CHAPTER 1

Marketing: Creating and Capturing Customer Value

What Is Marketing?
Simple Definition:

Marketing is managing profitable customer relationships. Attract new customers by promising superior value. Keep and grow current customers by delivering satisfaction.
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Goals:
1.

2.

Marketing Defined

A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.
NEW View New View of Marketing: of Marketing:

Making a Sale Telling & Selling

OLD View of Marketing:

Satisfying Satisfying Customer Needs customer needs

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The Marketing Process

A simple model of the marketing process:

Understand the marketplace and customer needs and wants. Design a customer-driven marketing strategy. Construct a marketing program that delivers superior value. Build profitable relationships and create customer delight. Capture value from customers to create profits and customer quality.
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Needs, Wants, & Demands

Need:

State of felt deprivation including physical, social, and individual needs.

Physical needs:

Food, clothing, shelter, safety

Belonging, affection Learning, knowledge, self-expression
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Social needs:

Individual needs:

Needs, Wants, & Demands

Wants:

Form that a human need takes, as shaped by culture and individual personality.

Wants + Buying Power = Demand

Need / Want Fulfillment

Needs and wants are fulfilled through a

Marketing Offer:

Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Need / Want Satisfiers

Products:

Services

Persons Places Organizations Information Ideas

Activity or benefit offered for sale that is essentially intangible and does not result in ownership.

Brand Experiences:
. . . dazzle their senses, touch their hearts, stimulate their minds.
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Marketing Myopia

Marketing myopia occurs when sellers

pay more attention to the specific products they offer than to the benefits and experiences produced by the products.

They focus on the wants and lose sight of the needs.

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Value & Satisfaction

Care must be taken when setting expectations:

If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high.

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What Is a Market?

The set of actual and potential buyers of a product.

These people share a need or want that can be satisfied through exchange relationships.

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Modern Marketing Systems

Main elements in a modern marketing system include:

Suppliers Company (marketer) Competitors Marketing intermediaries Final users

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Marketing Management

The art and science of choosing target markets and building profitable relationships with them.

Requires that consumers and the marketplace be fully understood What Customers Will We Serve? How will we Serve them Best? (Our VALUE Proposition)
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Marketing Management

Designing a winning marketing strategy requires answers to the following questions: 1. What customers will we serve?
What is our target market?

2. How can we best serve these customers?

What is our value proposition?
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Segmentation & Target Marketing

Market Segmentation:

Divide the market into segments of customers

Target Marketing:

Select the segment to cultivate

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Value Proposition

The set of benefits or values a company promises to deliver to consumers to satisfy their needs.

Value propositions dictate how firms will differentiate and position their brands in the marketplace.

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Marketing Management Philosophies

Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept

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The Marketing Plan

Transforms the marketing strategy into action Includes the marketing mix and 4 Ps of marketing:

Product Price Place (Distribution) Promotion

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Customer Relationship Management

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Acquiring customers Keeping customers Growing customers

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Customer Satisfaction

Dependent on the products perceived performance relative to a buyers expectations.

Customer satisfaction often leads to consumer loyalty. Some firms seek to DELIGHT customers by exceeding expectations.

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Partner Relationship Marketing

Marketing partners help create customer value and assist in building customer relationships. Partners inside the firm:

All employees customer focused Teams coordinate efforts toward customers Supply chain management Strategic alliances
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Partners outside the firm:

Customer Loyalty & Retention

Customer Lifetime Value

Share of Customer

The entire stream of purchases that the customer would make over a lifetime of patronage.

The share a company gets of the customers purchasing in their product categories.

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Customer Equity

The combined discounted customer lifetime values of all the companys current and potential customers.

Classify customers by loyalty and potential profitability Manage accordingly

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