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MarketingMarketing

Chapter 1

Customer ValueCustomer Value

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

customers and identify the five coremarketplace concepts.

Rest Stop:Rest Stop:Previewing the ConceptsPreviewing the Concepts

Copyright 2011, Pearson Education Inc. Publishing asPrentice-

Hall

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. en y e e emen s o a cus omer- r venmarketing strategy and discuss the marketingmanagement orientations that guide strategy.

4. Discuss customer relationship managementand identify strategies for creating value forand capturing value fromcustomers.

5. Describe the major trends and forces that arechanging the marketing landscape.

Creating Customer Value

Goal:Provide the very bestcustomer service & customerexperience.

ZapposCreatesCustomerValue&RelationshipsFirst Stop

Building Relationships

Service Culture:Built around10 core principles; every newhire takes 4 weeks of customerlo a lt t ra in in

Copyright 2011, Pearson Education Inc. Publishing asPrentice-Hall

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

Results:75% of sales comefrom current customers,tremendous sales growthdespite poor economy, 10million customers servedannually.

.

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

Lifelong relationships are thegoal:Employees comparisonshop other Web sites; socialnetworking is used for directcontact with customers;customer feedback and criticismis strongly encouraged andvalued.


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What Is Marketing?

Simple definition:Marketing is managing profitablecustomer relationships.


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oa s:1. Attract new customers by promising

superior value.

2. Keep and grow current customer-base by delivering satisfaction.

Marketing Defined

Marketing is the process by whichcompanies create value for customers andbuild strong customer relationships in orderto capture value from customers in return.


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OLDviewofmarketing:

Makingasale tellingandselling

NEWviewofmarketing:

Satisfyingcustomerneeds

The Marketing Process

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

needs and wants.

Design a customer-driven marketing strategy.


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Construct an integrated marketing programthat delivers superior value.

Build profitable relationships and createcustomer delight.

Capture value from customers to createprofits and customer equity.


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Core Concepts

Marketers must understand five corecustomer and marketplace concepts:Needs, wants, and demands


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ar e o er ngs

Value and satisfaction

Exchanges and relationships

Markets

Needs, Wants, and Demands

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


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ys ca , soc a , an n v ua nee s

Wants:Form that a human need takes, as shapedby culture and individual personality.

Wants + Buying Power = Demand

Marketing Offerings

Needs and wants are fulfilled througha Marketing Offer:

Some combination of products,


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services, information, or experiencesoffered to a market to satisfy a need orwant.


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Market Offerings

Products:Persons, places, organizations, information,and ideas.

Services:


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Activity or benefit offered for sale that isessentially intangible and does not result inownership.

Brand experiences:Should immerse the consumer in the brand

experience and may be intensely personal.

Marketing Myopia

Marketing myopia:Occurs when sellers pay more attention

to the specific products they offer than


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o e ene s an exper encesproduced by the products.

They focus on the wants and lose sight

of the needs.

Customer Value and Satisfaction

Care must be taken when settingexpectations for market offerings:

If performance islower than


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expectations, satisfaction is low.If performance ishigher 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


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.

Relationships:Marketing actions build and maintain

relationships with target audiencesinvolving an idea, product, service, orother object. Value builds relationships.

What Is a Market?

A market:Is the set of actual and potential buyers

of a product.


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These people share a need or wantthat can be satisfied throughexchange relationships.

Modern Marketing Systems

Main elements in a modern marketingsystem include:Suppliers

Company (marketer)


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CompetitorsMarketing intermediaries

Consumers

Major environmental forces affect eachelement.


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Marketing Management

The art and science of choosingtarget markets and building profitablerelationships with them.


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Aim is to find, attract, keep, and growcustomers by creating, delivering, and

communicating superior value.

Marketing Management

Designing a winning marketingstrategy requires answers to thefollowing questions:


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1. Whatcustomerswillweserve? Whatisourtargetmarket?

2. Howcanwebestservethesecustomers?

Whatisourvalueproposition?

Selecting Customers to Serve

Market segmentation:Dividing the market into segments of

customers.


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Target marketing:Selecting one or more segments to

cultivate.


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Choosing a Value Proposition

The set of benefits or values acompany promises to deliver toconsumers to satisfy their needs.


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Value propositions dictate how firms willdifferentiate and position their brands in

the marketplace.

Marketing ManagementOrientations

Organizations design and carry outtheir marketing strategies under fivealternate concepts:


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Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

The Marketing Concept

The marketing concept:A marketing management philosophy

that holds that achieving organizational


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goa s epen s on nowng e nee sand wants of target markets anddelivering the desired satisfaction better

than competitors.


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The SocietalMarketing Concept

The societal marketing concept:The idea that a companys marketing


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wants, the companys desires,consumers long-run interests, andsocietys long-run interests.

The Integrated Marketing Plan

Transforms the marketing strategyinto action.

Includes the marketing mix and 4 Ps


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of marketing:Product

Price

Place (Distribution)

Promotion

Building Customer Relationships

Customer relationship management:The overall process of building and

maintaining profitable customer


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re a ons ps y e ver ng super orcustomer 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:Customers evaluation of the difference

between all of the benefits and all of the


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cos s o a mar e ng o er re a ve o those of competing offers.

Perceptions may be subjective

To some customers value might meanpaying more to get more.

Customer Satisfaction

Customer satisfaction:Extent to which the products perceived

performance matches a buyers


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expec a ons.

High levels of customer satisfaction oftenleads to consumer loyalty.

Some firms seek to DELIGHT customers byexceeding expectations.

Profitability must be considered.

Customer Relationships

Firms may choose to buildrelationships at different levels.

Loyalty and retention programs build


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Frequency marketing programs

Club marketing programs


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Changing Nature of Relationships

Customer profitability analysis eliminates losingcustomers and selects profitable ones withwhom relationships should be developed.

Firms related more deeply and interactively via-


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, , ,video sharing.

Embracing customer-managed relationshipsrequires marketing via attraction rather thanintrusion.

Consumer-generated marketing has become asignificant marketing force.

Partner Relationship Marketing

Marketing partners help createcustomer value and assist in buildingcustomer relationships.


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Partners inside the firm:Cross-functional customer teams

Partners outside the firm:Supply chain management

Capturing Value From Customers

Value is captured from customers viacurrent and future sales, marketshare, and profit.


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satisfied loyal customers who buy more.

Key outcomes of customer valueinclude customer loyalty and retention,share of market, share of customer, andcustomer equity.


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Customer Equity

The total combined customer lifetimevalues of all the companys currentand potential customers.


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Manage equity by:Classifying customers by projected

loyalty and potential profitability.

Manage each group accordingly.

Capturing Value From Customers

Customer lifetime valueThe value of the entire stream of

purchases that the customer would


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ma e over a e me o pa ronage.

Share of customerThe portion of the customers

purchasing that a company gets in theirproduct categories.

Changing Marketing Landscape

The uncertain economic environment The digital age Ra id lobalization


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Sustainable marketing call for moresocial 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 coremarketplace concepts.

3. Identif the elements of a customer-driven

Rest Stop:Reviewing the Concepts


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marketing strategy and discuss the marketingmanagement orientations that guide strategy.

4. Discuss customer relationship managementand identify strategies for creating value forand capturing value fromcustomers.

5. Describe the major trends and forces that arechanging the marketing landscape.


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All rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior writtenpermission of the publisher. Printed in the United States of America.

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

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