Chapter # 1

Marketing:
Creating and Capturing Customer Value
· Definition of Marketing (Identifying customer needs, wants demand and fulfill
better than competitor also build long term profitable relationship with customer.)
· The Marketing Process

1. Understanding the Marketplace and Customer Needs and Wants

i). Customer Needs, Wants, Demands
a). Need (Basic human requirements)or (Basic Necessities of life)
(Needs are not created by marketers; they are a basic part of the human
makeup. Marketer just realize to the customer) e.g., Food, water, safety
b). Wants (Need take as shaped by culture and individual personality)
(Needs are limited wants are unlimited) e.g., Pizza, Juice, Bungalows
c). Demands (Human wants that are backed by buying power)
(Willingness to Purchase, Buying Power)
e.g., willing to buy BMW and having money
Marketer is a person who stimulates the demand.

ii). Market Offerings (Marketed) (Some combination of products and services

offered to a market to satisfy a need or want.) Marketing offering includes: Products,
Services, Experiences, person, places, information, Ideas, Organizations, Properties and Events.
· Marketing Myopia (the mistake of paying more attention to the
specific products they offer than to the benefits and experiences
produced by these products) (they focus only on existing wants
and lose sight of underlying customer needs.) e.g., Drill machine
 iii). Customer Value and Satisfaction
· Customer Value (balance between the benefits a customer derives
from a service or product and the customer's effort (Cost).
Customer value = benefits – cost
· Satisfaction (Satisfaction reflects a person’s judgment of a product’s perceived
performance (consumer expected value meets the actual value)
Customer Value = Customer Expectation (Customer Satisfaction)
Customer Value < Customer Expectation (Customer Dissatisfaction)
Customer Value > Customer Expectation (Customer Delight)
· Value (Value reflects the sum of the perceived tangible and intangible
benefits and cost to value)
iv). Exchanges and Relationships (The act of obtaining a desired obiect from someone
by offering something in return.) e.g., Marketer sell Lays (customer Value or Product or set of
value) to customer in return (Exchange) give money (value or profit or relation)

v). Markets (Market is a place where two or more parties are involved in buying and
selling.) The marketplace is physical. The marketspace is online. The metamarket is a
cluster of paired products and services that are closely related in the consumer’s mind but
spread across a diverse set of industries.

2. Designing a Customer-Driven Marketing Strategy

· Marketing Management is customer management and demand
management.
i). Selecting Customers to Serve (The company must decide first who it will serve.)
· Market Segmentation is dividing the market into segments of customers
· Target marketing is selecting which segments it will go after
· Demarketing is to reduce the number of customers or to reduce their demand
temporarily or permanently.
· ii). Choosing a Value Proposition (a set of benefits they offer
to customers to satisfy their needs) China differentiates on the bases of
price and get position in the mind of the customer “economy price
product.
· Differentiation: At what thing is differ in your product as compare to the
product of your competitors. e.g., Quality, Price, Delivery, Packing. Etc.
· Positioning refers to the place that a brand occupies in the mind of the
customers and how it is distinguished from the products of the
competitors. e.g., i-phone Users are status conscious people
iii). Marketing Management Orientations
a). The Production Concept: The production concept holds that consumers will prefer
products that are widely available and inexpensive. (Focus on quantity & Low Price, Chaina)
b). The Product Concept: The product concept holds that consumers will favor those products
that offer the most quality, performance, or innovative features. (Quality, Innovation, Japan)

c). The 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. E.g,
Insurance. Blood Donation
d). The Marketing Concept: Marketing is a process of identifying customer needs,
wants demand and fulfill better than competitor also build long term profitable
relationship with customer.
e). Societal Marketing Concept (Holistic Marketing Concept): marketing strategy
should deliver value to customers in a way that maintains or improves both the
consumer's and the society's well-being.
3. Preparing an Integrated Marketing Plan and Program
It consists of the firm's marketing mix, the set of marketing tools the firm uses to
implement its marketing strategy.
The major marketing mix tools are classified into four broad groups, called the
four Ps of marketing: product, price, place, and promotion.
4. Building Customer Relationships
i). Customer Relationship Management (CRM): Customer relationship
management is the overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction.
a). Relationship Building Blocks:
· Customer Value: The difference between total customer
value and total customer cost (e.g., Product, set of benefits)
· Customer Satisfaction: The extent to which a product’s
perceived performance matches a buyer’s expectations
b). Customer Relationship Levels and Tools
· Basic Relationships: A company with many low margin
customers may seek to develop basic relationships with
them. For example, Procter & Gamble does not phone or
call on all of its.

· Full Partnerships: In markets with few customers and

high margins, sellers want to create full partnerships with
key customers.
 · Marketing tools (extra benefits, protocol, birthday gift) to
develop stronger bonds with consumers.
ii). The Changing Nature of Customer Relationships

a). Relating With more Carefully Selected Customers: Relating

with more carefully selected customers uses selective relationship
management to target fewer, more profitable customers

b). Relating for the long term:

· Customer relationship management to retain current
customers and build profitable, long-term relationships with
them.
c). Relating Directly: Beyond connecting more deeply with their
customers, many companies are also connecting more directly.
Consumers can now buy virtually any product without going to a store--
by telephone, mail, online like Dell.
iii). Partner Relationship Management (PRM): Working closely with
partners in other company departments and outside the company to jointly bring
greater value to customers
a). Partners inside the Company: (linking all departments)
b). Marketing Partners outside the Firm: (suppliers, channel partners
and even competitors)

5. Capturing Value from Customers

i). Creating Customer Loyalty and Retention
· Customer Life Time Value: is the value of the entire stream of
purchases that the customer would make over a lifetime of
purchases
· Customer Loyalty: an ongoing emotional relationship between you
and your customer, how willing a customer is to engage with and
repeatedly purchase from you versus your competitors
· Customer Retention: is a metric that measures customer loyalty, or the
ability for an organization to keep its customers over time
ii). Growing Share of Customer
· Share of Customer: is the portion of the customer’s purchasing that a
company gets in its product categories
iii). Building Customer Equity
a). Customer Equity: is the total combined customer lifetime values of
all of the company’s customers
 b). Building the Right Relationships with the Right Customer
(Customer Relationship Groups)

· The New Marketing Landscape

1.The New Digital Age
2.Rapid Globalization
3.The Call for More Ethics and Social Responsibility
4.The Growth of Not-for-Profit Marketing