CH1: Marketing: Creating and Capturing Costumer Value

 Marketing – process by which companies crate value for customers and build strong customer
relationships to capture value from customers in return

How to create VALUE:

 Marketing Process
o Understand market and customer needs and wants (and demands)
o Design a customer-driven marketing strategy
 Who to serve? How to be different?
o Construct a marketing program that delivers superior value
 Marketing mix (4Ps – product price place and promotion)
o Build profitable relationships and create customer delight
 Customer relation management
 Are we creating value? Are customers satisfied?
o (Capture value from customers in return) capture value from customers to create profits
and customer equity
 Customer lifetime value
 Share of customer
 Customer equity

Understand market and customer needs and wants (and demands)

 Customer needs, wants, and demands (according to Maslow’s Hierarchy of needs)
o Needs –state of felt deprivation
o Wants – form that needs take as they are shaped by culture and individual personality
o Demands – Wants backed by buying power \
 Value proposition – set of beliefs that companies promise their consumers to satisfy needs
o to fulfill value proposition use Market Offerings – are some combination of products,
services, information, or experiences offered to a market to satisfy a need or want
o Market Myopia – focusing only on the existing products and losing sight of the
underlying problem
 Customer value – difference between the benefits the customer gains from owning and using a
product, and the cost of obtaining the product
o Marketers must be careful to set the right level of expectations

Design a customer-driven marketing strategy

 Markets – Set of actual and potential buyers of a product
o Marketing Management – Art and science of choosing target markets and building
relationships with them.
 What to serve? How to serve best?
o Market segmentation – dividing markets into segments of customers
o Target marketing – Which segments to go after
o Demarketing– marketing to reduce demand temporarily or permanently
 Aim to reduce or shift demand, and not necessarily destroy it.
 Marketing Management Orientations:
o Production concept – consumers will favour products that are available and highly
affordable
 Focus on improving production and distribution efficiency
 o Product Concept – consumers will favour products with most quality, performance, and
features
 Focus to make product improvements
 Could lead to Market myopia
o Selling Concept – consumers will not buy enough of the firm’s product unless it undertake
a large-scale selling and promotion effort
 Usually aims to sell what they make and not make what sells
o Marketing Concept –achieving organizational goals depends on knowing the needs and
wants of the target markets and delivering the desired satisfaction better than
competitors do
 Instead of “make and sell” it’s “sense and respond”
o Societal Marketing – idea that a company should make good marketing decisions by
considering consumers’ wants and long-term interests , company’s requirements, and
society’s long-run interests
 Possible conflict: Consumer’s short-run wants vs long-run welfare

Build profitable relationships and create customer delight

 Marketing Mix – (4 P’s) product, price, promotion, and place
o Used to implement firm’s marketing strategy
 Integrated marketing program – comprehensive plan that communicates and delivers the
intended value to chosen customers
 Customer Relationship Management – overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction
 Relationship Building Blocks
o Customer Perceived value - customer’s evaluation of difference between all benefits and
all costs of a marketing offering relative to those of competing offers
o Customer satisfaction – extent to which a product’s perceived performance matches a
buyer’s expectations
 Changing Nature of Customer Relationships
o Relating with more carefully selected customers using selective relationship management
to target fewer, more profitable customers
o Relating more deeply and interactively by incorporating more interactive two-way
relationships through blogs, websites, online communities, and social networks
 Partner Relationship Management – involves working closely with partners in other company
departments and outside the company to jointly bring greater value to customers
o Supply Chain and Management, and Strategic Partners and alliances

(Capture value from customers) capture value from customers to create profits and customer equity
 Customer lifetime value – value of the entire stream of purchases that the customer would make
over a lifetime patronage
 Share of Customer – portion customer’s purchasing that a company gets in tits product
categories
 Customer equity – total combined customer lifetime values of all the company’s customers
 Types of Customers:

 Expanded Marketing Process

 Major Developments
o Digital Age
o Rapid Globalization
o Ethics and Social Responsibility
o Not-for-profit Marketing