Definition of Marketing

and
Customer Value-driven Marketing Strategy Process

Topic #1
Topics
Management Guru on Business

“the purpose of
business is to
create a customer.”
Peter Drucker: The Practice of Management, 1954
Levitt on Marketing

“the purpose of
business is to create
and keep a customer.”
Theodore Levitt: The Marketing Imagination, 1983
Kotler on Customer-driven Marketing Strategy

“Marketing is a process by which

companies create value for
customers and build strong
customer relationships in order to
capture value from customers in
return”
Philip Kotler
 But Create and Keep Customers is Challenging: TM’s Unifi &
Streamyx ARPU
Unifi Streamy

200
Average
Revenue Per
194 191
User in RM
(ARPU) 90 90 88

2Q-2017 1Q-2018 2Q-2018

https://www.malaysianwireless.com/2018/09/telekom-malaysia-unifi-2q18/
 Astro is losing subscribers to Netflix
• Astro:
In FY 2017: Astro losses
80,000, (2.3%) of its
subscribers
As at nine months of FY18,
Astro subscribers had shrunk
to about 3.3 million

• Netflix
In 2017 - estimated 66,000
active streaming subscribers
2020E - 336,000 subscribers

http://www.theedgemarkets.com/article/challenging-environment-ahead-expected-astro
https://www.thestar.com.my/business/business-news/2018/03/24/astro-malaysia-slides/#wzx4j1RKX7fKis2e.99
https://www.thestar.com.my/tech/tech-news/2018/04/17/netflix-surges-as-users-stay-loyal-despite-higher-prices/
Marketing is a Young Discipline
• ~ 100 years
• Influenced by economic, psychology, social phycologists
• Consists at least 10 different school of thoughts
• Constantly revolving, changing, debating
 Marketing

1900s Late 1950s Late 1960s

- - -
late 1950s late 1960s Current

Traditional Paradigm Broadening

Approach Shift / Generic

What, who, how How marketing works? Marketing covers

marketing add Explanation & Theory all business and all
values? human activities
Shaw, E. H., & Jones, D. B. (2005). A history of schools of marketing thought. Marketing theory, 5(3), 239-281.
 Late 1960s • Tourism Marketing
-
Current
• Culinary Marketing

Broadening • Halal Marketing

/ Generic
• Digital Marketing
Marketing covers
• Etc
all business and all
human activities
• etc

Shaw, E. H., & Jones, D. B. (2005). A history of schools of marketing thought. Marketing theory, 5(3), 239-281.
 Marketing

Traditional Paradigm Broadening

Approach Shift / Generic

Functional Institutional Commodities Micro Macro Marketing Marketing Consumer

Management Exchange behaviour
“what are Who Different Household Marketing
marketing performed products/ buying Management
activities” what service needs behaviour Philip
activities different
Kotler
technique/
activities

Shaw, E. H., & Jones, D. B. (2005). A history of schools of marketing thought. Marketing theory, 5(3), 239-281.
Marketing vs Marketing Management

Marketing management is not marketing

Marketing  understanding Marketing Management

human wants and values and
determining what it take for
someone to act (individual
decision making)
How to apply marketing
techniques to any organizations
(business and non-business) or
person with the aim to persuade
or influence
Kotler on Marketing Management
Marketing management is the art and science of choosing
target markets and building profitable relationships with them.

What customers
will we serve How can we best serve
(target market)? these customers
(value proposition)?
Designing a Customer Value-Driven Marketing Strategy

Marketing Management:
How can we best serve
these customers
(value proposition)?

• A brand’s value proposition is the set of benefits or values it

promises to deliver to customers to satisfy their needs 
“Customer value-driven”
Customer Value-driven Example: Dollar Shave Club: Shave Time. Shave
Money

“My co-founder and I had always bristled at the price and experience of buying razors at the store,
and we decided that there was a better way to do it,” the CEO explained. So we launched a
service that sends you your razors once a month or every other month.
“Two hours after we launched it, the site had crashed, so I knew that instantly we had struck a
chord,”
https://www.huffingtonpost.com/2014/10/22/dollar-shave-club-michael-dubin-interview_n_6025648.html
- Michael Dubin
What is Utar value proposition?
Discussion: How Milo creates and Keeps customers
• How Milo creates values?
• How Milo keep customers?
Discussion: How Supreme “Create” Customers
Discussion: How Supreme “Create” Customers

The red brick, which cost

AUS$40 (US$30), sold out
instantly to customers who
waited hours outside
Supreme stores. Soon, the
items popped up on EBay,
reselling for as much as
AUS$1,300 (US$1,000).

https://www.lostateminor.com/2016/10/11/people-lined-up-for-hours-to-buy-a-supreme-brick-yes-an-actual-brick/
Recap: Kotler on Customer-driven Marketing Strategy

“Marketing is a process by which

companies create value for
customers and build strong
customer relationships in order to
capture value from customers in
return”
Philip Kotler
 Key Concepts of Marketing

Exchange, Market
transaction, Needs, Wants,
relationship Demand

Marketers Offerings

Value and
Satisfaction
Process / Activity
Needs : Psychological Perspective
Quick self-test based on the ‘Hierarchy of Needs’.
Read the following FOUR statements and tick below those that apply to you (include multiple).
There are no right or wrong answers. Interpretation guide below.

• A I am successful in life /study, and I’m recognized by my friends for being so. I’m
satisfied with the responsibility and role that I have in life/study, my status and
reputation, and my level of self-esteem.
• B I am part of, and loved by, my family. I have good relationships with my friends and
family - they accept me for who I am.
• C My aim is self-knowledge and enlightenment. The most important thing to me is
realizing my ultimate personal potential. I seek and welcome ‘peak’ experiences.
• D Aside from dieting and personal choice, I never starve through lack of food, nor lack
of money to buy food. I have no worry at all about having a place live - I have ‘a roof over
my head’.
• E I generally feel safe and secure - and protected from harm. My life generally has
routine and structure - long periods of uncontrollable chaos are rare or non-existent.
This assessment tool was developed by Alan Chapman consultancy
Example: Hierarchy of Needs
• Biological and Physiological needs
 Social security benefits, roadside recovery.
• Safety needs
home security products (alarms, etc), house an contents insurance, life assurance,
schools.
• Belongingness and Love needs
Social media, Dating and match-making services, chat-lines, clubs and membership
societies.
• Esteem needs
Cosmetics, fast cars, home improvements, furniture, fashion clothes, drinks, lifestyle
products and services.
• Self-Actualization needs
Challenge, new experiences, love of art, nature, etc.
Needs: Marketing Perspective

Stated  Expressed
“I am looking for a data plan

Real  Behind stated

“I am looking for a data plan with unlimited data but should
affordable”

Unstated  Expectations reveal at MOP

“I want the seller to provide uninterrupted access where ever I am”

Delight  Preferences when buying

“I want the seller to completely transparent with T&Cs”

Secret  Non-material/emotion
“By buying this plan, I want my friends to think I am a smart
consumers”
 Understand Customer Needs
• Consumers often buy products not only for what they do, but for what they mean.
• Functional:
What functional needs does the product fill?
What job(s) does it do to make consumers’ lives easier or better
• Emotional
 What meaning does the product bring to the consumers lives?
 In what rituals or traditions does the product play an important role?
 How does it help consumers build their identities?
 How does the product connect consumers to others in the social world?
 How does it help consumers fulfill their important social roles?
 How does the product make consumers feel?
 What emotions are associated with the purchase and consumption of the product?
 Example: China Mobile Phone Brand Users and Emotional Needs

iPhone Users Huawei Users

Education Less educated Diploma or bachelor
achievement High School cert degree
Monthly below 3,000 yuan 5,000 - 20,000 yuan
Income level (RM1,800). (RM3,000 – 12,000)
Perceived to be large proportion of
part of a group Huawei users own
known as the flats and cars while
“invisible poor” – Apple users do not.
those who do not
look as poor as
their financial
circumstances.
https://www.thedrum.com/news/2018/11/23/chinese-iphone-
users-are-poor-while-huawei-users-are-rich-according-research
Understand Customer Needs
• Remember consumers may not have direct access to their subconscious or
unconscious needs  market research may not be “helpful”

“We figure out what we want. And

“We do no market research. ...
We just want to make great
products.”
I think we’re pretty good at having
the right discipline to think through
whether a lot of other people are
going to want it, too. That’s what
we get paid to do.”
Understand Customer Needs
• When conducting a needs analysis  include rational and seemingly
irrational needs
Understand Customer Needs

Emotional/ Self-Actualization Stated

Meaning

Functional / Physiological Unstated

Utilitarian
Function of “Needs” = States of felt deprivation
• Needs are states of felt deprivation/lacking which create tension
• People are motivated to find solutions/fulfill the needs when needs build-up
• This creates wants

Deprived

Needs

Needs = “Lacking” Wants

Needs
Needs

Tensions Motivation
From Needs to Wants

Culture

Needs Wants Personality Example:

1. Thrill seekers love spicy food
2. People-pleasers tend to overeat when they have
company
Personality 3. Overly emotional people tend to gorge on
snacks in secret
4. Conscientious people are more likely to eat fruit
and vegetables
5. Extroverts can’t say no to animal fat, sweets and
alcohol
https://www.lifehack.org/articles/communication/5-research-findings-reveal-the-connection-
between-your-food-choices-and-personality-type.html
From Needs to Wants to Demand

Deprived Culture Desire

Needs Wants Demand

Tensions Personality Buying

power
Motivation and Desire

Deprived Culture Desire

Needs Wants Demand

Tensions Personality Buying power

Motivation Desire
Supplementary Reading on Motivation

https://www.forbes.com/sites/forbescom
municationscouncil/2018/04/19/the-key-
to-a-marketers-success-understanding-
consumer-motivations/#165aca9271ee
 Summary: Needs, Wants, and Demand

• Needs, Wants, Demands are basic elements of marketing

Offerings
• Market offerings are some combination of products, services, information,
or experiences offered to a market to satisfy a need or want
• Marketing myopia is focusing only on existing wants and losing sight of
underlying consumer needs

Products
Services
Offerings Information
Experience
Offering and Marketing Myopia
• Focusing on selling products and lost sights on customer needs/benefits

“They missed out on learning, they

missed out on changing, and thus they
lost the opportunity at hand to make it
big. Not only did they miss the
opportunity to earn big money, they lost
their chance of survival”.

“The advantage you have yesterday, will

be replaced by the trends of tomorrow.
You don’t have to do anything wrong, as
long as your competitors catch the wave
and do it RIGHT, you can lose out and
fail”
Value and Satisfaction in Selecting Offerings
• Value and satisfaction answering how does a consumer choose
a product from numerous offering?

• Value
• Satisfaction

https://cdn-images-1.medium.com/max/849/1*RsroxPBQmZtI5i_4jzaJOQ.jpeg
Value

Benefits - Costs = Value

• Product • Monetary • Also distributed and

• Services • Time added through value
• Personnel • Energy chain (e.g., shipping
• Image • Psychological service from e retailers)
 Satisfaction
> Loyalty & Talk
“good”
Delighted

Performance - Expectation = Vulnerable

Satisfied

• Realized during or after consumption

• Could have long-term implication on < Walk & Talk
“bad”
customer loyalty
Dissatisfied
Exchange, Transaction, Relationship
• Answering the question how are value delivered to satisfy the needs
• Conditions of exchange

• Value
• Satisfaction

Exchange,
Transaction,
Relationship
Exchange, Transaction, Relationship
• Answering the question how are value delivered to satisfy the needs
• Exchange of value  act of returning something of value to the exchange
parties
• Conditions of exchange

Minimum 2 Each has Each must able Freedom to Interested

Parties something to communicate accept or to strike a
valuable to and deliver the reject deal
offer offer

• Transaction = agreement is reached

Exchange, Transaction, Relationship
• Relationship - Repeated exchanges vs transaction of one (1) time deal
• Relationship connects customers and the products  Milo
• Benefits
Customer loyalty
Customer lifetime value
Share of customers
Cost effective
• Key to build relationship  Customer delight (Exceed expectation)

“the purpose of
business is to
create and keep a
customer.”
Theodore Levitt
Market
• A set of actual and possible buyer of:
Product
Services
Personnel
Image
• A market includes the following customers
1. Consumer market: buy for own consumption
2. Business market: buy for further processing, reselling, etc, and not for own
consumption
3. Government market: buy to provide services to public
4. International market: sell to customers in other countries
Summary: Basic Marketing Concepts
Translating Basic Marketing Concepts to Marketing Process
• Marketing process = how marketers meets customers’ needs
and wants by satisfying or providing value to them in exchange
for value to the company

Marketing Process

Customer Value -driven

marketing Strategy
 Marketing Process
• A process that meets customers’ needs and wants either by satisfying
them or providing value through an exchange/transaction
Gain Value From
Market Offering Customers

Identify Develop Develop

Developing
Market’s Needs Consumer Value- Relationship
Marketing Mix
Driven marketing with customers • Profits
Strategy • Life time
• Marketing • Segmentation • Product • Customer customer
Environment • Targeting • Price Relationship value
Analysis – • Positioning • Place Building
5Cs • Promotion
Development of Marketing Orientation

Societal
Production Product Selling Marketing Holistic
Marketing
concept concept concept concept Marketing
concept
1870-1920s 1900s 1920s 1950s current time
1980s

• Each marketing orientation dominated in certain time period

• They may be applied according to a company’s specific situation
1) Production Concept

Time Period 1st Industrial Revolution 1900s

Basic concept Consumers will favor products that are available and highly affordable.
Producers concentrate on producing and distributing more efficiently
Mass production
Application When demand is > Supply
Example • Henry Ford T-Model
• China manufacturers  production through manual labor by mass
producing and distributing products across the world
Risk lead to marketing myopia Management focuses on improving
production and distribution efficiency and ignoring customers needs
and wants.
2) Product Concept

Time Period 1920s

Basic concept Consumers favor products that offer the most quality, performance,
and features.
“Good products sell themselves”
Application When market is highly competitive with many similar offerings
Example Apple's products

Risk Management might commit the “better-mousetrap” fallacy, believing

that a better mousetrap will lead people to beat a path to its door.
3) Selling Concept

Time Period 1920s

Basic concept Consumers will not buy enough unless the firm undertakes a selling
and promotion effort.
Sell what company make rather than make what the market wants.
Application Supply > demand; unsought goods
Example Apple's products

Risk Focusing on sales transactions rather than building and enhancing

relationships with customers.
 4) Marketing Concept

Time Period 1950s

Basic concept A firm must understand the needs of its consumers and based on these
needs it should model its products and services, only then will it be able to
withstand the competition from its competitors.
• Customer satisfaction
• Integrated marketing
• Long term profits
Application Ensure customer satisfaction remains high with the company as a whole
and can function as a way to promote brand loyalty and positive word-of-
mouth advertising
Example FMCG
Risk Need to make decision when customer desires are not cost effective to
implement and produce optimum returns for the business.
 5) Societal Marketing Concept

Time Period 1980s

Basic concept The organization focus on the needs, wants, and interests of target markets
and to deliver the desired satisfactions more effectively and efficiently than
competitors (this is the original Marketing Concept) in a way that preserves
or enhances the consumer’s and the society’s well-being.
• Doing well by doing good
Application Social impact has become much more than just a business strategy —
driven by Millennials, social impact is, instead, a way of life and a way of
being in the world
Example Patagonia. https://www.fastcompany.com/90280950/exclusive-patagonia-is-in-business-to-save-
our-home-planet

Risk Need to make decision when customer desires are not cost effective to
implement and produce optimum returns for the business.
 6) Holistic Marketing Concept

Time Period 1990s

Basic concept A marketing strategy that is developed by thinking about the business as a
whole, its place in the broader economy and society, and in the lives of its
customers. It attempts to develop and maintain multiple perspectives on
the company's commercial activities.
• Relationship marketing
• Integrated marketing
• Internal marketing  marketing principles are embraced
• Performance marketing  Financial performance
Application Everything matters in marketing  consumers, employees, partners,
competitions, society
Risk Confusion about how to best pursue it.
 Recap #1
• Is this consider Societal Marketing? If not, then which concept?

https://www.fastcompany.com/90236715/apple-is-investing-in-a-
huge-mangrove-forest-in-colombia http://fortune.com/2018/07/18/starbucks-mcdonalds-sustainable-cup//
Customer Value-Driven Marketing Strategy Process

We will not be using

this process mapping
(but following same
principles)
Customer Value-Driven Marketing Strategy: The Road Map/Process
PLANNING ANALYSIS DECISION MAKING

Company Strategic Marketing Segmentation S),

Planning Environment targeting (T),
Analysis Positioning (P)
Market-Oriented

Topic #1 & 2

Topic #3 & 4
Mission
BCG

Topic #5
Company Objectives Matrix
and Goals
Ansoft
Designing Business Matrix
Portfolio
Marketing Mix
Marketing Information
Business Unit Planning

Topic #6,7,8,9
Topic #10
Consumer Buyer Behaviour
Consumer Value- Topic #11
driven Marketing Business Buyer Behaviour
Strategy Topic #12
Direct, online, Mobile Marketing
Topic #13
Topic Summary
Readings
• Kotler & Armstrong (2018). Chapter 1
Skipped Customer Relationship section)