Marketing: Creating and

Capturing Customer Value

Prof. Alexander Chan Trajano

Principles of Marketing
MARKPRI

What Is Marketing?
Marketing is the process by which companies
create value for customers and build strong
customer relationships in order to capture
value from customers in return
Marketing is a social and managerial process
by which individuals and organizations obtain
what they need and want through creating
and exchanging value with others
Marketing is managing profitable customer
relationships
Principles of Marketing
MARKPRI

Two-Fold Goal of Marketing

Attract new customers by promising
superior value (telling and selling)
Keep and grow current customers by
delivering satisfaction (satisfying
customer needs)

Principles of Marketing
MARKPRI

Some Examples
Walmart Save money. Live
better.
Nintendo Wii would like to play.
McDonalds Im lovin it

Principles of Marketing
MARKPRI

Sound Marketing
For profit firms
For non-profit organizations like
colleges, hospitals, museums,
symphony orchestras, churches, etc.

Principles of Marketing
MARKPRI

Where Do We See Marketing At

Work?

Shopping malls
Advertisements on TV, radio, print
Magazines
Mailbox
Web sites and online social networks
Cell phone

Principles of Marketing
MARKPRI

The Marketing Process

Understan
d the
marketpla
ce and
customer
needs and
wants

Design a
customerdriven
marketing
strategy

Construct
an
integrated
marketing
program
that
delivers
superior
value

Principles of Marketing
MARKPRIb

Build
profitable
relationshi
ps and
create
customer
delight

Capture
value from
customers
to create
profits and
customer
equity

Understanding the Marketplace

and Customer Needs
Five core customer and marketplace
concepts:
a. Needs, wants, and demands
b. Market offerings (products, services,
and experiences)
c. Value and satisfaction
d. Exchanges and relationships, and
e. Markets
Principles of Marketing
MARKPRI

Customer Needs, Wants, and

Demands
Needs are states of felt deprivation
Human needs include basic physical
needs for food, clothing, warmth, and
safety; social needs for belonging
and affection; and individual needs
for knowledge and self expression

Principles of Marketing
MARKPRI

Customer Needs, Wants, and

Demands
Wants are the form human needs
take as they are shaped by culture
and individual personality
A Filipino needs food but wants
Chicken Joy
Wants are shaped by ones society
and are described in terms of objects
that will satisfy those needs
Principles of Marketing
MARKPRI

10

Customer Needs, Wants, and

Demands
Demands are human wants that are
backed by buying power
Given peoples wants and resources,
they demand products with benefits
that add up to most value and
satisfaction

Principles of Marketing
MARKPRI

11

Using and Knowing Customer Needs,

Wants, and Demands
Outstanding marketing companies go to
great lengths to learn about and
understand their customers needs, wants,
and demands
They conduct consumer research and
analyze mountains of customer data
Their people at all levels including top
management stay close to customers
(using social media: Twitter, Facebook,
Instagram, etc.)
Principles of Marketing
MARKPRI

12

Market Offerings
Products, Services, and Experiences
Market offerings are some
combination of products, services,
information, or experiences offered
to a market to satisfy a need or want
Market offerings also include other
entities, such as persons, places,
organizations, information, and ideas

Principles of Marketing
MARKPRI

13

Marketing Myopia
Marketing myopia is the mistake of paying more
attention to the specific products a company offers
than to the benefits and experiences produced by
these products
Some companies focus only on existing wants and
lose sight of underlying customer needs. They
forget that a product is only a tool to solve a
consumer problem
Sellers will have trouble if a new product comes
along that serves the customers need better or
less expensively. The customer will have the same
need but will want the new product
Principles of Marketing
MARKPRI

14

Marketing Myopia
Smart marketers look beyond the
attributes of the products and
services they sell
By orchestrating several services and
products, they create brand
experiences for consumers

Principles of Marketing
MARKPRI

15

Customer Value and

Satisfaction

Consumers usually face a broad array of products

and services that might satisfy a given need
How do they choose among these many market
offerings?
Customers form expectations about the value
and satisfaction that various market
offerings will deliver and buy accordingly
Satisfied customers buy again and tell others
about their good experiences. Dissatisfied
customers often switch to competitors and
disparage the product to others (contd)
Principles of Marketing
MARKPRI

16

Customer Value and

Satisfaction
Marketers must be careful to set the right
level of expectations
If they set expectations too low, they may
satisfy those who buy but fail to attract
enough buyers. If they set expectations
too high, buyers will be disappointed
Customer value and customer satisfaction
are key building blocks for developing and
managing customer relationships
Principles of Marketing
MARKPRI

17

Exchanges and
Relationships
Marketing occurs when people decide to satisfy
needs and wants through exchange relationships
Exchange is the act of obtaining a desired object
from someone by offering something in return
The marketer tries to bring about a response to
some market offering. The response may be
more than simply buying or trading products and
services
A politician wants votes; a church wants
membership; an orchestra wants an audience; a
social action group wants idea acceptance
(contd)
Principles of Marketing
MARKPRI

18

Exchanges and
Relationships
Marketing consists of actions taken to build and
maintain desirable exchange relationships
with target audiences involving a product,
service, idea, or other object
Beyond simply attracting new customers and
creating transactions, companies want to retain
customers and grow their businesses
Marketers want to build strong relationships by
consistently delivering superior customer value

Principles of Marketing
MARKPRI

19

Markets
A market is the set of actual and potential buyers
of a product or service
These buyers share a particular need or want that
can be satisfied through exchange relationships
Marketing means managing markets to bring about
profitable customer relationships sellers must
search for buyers, identify their needs, design good
market offering, set prices for them, promote them,
and store and deliver them
Activities such as consumer research, product
development, communication, distribution, pricing,
and service are core marketing activities (contd)
Principles of Marketing
MARKPRI

20

Markets
Buyers also carry out marketing. Consumers market
when they search for products, interact with companies
to obtain information, and make their purchases
Today, digital technology have empowered consumers
and made marketing a truly interactive affair
In addition to customer relationship management,
todays marketers must also deal effectively with
customer-managed relationships
Marketers are no longer asking only, How can we
reach our customers? but also How should our
customers reach us? and even How can our
customers reach each other?

Principles of Marketing
MARKPRI

21

Designing A Customer-Driven
Marketing Strategy
Marketing Management is the art and science of
choosing target markets and building profitable
relationships with them
The marketing managers aim is to find, attract,
keep, and grow target customers by creating,
delivering, and communicating superior customer
value
To design a winning marketing strategy, the
marketing manager must answer two important
questions: What customers will we serve (whats
our target market)? and How can we serve these
customers best (whats our value proposition)?
Principles of Marketing
MARKPRI

22

Selecting Customers To
Serve

Market segmentation is dividing the market into

segments of customers
Target marketing is selecting which segments it will go
after
Marketing managers know that they cannot serve all
customers in every way, if they try this, they may not serve
any customers well
The company must select only customers that it can serve
well and profitably
Ultimately, marketing managers must decide which
customers they want to target on level, timing, and nature
of their demand. Marketing management is customer
management and dem
and management
Principles of Marketing
MARKPRI

23

Choosing A Value
Proposition

The company must also decide how it will serve

targeted customers how it will differentiate and
position itself in the marketplace
A brands value proposition is the set of benefits or
values it promises to deliver to consumers to satisfy
their needs
Such value propositions differentiate one brand from
another
They answer the customers question, Why should I
buy your brand rather than a competitors?
Companies must design strong value propositions
that give them the greatest advantage in their target
markets
Principles of Marketing
MARKPRI

24

Marketing Management Orientations

Marketing management wants to design strategies
that will build profitable relationships with target
consumers
But what philosophy should guide these marketing
strategies? What weight should be given to the
interests of customers, the organization, and
society?
There are five alternative concepts under which
organizations design and carry out their marketing
strategies: the production, product, selling,
marketing, and societal marketing concepts
Principles of Marketing
MARKPRI

25

The Production Concept

The production concept holds that
consumers will favor products that
are available and highly affordable
and that the organization should
therefore focus on improving
production and distribution efficiency
This concept is one of the oldest
orientations that guide sellers
Principles of Marketing
MARKPRI

26

The Product Concept

The product concept holds that consumers will
favor products that offer the most in quality,
performance, and innovative features and that the
organization should therefore devote its energy to
making continuous product improvements
This concept is important up to the point that it
should prevent the company from experiencing
marketing myopia
While consumers want manufacturers to build a
better mousetrap, they might be looking for a
better solution to a mouse problem
Principles of Marketing
MARKPRI

27

The Selling Concept

The selling concept is the idea that
consumers will not buy enough of the firms
product unless it undertakes a large-scale
selling and promotion effort
The selling concept is typically practiced with
unsought goods those that buyers do not
normally think of buying, such as insurance
or blood donations. These industries must
be good at tracking down prospects and
selling them on a products benefits (contd)
Principles of Marketing
MARKPRI

28

The Selling Concept

Such aggressive selling carries high risks. It
focuses on creating sales transactions rather
than on building long-term, profitable, customer
relationships
The aim often is to sell what the company
makes rather than making what the market
wants
It assumes that customers who are coaxed into
buying the product will like it
Or, it they dont like it, they will possibly forget
their disappointment and buy it again later
Principles of Marketing
MARKPRI

29

The Marketing Concept

The marketing concept is a philosophy that
holds that achieving organizational goals depends
on knowing the needs and wants of target markets
and delivering the desired satisfactions better than
competitors do
Customer focus and value are the paths to sales
and profits
Instead of a product-centered make and sell
philosophy, the marketing concept is a customercentered sense and respond philosophy
The job is not to find the right customers for your
product but to find the right products for your
customers
Principles of Marketing
MARKPRI

30

Selling and Marketing

Concepts Contrasted
The Selling
Concept
(Inside-Out View)

The Marketing
Concept
(Outside-In View)

Starting
Point

Factory

Market

Focus

Existing products

Customer needs
(satisfied)

Means

Selling and
promoting

Integrated marketing

Ends

Profits through sales

volume

Profits through customer

satisfaction

Trying to do

Sell what the

company
makes
Principles
of Marketing
MARKPRI
rather than what
the

We do not have a
marketing department,
31
we have a customer

The Marketing Concept

The marketing concept starts with a well-defined market,
focuses on customer needs, and integrates all the
marketing activities that affect customers
In turn, it yields profits by creating lasting relationships
with the right customers based on customer value and
satisfaction
Customer-driven companies research current customers
deeply to learn about their desires, gather new product and
service ideas, and test proposed product improvements
Customer-driving marketing is understanding customer
needs even better than customers themselves do (since
some times customers dont know what they want) and
creating products and services that meet existing and
latent needs, now and in the future
Principles of Marketing
MARKPRI

32

The Societal Marketing

Concept
The societal marketing concept is the idea that
a companys marketing decisions should consider
consumers wants, the companys requirements,
consumers long-run interests, and societys longrun interests
It calls for sustainable marketing, socially, and
environmentally responsible marketing that meets
the present needs of consumers and businesses
while also preserving or enhancing the ability of
future generations to meet their needs
Bottled water - plastic bottles use carbon dioxide
and recycling
Principles of Marketing
MARKPRI

33

Societal Marketing Concept

Society
(Human Welfare)

Consumers
(Want
Satisfaction)

Company
(Profits)
Principles of Marketing
MARKPRI

34

Preparing An Integrated
Marketing Plan and Program
The companys customer-driven
marketing strategy outlines which
customers it will serve (the target
market) and how it will create value
(value proposition) for these customers
Next, the marketer develops an
integrated marketing program
(marketing mix) that will actually deliver
the intended value to target customers
Principles of Marketing
MARKPRI

35

Building Customer
Relationships
Customer relationship
management is the overall process
of building and maintaining profitable
customer relationships by delivering
superior customer value and
satisfaction

Principles of Marketing
MARKPRI

36

Customer Value and

Satisfaction
Customer-perceived value is the
customers evaluation of the difference
between all the benefits and all the costs
of a marketing offer relative to those of
competing offers (some customers are
willing to pay more and some are not)
Customer satisfaction is the extent to
which a products perceived performance
matches a buyers expectations (fall short,
matches, exceeds expectations)
Principles of Marketing
MARKPRI

37

Customer Relationship
Levels and Tools
A company with many low-margin customers
may seek to develop basic relationships with
them
A company with few customers and high
margins create full partnerships with them
Companies can offer frequency marketing
programs that reward customers who buy
frequently or in large amounts
Companies can sponsor club marketing
programs that offer members special benefits
and create member communities
Principles of Marketing
MARKPRI

38

The Changing Nature of

Customer Relationships
Relating with More Carefully Selected
Customers
- By asking questions to screen if the customer is
a potential profitable one
- By firing customers that cost more to serve
than to lose
- Not all customers are worth your marketing
efforts. Some are more costly to serve than to
lose. If you cant say who your customers
arent, you probably cant say who your
customers are
Principles of Marketing
MARKPRI

39

The Changing Nature of

Customer Relationships
Relating More Deeply and Interactively
- Two-way customer relationships by employing
new technologies (e-mail, web sites, blogs, cell
phones, and video)
- This changing communications environment
also affects how companies and brands relate to
customers by letting markers create deeper
customer involvement and a sense of
community surrounding a brand to make the
brand a meaningful part of consumers
conversations and lives (contd)
Principles of Marketing
MARKPRI

40

The Changing Nature of

Customer Relationships
Relating More Deeply and Interactively
- Customer-managed relationships are
marketing relationships in which customers,
empowered by todays digital technologies,
interact with companies and with each other to
shape their relationships with brands
- Consumer-generated marketing are the 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
Principles of Marketing
MARKPRI

41

Partnership Relationship
Management
Partnership relationship
management is working closely with
partners in other company
departments and outside the
company to jointly bring greater value
to customer
- Partners inside the company
- Marketing partners outside the firm
(supply chain)
Principles of Marketing
MARKPRI

42

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

Principles of Marketing
MARKPRI

43

Capturing Value From

Customers
Growing Share of Customer
- Share of customer is the portion of
the customers purchasing that a
company gets in its product
categories

Principles of Marketing
MARKPRI

44

Capturing Value From

Customers
Building Customer Equity
- Customer Equity is the total
combined customer lifetime values of
all of the companys customers

Principles of Marketing
MARKPRI

45

Capturing Value From

Customers
Building the Right Relationships with
the Right Customers
1. Strangers - show low potential
profitability and little projected loyalty
2. Butterflies - are potentially profitable but
not loyal
3. True friends - are both profitable and loyal
4. Barnacles - are highly loyal but not very
profitable
Principles of Marketing
MARKPRI

46

The Changing Marketing

Landscape

The Uncertain Economic Environment

The Digital Age (Internet)
Rapid Globalization
Sustainable MarketingThe Call for
More Social Responsibility
The Growth of Not-for-Profit
Marketing
Principles of Marketing
MARKPRI

47