1-1 Chapter One Marketing: Creating and Capturing Customer Value With Duane Weaver © 2010.

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Chapter OneMarketing: Creating and

Capturing Customer Value

With Duane Weaver© 2010

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OUTLINE• Marketing – defined• Marketing Mix – defined• Market - defined• Marketing Process – discussed• Needs vs. Wants and Buyer Motivation• P for Product – deeper analysis• OOPS – Marketing Myopia• Value• Marketing Concepts• Not for Profit Marketing

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What is Marketing?

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What is Marketing?

“…a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others.”

Armstrong, et. al., p. 7

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What is a Market?

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What is a Market?• The set of actual and potential buyers of a product, service or

experience.– Also seen traditionally as a marketplace where the business

transaction (or trade) is enacted between buyers and sellers. For example:

• A bizarre• Flea market• Farmer’s market• Retail Store• Wholesale Outlet• Online Internet Store• Cell Phone’s digital radio waves

• In Marketing when we talk about potential markets we usually are referring to a set of buyers.

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

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What is successful Marketing?

• Attracting new customers by promising and delivering superior value.

• Building long-term relationships with customers by delivering continued customer satisfaction.

• Creating, building and managing these relationships profitably over time.

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Marketer Customer

1.Market Offerings

•Product• Service• Ideas• Experiences

2.Customers

•Needs•Wants•Demand

3. Value & Satisfaction

4. Exchange, &

Relationship

Core Marketplace Concepts

5. Market

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What is the Marketing Mix?

P

P

P

P

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The Four Ps (marketing mix)

• Product

• Price

• Place

• Promotion

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The Marketing Process1. Understand the marketplace and customer

needs and wants.

2. Design a customer-driven marketing strategy.

3. Construct a marketing program that delivers superior value.

4. Build profitable relationships and create customer delight.

5. Capture value from customers to create profits and customer equity.

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Needs vs. Wants and Buyer Motivation - needs

• Needs are states of felt deprivation.

– Physical:• Food, clothing, shelter, safety.

– Social:• Belonging, affection.

– Individual:• Learning, knowledge, self-expression.

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Abraham Maslow’sHiearchy of Needs

Solomon, Zaichowsky, Polegato, 2008

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Needs vs. Wants and Buyer Motivation - wants

• SO then, …what is a “WANT”?

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Needs vs. Wants and Buyer Motivation - Motivational Strength

• Biological vs. Learned Needs (innate instinct vs. learned behaviour)

• Drive Theory (achieving homeostasis by satiating tension

caused by the arousal of unpleasant states)

• Expectancy Theory pulled by positive incentives (goals) rather

than pushed from within

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Needs vs. Wants and Buyer Motivation - Motivational Direction

• MOTIVES tend to be directional• Needs vs. Wants

– Need = unsatisfied requirement (hunger)– Want = the way a person satisfies a need which ultimately is

dependent on “their historical reality” (cheeseburger vs. trail mix)

• Types of Needs– Biogenic or psychogenic

• Motivational Conflicts

Fig. 4-1

Solomon, Zaichowsky, Polegato, 2008

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P for product = Deeper Analysis• Products

– Anything that can be offered for:• acquisition,• attention,• use or consumption

That might satisfy a need or want.

• Services– Activities or benefits offered.– Essentially intangible.– Do not result in ownership of anything.

• Experiences– Create, stage and market brand experiences.– Attending live theatre, music concert.

• Ideas– Solutions, consultation, patents, innovations.

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Marketing Myopia• 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.”– The great railroads lost out to the exploding trucking

industry.– They forgot that their business was solving

transportation problems, not running railroads.

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Value and Satisfaction• If the performance and the customer’s

experience is lower than expectations, then customer satisfaction is low.

• If the performance and the customer’s experience meets expectations, then the customer is satisfied.

• If the performance and the customer’s experience exceeds expectations, then the customer is delighted.– How can we do this?

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Core Marketplace Concepts• Customers have needs, wants and demands.

• Marketers offer products or services.

• Customers seek value and satisfaction from offers.

• Demands and offers result in transactions and relationships.

• Markets are all potential customers with a similar demand.

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Customer-Driven Marketing1. Divide markets into segments.

2. Choose the right segment to target.

3. Offer a unique value proposition.

4. Differentiate your offer from competitor offers.

5. Build customer value and satisfaction.

6. Nurture long-term customer relationships.

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Segmentation and Targeting• Segmentation divides the market into groups of

customers with varying needs and wants.

• Targeting selects the right segment to nurture.

• Types of Market Segmentation (see Chp. 2):• Demographic variables• Geographic location• Behavioural variables• Psychographic variables

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Demand Management

• Marketing management seeks to control demand.– Increasing demand is the norm.– Demarketing seeks to reduce demand in

certain circumstances.

• DEMAND = Wants + $Buying Power

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Value Proposition

The set of benefits or values the company promises to deliver to its target markets

to satisfy their needs.

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Capturing Value In Return• Customer lifetime value

• Share of customer

• Building Customer Equity– The total combined customer lifetime value of all of the

company’s customers– Combination of market share, share of customer and

lifetime customer value– Often a more accurate measure of a company’s value than

sales or market share

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Marketing Concepts

• Production – affordability and availability.

• Product -- quality and innovation.

• Selling -- promotion and hard selling.

• Marketing -- customer satisfaction and relationships.

• Societal – long-term value to both customer and society.

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Not-For-Profit Marketing• Marketing of ideas, values and

institutions.

• Increasing awareness that these organizations must build relationships with constituents and stakeholders.

• Challenge of using new marketing techniques for not-for-profit initiatives.

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Thanks!

Do Happy Customers = Successful Companies?

Expectation Management is Key