Principles of Marketing

Seventeenth Edition
Chapter 1

Marketing
C r ea t i n g C u s to m e r Va l u e
A n d En g ag e m en t
 EMIRATE’ CUSTOMER
VALUE-DRIVEN MARKETING

Emirates is not just offering a way to connect people from point A to

point B but is the catalyst to connect people’s dreams, hopes, and
aspirations.
 Learning Objectives

Define marketing and outline the steps in

1-1 the marketing process.

Explain the importance of understanding

1-2 the marketplace and customers and identify
the five core marketplace concepts.
 Learning Objectives

Identify the key elements of a customer

1-3 value-driven marketing strategy and discuss
the marketing management orientations that
guide marketing strategy.
Discuss customer relationship management
1-4 and identify strategies for creating value for
customers and capturing value from customers
in return.

Describe the major trends and forces that are

1-5 changing the marketing landscape in this age
of relationships.
 Learning Objective 1

Define marketing and outline the steps in the

marketing process.

Simplest definition :
Marketing is engaging customers and
managing profitiable customer
relationships.
 What is Marketing?

Marketing Defined
Marketing is a process by which
companies engage customers, build strong
customer relationships, and create
customer value in order to capture
value from customers in return.
What is Marketing?
What is Marketing?

The Marketing Process

 Learning Objective 2

Explain the importance of understanding the

marketplace and customers and identify the five
core marketplace concepts.

Understanding the Marketplace

and
Customer Needs
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

Needs • States of deprivation

Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

• Form that needs

Wants take
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

• Wants backed by
Demands
buying power
 Understanding the Marketplace
and Customer Needs
Market offerings are some
combination of products,
services, information, or
experiences offered to a
market to satisfy a need or
want.

Marketing myopia is
focusing only on existing
wants and losing sight of
underlying consumer needs.
Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Customer
s
• Value and
satisfactio
Marketers n
• Set the
right level
of
expectatio
ns
Understanding the Marketplace
and Customer Needs
Exchanges and Relationships

Exchange is the act of obtaining a desired

object from someone by offering something in
return.

Marketing consists of actions taken to create,

maintain, and grow desirable exchange
relationships.
Understanding the Marketplace
and Customer Needs
Markets
A market is set of actual and potential buyers.
Consumers market when they:
search for products
interact with companies to obtain
information
make purchases
Understanding the Marketplace
and Customer Needs
 Learning Objective 3

Identify the key elements of a customer value-

driven marketing strategy and discuss the
marketing management orientations that guide
marketing strategy.

Designing a Customer
Value-Driven Marketing Strategy
and Plan
Designing a Customer Value-Driven
Marketing Strategy and Plan
Marketing management is the art
and science of choosing target markets
and building profitable relationships
with them.
What customers will we serve (target
market)? CH2
How can we best serve these customers
(value proposition)? CH7
Designing a Customer Value-Driven
Marketing Strategy and Plan
A brand’s value proposition is the set of
benefits or values it promises to deliver to
customers to satisfy their needs.
Designing a Customer Value-Driven
Marketing Strategy and Plan
Marketing Management
Orientations

Societal
Productio Product Selling Marketin
Marketin
n concept concept concept g concept
g concept
Designing a Customer Value-Driven
Marketing Strategy and Plan
Marketing Management
Orientations

Societal
Productio Product Selling Marketing
Marketing
n concept concept concept concept
concept

Production concept:
Consumers will favor products that are available and
highly affordable.
Designing a Customer Value-Driven
Marketing Strategy and Plan
Marketing Management
Orientations
Societal
Productio Product Selling Marketing
Marketing
n concept concept concept concept
concept

Product concept:

Consumers favor products that offer the most in quality,

performance, and innovative features.
Marketing strategy focuses on making continuous
product improvements.
Designing a Customer Value-Driven
Marketing Strategy and Plan
Marketing Management
Orientations
Societal
Productio Product Selling Marketing
Marketing
n concept concept concept concept
concept

Selling concept:
Consumers will not buy enough of the firm’s products
unless the firm undertakes a large-scale selling and
promotion effort.
Designing a Customer Value-Driven
Marketing Strategy and Plan
Marketing Management
Orientations
Societal
Productio Product Selling Marketing
Marketing
n concept concept concept concept
concept

Marketing concept:
Know the needs and wants of target markets and deliver
the desired satisfactions better than competitors.
Designing a Customer Value-Driven
Marketing Strategy and Plan
Marketing Management
Orientations
Societal
Productio Product Selling Marketing
Marketing
n concept concept concept concept
concept

Societal marketing:
The company’s marketing decisions should consider
consumers’ wants, the company’s requirements,
consumers’ long-run interests, and society’s long-run
interests.
Designing a Customer Value-Driven
Marketing Strategy and Plan
Figure 1.3 contrasts the selling concept and the marketing
concept. The selling concept takes an inside-out
perspective. It starts with the factory, focuses on the
company’s existing products, and calls for heavy selling and
promotion to obtain profitable sales. It focuses primarily on
customer conquest—getting short-term sales with little
concern about who buys or why.
Designing a Customer Value-Driven
Marketing Strategy and Plan

Societal marketing:

The company’s marketing

decisions should consider
consumers’ wants, the
company’s requirements,
consumers’ long-run
interests, and society’s
long-run interests.
Designing a Customer Value-Driven
Marketing Strategy and Plan
Preparing an Integrated Marketing
Plan and Program
The marketing mix is comprised of a set of tools known a

the four Ps:

Price
ct otion
Produ Pr o m

Place
Designing a Customer Value-Driven
Marketing Strategy and Plan
Preparing an Integrated Marketing
Plan and Program
Integrated marketing program
—a comprehensive plan that communicates and
delivers intended value
 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
 Managing Customer Relationships
and Capturing Customer Value
Engaging Customers and Managing
Customer Relationships

Customer relationship management—the

overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction.
 Managing Customer Relationships
and Capturing Customer Value
Engaging Customers and Managing
Customer Relationships
Relationship Building Blocks

Customer- Customer
perceived value satisfaction
•The difference •The extent to which a
between all the product’s perceived
benefits and all the performance matches
cost a buyer’s expectations
 Managing Customer Relationships
and Capturing Customer Value
Engaging Customers and Managing
Customer Relationships

Customer Relationship Levels and Tools

Basic Relationships Full Partnerships
– low-margin – high-margin
customers customers

Frequency
Marketing
Programs – reward
customers
 Managing Customer Relationships
and Capturing Customer Value
Customer-Engagement and Today’s
Digital and Social Media
Customer-Engagement Marketing
fosters direct and continuous customer
involvement in shaping brand conversations,
experiences, and community.
Engaging customers: Life is
good starts with a deeply felt,
engagement-worthy sense of
purpose: spreading the power of
optimism.
 Managing Customer Relationships
and Capturing Customer Value

Consumer-Generated
Marketing
Brand exchanges created by
consumers themselves.
For example, Mountain Dew stirred
Consumers arecontent
up user-generated playing an
to create
increasing
buzz around arole in shaping
limited-time
reintroduction of its iconic Baja Blast
brand experiences.
beverage, boosting online chatter by
170 percent.
 Managing Customer Relationships
and Capturing Customer Value
Partner relationship management involves
working closely with partners in other company
departments and outside the company to jointly
bring greater value to customers.

In today’s more connected world, every functional area

in the organization can interact with customers.
Through supply chain management, companies today
are strengthening their connections with partners all
along the supply chain.
 Managing Customer Relationships
and Capturing Customer Value
Capturing Value from Customers
Creating Customer Loyalty and Retention

Customer lifetime
value is the value of the
entire stream of purchases
that the customer would
make over a lifetime of
patronage.
Managing Customer Relationships
and Capturing Customer Value
Capturing Value from Customers
Growing Share of Customer
Share of customer is the portion of the
customer’s purchasing that a company gets in
its product categories.

To increase share of customer , firms can offer greater

variety to current customer.

Or they can creat programs to cross-sell and up-sell to

market more products and services to existing customers.
 Managing Customer Relationships
and Capturing Customer Value
Capturing Value from Customers
Building Customer Equity

Customer equity is the

total combined customer
lifetime values of all of the
company’s customers.

To increase customer equity, Cadillac

is making the classic car cool again
among younger buyers, encouraging
consumers to “Dare Greatly.”
 Managing Customer Relationships
and Capturing Customer Value
Building the Right Relationships with the Right Customers

Different types of
customers require
different relationship
management strategies.
 Customer Relationship Groups

Strangers

• show low potential profitability and little projected loyalty.

Butterflies

• are potentially profitable but not loyal.

True friends

• are both profitable and loyal.

Barnacles

• are highly loyal but not very profitable.

43
 Learning Objective 5

Describe the major trends and forces that are changing

the marketing landscape in this age of relationships.

The Changing Marketing

Landscape
 The Changing Marketing
Landscape
The Digital Age: Online, Mobile, and
Social Media Marketing
Digital and social media marketing
involves using digital marketing tools such as
websites, social media, mobile ads and apps,
online video, email, and
blogs to engage consumers
anywhere, at any time, via
their digital devices.
 The Changing Marketing
Landscape
The Digital Age: Online, Mobile, and
Social Media Marketing

Petco’s Community
site is a place where
pet lovers can connect,
share, and learn via a
blog and discussion
boards dedicated to
pets of all types, from
dogs and cats to birds,
fish, and reptiles.
 The Changing Marketing
Landscape
The Digital Age: Online, Mobile, and
Social Media Marketing
Social Media Marketing Mobile Marketing
 The Changing Marketing
Landscape
The Changing Economic Environment
 The Great Recession caused many consumers to rethink
their spending priorities and cut back on their buying.
 In adjusting to the new economy, companies cut their
marketing budget and slash prices in an effort to coax
more frugal customers into opening their wallets.
 The challenge is to balance the brand’s value proposition
with the current times while also enhancing its long-term
equity.
 The Changing Marketing
Landscape
The Growth of Not-for-profit Marketing
• In recent years, marketing has also become a major
part of the strategies of many not-for-profit
organizations, such as colleges, hospitals, museums,
zoos, symphony orchestras, and even churches.
• Government agencies have also shown an increased
interest in marketing.

St. Jude Children’s Research

Hospital aggressively markets its
powerful mission:”Finding
cures. Saving children.”
 The Changing Marketing
Landscape
Rapid Globalization
 Today, almost every company, large or small, is touched
in some way by global competition.
 Managers in countries around the world are increasingly
taking a global, not just local, view of the company’s
industry, competitors, and opportunities.
 The Changing Marketing
Landscape
Sustainable Marketing - The Call for More
Ben &Environmental and prosperity”
Jerry’s three-part “linked Social Responsibility
mission drives it
to make
 As thefantastic
worldwideice cream (product mission),
consumerism manage the
and environmentalism
company for sustainable financial growth (economic
movements mature, today’s marketers are being called on
mission), and use the company “in innovative ways to make
to develop sustainable marketing practices.
the world a better place” (social mission). Both Ben & Jerry’s
 Corporate
and ethics
its products and social
are “Made responsibility
of Something Better.”have become
hot topics for almost every business.
 So, What Is Marketing?
Pulling It All Together
At the start of this chapter, Figure 1.1 presented a
simple model of the marketing process.

Now that we’ve discussed all the steps in the

process, Figure 1.6 presents an expanded model
that will help you pull it all together.
The End