Chapter 1 - Marketing-Creating - Capturing Customer Value

ABDT2043 Fundamentals of
Marketing
Christina Lai Mei Ling

laiml@tarc.edu.my
Block SA, 4th Floor,
Marketing Department
Consultation hours:
Monday 2 – 4 PM
Tuesday 12 – 1 PM
Thursday 12 – 1 PM
Friday 11 – 1 PM
Core Text:
Armstrong, G., Kotler, P & Opresnik MO,
2022, Marketing: An introduction, 14th
edn, Pearson, England.
1 MARKETING AN INTRODUCTION
Armstrong/Kotler
Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Outline
A. What is Marketing?
B. Understanding the Marketplace and Customer
Needs
C. Designing a Customer-Driven Marketing Strategy
D. Preparing an Integrated Marketing Plan and
Program
E. Building Customer Relationships
F. Capturing Value from Customers
G. Marketing Ethics and Sustainable Marketing
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(Armstrong, Kotler & Opresnik)
A. What is Marketing
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.
Goals of Marketing:
– Attract new customers by promising superior value
– Keep and grow current customers by delivering satisfaction
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The Marketing Process

B. Understanding the marketplace
and customer needs
Needs
Wants
Demands
Needs
•Needs are states of felt deprivation.
•Physical needs for food, clothing, warmth

and safety.
•Social needs - Belonging and affection
•Individual needs for knowledge and self-
expression.

Wants & Demands
•Wants are the form human needs take as
they are shaped by culture and individual
personality.
•Demands are human wants that are

backed up by buying power.

Markets
A market is the set of all actual and
potential buyers of a product or service.
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C. Designing a Customer-Driven Marketing
Strategy
Marketing
management is
choosing target
markets and
building profitable
relationships with
them.

Selecting customers to serve
The company must first decide whom it
will serve.
• Market segmentation refers to
dividing the markets into segments of
customers.
• Target marketing refers to which
segments to go after.

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.
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Societal
Productio Product Selling Marketing
n concept concept concept concept marketing
concept
Copyright ©2022 by Pearson Education

Marketing Management
Orientations
The Production Concept
This concept holds that consumers will
favor products that are available and highly
affordable. Management should focus on
improving production and distribution
efficiency.

Orientations
The production concept can lead to
marketing myopia which refers to the
mistake of paying more attention to the
specific products a company offers than to
the benefits and experiences produced by
these products. Companies neglect to
satisfy customer needs and build customer
relationships.

Orientations
The Product Concept
This concept holds that consumers will
favor products that offer the most in
quality, performance and innovative
features. Marketing strategy focuses on
making continuous product improvements.
This concept can also lead to marketing
myopia.

Orientations
The Selling Concept
This concept holds that consumers will not
buy enough of the firm’s products unless it
undertakes a large-scale selling and
promotion effort. It is typically practiced
with unsought goods e.g. insurance or
blood donations.

Orientations
The selling concept focuses on creating
sales transactions rather than on building
long-term, profitable customer
relationships. The aim is to sell what the
company makes rather than making what
the market wants.

Orientations
The Marketing Concept
This concept holds that achieving
organizational goals depends on knowing
the needs and wants of target markets and
delivering the desired satisfaction better
than competitors do.
Customer focus and value are the paths to
sales and profits.
Orientations
The selling concept takes an inside-out
perspective.
The marketing concept takes an outside-in

perspective.

Orientations

Orientations
The Societal Marketing Concept
This concept holds that a company’s
marketing decisions should consider
consumers’ wants, the company’s
requirements, consumers’ long-run
interests and society’s long-run interests.

The Considerations Underlying the
Societal Marketing Concept

(Armstrong, Kotler & Opresnik) 1-24
Societal Classification of Products

Societal Marketing
Deficient products
• Products that have neither immediate
appeal nor long-run benefits.
Pleasing products
• Products that give high immediate
satisfaction but may hurt consumers in the
long run.
Societal Marketing
Salutary products
• Products that have low immediate appeal but
may benefit consumers in the long run.
Desirable products
• Products that give both high immediate
satisfaction and high long-run benefits.

D. Preparing an Integrated Marketing
Plan and Program
The company’s strategy outlines which
customers it will service and how it will serve
them. Then develops marketing plans and
programs that will deliver the intended
customer value.
Marketing mix tools or 4Ps: product, price, place

and promotion

E. Building Customer
Relationships
Customer Relationship Management
(CRM) is the overall process of
building and maintaining
profitable customer
relationships
by delivering
superior customer
value and satisfaction.
Customer Value
Customer-perceived value – 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
Costs

Customer Satisfaction
Customer satisfaction – The extent to which a

product’s perceived performance matches a
buyer’s expectations
 Performance < expectation, dissatisfied

 Performance = expectations, satisfied
 Performance > expectations, highly satisfied
or delighted.

F.Capturing Value from Customers
Creating customer loyalty and retention:
Good (CRM) customer relationship
management creates customer
satisfaction. In turn, satisfied customers
remain loyal and talk favorably to others
about the company and its products.
Customer defections can be costly

Capturing Value from Customers
Growing share of customer:
Good CRM can help marketers increase
their share of customer – the share they
get of the customer’s purchasing in their
product categories. Firms can create
programs to cross-sell and up-sell to
market more products and services to
existing customers.

Capturing Value from Customers
Building Customer Equity:
Customer equity is the total combined
customer lifetime values of all of the
company’s current and potential
customers. The more loyal the firm’s
profitable customers, the higher its
customer equity.

Sustainable Marketing
Sustainable marketing is socially and

environmentally responsible marketing that
meets the present needs of consumers and
businesses while also preserving or enhancing
the ability of future generations to meet their
needs.

Consumer Actions to Promote Sustainable
Marketing
Consumerism is an organized movement of

citizens and government
agencies to improve the
rights and power of
buyers in relation
to sellers.
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Consumer Actions to Promote Sustainable
Marketing
Environmentalism is an organized movement of
concerned citizens and government agencies
designed to protect and improve people’s
current and future living environment.
Concerned with
• Damage to the ecosystem
• Loss of recreational areas
• Increase in health problems
14 - 37

Marketing Ethics
• Many companies are now adopting their own
code of ethics.
• Companies are also developing programs to
teach managers about important ethical
issues and help them find the proper
responses.
• However, written codes and ethics programs
do not ensure ethical behavior.
• Ethics and social responsibility require a total
corporate commitment.
Copyright 2022 Pearson Education, Ltd
14- 38
Looking Ahead to Chapter 2
Company and Marketing
Strategy
Partnering to Build Customer
Relationships
1- 39

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ABDT2043 Fundamentals of

Christina Lai Mei Ling

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2022 Pearson Education, Ltd 1- 4

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•Needs are states of felt deprivation.

•Physical needs for food, clothing, warmth

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•Demands are human wants that are

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A brand’s value proposition is the set of

Marketing Management Orientations

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The marketing concept takes an outside-in

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Marketing mix tools or 4Ps: product, price, place

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Customer-perceived value – The customer’s evaluation

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Customer satisfaction – The extent to which a

 Performance < expectation, dissatisfied

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Sustainable marketing is socially and

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Consumerism is an organized movement of

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall

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