Creating and Capturing Customer Value

COURSE #1

Daniela Ioniță,
Associate Professor - Marketing Department
A Hong Kong shoe manufacturer wondered whether a market existed for his shoes
on a remote South Pacific island. He sent a finance professional  to the island
who, upon a cursory examination, wired back:
“The people here do not wear shoes. There is no market.”
Not convinced, the Hong Kong manufacturer sent a salesperson to the island. This
salesperson wired back:
“The people here don’t wear shoes. There is a tremendous market.”
Afraid that this sales rep was being carried away by the sight of so many shoeless
feet, the manufacturer sent a third person, a marketer. This marketing
professional interviewed the tribal chief and several natives and wired back:
“The people here don’t wear shoes. As a result their feet are sore and bruised. I
have shown the chief how shoes would help his people avoid foot problems. He is
enthusiastic. He estimates the 70% of his people will buy the shoes at $10 a pair.
We probably can sell 5,000 pairs of shoes in the first year. Our cost of bringing the
shoes to the island and setting up distribution would amount to $6 a pair. We will
clear $20,000 in the first year. This is not to mention the high value of our future
earnings by entering this market. I recommend that we go ahead.”
Objectives

Define marketing and other key concepts

Identify different marketing orientations
Describe major trends and forces
What is marketing?

1935 - 1985 1985 - 2004 2004 - now

• Marketing is the • Marketing is the • Marketing is the

performance of process of activity, set of
business planning and institutions, and
activities that executing the processes for
direct the flow of conception, creating,
goods and pricing, communicating,
services from promotion, and delivering, and
producers to distribution of exchanging
consumers. ideas, goods and offerings that
services to create have value for
exchanges that customers,
satisfy individual partners, and
and society at large.
organizational
objectives.
Value- key concept
• The concept of value has a long history, being initially investigated by
economists ( Smith A., Marshall A.), and later developed by researchers in
the area of management and marketing.
• The significance of this concept is extremely varied - market equilibrium
price, ability of something to meet a need, etc.
• Can be evaluated from different perspectives (customer, the company, the
shareholders, etc.).
• Requires a compromise between what the customer receives and what pays
in exchange.
Company orientation toward the
marketplace (1/2)

The Production Concept The Product Concept The Selling Concept

• It holds that consumers • Consumers favor • Consumers, if left alone,

prefer products that are products offering the
widely available and most quality,
inexpensive. performance, or
• Managers concentrate on innovative features
achieving high production (perfect product).
efficiency, low costs, and • “Better-mousetrap”
mass distribution. fallacy (better product
• Makes sense in will by itself lead people
developing countries to beat a path to their
such as China or when door. A new or improved
marketers want to product will not
expand the market. necessarily be
successful).
won’t buy enough of the
organization’s products.
• Based on hard selling ->
risky. It assumes
customers coaxed into
buying a product not only
won’t return or bad-
mouth it but might even
buy it again.
• Makes sense when firms
with overcapacity aim to
sell what they make,
rather than make what
the market wants.
Company orientation toward the
marketplace (2/2)
The Societal Marketing
The Marketing Concept
Concept
• The job is to find not the right • Conflicts between consumer
customers for your products, short-run wants and
but the right products for consumer long-run welfare. Society
(human
your customers. • Deliver value to customers in welfare)
• “Selling focuses on the needs a way that maintains both
of the seller; marketing on the consumer and society well
needs of the buyer. Selling is being
preoccupied with the seller’s • Sustainable marketing =
need to convert his product socially and environmentally
into cash; marketing with the responsible marketing that Societal
idea of satisfying the needs of meets the present needs marketing
the customer” - Theodore while preserving the ability of concept
Levitt. [In 1983, he proposed future generations to meet
a definition for corporate Consumers
their needs. Company
(want
purpose: Rather than merely (profits)
satisfaction)
making money, it is to create
and keep a customer].
What is marketed? (1/2)
 GOODS - the bulk of most countries’ production and marketing efforts (food products, cars,
refrigerators, televisions, machines, etc)

 SERVICES - the work of airlines, hotels, car rental firms, barbers and beauticians, maintenance
and repair people, accountants, bankers, lawyers, engineers, doctors, software programmers,
and management consultants. Many market offerings mix goods and services, such as a fast-
food meal (advanced economies: 70%–30% services-to-goods mix)

 EVENTS - major trade shows, artistic performances, global sporting events (Olympics, World
Cup)

 EXPERIENCES - Walt Disney World’s Magic Kingdom or customized experiences (such as a week
at a baseball camp with retired baseball greats, a four-day rock and roll fantasy camp, or a climb
up Mount Everest)

 PERSONS - artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other
(David Beckham, Oprah Winfrey, Rolling Stones)
What is marketed?
What is marketed?
What is marketed? (2/2)
 PLACES - cities, states, regions, and whole nations compete to attract tourists,
residents, factories, and company headquarters .
 IDEAS - social marketers are busy promoting such ideas as “Friends Don’t Let
Friends Drive Drunk”.
 PROPERTIES - intangible rights of ownership to either real property (real estate)
or financial property (stocks and bonds)
 ORGANIZATIONS - work to build a strong, favorable, and unique image in the
minds of their target publics. Universities, museums, performing arts
organizations, corporations, and nonprofits all use marketing to boost their public
images and compete for audiences and funds.
 INFORMATION - the production, packaging, and distribution of information are
major industries.
 The digital
age

Sustainable The
marketing economic
practices The environment
changing
marketing
landscape

Not-for-
Rapid
profit
globalisation
marketing
1) The digital age: online, mobile and social
media marketing
involves using digital marketing tools
(websites, social media, mobile apps, online
video, email, blogs and platforms) to engage
consumers anywhere, anytime via their
computers, smartphones, tablets, smart TVs

• 5.2 billion people – 65% of

the world’s population – are
now online.

• 4.7 billion social media

users
2) The changing economic environment
2008- Great Recession left consumers short of money and
confidence as they faced losses in income, a severe credit
crunch, declining home values and rising unemployment.
“Americans have changed their lifestyles in many different ways
to make ends meet during this recession. 71% have
bought less expensive brands, 57% have cut back or
canceled vacation plans, 3 in 10 have cut back on alcohol
or cigarette consumption and 24% among adults ages 18
to 29 have moved back in with their parents. Coupled
with this economic imperative is a willful desire for a
simpler, more meaningful and less acquisitive lifestyle”
Companies have aligned their marketing strategies 
emphasizing value (value for money, practicality,
durability)
COVID pandemic -> channel switching and brand loyalty
disruption.
75 % of consumers tried new shopping behaviors, with many of
them citing convenience and value.
39 % (mainly Gen Z and millennials), deserted trusted brands
for new ones.
3) The growth of not-for profit
marketing
Colleges, hospitals, museums, zoos,
symphony orchestra, churches -
> support, funds and
membership.

World Wildlife Fund (WWF), a global

not-for-profit conservation organization
- conserve nature and protect wildlife.
4) Rapid globalization
The world is shrinking rapidly with the
advent of faster communication and
transportation.
->global trade grows
-> global competition intensifies
-> firms that stay at home to play it safe
might not only lose their chances to
enter other markets but also risk
losing their home markets.
Challenges: unstable governments and
currencies, restrictive policies and
regulations, high trade barriers.
Otis Elevator is headquartered in USA. It
offers products in more than 200
countries (83% of sales outside US). It
gets elevator door system from France,
small geared parts from Spain,
electronics from Germany and special
motor drives from Japan. It operates
manufacturing facilities in Americas,
Europe and Asia and engineering
centers in US, Austria, Brazil, China,
Czech Republik, France, Germany, India,
Italy, Japan, Korea and Spain.
Global chip shortage 
Started in 2020 and is an ongoing crisis in which the
demand for integrated circuits (semiconductor chips) is
greater than the supply, affecting more than 169
industries.

Consequences
-> major price increases
-> shortages and queues amongst consumers for
automobiles, graphics cards, video game consoles, PC
-> carmakers to suffer chip shortages until at least end of
2023
Reactions
European Chips Act - a set of measures to ensure the EU's
security of supply, resilience and technological leadership
in semiconductor technologies (digital sovereignty, 43 bn
Euro – 20% market share in 2030)
5)Sustainable marketing – the call for
more social responsibility
Consumerism - tendency of people to identify strongly with products they consume,
especially those with commercial brand-names and perceived status-
symbolism appeal. Consumerism can take extreme forms – such that consumers
sacrifice significant time and income not only to purchase but also to actively
support a certain firm or brand.
With less than 5% of world population, the U.S. uses one-third of the world’s paper,
a quarter of the world’s oil, 23% of the coal, 27% of the aluminum, and 19% of
the copper.
Anti-consumerism+ environmentalism movements are forcing marketers to
reexamine their relationships with social values and natural environment
Some are practicing caring capitalism; others are resisting such movements and
comply only when forced by legislation
Patagonia, Timberland, and Jack Wolfskin vs. Walmart or Procter & Gamble (some
sustainable products, but for most of their product oferings and practices, they are
heavily criticized).
Growth and sustainability seem to be two mutually exclusive goals!
Three diferent strategies to create sustainable growth

Decouple revenue
Redefine growth from
growth depletion of
natural resources
Is financial growth in the traditional
sense all there is? Growth has By establishing a circular economy,
many facets, like societal growth or where frms care about products
the growth of well-being on a after they have been used, the use
personal level. Firms should set of resources can be lowered. For
growth goals considering other new products, frms can use
perspective than just fnancial ones. renewable resources (Ikea) or
material that has been recycled
(Nike)

Produce fewer
and better
products
In times of the shared economy,
firms can adjust their business
models and incentivize
customers to share (Airbnb,
Uber), rent, or lease products.
This can create new revenue
streams while also making the
business more sustainable (GE,
Siemens Gamesa).
Evaluation system

1. Exam 50%
2. Seminar 50%
Case studies (30%)
Final project (20%)