Chapter One
Marketing: Creating and Capturing
Customer Value
Chapter 1- slide 1
Creating and Capturing Customer
Value
Topic Outline
• What Is Marketing?
• Understand the Marketplace and Customer Needs
• Designing a Customer-Driven Marketing Strategy
• Preparing an Integrated Marketing Plan and Program
• Building Customer Relationships
• Capturing Value from Customers
• The Changing Marketing Landscape
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Chapter 1- slide 2
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What Is Marketing?
Marketing is a process by which
companies create value for customers and
build strong customer relationships to
capture value from customers in return
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Chapter 1- slide 3
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Understanding the Marketplace
and Customer Needs
Core Concepts
• Customer needs, wants, and demands
• Market offerings
• Value and satisfaction
• Exchanges and relationships
• Markets
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Chapter 1- slide 4
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Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
• States of deprivation
• Physical—food, clothing, warmth, safety
Needs • Social—belonging and affection
• Individual—knowledge and self-expression
• Form that needs take as they are shaped by culture
Wants and individual personality
Demands • Wants backed by buying power
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Marketing process
Determine Design Construct Build Capture
needs and customer marketing relationshi value from
wants driven program ps and customer
marketing that delight the to achieve
strategy delivers customer profits
superior
value
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Chapter 1- slide 6
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Understanding the Marketplace
and Customer Needs
• 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
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Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
• Value and
satisfaction
Marketers
• Set the right level of
expectations
• Not too high or low
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Chapter 1- slide 8
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Understanding the Marketplace
and Customer Needs
Exchange is the act of obtaining a desired
object from someone by offering
something in return
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Chapter 1- slide 9
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Understanding the Marketplace
and Customer Needs
Markets are the set of actual and
potential buyers of a product
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Chapter 1- slide 10
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Customer driven marketing
Strategy
MARKETING MANAGEMENT
SELECTING CUSTOMERS
CHOOSE VALUE PROPOSITION
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Hall
Chapter 1- slide 11
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Designing a Customer-Driven
Marketing Strategy
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 these customers?
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Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Market segmentation refers to dividing the
markets into segments of customers
Target marketing refers to which segments
to go after
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Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Demarketing is marketing to reduce demand
temporarily or permanently; the aim is not
to destroy demand but to reduce or shift it
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Chapter 1- slide 14
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Designing a Customer-Driven
Marketing Strategy
Choosing a Value Proposition
The value proposition is the set of
benefits or values a company promises to
deliver to customers to satisfy their needs
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production Product Selling Marketing Societal
concept concept concept concept concept
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production concept is the idea that
consumers will favor products that are
available or highly affordable
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Product concept is the idea that consumers
will favor products that offer the most
quality, performance, and features.
Organization should therefore devote its
energy to making continuous product
improvements.
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Selling concept is the idea that consumers
will not buy enough of the firm’s products
unless it undertakes a large scale selling
and promotion effort
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Marketing concept is the idea that
achieving organizational goals
depends on knowing the needs and
wants of the target markets and
delivering the desired satisfactions
better than competitors do
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Societal marketing concept is the idea that a
company should make good marketing
decisions by considering consumers’ wants,
the company’s requirements, consumers’
long-term interests, and society’s long-run
interests
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Chapter 1- slide 21
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Preparing an Integrated Marketing Plan
and Program
The marketing mix is the set of tools (four Ps)
the firm uses to implement its marketing
strategy. It includes product, price,
promotion, and place.
Integrated marketing program is a
comprehensive plan that communicates
and delivers the intended value to chosen
customers.
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Chapter 1- slide 22
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Building Customer Relationships
Customer Relationship Management (CRM)
The overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction
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Chapter 1- slide 23
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Building Customer Relationships
Relationship Building Blocks: Customer Value and Satisfaction
Customer- Customer
perceived value satisfaction
• The difference • The extent to
between total which a product’s
customer value perceived
and total customer performance
cost matches a buyer’s
expectations
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Customer Satisfaction
Performance SATISFACTION
Expected
level
DISSATISFACTION
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Chapter 1- slide 25
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Building Customer Relationships
Customer Relationship Levels and Tools
Basic
Relationships
Full
Partnerships
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Chapter 1- slide 26
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Relationship Levels
BASIC RELATIONSHIP
FULL PARTNERSHIP
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Chapter 1- slide 27
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Building Customer Relationships
The Changing Nature of Customer Relationships
• Relating with more carefully selected
customers uses selective relationship
management to target fewer, more profitable
customers
• Relating more deeply and interactively by
incorporating more interactive two way
relationships through blogs, Websites, online
communities and social networks
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• Basic Relationships are often used by
a company with many low-margin
customers. For example, Procter &
Gamble does not phone or call on all of
its Tide consumers to get to know them
personally. Instead, P&G creates
relationships through brand-building
advertising, sales promotions, and its
Web site.
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Building Customer Relationships
Partner relationship management involves
working closely with partners in other
company departments and outside the
company to jointly bring greater value to
customers
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Building Customer Relationships
Partner Relationship Management
• Partners inside the company is every
function area interacting with customers
– Electronically
– Cross-functional teams
• Partners outside the company is how
marketers connect with their suppliers,
channel partners, and competitors by
developing partnerships
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Building Customer Relationships
Partner Relationship Management
• Supply chain is a channel that stretches
from raw materials to components to final
products to final buyers
• Supply management
• Strategic partners
• Strategic alliances
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Partner relationship
management
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Chapter 1- slide 33
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Capturing Value from Customers
Creating Customer Loyalty and Retention
• Customer lifetime value is the value of
the entire stream of purchases that the
customer would make over a lifetime of
patronage
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Share of customer
Sales to
your firm
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Capturing Value from Customers
Growing Share of Customer
Share of customer is the portion of the
customer’s purchasing that a company gets
in its product categories
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Customer
Equity
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Capturing Value from Customers
Customer equity is the total combined
customer lifetime values of all of the
company’s customers
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Chapter 1- slide 38
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Capturing Value from Customers
Building Customer Equity
• Building the right relationships with the
right customers involves treating
customers as assets that need to be
managed and maximized
• Different types of customers require
different relationship management
strategies
– Build the right relationship with the right
customers
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Chapter 1- slide 39
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The Changing Marketing Landscape
Major Developments
Rapid
Digital age
globalization
Ethics and
Not-for-profit
social
marketing
responsibility
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Digital age
The Changing Marketing Landscape
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Chapter 1- slide 41
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• The recent technology boom has created a
digital age. Beyond competing in traditional
marketplaces, companies now have access
to exciting new market spaces. Online
marketing is now the fastest growing form of
marketing.
• Some 65 percent of American online users
now use the Internet to shop
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Globalization
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Rapid Globalization
• Almost every company, large or small,
is touched in some way by global
competition. Today, companies are also
buying more supplies and components
abroad.
• McDonald’s gets 65 percent of its
revenues from outside the United
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Not-for-Profit Marketing
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• The Growth of Not-for-Profit Marketing
• Not-for-profit marketing: Museums,
zoos, churches, and organizations often
operate as not-for-profit entities. The
nation’s nonprofits face stiff competition
for support and membership. Sound
marketing can help them to attract
membership and support.
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Marketing system
Company
Intermediaries Consumers
Suppliers
Competitors
ENVIRONMENTAL FORCES
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Chapter 1- slide 47
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