Chapter 1

Marketing:
Creating Customer Value and
Engagement
Learning Objectives

1-1 Define marketing and outline the steps in the marketing process.
1-2 Explain the importance of understanding the marketplace and customers
and identify the core marketplace concepts.
1-3 Identify the key elements of a customer-driven marketing strategy and discuss
the marketing management orientations that guide marketing strategy.
1-4 Discuss customer relationship management and identify strategies for creating
value for customers and capturing value from customers in return.
1-5 Describe the major trends and forces that are changing the marketing
landscape in this age of relationships.
Learning Objective 1

Define marketing and outline the steps in the marketing

process.
What is Marketing?
What is Marketing?

Marketing is the process by which companies engage customers,

build strong customer relationships, and create customer value
in order to capture value from customers in return.
What kind of value companies expect to
capture from customers in return?

• sales
• profit
• market share
• brand loyalty
What is Marketing?

The Marketing Process

Learning Objective 2

Explain the importance of understanding the marketplace and

customers and identify the core marketplace concepts.
Understanding the Marketplace and Customer Needs

Needs are states of felt deprivation.

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.
Understanding the Marketplace and Customer Needs

Market offerings are some combination of

products, services, information, or ex-
periences offered to a market to sat-
isfy a need or want.

Marketing Myopia
The mistake of paying more attention to
the specific products a company offers
than to the benefits and experiences
produced by these products.
What are the other examples of Marketing
Myopia?

• Kodak - Fuji
• Nokia - Samsung
• Yahoo - Facebook
Learning Objective 3

Identify the key elements of a customer-driven marketing strategy and

discuss the marketing management orientations that guide marketing
strategy.
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 (what’s our target market)?

• How can we best serve these customers (what’s our value proposition)?
Designing a Customer Value-Driven Marketing Strategy

Marketing Management Orientations

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 afford-
able;
companies should focus on improving production and distribution effi-
ciency.

Product concept
Consumers will favor products that offer the most quality, perfor-
mance, and features;
companies should devote their energy to making continuous product
improvements.
Designing a Customer Value-Driven Marketing Strategy

Selling concept
Consumers will not buy enough products unless the firm undertakes a
large-scale selling and promotion effort.

Marketing concept
A philosophy in which achieving organizational goals depends on
knowing the needs and wants of target markets and delivering the de-
sired satisfactions better than competitors do.
Designing a Customer Value-Driven Marketing Strategy
Designing a Customer Value-Driven Marketing Strategy

Societal marketing concept

A company’s marketing decisions should consider consumers’ wants,
the company’s requirements, and society’s long-run interests.
Designing a Customer Value-Driven Marketing Strategy

The Marketing Mix is comprised of a set of tools known as the 4 Ps:

• product
• price
• promotion
• place

Integrated marketing program—a comprehensive plan that communicates and

delivers intended value to chosen customers.
 What does Double Bottom Line mean?
Triple Bottom Line?

• Bottom Line: net income = profit - cost

• Double Bottom Line: Economic value + Social
value
• Triple Bottom Line: people + planet + profit
Learning Objective 4

Discuss customer relationship management and identify

strategies for creating value for customers and capturing
value from customers in return.
Managing Customer Relationships and Capturing
Customer Value

Customer relationship management (CRM) — the overall process of

building and maintaining profitable customer relationships by delivering
superior customer value and satisfaction in the broad sense.
Managing Customer Relationships and Capturing
Customer Value
Relationship Building Blocks

Customer- perceived value Customer satisfaction

• The difference between to- • The extent to which per-

tal customer perceived ceived performance
benefits and customer cost matches a buyer’s expecta-
tions
Managing Customer Relationships and Capturing
Customer Value

Customer Relationship Levels and Tools

Basic Relationships Full Partnerships Frequency Marketing

low-margin cus- high-margin cus- Programs
tomers tomers reward customers
Managing Customer Relationships and Capturing
Customer Value

Consumer-Generated Marketing

Brand exchanges created by consumers

themselves – both invited and uninvited
– by which consumers are playing an
increasing role in shaping their own
brand experiences and those of other
consumers.

https://www.youtube.com/watch?v=ZwyMcV9emmc
Managing Customer Relationships and Capturing
Customer Value

Customer Lifetime Value (CLV)

The value of the entire stream of pur-

chases that a customer makes over a
lifetime of patronage.

Customer loyalty and retention are the

outcomes of creating customer value.
Managing Customer Relationships and Capturing
Customer Value

Customer Equity
The total combined customer lifetime
values (CLVs) of all of the com-
pany’s customers.
A measure of the future value of the
company’s customer base.
Managing Customer Relationships and Capturing
Customer Value

building the right relationships with the right customers

1. What kind of customer do you think you are?
2. As a future marketer, to which customers would you
give priority in using your marketing budget?
Learning Objective 5

Describe the major trends and forces that are changing the
marketing landscape in this age of relationships.
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 Marketing Landscape

• Not-for-profit marketing growth

• Rapid globalization
• Sustainable marketing
So, What Is Marketing? Pulling It All Together