Ch 1Marketing: Creating and Capturing Customer

Value
04/03/2015
Marketing
Process which companies create value for customers and
build strong customer relationships in order to capture value
from customers in return
Goals of Mktg:
o Attract new customers by promising superior value
o Keep and grow current customers by delivering satisfaction
Old view:
o Selling concept (inside out)
o Making a sale telling and selling
New view of Mktg:
o Satisfy customer needs
o Marketing concept (outside in)
Marketing Process:

1. Understand market and customer needs and wants

2. Design customer-driven marketing strategy
3. Develop integrated marketing program that delivers superior value
4. Build profitable relationships and create customer delight
5. Capture value from customers to create profit and customer equity
Marketers have 5 core customer and marketplace concepts
Needs, wants and demands
o NeedsStates of felt deprivation
Physical needs: Food, clothing, warmth, and safety
Social needs: Belonging and affection
Individual needs: Learning, knowledge, and selfexpression
o WantsThe form human needs take as theyre shaped by
culture and individual personality

 Eg; Needs food but wants a Big Mac

o DemandsHuman wants that are backed by buying power
Market Offerings (products, services and experiences)
o Some combo of products, services or experiences offered to a
market to satisfy a need or want
o Not limited to physical products
o Includes entities (persons, places, organizations and ideas)
o Marketing Myopia: The mistake of paying more attention to
their own products that they lose sight of underlying
customer needs
Value and satisfaction
o Customers form expectations about the value and satisfaction
that various market offerings will deliver
o Marketers set expectations too low, may satisfy customer but
fail to attract enough buyers
o Set expectations too high, buyers will be disappointed
Exchanges and relationships
o ExchangeThe act of obtaining a desired object form
someone by offering something in return
o Relationships
Marketing actions build and maintain exchange
relationships w/ target audiences involving an idea,
product, service or other object
Marketers build strong relationships by consistently
delivering superior customer value
Markets
o The set of all actual and potential buyers of a product or
service
Modern Marketing System

Each party in marketing system adds value to the transaction

Arrows rep all the relationships that must be developed and
managed to create customer value and profitable relationships

Market IntermediariesHelp company promote, sell and

distribute its products to final buyers

Designing a Customer-Driven Marketing Strategy

Reqs answers to questions:
o What customer will we serve? (Target Market?)
o How can we serve these customers best? (Our value
proposition)
Promise of value to be delivered
Marketing Management
The art and science of choosing target markets and building
profitable relationships with them
Selecting Customers to Serve
Market SegmentationDividing market into segments of
customers
Target MarketingSelecting one or more segments to cultivate
Choosing a Value Proposition
Value propositionSet of benefits or values a company promises
to deliver to consumers to satisfy their needs
Eg: Smart car positioned as compact, yet comfortable
Answers the customers question: Why should I buy your brand
rather than a competitors?
Used to differentiate one brand from another
Marketing Management Orientations
Organizations design and carry out their marketing strategies under
5 alternate concepts:
o Production concept
Consumers will favor products that are available and
highly affordable
Organization should focus on improving production and
distribution efficiency
o Product concept
Consumers will favor products that offer the most
quality, performance, and features
Organization should devote its energy to making
continuous product improvements
o Selling concept
Consumers will NOT buy enough of the firms products
unless the firm undertakes a large-scale selling and
promotion effort
Inside-out approach
o Marketing concept

Achieving organizational goals depends on knowing the

needs and wants of target markets and delivering the
desired satisfactions better than competitors do
Outside-in approach
o Societal Marketing concept
A companys marketing decisions should consider
consumers wants, the companys desires, consumers
long-run interests and societys long-run interests
Eg: UPS proactively seeks chances to act responsibly
Calls for sustainable marketingsocially and
environmentally responsible marketing that meets
presents needs of consumers while also preserving
the ability of future generations to meet their
needs

Preparing an Integrated Marketing Plan and Program

Marketing Mix tools (4 Ps)
o Product
o Price
o Place (Distribution)
o Promotion
Customer Relationship Management
Overall process of building and maintaining profitable
customer relationships by delivering superior customer
value and satisfaction
Customer Perceived Value
Customers evaluation of the difference b/n all of the
benefits and all of the costs of a marketing offer relative to
those of competing offers
Customer lifetime Value (CLV)

Value of the entire stream of purchases that the customer

would make over a lifetime of patronage
Share of customer
Portion of customers purchasing that a company gets in its
product categories
Customer Equity
Total combined customer lifetime values of all the companys
current and potential customers

ButterfliesST loyalty, High profitability (Not loyal)

StrangersST loyal, low profit (No gain by investing) (One time
vacation)
True FriendsLT loyal, high profit. Generate profits (nurture,
retain and grow them)
BarnaclesLT loyal, low profit. Fired if not profitable, but highly
loyal

Changing Marketing Landscape

Economic uncertainties
Growth in digital technology
Rapid globalization
Sustainable marketing
Growth of not-for-profit marketing
Review Concepts:
Define marketing and outline marketing process
Importance of understanding customers & marketplace
Identify 5 core marketplace concepts
Identify key elements of a customer-driven marketing strategy

Discuss customer relationship management and identify strategies

for creating value for customers and capturing value from
customers in return
Describe major trends and forces that are changing the marketing
landscape in this age of relationships