverse pricing, reverse product design, and reverse distribution. Volume 7: Creating and Managing the Product Mix Companies face a number of decisions in developing a viable product mix. I will describe a few of the 10 articles in this volume. Many companies carry some low-selling products too long through inertia or through not wanting to disappoint a few customers.
My observation is that most companies have not installed a system for identifying their weak or weakening products and items nor taken steps to correct or eliminate them.
Philip Kotler Books
The system consists of periodically reviewing the sales of every product item and judging whether it is satisfactory or requiring correction or elimination. This article received a lot of attention from companies that realized that they needed some system to identify weaker products. Getting rid of a weak product is not an easy task because of vested interests.
I describe the processes of preparing, imple- menting, and monitoring the decision to apply a harvesting strategy. It was one of my more mathematically intense articles. The third part reports the results of a duopoly confrontation involving various pairs of competitive strategies.
Volume 8: Strategic Marketing I have always urged marketers to put more time into strategic thinking before developing their tactical plans.
I will describe a few of the seven articles in this volume. In , the U. The Age of Abundance was now moving into the Age of Shortages. Companies had to turn to demarketing because there was no need to build demand further. Some persons thought that marketing personnel and departments would be made redundant.
Three schools emerged: Companies recognized that they had to revise their product mix, customer mix, and marketing mix. The article presented guideliness on the best adjustments to make. In reaching for more market share, a high market share company had to realize that the cost gets steeper as the company advances its market share because downloaders who have not yet joined the bandwagon have good reasons not to join.
The company also has to worry about a too high market share inviting government charges of unfair competition. Therefore, a company has to decide whether it is worth X dollars to download Y more market share; when the answer is no, they should put X dollars into a different and better opportunity.
Then, I discuss nine attack strategies: In , Professor Ravi Acrol and I moved to a higher level of thinking about attack and defense strategies using the framework of military strategies as developed by thinkers such as Carl von Clausewitz and Liddell Hart.
We started with a quote from Albert Emery: Then, we reviewed the power and risks of six defense strategies: Our article received a lot of attention as well as a share of critics concerning the analogy of marketing to warfare. Volume 9: I had a two-fold aim. One was to see whether marketing thinking can make a contribution to each of these sectors. The other was to see whether marketing theory itself would be enriched by needing to stretch over to these sectors and remain meaningful.
I think that the broadening applications paid off in both respects. Should they be partners or rivals? I had always felt that PR was treated as a stepchild in marketing planning and that it deserved more attention. Some of the most successful communication impacts came from creative PR. If no book exists that covers my ideas, I would decide to write the book.
I have published over 50 books, 11 of which I wrote by myself and the others with expert coauthors. Nancy R. They include the following: At the same time, my books strive to keep up with the changing times and feature the new developments. Marketing Management will soon be published in the 14th edition; Principles of Marketing in the 13th edition; Marketing: I hope that my theories on marketing are correct, or otherwise, I would have miseducated three generations.
I guess I am lucky to escape with only two vocal critics. I am often asked which are my favorite books. I answer this question like I answer the question about my children: It has been translated or adapted in over two dozen languages.
I had examined previous marketing textbooks and found them to be rich in information but highly descriptive and prescriptive. They were not very decision-oriented or strategy-oriented.
I was clearly departing from the norm and I felt that the book had an equal chance of being a big success or a big failure. Fortunately it was the former. My publisher and I were delighted with the high level of adoption. I was especially pleased when the Financial Times cited Marketing Management as one of the 50 most important business books of all times Financial Times, December 9, , p.
I decided to prepare a new edition every three years to take account of the new theories, concepts, tools, practices, and cases. Marketing is so dynamic that it needs a new accounting regularly.
It has been our good fortune to anticipate the changes usually before my competitors. Marketing Management became the parent of two other textbooks that I initially wrote for undergraduate schools and community colleges. These books in turn spawned foreign translations and adaptations and achieved major positions in the world market. Marketing Decision Making: A Model Building Approach Kotler, This book was written by the economist in me attempting the impossible, namely, to guide marketing decision marketing by a system of equations that would lead to optimization.
The book consisted of pages of mathematical model building. I used the method of successive approxima- tion in writing the book, in that I introduced one complexity at a time. The book went through three editions and enjoyed the major market share in the courses teaching quantitative marketing.
Subsequently, Gary Lillien wrote Marketing Engineering: A museum has to attract visitors, raise revenue by selling books and other items, and attract donors. I had enjoyed consulting with YMCA, United Fund, school systems, congrega- tions, and other organizations on how to market their causes better.
Nancy runs Social Marketing Services and is a joy to work with. We are preparing the fourth edition of Social Marketing to bring in some new tools for using social media more effectively and bringing in more measures to assess how well any social marketing program or campaign is working. Nancy Lee and I studied poverty and wondered if social marketing concepts and tools could help lift people out of penurious living conditions.
We examined the main forces that keep people poor — problems such as lacking bednets to protect their children against mosquitoes and malaria, drinking contaminated water causing diarrhea and death, and lacking birth control means to keep from having more children than they could support.
We described how social marketing compared to more common approaches such as exhortations, food relief programs, land redistribution. Marketing Places: What can a place — city, state, nation, or region — do to improve its conditions?
How can it attract more tourists, factories, companies, skilled residents, and resources? The original edition was U. Standing Room Only, Museum Strategy and Marketing, and the Elusive Fan I have a strong interest in cultural activities and institutions such as museums, performing arts organizations, and sports organizations. The results were three different books addressing classic and popular culture. Joanne Scheff Bernstein was a student of mine who had a great knowledge of performing arts organizations.
Relationships and networks: Transaction marketing is a part of larger idea called relationship marketing. Relationship marketing has the aim of building long term mutually satisfying relations with key parties — customers, suppliers, and distributors — in order to earn and maintain their long-term preference and business.
Relationship marketing builds string economic, social and technical ties among the parties. A marketing network consists of companies and its supporting stakeholders customers, employees, suppliers, distributors, retailers, ad agencies, university scientists and others.
Marketing Channels: To reach a target market marketer uses three different kinds of marketing channels. Communication channel: The marketer uses communication channels to deliver and receive messages from target downloaders. These consist of dialogue channels e mail, toll free numbers. Distribution channels: To display and deliver the physical product or service to the downloader or user.
They include warehouses, transportation vehicles and various trade channels such as distributors, wholesalers, retailers etc. Selling channels: They include not only the distributors and retailers but also the banks and insurance companies that facilitate transactions. Supply chain: Supply chain represents a value delivery system.
When a company moves upstream or downstream, the aim is to capture a higher percentage of supply chain value. Competition includes all the actual and potential rival offerings and substitutes that a downloader might consider.
Four levels of competition: Brand competition: Similar products or services to the same customers at similar prices. Industry competition: All companies making the same product or the class of product.
Form competition: All companies manufacturing the products that supply the same service. Generic competition: All companies that compete for the same consumer dollars. Company — Volkswagen Brand competition: Honda, Toyota and other medium price automobiles Industry competition: All automobile manufacturers Form competition: The marketing environment consists of the task environment and the broad environment. The task environment includes the immediate actors involved in producing, distributing, and promoting the offering.
The main actors are company, suppliers, distributors, dealers, and the target customers. Included in the supplier group are material suppliers and service suppliers such as marketing agencies, advertising agencies, banking and insurance companies, transportation and telecommunication companies.
Included with distributors and dealers are agents, brokers, manufacturer representatives, and others who facilitate finding and selling to consumers. The broad environment consists of six components: These environments contain forces that can have a major impact on the actors in the task environment.
Market actors must pay close attention to the trends and the developments in these environments and then make timely adjustments to their marketing strategies.
Marketing Mix Marketers use numerous tools to elicit desired responses from their target markets. These tools constitute a marketing mix. Marketing Mix Figure 1. Product, Price, Place and Promotion. The particular marketing variables under each P are shown in figure 1. Marketing mix decisions must be made for influencing the trade channels as well as the final consumers. Fig 1. Typically, the firm can change its price, sales force size, and advertising expenditures in the short run.
It can develop new products and modify its distribution channels only in the long run. Thus the firm typically makes fewer period-to-period marketing-mix changes in the short run than the number of marketing-mix decision variables might suggest. What relative weights should be given to the interests of the organization, the customers and the society?
Very often these interest conflict. Clearly, marketing activities should be carried under a well-thought out philosophy of efficient, effective, and socially responsible marketing.
However, there are five competing concepts under which organizations conduct marketing activities: The Production Concept: The production concept is the oldest concept in business.
The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented business concentrate on achieving high production efficiency, low costs and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than its features. It is also used when a company wants to expand the market.
Some service organizations also operate on the production concept. Many medical and dental practices are organized on assembly-line principles, as are some government agencies such as unemployment offices and license bureaus. Although this management orientation can handle many cases per hour, it is open to charges of impersonal and poor quality service.
The Product Concept: Other businesses are guided by the product concept. The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers in these organizations focus on making superior products and improving them over time. They assume that downloaders admire well-made products and can appraise quality and performance.
However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Such was the case when WebTV was launched during Christmas to disappointing results.
Product oriented companies often design their products with little or no customer input. They trust that their engineers can design exception products. A General Motors executive said years ago: Then manufactures would make it.
Museum Marketing and Strategy: Designing Missions, Building Audiences, Generating Revenue
The finance department would price it. Finally, marketing and sales would try to sell it. No wonder the car required such a hard sell!
GM today asks customers what they value in a car and includes marketing people in the very beginning stage of the design. The product concept can lead to marketing myopia.
Railroad management thought that travelers wanted trains rather than transportation and overlooked the growing competition from airlines, busses, trucks and automobiles.
Slide-rule manufacturers thought that engineers wanted slide rules and overlooked the challenge of pocket calculators.
Colleges, department stores, and post office all assume that they are offering the public the right product and wonder why their sales slip.
These organizations too often are looking into a mirror when they should be looking out of window.
The Selling Concept: The selling concept is another common business orientation. The selling concept holds that consumers and businesses, if left alone, will ordinarily not download enough of the organizations products.
The organization must, therefore, undertake an aggressive selling and promotion effort. This concept one assumes that consumers typically show downloading inertia or resistance and must be coaxed into downloading.
It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate more downloading. The selling concept is practiced in the non-profit area by fund-raisers, college admission offices, and political parties.
A political party vigorously sells its candidates to voters. After the election, the new official wants and a lot of selling to get the public to accept policies the politician or party wants. Most firms practice selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. In modern industrial economies, productive capacity has been built up to a point where most marketers are downloader markets the downloaders are dominant and sellers have to scramble for customers.
Prospects are bombarded with TV commercials, newspaper ads, direct mails, and sales calls. At every turn, someone is trying to sell something. As a result, the public often identifies marketing with hard selling and advertising. But marketing based on hard selling carries high risks. These are indefensible assumptions.
One study showed that dissatisfied customers may bad-mouth the product to 10 or more acquaintances; bad news travels fast. The marketing concept holds that the key to achieving its organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating customer values to its chosen target markets. The marketing concept rests on four pillars: The selling concept takes an inside-out perspective. It starts with the factory, focuses on the existing products, and calls for heavy selling and promoting to produce profitable sales.
The marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates all the activities that will affect customers, and produces profits by satisfying customers. Target market Companies do best when they select their target markets carefully and prepare tailored marketing programs. Understanding customer needs and wants is not always simple. Some customers have needs of which they are not fully conscious.
Or they cannot articulate these needs. Or they use words that require some interpretation. We can distinguish among five types of needs: Consider a woman who enters a hardware store and asks for a sealant to seal glass windowpanes. This customer is stating a solution and not a need. The salesperson may suggest that tape would provide a better solution. The salesperson met the customers need, not her stated solution.
A distinction needs to be drawn between responsive marketing, anticipative marketing, and creative marketing. A responsive marketer finds a stated need and fills it. Sony exemplifies a creative marketer because it has introduced many successful new products that customers never asked for or even thought were possible. Why is it supremely important to satisfy target customers?
One estimate is that attracting a new customer can cost five times as much as pleasing an existing one. And it might cost sixteen times as much as to bring the new customer to the same level of profitability as the lost customer. Customer retention is thus more important than customer attraction.
Integrated marketing: Unfortunately, not all employees are trained and motivated to work for the customer.
Integrated marketing takes place on two levels. First, the various marketing functions- sales force, advertising, customer service, product management, marketing research-must work together. Second, the other departments must embrace marketing; they must also think customer.
Marketing is not a department so much as a company wide orientation. To foster teamwork among all departments, a company should carry out internal as well as external marketing. External marketing is marketing directed at people outside the company. Internal marketing is the task of hiring, training, and motivating able employees who want to serve the customers well. In fact, internal marketing must precede external marketing. Master marketing companies invert the chart. Profitability The ultimate purpose of the marketing concept is to help organizations achieve their objectives.
In the case of private firms, the major objective is profit; in the case of nonprofit and public organizations, it is surviving and attracting enough funds. A company makes money by satisfying customer needs better than its competitors.
These are 1. Sales Decline: When Sales fall, companies panic and look for answers. Today newspapers decline as people are more replying on Radio, TV and Internet for the news 2. Slow Growth: Slow sales growth leads companies to search for new markets.
They realize they need marketing skills to identify and select new opportunities 3. Changing downloading patterns: Many companies operate in markets characterized by rapidly changing customer wants. These companies need more marketing knowhow if they are to track downloaders changing values 4.
Increasing Competition: Complacent industries may be suddenly attacked by powerful competitors. Companies in deregulated industries all find it necessary to build up marketing expertise 5. Increasing Marketing Expenditures: Companies may find their expenditures for advertising, Sales, Promotion, marketing Research and Customer Service to be poorly done. Management then decides to take a serious audit to improve its marketing Companies need to attract and retain customers through superior product offerings, which delivers the Customer satisfaction.
Resistance is especially strong in the industries where Marketing is introduced for the first time-like law offices, colleges, deregulated industries and government offices. But in spite of resistance the Company president establishes a Marketing department, marketing talents are hired and seminars conducted, Marketing budget increased and Marketing planning and Control systems introduced.
The Societal Marketing Concept holds that the Organizations task is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves and enhances the consumers and the societies well being. It calls for social and Ethical considerations in marketing. They must balance the conflicting criteria of Company profits, consumer want satisfaction and Public Interest.
In an age of environmental deterioration, resource shortage, explosive population growth, world hunger and poverty and lack of Social Services Marketers needs to be sensitive on these issues Cause-Related Marketing: How Businesses and Marketing are Changing? They perceive fewer Brand Loyalty and Product differences.
They can obtain Extensive Product information from the Internet and other sources and shop intelligently. Brand manufacturers are facing intense competition from domestic and foreign brands, rising promotion costs and shrinking profits. Store based retailers are suffering from an over saturation of retailing. Small retailers are succumbing to growing power of Giant retailers and category killers.
Store based retailers are suffering from competition from catalog houses, Direct mail firms, TV direct to customer ads, Telemarketing, Tele-shopping etc. Company Response and Adjustments Here are some current trends 1.
Focusing on Functional departments to reorganize the key business processes, each managed by multidiscipline teams 2. From making everything inside to downloading more goods and services outside, to obtain them cheaper and better.
Few companies are outsourcing everything making them Virtual companies owning very few assets and therefore extraordinary rates of return 3. Making all products available on the Internet. Customers can now shop online from different vendors, have access to a lot of Pricing and Quality and Variety information. Adopting the best practices of World Class performers 5.
Network of partners 6. From many suppliers to a few reliable suppliers who work more closely in Partnership relationships with the company 7. From organized around the product to organized around the Market segment 8. Global and Local: From being local to being Globally local and locally Global 9. More intrepreneurship at the local level Marketer responses and adjustments: Relationship Marketing: From focusing transactions to building Long Term profitable Customer Relationships.
The rule 2. Customer Lifetime value: From making a profit on each sale to making Profits by managing Customer Lifetime value. Customer Share: From focusing on gaining on Market Share to focusing on gaining Customer Mindshare by selling a large variety of goods and services, training employees to do Cross-selling and Up-selling 4. Target Marketing: From selling to everyone to serving better well defined market segments 5.
From selling the same offer in the same way in the target market to individualization and Customization. Customers designing their own products on the web pages and all 6. Customer Database: Integrated Marketing Communication: From relying on one communication tool like advertising and Promotion to blending several tools to deliver a consistent brand image to customers at every brand contact 8.
Channels as Partners: From thinking of intermediaries as Customers to treating them as Partners in delivering value 9. Every Employee as a Marketer Model based Decision making: Four methods of tracking customer satisfaction: Feedback and Suggestion Forms 2. Customer Surveys 3. Ghost shopping 4. Processes — The trick lies in overcoming the problems posed by departmental organization. The successful companies are those which achieve excellent capabilities in managing core business process through cross — functional teams.
Core processes here could be new-prod development, customer attraction, order fulfillment, etc Resources — The major businesses are nowadays trying to own and nurture only their respective core resources and competences, while out sourcing the rest of the processes.
Companies are paying increasing focus on their core competences and distinctive capabilities. One should go in for outsourcing, if through outsourcing, 1. If resources are less critical Core competence has 3 characteristics 1. Difficult for competitors to imitate 2. Source of competitive advantage if it makes significant contribution to perceived customer benefits 3. Potential breadth of application to a wide variety of markets Set strategies to satisfy key stakeholders Stakeholders By improving critical biz processes Processes And aligning resources and organization Resources and Organisation Organization and Organizational Culture — According to the article Built to Last, there are 3 commonalities amongst the visionary companies — 1.
They all held a core value system from which they did not deviate 2. They expressed their purpose in enlightened terms 3. They have developed a vision for their future and they strive towards it.
They communicated it to their employees and embrace a higher purpose beyond making money Senior mgmt must encourage fresh ideas from 3 grps wrt strategy making a.
Employees with youthful perspectives b. Primary Activities: Support Activities: Lead generation — to generate leads, the company develops ads and places them in media that will reach new prospects; its sales person participate in trade shows where they might find new leads and so on. All this produces a list of suspects. Lead qualification — the next task is to qualify which of the suspects are really good prospects, and this is done by interviewing them, checking for there financials, and so on.
The prospects may be graded as hot warm and cool. The sales people first contact the hot prospects and work on account conversion, which involves making presentations, answering objections and negotiating final terms.
Computing cost of lost customers — Too many companies suffer from high customer churn namely they gain new customer only to lose many of them.
Today companies must pay closer attention to their customer defection rate the rate at which they lose customer. The steps involved here are 1.
A company must define and measure retention rate 2. The company must distinguish the causes of customer attrition and identify those that can be managed better. Not much can be done for customer who leave the region or go out of business but much can be done about the customer who leaves because of poor service shoddy products or high prices. The company needs to examine the percentages of customer who defect for these reasons.
Third, the company needs to estimate how much profit it loses when it loses customer. In case of an individual customer the lost profit is equal to the customers lifetime value that is the present value of the profit stream that the company would have realized if the customer had not defected prematurely.
Fourth the company needs to figure out how much it would cost to reduce the defection rate. As long as the cost is less than the lost profit the company should spend the amount to reduce the defection rate. The key to customer retention is customer satisfaction. A highly satisfied customer: Acquiring new customers costs 5 times more than retaining old ones 2. Customer profit rates tend to increase over the lifetime of the customer. The two ways of retaining a customer would be — 1.
To erect high switching costs customers are less inclined to switch to another supplier when this would involve high capital costs, high search costs, or loss of loyal customer discounts.
Deliver high customer satisfaction Relationship marketing — The task of creating strong customer loyalty is called Relationship Marketing.
There might be defections from any of these levels, in which case, relationship marketing works on customer win-back strategies. There are 5 different types of levels of investment in customer relationship marketing — 1. Basic marketing: Reactive marketing: Accountable marketing: Proactive marketing: Partnership marketing: There are also certain marketing tools which can be used for added customer satisfaction — 1.
Adding financial benefits - through frequency marketing programs and club marketing programs. Club membership programs to bond the customer closer to the company can be open to everyone who downloads the product or service, such as frequent flier or frequent diner club, or it can be limited to the affinity group. Adding social benefits — developing more social bonds with the customer; help make brand communities; etc.
Adding structural ties — Supplying customers with special equipment or computer linkages to help them manage their payrolls, inventory, etc. Customer profitability the ultimate test Ultimately, marketing is the art of attracting and retaining profitable customers. The largest customers who are yielding the most profit. The largest customers demand considerable service and receive the deepest discounts.
The smallest customers pay full price and receive minimal service, but the costs of transacting with small customers reduce their profitability. The mid size customers receive good service and pay nearly full price and are often the most profitable. A company should not pursue and satisfy all customers. Implementing Total Quality Management TQM is an organization wide approach to continuously improving the organizations processes, products and services.
This is because higher levels of quality support higher prices while delivering high satisfaction at lower costs. Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
Conformance quality is satisfied if all the units deliver the expected quality. Performance quality, however, is different in that it is based upon the grade. A Mercedes and Hyundai may both deliver Conformance Quality, but Mercedes can be said to deliver higher Performance quality. The main responsibilities of a Marketing Manager are — 1. They must participate in formulating strategies and policies designed to give company total quality.
They must deliver marketing quality aside production quality. Communicate these requirements to the product designers 3. Ensure customer is trained enough to use the product well 5. Ensure after sales service and satisfaction 6. Get improvement suggestions from the customers, convey them to respective depts. Chapter 3 Winning Markets: Market Oriented Strategic Planning Strategic planning consists of 3 actions broadly — 1. Formulating a game plan for each of its businesses to achieve long-term objectives.
Strategic Planning is done in 4 levels — 1.
Corporate Strategic Plan — It decides what resources to allocate to which business and what businesses to diversify into 2. SBU Plan — 4. Defining corporate mission 2. Establishing SBU 3. Assigning resources to each SBU 4. Planning new businesses, downsizing older ones Defining the Corporate Mission — A good mission statement provides employees with a shared sense of purpose, direction and opportunity.
A good mission statement has 3 characteristics — 1.
Consumer Adoption Process (5 Stages)
They focus on a limited number of goals 2. They stress on major policies and values the company wants to honor 3. They define the major competitive scope within which the company will operate. Some of such scopes are: A business can de defined in terms of three dimensions — Customer groups, Customer needs and Technology. Characteristics of an SBU are — 1. It is independent in terms of the policies it needs 2. The area of the circle denotes the volume of the business.
Question marks 2.
Stars 3. Cash cows 4. Dogs After plotting the matrix, the company can judge the health of its portfolio and can take one of the following 4 actions to determine the budget to assign to each SBU— 1. Build — to increase market share, at the expense of short-term earnings, if necessary. Done on dogs 2. Hold — to preserve market share. Done on cash cows 3.
Harvest — to increase short term flow, regardless of long-term effect. This generally diminishes the value of the SBU. Done so that the costs are reduced at a faster rate than the fall in sales. Done on losing cash cows, dogs and question marks 4. Divest — to liquidate the business. For each business the two dimensions are calculated after setting the values for the parameters under each of the two, and then using their weightage.
The 9 cells are divided into 3 zones — 1. Divest or harvest these. Planning new Businesses, Downsizing old ones — The company can try one the following 3 strategies to increase its business — 1. Intensive growth — a review of whether any opportunities exist for improving the existing business performance. Diversification growth — Exploiting opportunities in new businesses. Business Mission — Each business unit needs to come up with a mission within the broader company mission.
Further, they need to trace trends in these factors then identify which can be their opportunities and weaknesses. A marketing opportunity is an area of downloader need in which a company can perform profitably. A threat is a challenge posed by an unfavorable trend which, in absence of marketing action would lead to fall in profitability. A company needs to chalk out a strategy for dealing with these threats. Goal Formulation Goals are developed to facilitate the management in planning, implementation and control of achieving the targets.
Most businesses pursue a variety of objectives, which should ideally meet the following criteria - the objectives must be placed hierarchically, in decreasing order of priorities - they should be stated quantitatively - the goals should be realistic - the goals should be consistent with each other 4.
Strategic formulation Strategy is the roadmap for achieving the envisaged goals. Such businesses require to be good at engineering, downloading, manufacturing and distribution. A disadvantage of this strategy is that some other company will eventually emerge with still lower costs. Differentiation — here a business aims at achieving superior performance in an important customer area valued by a large chunk of the market.
It could strive to be the service leader, the quality leader, the style leader or technology leader. Focus — Here a firm concentrates on one or more narrow market segments. It first identifies such a segment and then pursues either cost leadership or differentiation in them. Strategic Alliances Companies are discovering that to achieve leadership they need to form strategic alliances with domestic or multinational companies that complement or leverage their capabilities and resources.
Product or service alliance — one company licenses the other to produce its product, or two companies jointly market their complementary product or a new product. Pricing collaboration — one more companies join in a special pricing collaboration.
Program formulation After developing the principal strategies, companies must work out detailed supporting programs for them. After formulating the marketing programs, the costs and benefit scenario is calculated.
Activity Based Costing should be applied to each program to determine whether the benefits form it outdo the costs. Implementation For the implementation of strategy, McKinsey has come up with a 7-S framework. The implementation part of this framework consists of - Style: Feedback and Control A firm needs to constantly track and monitor new developments in the internal and external environment.Internal marketing is the task of hiring, training, and motivating able employees who want to serve the customers well.
I developed a particular interest in optimizing the selection of advertising media using the computer. The survey looks inquires into the download intentions of consumer, their present and future personal finances and their expectations about the economy. Hence, Japanese companies expanded faster. Management then decides to take a serious audit to improve its marketing Companies need to attract and retain customers through superior product offerings, which delivers the Customer satisfaction.
Marketing — An introduction. The salesperson met the customers need, not her stated solution.