MARKETING

CREATING CUSTOMER VALUE AND ENGAGEMENT

IM1019 Principles of Marketing

Sem 2, 2023-2024

Adapted from Kotler P. T. & Amstrong G. 2018, Principles of Marketing (17th Global Edition), Pearson.
Learning objectives
1. Define marketing and outline the steps in the marketing process.

2. Explain the importance of understanding the marketplace and customers and

identify the five core marketplace concepts.

3. Identify the key elements of a customer-driven marketing strategy and discuss the
marketing management orientations that guide marketing strategy.

4. Discuss customer relationship management and identify strategies for creating

value for customers and capturing value from customers in return.

5. Describe the major trends and forces that are changing the marketing landscape in
this age of relationships.
You already know a lot about marketing - it’s all around you!

• products at your nearby shopping mall

• ads that fill your TV screen and magazines, or stuff your mailbox

• websites and mobile phone apps

• blogs, online videos, and social media

Consumers are exposed to thousands of marketing stimuli …
How can you get their attention???
What customer problems do you solve???
How can you best add value to customer's life???
Who is your target market???
How can you reach your target market???
How can you understand your customers???
How can you make your product stand out???
And many other marketing questions …
AMA definition of marketing
What is marketing?

Marketing is a process by which companies create value for customers and

build strong customer relationships in order to capture value from customers
in return.

The twofold goal of marketing is to:

 attract new customers by promising superior value
 grow current customers by delivering satisfaction

Marketing is managing profitable customer relationships.

The marketing process
Discussion question

How is marketing different from selling?

Selling is only the tip of the marketing iceberg!

“There will always, one can assume, be need for some

selling.

But the aim of marketing is to make selling superfluous.

The aim of marketing is to know and understand the

customer so well that the product or service fits him and
sells itself.

Ideally, marketing should result in a customer who is

ready to buy.

All that should be needed then is to make the product or

service available.”
Peter Drucker
Understanding the market place and customer needs

Some key concepts:

1. needs, wants, and demands

2. market offerings (products, services, and experiences)
3. value and satisfaction
4. exchanges and relationships
5. markets
 Understanding the market place and customer needs

Customer needs, wants, and demands

 Needs are states of felt deprivation
(physical, social, and individual needs).
 Wants are the form human needs take as
they are shaped by culture and individual
personality.
 Demands are human wants that are
backed by buying power.
Maslow’s hierarchy of needs
Discussion question

Give an example of a product (good or service) you purchased

recently and tell how that product satisfied a need.
Quester P., Pettigrew S., Rao Hill S., Kopanidis F., Hawkins D. I. 2014, Consumer Behaviour - Implications for
Marketing Strategy, McGraw-Hill Education.
Understanding the market place and customer needs

Market offerings - products, services, and experiences

 Needs and wants are fulfilled through market offerings, which are some
combination of products, services, information, or experiences offered to
a market to satisfy a need or want.

 Many sellers suffer from marketing myopia, the mistake of focusing only
on existing wants and losing sight of underlying consumer needs.
Understanding the market place and customer needs

Customer value and satisfaction

 Customers form expectations about the value and satisfaction that

various market offerings will deliver and buy accordingly.

 Satisfied customers buy again and tell others about their good experiences.
 Dissatisfied customers switch to competitors and disparage the product to
others.
Understanding the market place and customer needs

Exchanges and relationships

 Exchange is the act of obtaining a desired object from someone by

offering something in return.
 Marketing actions try to create, maintain, and grow desirable exchange
relationships.
Understanding the market place and customer needs

Markets

 A market is set of actual and potential buyers.

 Marketing means managing markets to bring about profitable customer
relationships.
Understanding the market place and customer needs
Designing a customer value-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 (target market)?

 How can we best serve these customers (value proposition)?

Designing a customer value-driven marketing strategy

Selecting customers to serve

 Dividing the market into segments of customers (market segmentation)

and selecting which segments it will go after (target marketing)
Designing a customer value-driven marketing strategy

Choosing a value proposition

 A brand’s value proposition is the set of benefits or values it promises to

deliver to customers to satisfy their needs. Such value propositions
differentiate one brand from another.

 Example: BMW promises “the ultimate driving machine”

Designing a customer value-driven marketing strategy

 Five alternative concepts under which organizations design and carry out their
marketing strategies:

Societal
Production Product Selling Marketing
marketing
concept concept concept concept
concept
Designing a customer value-driven marketing strategy
 Production concept: consumers will favor products that are available and highly
affordable.
 Focus on improving production and distribution efficiency.

 Product concept: consumers will favor products that offer the most in quality,
performance, and innovative features.
 Focus on making continuous product improvements.

 Selling concept: consumers will not buy enough of the firm’s products unless
the firm undertakes a large-scale selling and promotion effort.
 Focus on tracking down prospects and selling them on product benefits.
Designing a customer value-driven marketing strategy

 Marketing concept: achieving organizational goals depends on knowing the

needs and wants of target markets and delivering the desired satisfactions
better than competitors.
 Customer focus and value are the paths to sales and profits. .
Designing a customer value-driven marketing strategy
Designing a customer value-driven marketing strategy

 Societal marketing concept: The

company’s marketing decisions
should consider consumers’ wants,
the company’s requirements,
consumers’ long-run interests, and
society’s long-run interests.
Discussion question

How does the societal marketing concept influences your

buying decisions, including brand selection and where you
make purchases?
Nestlé’s palm oil scandal
Kia Niro “Hero’s Journey”
Too Good To Go - food waste revolution!
Newman's Own - 100% of Profits to Charity
Preparing an integrated marketing plan & program

 The marketing mix is comprised of a set of tools known a

the four Ps:
 product
 price
 promotion
 place
 Integrated marketing program is a comprehensive plan that communicates

and delivers intended value.

Managing customer relationships

 Customer relationship management - the overall process of building and

maintaining profitable customer relationships by delivering superior
customer value and satisfaction.

 It deals with all aspects of acquiring, keeping, and growing customers.

Managing customer relationships
Relationship building blocks

Customer- Customer
perceived value satisfaction

• The difference • The extent to

between total which perceived
customer performance
perceived matches a
benefits and buyer’s
customer cost expectations Customer delight
Discussion questions

Should firms attempt to maximize customer satisfaction?

What factors influence a customer’s expectation?

 Managing customer relationships

 Yesterday’s companies focused on mass marketing to all customers at arm’s length.

 Today’s companies are building deeper, more direct, and more lasting relationships
with carefully selected customers.

Customer-engagement marketing
fosters direct and continuous customer involvement in shaping brand
conversations, experiences, and community.

Make the brand a meaningful part of consumers’ conversations and lives!

Discussion question

Think of a product or retailer to which you are loyal.

What has caused this loyalty?

What could a competing product/retailer do to break this loyalty?

Capturing value from customers

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

Losing a customer means losing more than a single sale!

Capturing value from customers

Customer equity is the total combined customer lifetime values of all of the
company’s customers.

The more loyal the firm’s profitable customers,

the higher the firm’s customer equity.
Capturing customer value

Share of customer is the portion of the customer’s purchasing that a company

gets in its product categories.

To increase share of customer:

• Offer greater variety

• Cross-sell or up-sell
Capturing customer value
Building the right relationships with the right customers
The changing marketing landscape

Digital and social media marketing

involves using digital marketing tools
such as web sites, social media, mobile
ads and apps, online videos, e-mail, and
blogs that engage consumers anywhere,
at any time, via their digital devices.
The changing economic environment

 The growth of not-for-profit marketing

 Rapid globalization
 Sustainable marketing
So, what is marketing?