AECP 223 – Agricultural Marketing

Chapter 1
Marketing: creating and capturing customer value

Ernst Idsardi
Some more on the Netherlands…

….cycling in Amsterdam

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Chapter 1: learning outcomes

After studying this chapter, students should be able to:

• Define marketing and outline the steps in the marketing process
• Explain the importance of understanding customers and the marketplace
• Understand what the marketing mix is
• Identify the key elements of a customer-driven marketing strategy and discuss
the marketing management orientations that guide this strategy
• Discuss customer relationship management and identify strategies for creating
and capturing value
• Describe the trends and forces that are changing the marketing landscape in this
new age of relationships.

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Key topics

1. What is marketing?

2. Understanding the marketplace and customer needs

3. Designing a customer-driven marketing strategy

4. Preparing an integrated marketing programme

5. Building customer relationships

6. Capturing value from customers

7. The new marketing landscape

8. Marketing – pulling it all together

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What is marketing?
Selling?

Advertising?

Promotion?

Knowing your customers?

Making a profit?

Customer is king?

???

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What is marketing?

Marketing: the process by which firms create value for customers and build
strong customer relationships to capture value from customers in return.

The marketing process is a five-step process:

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Understanding the market place and customer
needs
The basic concept underlying marketing is that of human needs:
• Needs – state of felt deprivation
• Wants – needs shaped by culture and personality
• Demands – wants backed by buying power

Needs and wants are fulfilled through a market offering – the combination of
products (for example, a Cadbury’s chocolate), services (for example, from a
mechanic), information (for example, a first aid booklet) or experiences (for example,
a hot air balloon ride) offered to satisfy a need or want.

Marketing myopia: the mistake made by marketers by focusing more on the

product than the benefits and experiences produced by the product.
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Understanding the market place and customer
needs (2)
How do customers choose what to buy?
• Customers make choices based on their expectations of value and satisfaction.

• Marketers must therefore be careful to set expectations at the right level.

What happens when they buy?

• Customers respond positively to an offering by buying what they desire (called
an exchange).
• By focusing on building and maintaining relationships, marketers may develop
desirable exchange relationships.

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Understanding the market place and customer
needs (3)
Market: the set of all potential buyers and sellers of a product or service.

Marketing is about managing markets to bring about profitable customer

relationships:
• Sellers (for example food companies) must search for buyers, identify their needs,
create an attractive offering, promote it, store it and deliver it.
• Buyers also conduct marketing when they search for what they want to buy. For
example, if you want to buy a new car, you may read reviews in car magazines,
visit different dealerships and test drive different cars.

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Understanding the market place and customer
needs (4)
A firm’s success at building profitable relationships depends on how well the entire
marketing system serves the needs of final consumers.

The modern marketing system:

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Designing a customer-driven market strategy

Marketing management: the art and science of choosing target markets and
building profitable relationships with them.

Questions the marketing manager must ask:

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Designing a customer-driven market strategy (2)

Questions the marketing manager must ask:

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Preparing an integrated marketing programme

What is the purpose of the marketing programme?

To build customer relationships by transforming the marketing strategy into action.

What does the programme consist of?

The firm’s marketing mix (the four Ps):

• Product – a product that will satisfy a customer need
• Price – how much to charge for the offer
• Place – how and where the offer will be made available
• Promotion – how to communicate with customers and persuade them of the
merits of the product.

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Building customer relationships

Customer relationship management (CRM): the overall process of building and

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

To build lasting relationships, marketers must create:

• Superior customer value – customers will buy from the firm that offers the
highest customer perceived value.
• Superior customer satisfaction – this is the extent to which the perceived
performance of a product matches the customer’s satisfaction.

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Building customer relationships (2)

Firms must take into account the changing nature of customer relationships:
• Relate with more carefully selected customers
• Relate for the long term
• Relate directly.

For example, FNB is the leader in convenient, digital banking.

Also, firms need partners (internal and external) to build customer relationships:

Partner relationship management: working with partners to jointly bring

greater value to customers

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Capturing value from customers

The outcomes of creating customer value:

• Customer loyalty and retention – delighted customers remain loyal and talk
favourably about the firm and its products.
• Growing share of customer – this is an increase in the portion of a customer’s
purchasing in the firm’s product categories.
• Customer equity – this is the combined discounted customer lifetime values of all
the firm’s current and potential customers; the more loyal the firm’s profitable
customers, the higher the customer equity.

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The new marketing landscape

Features of the current marketing landscape:

The new digital age and the technology boom

• It creates new ways to learn about and track customers.
• It helps firms to distribute products more efficiently and effectively.
• It enables new ways to communicate and advertise.
• It creates a connected marketing ‘space’.

Rapid globalisation
• Firms are connected globally with their customers and partners.
• Marketing managers must therefore take a global, not just a local view of the
industry, competitors and opportunities.

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The new marketing landscape (2)
Features of the current marketing landscape:

A call for more ethics and social responsibility

• Marketers must take greater responsibility for the social and environmental
impact of their actions.
• Firms that practise ‘caring capitalism’ set themselves apart by building social
responsibility and action into the value of their business and mission statements.

Growth of not-for-profit marketing

• Not-for-profit organisations, for example the Organ Donor Foundation or the
SPCA, use sound marketing to attract membership, support and donors.

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Marketing – pulling it all together (summary)

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Make sure you get a copy of the textbook!

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