armstrong mai10e stppt01

7/30/2019 Armstrong Mai10e Stppt01

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Chapter 1

Marketing

Creating and CapturingCustomer 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 understandingcustomers and identify the five coremarketplace concepts.

3. Identify the elements of a customer-drivenmarketing strategy and discuss the marketingmanagement orientations that guide strategy.

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

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

Rest Stop: Previewing the Concepts




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Creating Customer Value

• Goal: Provide the very bestcustomer service & customer

experience.• 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.

Zappos Creates Customer Value & Relationships

First Stop

Building Relationships

• Service Culture: Built around10 core principles; every new

hire takes 4 weeks of customer loyalty training.• Commitment: During training,

employees are offered $2000 toquit; only 1% do so.

• Lifelong relationships are the

goal: 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 profitable customer relationships.

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 whichcompanies create value for customers andbuild 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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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 shapedby culture and individual personality.

• Wants + Buying Power = Demand


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Marketing Offerings

• Needs and wants are fulfilled througha 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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Customer Value and Satisfaction

• Care must be taken when settingexpectations 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 marketingsystem include:Suppliers

Company (marketer)Competitors

Marketing intermediaries

Consumers • Major environmental forces affect eachelement.




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Marketing Management

• The art and science of choosingtarget 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 marketingstrategy 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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Choosing a Value Proposition

• The set of benefits or values acompany 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 ManagementOrientations

• Organizations design and carry outtheir marketing strategies under five

alternate concepts:Production Concept

Product Concept

Selling Concept Marketing Concept

Societal 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 strategyinto action.

• Includes the marketing mix and 4 Psof marketing:Product

Price Place (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’sexpectations.

• High levels of customer satisfaction oftenleads to consumer loyalty.

• Some firms seek to DELIGHT customers byexceeding expectations.

• Profitability must be considered.




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Customer Relationships

• Firms may choose to buildrelationships at different levels.

• Loyalty and retention programs build

relationships and may include:Frequency marketing programs

Club marketing programs




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Partner Relationship Marketing

• Marketing partners help createcustomer 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 viacurrent and future sales, marketshare, 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 lifetimevalues 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 value

The value of the entire stream of purchases that the customer would make over a lifetime of patronage.

• Share of customer

The portion of the customer’spurchasing 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 coremarketplace concepts.

3. Identify the elements of a customer-drivenmarketing strategy and discuss the marketingmanagement 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 arechanging the marketing landscape.

Rest Stop: Reviewing the Concepts



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.Publishing as Prentice Hall

armstrong mai10e stppt01

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