Chapter-1: Creating Customer Value and Engagement

Marketing=Market+ing;
Market: It is the set of all actual and potential buyers of a product and
services.
Marketing: It is the delivery of customer satisfaction at a profit.
Writer Stanton says, “Marketing is a total system of business activities
designed to plan , price ,promote, and distribute want-satisfying products
to target markets to achieve organizational objectives.”
Marketing Researcher Philip Kotlar says, “Marketing is a social and
managerial process by which individuals and groups obtain what they
need and want through creating and exchanging products and value with
others.”
Marketing Researcher Philip Kotlar(2014) says, “ marketing is the process
by which companies create value for customers and build strong customer
relationships in order to capture value from customers in return.”
Marketing Researcher Philip Kotlar(2021) says, “ marketing is the
process by which companies engage customers, build strong customer
relationships, and create customer value in order to capture value from
 Marketing Process
Figure 1.1 presents a simple five step model of the marketing process.

Create value for customers and Capture value from

build customer relationships customer in return

Capturing
Construct an value
Understand Engage customers,Build
Design a Integrated from
the market profitable
Customer- marketing
Place and relationships Customer
Value driven Program to create
customer and create
marketing that delivers profits
needs and customer
strategy superior
wants delight and custom
value equity
Understanding the market Place and customer needs
 As a first step, marketers need to understand customer needs and
wants and market place within which they operate. We now examine
five core customer and marketplace concepts:
1.Needs, wants, Demands

2.Market offerings (products, services, and experiences)

3.Customer Value and Satisfaction

4.Exchange & relationships

5.Markets
To explain this definition, we will examine the following important core marketing
concepts: needs, wants and demand; marketing offers (products, service and
experiences); value and satisfaction, exchange, transaction and relationship; and
market.

Needs, wants,
Demands
Market offerings
Markets (products, services,
and experiences)

Core
Marketing
Concept

Exchange,
Transactions & Value, Satisfaction
relationships and quality

Figure: Core marketing Concept.

 1.Needs, wants, Demands

 Needs:
 Human needs are states of felt deprivation.
*Example-They include:
- physical need for food, clothing, warmth, and safety;
- social needs for belonging and affection; and
- individual needs for knowledge and self-expression.
 Wants:
 Wants are the form human needs take as they are shaped by culture and
individual personality.
*Example-An American needs food but wants Berger, French fries, and a soft
drink.
 Demands:
 When backed by buying power, wants become demands.
*Example –Given their wants and resources, people demand products with
benefits that add up to the most value and satisfaction.
 2.Market offerings (products, services, and experiences)
 Companies’ address needs by putting forth a value proposition, a set of benefits
that they promise to consumers to satisfy their needs.
 The value proposition 0r companies needs and wants are fulfilled
through market offers-some combination of products, services,
information, or experiences offered to a market to satisfy a need
or want.

-Product: It is anything that can be offered to a market for

attention, acquisition, use or consumption that might satisfy a
want or need.
*Example-Physical product-pen, books, tables.
-Service: It is any activity or benefit that one party can offer to
another that is essentially intangible and does not result in the
ownership of anything.
*Examples are banking, hotel, airline, retail, tax preparation, and home
repair services.
 2.Market offerings (products, services, and experiences)

other entities-
1.Organization Marketing: It consists of activities undertaken to create,
maintain, or change the attitudes and behavior of target consumers
toward an organization.
*Exp-Business firms sponsor public relations or corporate advertising
campaigns to polish their
images.

2. Person Marketing: It consists of activities undertaken to create ,

maintain , or change the attitudes and behavior toward particular people.
*Exp-Today’s prime Minister market herself and her parties..

3.Place Marketing: It consists of activities undertaken to create,

maintain, or change the attitudes and behavior toward particular place.
*Exp-Cities, states, regions and even entire nations complete to attract
tourists..
 2.Market offerings (products, services, and experiences)

4.Ideas can also be marketed. In one sense all marketing is

the marketing of an idea, either it be the general idea of
brushing your teeth or the specific idea that crest
toothpastes “create smiles every day”. Here however we
narrow our focus to the marketing of social ideas.

Social marketing: The design implementation and control of

program seeking to increase the acceptability of a social
idea, cause or practice among a target group.

Example-Such programs include public health campaigns to

reduce smoking alcoholism drug abuse and overeating other
social marketing efforts include environmental campaigns
to promote wilderness protection clean air and conservation.
Experience is the knowledge and skill that you have gained
through doing something for a period of time.
Example-He gained valuable experience whilst working on the
project.

 Marketing myopia: It is the mistake of paying more

attention to the specific products a company offers than to
the benefits and experiences produced by these products.
*Example-Sellers are so taken with their products that they
focus only on existing wants lose sight of underlying
customer needs. A manufacturer of quarter-inches drill bits
may think that the customer needs a drill bit .But what the
customer really needs is a quarter inches hole.
 3.Customer Value and Satisfaction
 Value: Customer value is the difference between the
values the customer gains from owning and using a
product and the costs of obtaining the product.
Functional benefits + Emotional benefits
 Value = Benefits Monetary cost + Time cost + Energy cost + Physic cost
Costs

 Customer expectations are based on past buying

experiences, the opinions of friends, and marketer and
competitor information and promises.
 Satisfaction:
 Customer satisfaction is the extent to which a product
perceived performance matches buyers expectation
 4.Exchange,Transactions & relationships
 Marketing occurs when people decide to satisfy needs and
wants through exchange.
 Exchange is the act of obtaining a desired object from
someone by offering something in return. Five conditions
must be satisfied for exchange-
 At least two parties.
 Each party has something that might be of value to the other
party.
 Each party is capable of communication and delivery.
 Each party is free to accept or reject the exchange.
 Each party believes it is appropriate to or devisable to deal
with the other party.
 4.Exchange,Transactions & relationships
 A transaction consists of a trade values between two parties
.
-One party gives X to another party and gets Y in return.
-For example, you pay Sears $ 350 for a television set.
-Five conditions must be satisfied for transaction-
 At least two parties.
 Two things of value.
 Agreement up on condition.
 Agreement upon time.
 Agreement upon place.
 Relationships Marketing: consists of actions taken to build and
maintain desirable exchange relationships with target audiences
involving a product, service, and idea other object.
-The aim is to retain customers and grow with their business with the
company.
 Markets
 The concepts of exchange and relationships lead to the concept a
market.
-A market is the set of actual and potential buyers of a product.
 Marketing means managing markets to bring about profitable
exchange relationships by creating value and satisfying needs and
wants.
 Thus, we return to our definition of marketing as a process by which
individuals and groups what they need and want by creating and
exchanging products and value with other.
 Figure: Elements of modern marketing systems:

 Company
Marketing
Supplier (Marketer) End users
intermediaries
Competitors
 Designing a Customer value-driven marketing strategy
and plan
 Customer value-driven marketing strategy
 We define marketing management as the art and science of
choosing target markets and building profitable relationships with.
 This involves getting, keeping and growing customers through
creating, delivering and communicating superior customer value.
 Thus, marketing management involves management demand, which
in turn involves managing customer relationships.
 It is the analysis, planning, implementation and control of
programs designed to create, build and maintain beneficial
exchanges with target buyers for the purpose of achieving
organizational objectives.
 i. Selecting customer to serve
 Segmentation, targeting, increasing demand
Demarkating may be required to reduce the number of
customers or to shift their demand temporarily or permanently.
For example, to reduce demand for space on congested
expressways in Washington. D.C. the Metropolitan
Washington Council of Governments has set up a Web site
encouraging commuters to carpool and use mass transit.

Key elements of customer value driven marketing strategies

i. Selecting Customers to Serve
The company must first decide whom it will serve. It does this
by dividing the market into segments of customers (market
segmentation) and selecting which segments it will go after
(target marketing).
iii. Choosing a Value Proposition
The company must also decide how it will serve targeted
customers—how it will differentiate and position itself in the
marketplace. A brand’s value proposition is the set of benefits
or values it promises to deliver to consumers to satisfy their
needs.
iii. Marketing Management Orientations
We describe Marketing Management as carrying out tasks to build profitable
relationships with target customers. What philosophy should guide these marketing
efforts? What weight should be given to the interests of the organization , customers,
and society? Very often these interests conflict. There are five alternative concepts
under which organization conduct their marketing activities-

a. The production Concept

b. The Product Concept
c. The Selling Concept
d. The Marketing Concept
e. The Societal marketing concept
 a.The production concept
 The production concept holds that consumers
will favor products that are available and highly
affordable. Therefore, management should focus
on improving production and distribution
efficiency

 The production concept is still a useful philosophy in two

types of situations: -
 When demand for a product exceeds the supply.
 When the products cost is too high
 b.The product concept
 The product concept holds that consumers will
favor products that offer the most in quality,
performance, and innovative features. Thus, an
organization should devote energy to making
continuous product improvements.
 The product concept also can lead to marketing
myopia. For instance, railroad management once
thought that users wanted trains rather that
transpiration and overlooked growing challenge of
airlines, buses, trucks and automobiles
 c. The Selling Concept:
 It is the idea that consumes will not buy
enough of the firm’s products unless it
undertakes a large-scale selling and
promotion effort.
 This concept is typically practiced with
unsought goods –those that buyers do not
normally think of buying such as insurance
or blood donations.
 d. The Marketing Concept :

 The marketing concept holds that achieving

organizational goals depends on
determining the needs and wants of target
market and delivering the desired
satisfactions more effectively and
efficiently than competitors do.
 e. The Societal Marketing Concept:

 e. The Societal Marketing Concept:

 The societal marketing concept holds that
the organization should determine the
needs, wants and interests of target markets.
It should then deliver superior value to
customers in a way that maintains or
improves the consumer’s and the society’s
well- being.
Figure: The selling and marketing concepts contrasted.
Starting Focus Means Ends
Point
Factory Existing Selling and Profits through
Products promoting sales volume

The selling concept

Market Customer Integrated Profits through

Needs Marketing customer satisfaction

The marketing concept

 Society
(Human welfare)

Societal Marketing concept

Consumer
Company
(wants satisfaction)
(profit)

Figure: Three considerations underlying the Societal Marketing concept

Preparing an integrated marketing plan and program
-The company must also decide how it will serve targeted
customers—how it will differentiate and position itself in the
marketplace.
-A brand’s value proposition is the set of benefits or values
it promises to deliver to consumers to satisfy their needs.
-The marketer develops an integrated marketing program
that will actually deliver the intended value to target
customers.
-The marketing program builds customer relationships by
transforming the marketing strategy into action. 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.
-To deliver on its value proposition, the firm must first create
a need-satisfying market offering (product).
-It must decide how much it will charge for the offering
(price) and how it will make the offering available to target
consumers (place).
-Finally, it must communicate with target customers about the
offering
and persuade them of its merits (promotion).
-The firm must blend each marketing mix tool into a
comprehensive integrated marketing program that
communicates and delivers the intended value to chosen
customers.
Managing Customer Relationships and capturing
customer value
(Discuss customer relationship management and identify strategies for creating value for customers and
capturing value from customers in return)
Engaging customers and Managing Customer Relationship
1.Customer relationship Management is the overall process of
building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction. It deals with all
aspects of acquiring, engaging, and growing customers.

We now look more closely at the concepts of customer value

and satisfaction ,loyalty and retention and share of customer.
i.Relationship building blocks: customer value and satisfaction
To attract and keep customers, a company must constantly seek ways to
deliver superior customer value and satisfaction.
Value: Customer value is the difference between the values the
customer gains from owning and using a product and the costs of
obtaining the product.
Value= Benefits/costs
=(Functional benefits + Emotional benefits)/(Monetary cost + Time cost
+ Energy cost + Physic cost)
 0r Customer perceived value :It is the customer's evaluation of the
difference between all the benefits and all the costs of a marketing
offer relative to those of competing offers.
 Customer Satisfaction: It is the extent to which a product’s
perceived performance matches a buyer’s expectations.
 ii. Customer Relationship Levels And Tools
-many levels ,depending on the nature of the target market
2. Customer Engagement and Today's Digital, Mobile and Social
Media
-Customer Engagement Marketing-fostering direct and continuous
customer involvement in shaping brand conversations, brand
experiences, and brand community.
Customer brand advocacy-actions by which satisfied customers
initiative favorable interactions with others about a brand.
3.Consumer Generated Marketing, by which consumers themselves
play roles in shaping their own brand experiences and those of others.
4.Partner Relationship Management –working with others inside and
outside the company to jointly engage and bring more value to other
customers.
Capturing Value from customer
1.Creating Customer Loyalty and 2. Retention :
-CRM creates customer satisfaction.
-In all cases, as satisfaction increases, so does loyalty.
-loyal customers spend more and stay around longer.
-losing customer means losing more than a single sale.
Customer lifetime value :The value of the entire stream of
purchases that the customer would make over a lifetime of
patronage
3. Growing “ Share of Customer” : Beyond simply retaining
good customers, marketers want to constantly increase their
share of customer-the share they get of the customer’s
purchasing in their product categories. Example: Car
companies want a greater “share of garage” and air lines want
a greater “share of travel”.

4. Building customer equity

Today’s smart companies not only want to create customers,
they want to “own” them for life, capture their customer
lifetime value, and build overall customer equity.
Customer equity:
The total combined customer lifetime values of all of the
company’s customers .The more loyal the firm’s customers,
the higher the firm’s customer equity.
Figure: Relationship Between customer satisfaction and loyalty
Customer Relationship Levels and Tools
i. Basic relationships: a company with many low-margin
customers may seek to develop basic relationships with them.
For example, Nike does not phone or call on all of its
consumers to get to know them personally.
ii. full partnerships: At the other extreme, in markets with
few customers and high margins, sellers want to create full
partnerships with key customers. For example, Nike sales
representatives work closely with the Sports Authority, Dick’s
Sporting Goods, Foot Locker, and other large retailers.
iii. stronger bonds :Beyond offering consistently high value
and satisfaction, marketers can use specific marketing tools to
develop stronger bonds with customers. For example, many
companies offer frequency marketing programs that reward
customers who buy frequently or in large amounts. Airlines
offer frequent-flyer programs.
iv. club marketing programs :Other companies sponsor club
marketing programs that offer members special benefits and
create member communities. For example, Harley-Davidson
sponsors the Harley Owners Group (H.O.G.), which gives
Harley riders a way to share their common passion of “making
the Harley-Davidson dream a way of life.”
 THE CHANGING MARKETING LANDSCAPE
In this section, we examine the major trends and forces that
are changing the marketing landscape and changing marketing
strategy. companies are now connected globally with their
customers and marketing partners
we look at four major developments:
1.The Digital Age: Online, Mobile, and Social Media Marketing
2. The Growth of Not For Profit Marketing
3.Rapid globalization,
4. Sustainable Marketing: The call for more environmental
and social responsibility
5. So, What Is Marketing? Putting It All Together.
1.The Digital Age: Online, Mobile, and Social Media
Marketing
Internet of things is a global environment where everything
and everyone is digitally connected to everything and
everyone else.
Digital and social media marketing involves using digital
marketing tools such as websites, social media, mobile ads and
apps, online video, email, blogs, and other digital platforms to
engage consumers anywhere, anytime via their computers,
smartphone, tablets, internet ready tvs, and other digital tv.
Social media marketing is the use of social media platforms
to connect with your audience to build your brand, increase
sales, and drive website traffic.
Mobile Marketing is any advertising activity that promotes
products and services via mobile devices, such as tablets and
smartphones.
Big Data and Artificial Intelligence
Big data is extremely large data sets that may be analyzed
computationally to reveal patterns, trends, and associations,
especially relating to human behavior and interactions.

Artificial intelligence (AI) makes it possible for machines to

learn from experience, adjust to new inputs and perform
human-like tasks.

Big Data is the raw input that needs to be cleaned, structured

and integrated before it becomes useful, while artificial
intelligence is the output, the intelligence that results from
the processed data.
2. Nonprofit marketing refers to activities and strategies that spread the
message of the organization, as well as solicit donations and call for
volunteers.
-It involves the creation of logos, slogans, and copy, as well as the
development of a media campaign to expose the organization to an
outside audience.
-The goal of nonprofit marketing is to promote the organization's ideals
and causes to get the attention of potential volunteers and donors.
-Key takeways:
i.Nonprofit marketing refers to the tactics and strategies nonprofit organizations use
to raise donations and spread their message.
ii.Nonprofit marketing includes a wide range of activities, such as direct mail
marketing, mobile marketing, content marketing, and social media marketing.
iii. A point-of-sale campaign relies on asking for a donation at the same time the
potential donor is making a purchase.
iv.In a message-focused campaign, the nonprofit ties its fundraising efforts to a high-
profile current event that has already captured the public's attention.
v.In a transactional campaign, the nonprofit organization partners with a corporate
sponsor to encourage consumers to use their purchases to assist in funding the
nonprofit's mission.
3.Rapid globalization is simply globalization that happens at a fast
pace. The term "globalization" is used to mean the trend whereby
countries are becoming more and more able to trade a wider variety of
goods and services with one another.
 Connections with customers
Connecting more Selectively
Figure: Today's Marketing connection
Connecting for life
Connecting directly

Connections with marketing partner

Connecting Technologies Connecting with other company
Computer departments.
Information Connecting with suppliers and
Communication distributors
Connecting through strategic alliance.

Connections with the world around us

Global connection
Connections with values and
responsibility
Broadened connections
Connecting Technologies
Computer
Information
Communication
Connections with customers
Connecting more Selectively
Connecting for life
Connecting directly
Connections with marketing partner

*Connecting with other company

departments.
 Connecting with suppliers and
distributors
 Connecting through strategic
alliance.
onnections with the world around us

Global connection
Connections with values and
responsibility
Broadened connections
The New, Connected World of Marketing
The old marketing thinking
1. Connections with Customers:
i. Be sales and product centered
ii. Practice mass marketing.
iii. Focus on products and sales
iv. Make sales to customers
v. Get new customer
vi. Grow share of market
vii. Serve any customer
viii. Communicate through mass
media
ix. Make standardized products
The new marketing thanking
i. Be market and customer centered
ii. Target selected market segments
iii. Focus on customer satisfaction
&value
iv. Develop customers’ relationships
v. Keep old customers
Vi. Grow share of customer
vii. Serve profitable customers, fire
losing ones.
Viii. Connect with customers directly
Ix. develop customized products
2. Connections with Marketing
partners :
i. Leave customer satisfaction
and value to sales and
marketing
ii. Go is alone
3.Connections with the world
around us:
i. Market locally
ii. Assume profit responsibilities
iii. Market for profits
iv. conduct commerce in market
places
i. Enlist all departments in the
cause of customer satisfaction
and value
ii. Partner with other firms
i. Market locally and globally
ii. Assume social and
environmental responsibility
iii. Market for non profits
iv. conduct e-commerce in
market places