57 Marketing: Concept, Orientation and Customer Value

57.1 What is Marketing?

Marketing is the activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society at large — the official definition of the American Marketing Association (AMA, 2017).

Philip Kotler — the father of modern marketing — adds the managerial frame: marketing is “the science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit” (kotlerkeller2022?). The Indian standard text by V.S. Ramaswamy and S. Namakumari treats marketing as “a total business philosophy aimed at satisfying customer needs” (ramaswamy2018?).

Three Working Definitions

Source	Definition	What it foregrounds
AMA (2017)	“Activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings of value for customers, clients, partners and society at large.”	Process + stakeholders
Philip Kotler	“Science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit.”	Value at a profit
Peter Drucker	“The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”	Customer focus

57.1.1 Core marketing concepts

Six Core Marketing Concepts (Kotler)

Concept	What it captures
Need	Basic human requirement (food, shelter, belonging)
Want	A specific, culturally shaped desire (rice vs bread)
Demand	A want backed by ability and willingness to pay
Offering	The mix of product/service/information/experience
Value	Total benefit minus total cost
Exchange	Voluntary trade — mutual benefit

A useful Kotler shorthand: marketing is about identifying and meeting human and social needs profitably (kotlerkeller2022?).

57.2 Evolution of Marketing Concepts (Orientations)

Kotler traces six successive marketing orientations (kotlerkeller2022?):

Six Marketing Orientations

Orientation	Premise	Era
Production concept	Consumers prefer products that are widely available and affordable; focus on production efficiency	Pre-1920s
Product concept	Consumers favour products with the most quality, performance and innovation	1920s–30s
Selling concept	Consumers must be persuaded to buy through aggressive selling	1930s–50s
Marketing concept	Identify and satisfy customer needs better than competitors	1950s–80s
Societal marketing	Balance customer needs, firm objectives, and society’s long-run welfare	1970s onwards
Holistic marketing	Integrate relationship + integrated + internal + performance marketing	2000s onwards

flowchart LR
  PR[Production<br/>Pre-1920s] --> PD[Product<br/>1920s–30s]
  PD --> SE[Selling<br/>1930s–50s]
  SE --> M[Marketing Concept<br/>1950s–80s]
  M --> SO[Societal Marketing<br/>1970s+]
  SO --> H[Holistic Marketing<br/>2000s+]
  style PR fill:#FFEBEE,stroke:#C62828
  style M fill:#FFF8E1,stroke:#F9A825
  style H fill:#E8F5E9,stroke:#2E7D32

The shift from selling to marketing concept is the most-tested transition. Theodore Levitt’s Marketing Myopia (1960) was the seminal critique of selling-oriented thinking (levitt1960?): “Selling focuses on the needs of the seller, marketing on the needs of the buyer.”

57.2.1 Holistic marketing — the modern view

Kotler’s holistic marketing integrates four dimensions (kotlerkeller2022?):

Four Pillars of Holistic Marketing

Pillar	What it does
Relationship marketing	Build mutually satisfying long-term relationships with customers, employees, partners, financial community
Integrated marketing	Coordinate all marketing activities for maximum impact
Internal marketing	Treat employees as internal customers; align them with marketing strategy
Performance marketing	Measure financial and non-financial returns; focus on outcomes — including ESG

57.3 Customer Value, Satisfaction and Loyalty

The single most important concept in modern marketing.

57.3.1 Customer value

Customer Perceived Value (Kotler)

Component	What it includes
Total Customer Benefit	Product, services, personal, image
Total Customer Cost	Monetary + time + energy + psychological
Customer Perceived Value	Total Benefit − Total Cost

Customers choose the offering that delivers the highest perceived value. This is the marketing version of NPV.

57.3.2 Customer satisfaction

Satisfaction is the customer’s evaluation after purchase, comparing perceived performance against expectations. Three outcomes: delighted (performance > expectation), satisfied (= expectation), dissatisfied (< expectation).

Satisfaction → loyalty → lifetime value → advocacy → growth. Frederick Reichheld’s research consistently shows that a 5 per cent increase in customer retention raises profits by 25–95 per cent — the Loyalty Effect (reichheld1996?).

57.3.3 Net Promoter Score (NPS)

Reichheld’s NPS asks one question: “How likely are you to recommend us to a friend or colleague?” (0–10). Promoters (9–10) − Detractors (0–6) = NPS. A widely-used measure of customer-driven growth.

57.3.4 Customer Lifetime Value (CLV / CLTV)

The CLV is the present value of the future stream of profits from a customer over the duration of the relationship. CLV = (Margin × Retention rate) ÷ (Discount rate − Retention rate).

57.4 Customer Relationship Management (CRM)

CRM is the strategy and technology of building long-term customer relationships through personalised, data-driven engagement.

Three Components of CRM

Component	What it does
Operational CRM	Sales, marketing and service automation
Analytical CRM	Customer data analysis, segmentation, propensity modelling
Collaborative CRM	Sharing customer information across functions and channels

A useful Kotler distinction: Customer Equity = aggregate of CLVs across all current and potential customers; the firm’s most important long-run asset.

57.5 The Marketing Mix — 4 Ps and 7 Ps

The Marketing Mix — popularised by E. Jerome McCarthy (1960) and Kotler — is the set of controllable variables a firm combines to produce the desired response in the target market (mccarthy1960?).

The 4 Ps of the Marketing Mix

P	What it covers
Product	Variety, quality, design, features, brand, packaging, services
Price	List price, discounts, allowances, payment period, credit terms
Place	Channels, coverage, locations, inventory, transport
Promotion	Advertising, sales promotion, personal selling, PR, direct, digital

For services, Booms and Bitner (1981) extended the mix to 7 Ps, adding three:

The 7 Ps for Services

Additional P	What it covers
People	Employees, training, attitudes, customer-facing service
Process	Service-delivery flow, queueing, automation
Physical Evidence	Facilities, signage, branding cues, ambience

57.5.1 From 4 Ps to 4 Cs

Robert Lauterborn (1990) re-cast the 4 Ps from a customer’s perspective:

The 4 Cs (Lauterborn)

4 P	4 C
Product	Customer solution
Price	Cost to the customer
Place	Convenience
Promotion	Communication

The 4 Cs reflect the customer-centric re-orientation that marketing has undergone since the 1990s.

57.6 Marketing Environment

Marketers operate inside an environment of micro and macro forces (kotlerkeller2022?):

Marketing Micro and Macro Environment

Layer	Forces
Micro environment	Company itself, suppliers, marketing intermediaries, customers, competitors, publics
Macro environment	Demographic, economic, natural, technological, political-legal, cultural

The macro analysis is the PESTEL lens (Topic 54).

57.7 Practice Questions

Q 01 AMA Easy

According to the AMA's 2017 definition, marketing is the activity for creating, communicating, delivering and exchanging offerings of value for:

ACustomers and shareholders only
BCustomers, clients, partners and society at large
CGovernment bodies
DInternal employees only

View solution

Correct Option: B

AMA (2017): for customers, clients, partners and society at large. The definition is broader than the older customer-focused version.

Q 02 Levitt Medium

Theodore Levitt's *Marketing Myopia* (1960) is best remembered for the line:

A"Marketing is the new selling"
B"Selling focuses on the needs of the seller, marketing on the needs of the buyer"
C"Customer is king"
D"Strategy follows structure"

View solution

Correct Option: B

Levitt's seminal critique of selling-oriented thinking — captured in this line that contrasts seller-centric vs buyer-centric perspectives.

Q 03 Orientations Medium

A firm that focuses on producing as much as possible at the lowest cost — assuming consumers prefer affordable, widely available goods — follows the:

AProduction concept
BSelling concept
CMarketing concept
DHolistic marketing

View solution

Correct Option: A

Production concept — pre-1920s, focus on volume and cost. Selling pushes existing products; marketing identifies and meets needs.

Q 04 Holistic Medium

Kotler's holistic marketing concept integrates four pillars. Which of the following is NOT one of them?

ARelationship marketing
BIntegrated marketing
CPerformance marketing
DPredatory marketing

View solution

Correct Option: D

Holistic marketing's four pillars: Relationship · Integrated · Internal · Performance. "Predatory" is not one of them.

Q 05 CPV Medium

"Customer Perceived Value" is best defined as:

ATotal Customer Benefit ÷ Total Customer Cost
BTotal Customer Benefit − Total Customer Cost
CSelling price minus cost of goods sold
DAnnual sales

View solution

Correct Option: B

CPV = Total Customer Benefit − Total Customer Cost. Costs include money, time, energy, psychological cost.

Q 06 7 Ps Medium

The 7 Ps of services marketing extend the 4 Ps with three additional Ps. Which of the following is one of them?

APolitics
BPeople
CProfit
DPerformance

View solution

Correct Option: B

Booms & Bitner (1981) added People · Process · Physical evidence to the original 4 Ps for services marketing.

Q 07 4 Cs Medium

In Lauterborn's 4 Cs, "Promotion" is reframed as:

ACustomer solution
BCost
CCommunication
DConvenience

View solution

Correct Option: C

Lauterborn (1990) maps Product → Customer solution, Price → Cost, Place → Convenience, Promotion → Communication.

Q 08 NPS Medium

The Net Promoter Score (NPS), developed by Frederick Reichheld, is computed as:

A% Promoters + % Detractors
B% Promoters − % Detractors
C% Passives
D% Sales × 100

View solution

Correct Option: B

NPS = % Promoters (9–10) − % Detractors (0–6). Passives (7–8) are excluded.

Quick recall

Marketing — AMA (2017): activity for creating, communicating, delivering and exchanging offerings of value to customers, clients, partners and society. Standard text: Kotler & Keller; Indian: Ramaswamy & Namakumari.
Six core concepts: Need · Want · Demand · Offering · Value · Exchange.
Six orientations: Production → Product → Selling → Marketing concept → Societal → Holistic. Levitt’s Marketing Myopia (1960).
Holistic marketing = Relationship + Integrated + Internal + Performance.
Customer Perceived Value = Total benefit − Total cost. Satisfaction → loyalty → CLV → advocacy.
Reichheld’s NPS = % Promoters − % Detractors. Loyalty effect: 5% retention raises profits 25–95%.
Marketing mix: 4 Ps (McCarthy) → 7 Ps for services (Booms & Bitner — adds People, Process, Physical evidence). 4 Cs (Lauterborn) reframe from customer’s view.
CRM: Operational + Analytical + Collaborative.
Environment: Micro (company, suppliers, intermediaries, customers, competitors, publics) + Macro (PESTEL).