Chapter 1 Marketing Creating and Capturing Customer Value.

Chapter 1

MarketingMarketing

Creating and Capturing Creating and Capturing Customer ValueCustomer Value

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall

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1. Define marketing and the marketing process.2. Explain the importance of understanding

customers and identify the five core marketplace concepts.

3. Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide strategy.

4. Discuss customer relationship management and identify strategies for creating value for and capturing value from customers.

5. Describe the major trends and forces that are changing the marketing landscape.

Rest Stop:Rest Stop: Previewing the ConceptsPreviewing the Concepts


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Creating Customer Value

• Goal: Provide the very best customer service & customer experience.

• Customer-centric approach: Free delivery, free returns, 365 day return policy & service upgrades.

• Results: 75% of sales come from current customers, tremendous sales growth despite poor economy, 10 million customers served annually.

Zappos Creates Customer Value & RelationshipsFirst Stop

Building Relationships

• Service Culture: Built around 10 core principles; every new hire takes 4 weeks of customer loyalty training.

• Commitment: During training, employees are offered $2000 to quit; only 1% do so.

• Lifelong relationships are the goal: Employees comparison shop other Web sites; social networking is used for direct contact with customers; customer feedback and criticism is strongly encouraged and valued.


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What Is Marketing?

Simple definition: Marketing is managing profitable customer relationships.

Therefore: Marketing is satisfying the wants and needs of customers, at a profit.

Goals: 1. Attract new customers by promising

superior value. 2. Keep and grow current customer-base by

delivering satisfaction.


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Marketing Defined

• Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

OLD view of marketing:

Making a sale - “telling and selling”

NEW view of marketing:

Satisfying customer needs


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The Marketing Process

• A simple model of the marketing process:Understand the marketplace and customer

needs and wants.Design a customer-driven marketing strategy.Construct an integrated marketing program

that delivers superior value.Build profitable relationships and create

customer delight.Capture value from customers to create

profits and customer equity.


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Core Concepts

• Marketers must understand five core customer and marketplace concepts:Needs, wants, and demandsMarket offeringsValue and satisfactionExchanges and relationshipsMarkets


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Needs, Wants, and Demands

• Need: State of felt deprivation including physical, social, and individual needs.Physical, social, and individual needs

• Wants: Form that a human need takes, as shaped by culture and individual personality.

• Wants + Buying Power = Demand


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Marketing Offerings

• Needs and wants are fulfilled through a Marketing Offer:Some combination of products,

services, information, or experiences offered to a market to satisfy a need or want.


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Market Offerings

• Products:Persons, places, organizations, information,

and ideas.

• Services:Activity or benefit offered for sale that is

essentially intangible and does not result in ownership.

• Brand experiences:Should immerse the consumer in the brand

experience and may be intensely personal.


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Marketing Myopia

• Marketing myopia:Occurs when sellers pay more attention

to the specific products they offer than to the benefits and experiences produced by the products.

They focus on the “wants” and lose sight of the “needs.”


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Customer Value and Satisfaction

• Care must be taken when setting expectations for market offerings:If performance is lower than

expectations, satisfaction is low.If performance is higher than

expectations, satisfaction is high.


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Exchanges and Relationships

• Exchange:Act of obtaining a desired object from

someone by offering something in return.

• Relationships:Marketing actions build and maintain

relationships with target audiences involving an idea, product, service, or other object. Value builds relationships.


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What Is a Market?

• A market:Is the set of actual and potential buyers

of a product.• These people share a need or want

that can be satisfied through exchange relationships.


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Modern Marketing Systems

• Main elements in a modern marketing system include:SuppliersCompany (marketer)CompetitorsMarketing intermediariesConsumers

• Major environmental forces affect each element.


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Marketing Management

• The art and science of choosing target markets and building profitable relationships with them.Aim is to find, attract, keep, and grow

customers by creating, delivering, and communicating superior value.


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Marketing Management

• Designing a winning marketing strategy requires answers to the following questions:

1. What customers will we serve? — What is our target market?

2. How can we best serve these customers? — What is our value proposition?


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Selecting Customers to Serve

• Market segmentation:Dividing the market into segments of

customers.

• Target marketing:Selecting one or more segments to

cultivate.


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Choosing a Value Proposition

• The set of benefits or values a company promises to deliver to consumers to satisfy their needs.Value propositions dictate how firms will

differentiate and position their brands in the marketplace.


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Marketing Management Orientations

• Organizations design and carry out their marketing strategies under five alternate concepts:Production ConceptProduct ConceptSelling ConceptMarketing ConceptSocietal Marketing Concept


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The Marketing Concept

• The marketing concept:A marketing management philosophy

that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors.


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The Societal Marketing Concept

• The societal marketing concept:The idea that a company’s marketing

decisions should consider consumers’ wants, the company’s desires, consumers’ long-run interests, and society’s long-run interests.


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The Integrated Marketing Plan

• Transforms the marketing strategy into action.

• Includes the marketing mix and 4 Ps of marketing:ProductPricePlace (Distribution)Promotion


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Building Customer Relationships

• Customer relationship management:The overall process of building and

maintaining profitable customer relationships by delivering superior customer value and satisfaction.• CRM deals with all aspects of acquiring,

keeping, and growing customers.• Customer value and satisfaction are key.


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Customer Perceived Value

• Customer perceived value:Customer’s evaluation of the difference

between all of the benefits and all of the costs of a marketing offer relative to those of competing offers.• Perceptions may be subjective • To some customers “value” might mean

paying more to get more.


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Customer Satisfaction

• Customer satisfaction:Extent to which the product’s perceived

performance matches a buyer’s expectations.• High levels of customer satisfaction often

leads to consumer loyalty.• Some firms seek to DELIGHT customers by

exceeding expectations.• Profitability must be considered.


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Customer Relationships

• Firms may choose to build relationships at different levels.

• Loyalty and retention programs build relationships and may include:Frequency marketing programsClub marketing programs


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Changing Nature of Relationships

• Customer profitability analysis eliminates losing customers and selects profitable ones with whom relationships should be developed.

• Firms related more deeply and interactively via blogs, social network Web sites, e-mail, and video sharing.

• Embracing customer-managed relationships requires marketing via attraction rather than intrusion.

• Consumer-generated marketing has become a significant marketing force.


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Partner Relationship Marketing

• Marketing partners help create customer value and assist in building customer relationships.

• Partners inside the firm:Cross-functional customer teams

• Partners outside the firm:Supply chain management


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Capturing Value From Customers

• Value is captured from customers via current and future sales, market share, and profit.Superior customer value leads to highly

satisfied loyal customers who buy more.Key outcomes of customer value include

customer loyalty and retention, share of market, share of customer, and customer equity.


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Customer Equity

• The total combined customer lifetime values of all the company’s current and potential customers.

• Manage equity by:Classifying customers by projected

loyalty and potential profitability.Manage each group accordingly.


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Capturing Value From Customers

• Customer lifetime valueThe value of the entire stream of

purchases that the customer would make over a lifetime of patronage.

• Share of customerThe portion of the customer’s

purchasing that a company gets in their product categories.


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Changing Marketing Landscape

• The uncertain economic environment

• The digital age

• Rapid globalization

• Sustainable marketing – call for more social responsibility

• Growth of not-for-profit marketing


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1. Define marketing and the marketing process.2. Explain the importance of understanding

customers and identify the five core marketplace concepts.

3. Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide strategy.

4. Discuss customer relationship management and identify strategies for creating value for and capturing value from customers.

5. Describe the major trends and forces that are changing the marketing landscape.

Rest Stop: Reviewing the Concepts


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Copyright © 2011 Pearson Education, Inc. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

Chapter 1 Marketing Creating and Capturing Customer Value.

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Transcript of Chapter 1 Marketing Creating and Capturing Customer Value.