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• 1. Chapter 1Marketing: Creating and CapturingCustomer Value

2. What is Marketing?Meeting customer needs profitably Old sense of marketing - telling and selling. New sense of marketing - satisfying customerneeds. The process by which companies createvalue for customers and build strongcustomer relationships in order to capturevalue from customers in return. 3. The Marketing ProcessDESIGNINTEGRATEDUNDERSTANDCUSTOMERMARKETING MKT PLACE,DRIVENPROGRAM THATCUSTOMER NEEDSMARKETING DELIVERS AND WANTS STRATEGY SUPERIOR VALUE CAPTURE VALUEBUILD FROMPROFITABLE CUSTOMERS TO RELATIONSHIP CREATE PROFITSAND CREATE AND CUSTOMER CUSTOMEREQUITY DELIGHT 4. Customer Needs, Wants & Demands Basic human requirements Needs Physicalfood, clothing, warmth, safety Socialbelonging and affection Individualknowledge and self-expression Form that needs take as they are Wants shaped by culture and individual personalityDemands Wants backed by buying power 5. Realization DirectionDeficiencyNeedWant Backed bybuying power Demand Examples I need food but want fish and chips I need a place to live but want a flat I need a vacation but want to go to Naran I need education but want to pursue BBA I need clothing but want designer clothes. 6. Market OfferingsProducts, Services & Experiences Market offerings - combination of products,services, information, or experiences offered to amarket to satisfy a need or want. 7. Market offerings include: Products cars, computers, watches, cosmetics etc. Services airline, hotels, car rental, barbers, bankers,lawyers, repair people etc. Information education, product manuals, X-ray etc. Experiences amusement parks, cinemas, football &cricket leagues, travel tales etc. Persons artists, musicians, high profile professionals,politicians etc. Places cities, states, regions shopping malls etc. Organizations universities, multinational companiesetc. Ideas AIDS, dengue, polio, anti-smoking campaignsetc. 8. Marketing Myopia Failure to recognize the scope of the business Product-oriented rather than customer-orientedmanagement endangers future growth. e.g. railway,movies etc. Customers do not buy products, they buy solution orbenefit.The needs would stay the same but the wantswould change 9. Exchange Exchange is the act of obtaining a desired objectfrom someone by offering something in return. The essence of marketing is a transaction or exchange. Marketing occurs when people decide to satisfy needs and wants through exchange relationships. 10. Market Markets are the set of actual and potential buyers of aproduct. These buyers share a particular need or want that canbe satisfied through exchange relationships. 11. Designing a customer-driven marketing strategy Marketing management is the art and science ofchoosing target markets and building profitablerelationships with them. Find, attract, keep & grow target customers bycreating, delivering & communicating superiorcustomer value. The marketing manager must answer: What customers will we serve? (Target market) How can we best serve these customers? (Valueproposition) 12. Selecting customers to serveYou cant keep everybody happy By trying to serve all the customers, they maynot serve any customers well Market segmentation refers to dividing themarkets into segments of customers. Target marketing refers to which segments to goafter. Market segmentation must take place before atarget market is determined. 13. Market segmentation is the process of dividing amarket into separate subsets that behave in thesame way. 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, brandloyalties, shopping habits, etc. 14. Demarketing In case of excess demand, companies may practice demarketing to: Reduce the number of their customers Shift their demand temporarily or permanently Example WAPDA, Sui Gas 15. Choosing a value proposition Differentiating & Positioning yourself in the market The value proposition is the set of benefits orvalues a company promises to deliver to customersto satisfy their needs. It answers customers question why I should buyyour brand rather than a competitors? Example: Nokia is connecting people, where asApple iphone is touching is believing. 16. Marketing management orientationsProduction ProductSelling Marketing Societal concept concept concept conceptconcept 17. Production concept Production concept is the idea that consumerswill favor products that are available or highlyaffordable. Management should focus on improvingproduction and distribution efficiency. This concept is one of the oldest orientation thatguides sellers. Although useful in some situations such as highlycompetitive, price sensitive markets but can leadto marketing myopia. 18. Product concept Product concept is the idea that consumers willfavor products that offer the most quality,performance, and features. Organization should therefore devote its energyto: Design, pack and price the product attractively Place it in convenient distribution channels Bring it to the attention of people Convince buyers that it is a better product 19. Selling concept Selling concept is the idea that consumers willnot buy enough of the firms products unless itundertakes a large scale selling and promotioneffort. Focus is on creating sales transactions rather thanon buildinglong term profitable customerrelationship. The aim is to sell what the company makes ratherthan making what the market wants. 20. Marketing concept is the idea that achievingorganizational goals depends on knowing theneeds and wants of the target markets anddelivering the desired satisfactions better thancompetitors do. Customer focus and value are the paths to salesand profits. The job is not to find the right customers for your product but to find the right products for your customers. 21. Societal marketing Societal marketing concept is the idea that acompany should make good marketing decisionsby considering consumers wants, the companysrequirements, consumers long-term interests, andsocietys long-run interests. Examples: Bottled water companies contribute to global warming. Fast food affects societys health in the long run. 22. Society(Human welfare)Societal marketingconceptConsumers Company(Want satisfaction) (Profits ) 23. Preparing an Integrated MarketingPlan and Program Marketing mix is the set of tools classified as 4Ps: Product a need satisfying market offering Price the charge for the offering Place the availability of the offering Promotion communicating with the customers Integrated marketing program is acomprehensive plan that communicates anddelivers the intended value to chosen customers. 24. Customer Relationship Management (CRM) The overall process of building and maintaining profitablecustomer relationships by delivering superior customervalue and satisfaction. It deals with the aspects of acquiring, keeping and growingcustomers. 25. Relationship Building Blocks:Customer Value and SatisfactionCustomer- Customerperceived valuesatisfaction The customers The extent to whichevaluation ofa productsdifference between perceivedall the benefits and performanceall the costs of a matches a buyersmarketing offerexpectationsrelative to those ofcompeting offers. 26. Customer Value & Satisfaction Customers form expectations about the value andsatisfaction that various marketing offerings willdeliver and buy accordingly. Satisfied customers buy again and tell others. Dissatisfied customers often switch to competitorsand pass on their bad experience. Marketers must set the right level of expectationsto ensure customer satisfaction. Customer satisfaction leads to customer relationships 27. Customer satisfaction Performance < Expectation = Dissatisfied Performance = Expectation = Satisfied Performance > Expectation = Delighted 28. Customer Relationship Levels and Tools Full Partnerships -Basic Relationships -company with fewcompany with many customers and high low margin customersmargins Tools: brand buildingTools: one to one advertising, sales communication,promotion, website etc. customizedcommunication 29. The changing nature of Customer Relationships Relating with more carefully selected customers Today marketers engage in selective relationship management by targeting fewer, more profitable customers. Relating more deeply & interactively Marketers are using more interactive two way relationships through emails, blogs, websites, video sharing to online communities and social networks such as face book and you tube. This has led to rise in Consumer -Generated Marketing. 30. Partner relationship management Partners inside the company is every function areainteracting with customers Partners outside the company is how marketersconnect with their suppliers, channel partners,and competitors by developing partnerships 31. Creating Customer Loyalty & Retention The final step involves capturing value in return inform 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 createscustomer delight. Delighted customers remain loyal and talkfavorably to others about the company and itsproducts. 32. Customer equity Customer equity is the total combined customer lifetimevalues of all of the companys customers. The only value your company will ever create is the valuethat comes from customers the ones you have now andthe ones you have in the future. The more loyal the firms profitable customers, the higherthe firms customer equity. 33. The changing marketing landscapeRapidDigital age globalizationEthics and Not-for-profitsocialmarketingresponsibility