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Creating and Capturing Customer Value
What Is Marketing?
Designing a Customer-Driven Marketing Strategy
Preparing an Integrated Marketing Plan and Program
Building Customer Relationships
Topic Outline
What Is Marketing?
Old sense of marketing- making a sale “telling and selling”.
New sense of marketing is satisfying customer needs.
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Copyright © 2010 Pearson Education, Inc. Publishing as
Prentice Hall
Marketing: is a total system of business activities designed to
plan, price, promote and distribute want- satisfying products to
target markets to achieve organizational objectives.
This definition has two significant implications:
The entire system of business activities should be customer
oriented. Customer wants must be recognized and satisfied.
Marketing should start with an idea about a want – satisfying
product and should not end until the customer wants are completely
satisfied, which may be sometime after the exchange is made.
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Specify what we mean by “product” and “customer”.
Product is used as a generic term to describe what is being
marketed – whether it is a good, service, idea, person or
place.
The term consumer and customer often used interchangeably.
Customer is the individual or organization that actually makes the
purchase decision.
Consumer is the individual or organizational unit that uses or
consumes a product.
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THE MARKETING PROCESS
Chapter 1- slide *
Copyright © 2010 Pearson Education, Inc. Publishing as
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Marketing is the process of determining customer wants and then
developing a product to satisfy that need and also yield a
satisfactory profit. In this the company adjusts its supply to the
will of the consumer demand. It is externally focused.
Selling is producing a product and then trying to persuade
customers to purchase it -- in effect, trying to alter consumer
demand to fit the firm’s supply of the product. It is internally
focused.
DIFFERENCES BETWEEN MARKETING
Difference between selling and marketing
In selling
Emphasis is on the product.
Company first makes the product and then figures out how to sell
it.
Management is sales – volume oriented.
Planning is short run oriented, in terms of today’s products and
markets.
In marketing
Emphasis is on customer wants.
Company first determines customer’s wants and then figure out how
to make and deliver a product to satisfy those wants.
Management is profit – oriented.
Planning is long run oriented in terms of new products, tomorrows
markets and future growth.
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starting point focus means ends
The
Selling
Concept
The
Marketing
concept
Factory existing selling profits
Market customer integrated profits
Understanding the Marketplace
and Customer Needs
Market offerings
Understanding the Marketplace
and Customer Needs
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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.
Not limited to physical products – also includes services for
example banking, air travel, hotel stays.
Marketing myopia: the mistake of paying more attention to the
specific products a company offers than to the benefits and
experiences produced by these products.
Is focusing only on existing wants and losing sight of underlying
consumer needs.
They forget that a product is only a tool to solve a consumer
problem.
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Understanding the Marketplace
and Customer Needs
Copyright © 2010 Pearson Education, Inc. Publishing as
Prentice Hall
Exchange is the act of obtaining a desired object from someone by
offering something in return.
Marketing can occur anytime one social unit (person or
organization) strives to exchange something of value with another
social unit.
The essence of marketing is a transaction or exchange.
Marketing occurs when people decide to satisfy needs and wants
through exchange relationships.
Suppose you want some clothes. You can make them yourself, or you
can steal them or you can offer some thing of value to a person who
will exchange the clothes for what you offer.
Understanding the Marketplace
and Customer Needs
Copyright © 2010 Pearson Education, Inc. Publishing as
Prentice Hall
Exchanges are carried out by business firms, and also by
non-business organizations and even individuals.
Four conditions must exist for an exchange to be able to
occur:
Two or more people or organizations must be involved.
The parties must be involved voluntarily.
Each party must have something of value to exchange, and the
parties must believe they will each benefit from the
exchange.
The parties must be able to communicate with each other.
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Understanding the Marketplace
and Customer Needs
Markets are the set of actual and potential buyers of a
product.
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Designing a Customer-Driven Marketing Strategy
Marketing management is the art and science of choosing target
markets and building profitable relationships with them
What customers will we serve?
How can we best serve these customers?
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Designing a Customer-Driven Marketing Strategy
Market segmentation refers to dividing the markets into segments of
customers
Target marketing refers to which segments to go after
Market segmentation and target marketing are two steps of the
marketing process. Although the two go hand-in-hand, there are
distinct differences between them, as market segmentation must take
place before a target market is determined.
Market segmentation occurs when a company decides that they want to
identify a specific type of consumer to which they can market their
product or service. A target market is determined once the company
identifies which consumers to sell to.
Selecting Customers to Serve
Copyright © 2010 Pearson Education, Inc. Publishing as
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Market segmentation is the process of dividing a market into
distinct subsets that behave in the same way or have similar
potential for your product/service. Segmenting is done by
demographics (age, sex, income, race, etc.), geographic
(international, city, state, national, climate, etc.),
psychographics (personality, lifestyle, political party, etc.),
behavioral characteristics (consumption status, brand loyalties,
shopping habits, etc.) , and by sought after benefits that can
better the lives of your segmented market with your
product/service.
Through this process you are able to target market to the specific
segmented market fit for your product/service
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Designing a Customer-Driven Marketing Strategy
Demarketing is marketing to reduce demand temporarily or
permanently; the aim is not to destroy demand but to reduce or
shift it.
These marketers seek fewer customers and reduced demands.
For example: amusement parks overcrowded in summers, so trouble
meeting demands, then company practice demarketing, to reduce
number of customers.
Selecting Customers to Serve
Designing a Customer-Driven Marketing Strategy
Choosing a Value Proposition
The value proposition is the set of benefits or values a company
promises to deliver to customers to satisfy their needs
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Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Designing a Customer-Driven Marketing Strategy
Production concept is the idea that consumers will favor products
that are available or highly affordable.
Management should focus on improving production and distribution
efficiency.
This concept is one of the oldest orientation that guides
sellers.
Company focus on their own operations and not focusing on real
objective.
Marketing Management Orientations
Designing a Customer-Driven Marketing Strategy
Product concept is the idea that consumers will favor products that
offer the most quality, performance, and features. Organization
should therefore devote its energy to making continuous product
improvements.
Focus is on making continuous product improvements & product
quality.
Marketing Management Orientations
Designing a Customer-Driven Marketing Strategy
Selling concept is the idea that consumers will not buy enough of
the firm’s products unless it undertakes a large scale selling and
promotion effort.
Focus is on creating sales transactions rather than on building
long term profitable customer relationship.
The aim is to sell what the company makes rather than making what
the market wants.
Marketing Management Orientations
Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Marketing concept is the idea that achieving organizational goals
depends on knowing the needs and wants of the target markets and
delivering the desired satisfactions better than competitors
do.
Customer focus and value are the paths to sales and profits.
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Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Societal marketing concept is the idea that a company should make
good marketing decisions by considering consumers’ wants, the
company’s requirements, consumers’ long-term interests, and
society’s long-run interests.
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The marketing mix is the set of tools (four Ps) the firm uses to
implement its marketing strategy. It includes product, price,
promotion, and place.
Integrated marketing program is a comprehensive plan that
communicates and delivers the intended value to chosen
customers.
Preparing an Integrated Marketing Plan and Program
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Building Customer Relationships
The overall process of building and maintaining profitable customer
relationships by delivering superior customer value and
satisfaction.
It deals with the aspects of acquiring, keeping and growing
customers.
Customer Relationship Management (CRM)
Building Customer Relationships
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. Customer perceived value: For example, Do Ammar Bilal black label
dress shirts, really provide superior quality and that
sophisticated look that make them worth the higher price? Its all
the matter of personal value perceptions.
Customer satisfaction: if the product performance falls short of
expectations, the customer is dissatisfied.
If performance matches expectation the customer is satisfied.
If performance exceeds expectations, the customer is highly
satisfied or delighted.
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Building Customer Relationships
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Building Customer Relationships
Relating with more carefully selected customers uses selective
relationship management to target fewer, more profitable
customers.
Once firm identify profitable customers firms can create attractive
offers to capture these customers and earn their loyalty.
For example consumer electronics retailer best buy recently rolled
out a new “customer centricity” strategy that distinguishes between
its best customers called angels and less profitable ones called
demons. The aim is to embrace the angels while ditching the
demons.
Relating more deeply and interactively by incorporating more
interactive two way relationships through emails, blogs, Websites,
video sharing to online communities and social networks such as
face book and you tube.
The Changing Nature of Customer Relationships
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Marketers cannot work alone, they must work closely with variety of
marketing partners.
Partner relationship management involves working closely with
partners in other company departments and outside the company to
jointly bring greater value to customers
Building Customer Relationships
Building Customer Relationships
Partners inside the company is every function area interacting with
customers
Electronically
Cross-functional teams: rather than assigning sales and marketing
people to customers P&G assigns “customer development teams”
consists of sales and marketing people, operation specialists,
market and financial analyst and others coordinate the efforts of
P&G departments.
Partners outside the company is how marketers connect with their
suppliers, channel partners, and competitors by developing
partnerships
Partner Relationship Management
Building Customer Relationships
Marketing channels consist of distributors, retailers, and other
who connect the company to its buyers.
Supply chain is a channel that stretches from raw materials to
components to final products to final buyers.
For example supply chain for personal computers consists of
suppliers of computer chips and other components, the computer
manufacturer, the distributors, retailers and others who sell the
computers.
Supply chain management many companies today are strengthening
their connections with partners all along the supply chain.
Success at building customer relationships also rests on how well
their entire supply chain performs against competitors supply
chains.
Partner Relationship Management
Capturing Value from Customers
The final step involves capturing value in return in form of
current and future sales, market share, profits.
It creates highly satisfied customers who stay loyal, who buy and
continue to buy the company brands.
This creates greater long run return for the firms.
Good customer relationship management creates customer
delight.
Delighted customers remain loyal and talk favorably to others about
the company and its products.
Customer lifetime value is the value of the entire stream of
purchases that the customer would make over a lifetime of
patronage.
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Capturing Value from Customers
Share of customer is the portion of the customer’s purchasing that
a company gets in its product categories.
To increase share of customers firms can offer great variety to
current customers.
For Amazon.com, online book seller, in order to increase share of
customer offers music, videos, gifts, toys, consumer electronics,
office products, home improvements items, lawn and garden products,
apparel and accessories, jewelry, tools and even groceries. This
way it captures a greater share of each customers spending
budget.
Growing Share of Customer
Capturing Value from Customers
Customer equity is the total combined customer lifetime values of
all of the company’s customers.
The only value your company will ever create is the value that
comes from customers – the ones you have now and the ones you have
in the future.
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Capturing Value from Customers
Building the right relationships with the right customers involves
treating customers as assets that need to be managed and
maximized
Different types of customers require different relationship
management strategies
Build the right relationship with the right customers
Building Customer Equity
BUILDING THE RIGHT RELATIONSHIP WITH THE RIGHT CUSTOMERS
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The Changing Marketing Landscape