Kotler POM 13e

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Chapter 1: Marketing: Creating and Capturing Customer Value

Chapter 1

MARKETING: CREATING AND CAPTURING

CUSTOMER VALUE

CHAPTER OVERVIEWUse Power Point Slide 1-1 Here

In this chapter, we introduce the asic concepts o! marketing" It starts with the #uestion, $%hat ismarketing&' Simpl( put, marketing is managing pro!itale customer relationships" )he aim o! marketing is to create *alue for customers and to capture *alue from customers in return" +et isdiscussed the !i*e steps in the marketing process !rom understanding customer needs, todesigning customer-dri*en marketing strategies and programs, to uilding customer relationshipsand capturing *alue !or the !irm" .inall( is discussed the ma/or trends and !orces a!!ecting

marketing in this age o! customer relationships"

CHAPTER OBJECTIVESUse Power Point Slide 1-0 Here

1" e!ine marketing and outline the steps in the marketing process"0" 2plain the importance o! understanding customers and the marketplace, and identi!( the

!i*e core marketplace concepts"3" Identi!( the ke( elements o! a customer-dri*e marketing strateg( and discuss the

marketing management orientations that guide marketing strateg("4" iscuss customer relationship management, and identi!( strategies !or creating *alue for

customers and capturing *alue from customers in return"5" escrie the ma/or trends and !orces that are changing the marketing landscape in this

age o! relationships"

CHAPTER OUTLINE

P" 0 INTRODUCTION

Procter 6 7amle 8the makers o! )ide9 is a great marketingorganiation" )ide controls 43 percent o! the detergentmarket"

)o keep )ide competiti*e in the market it ecame importantto determine how )ide $speaks' to customers"

)ide was *iewed as getting clothes clean, ut also as eingan $arrogant, masculine' rand"

P67 was success!ul in repositioning the product as eing

P" 3;d: )ide

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Part 1: e!ining Marketing and the Marketing Process

more rele*ant in the da(-to-da( eistence o! its largel(!emale clientele"

)oda(>s success!ul companies ha*e one thing in common:the( are strongl( customer !ocused and hea*il( committed

to marketing"

Openn! V!nette "#e$t%n$

1" %h( was )ide percei*ed in consumers> minds as eing an $arrogant, masculine' rand&

0" %ho is the main market !or )ide&3" %hat did P67 do to e!!ecti*el( reposition this

powerhouse rand&

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WHAT IS MARKETING&

; simple de!inition o! marketing is managing profitablecustomer relationships.

Marketing must oth attract new customers and grow thecurrent customers"

2*er( organiation must per!orm marketing !unctions, not /ust !or-pro!it companies"

+on-pro!its 8colleges, hospitals, churches, etc"9 also mustalso per!orm marketing"

Mar'etn! De(ne)

Most people think o! marketing as selling and?or ad*ertising @$telling and selling"'

Marketing must !ocus on satis!(ing customer needs"

%e de!ine *ar'etn! as the process ( which companiescreate *alue !or customers and uild strong customer relationships in order to capture *alue !rom customers inreturn"

Ae( )erm:Marketing

A$$!n*ent$+ Re$%#r,e$

Use Discussing the Concepts 1 hereUse Application Question 1 hereUse Web Resource 1 here

Tr%#-.e$h%%tn! Tp

.or most students, this will e their !irst introductionto marketing and all its rami!ications" )o most o!

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them, marketing is nothing more than selling and?or ad*ertising, and this gets rein!orced dail( when the(see $marketing' /o ads that are reall( sales positions" It helps to get students talking aout whatmarketing is, and to gi*e eamples o! what the(

think is reall( good marketing" )r( to ring incontemporar( eamples that the students can relateto"

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The Mar'etn! Pr%,e$$

.igure 1-1 shows the !i*e-step marketing process"1" Understand the marketplace and customer needs and

wants"0" esign a customer-dri*en marketing strateg("

3" Construct a marketing program that deli*ers superior *alue"

4" uild pro!itale relationships and create customer delight"

5" Capture *alue !rom customers to create pro!its andcustomer #ualit("

In the !irst !our steps, companies work to understandconsumers, create customer *alue, and uild strongcustomer relationships"

In the !inal step, companies reap the rewards o! creatingsuperior customer *alue" ( creating *alue for consumers,the( in turn capture *alue from consumers in the !orm o! sales, pro!its, and long-term customer e#uit("

Chapter D/ecti*e 1

P" 5.igure 1"1: ;Simple Model o! theMarketing Process


Use Think-Pair-Share 1 here

P" B

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UNDERSTANDING THE MARKETPLACE AND

CUSTOMER NEEDS

.i*e core customer and marketplace concepts are critical:819 nees! "ants! an emansE 809 marketing offers#proucts! ser$ices! an e%periences&E 839 $alue an satisfactionE 849 e%changes an relationshipsE and 859markets"

C#$t%*er Nee)$+ Want$+ an) De*an)$

Chapter D/ecti*e 0

P" BAe( )erms: +eeds,

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)he most asic concept underl(ing marketing is that o! h#*an nee)$/

Human nee)$ are states o! !elt depri*ation" )he( include

ph'sical! social! an ini$iuals needs" )hese needs werenot created ( marketersE the( are a asic part o! the humanmakeup"

Want$ are the !orm human needs take as the( are shaped (culture and indi*idual personalit(" ;n ;merican nees !ood ut "ants a ig Mac"

%hen acked ( u(ing power, wants ecome )e*an)$"

)he est marketing companies go to great lengths to learn

and understand their customers> needs, wants, and demands"

%ants, emands


Use Discussing the Concepts ( hereUse Aitional Pro)ect 1 hereUse Think-Pair-Share ( here

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Mar'et O((ern!$0Pr%)#,t$+ Ser,e$+ an) E2peren,e$

+eeds and wants are !ul!illed through market o!!erings@ some comination o! products, ser*ices, in!ormation, or

eperiences o!!ered to a market to satis!( a need or want"

Market o!!erings include proucts and ser$ices @acti*itiesor ene!its o!!ered !or sale that are essentiall( intangile anddo not result in the ownership o! an(thing"

Mar'etn! *3%pa occurs when a compan( ecomes sotaken with their own products that the( lose sight o! underl(ing customer needs"

P" BAe( )erm: MarketD!!ering

P" BAe( )erm:Marketing M(opia

P" F;d: U+C.

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C#$t%*er Va.#e an) Sat$(a,t%n

Customers !orm epectations aout the *alue andsatis!action that *arious market o!!erings will deli*er and u( accordingl("

Satis!ied customers u( again and tell others aout their good eperiences"

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issatis!ied customers switch to competitors and disparagethe product to others"

Customer *alue and customer satis!action are ke( uilding

locks !or de*eloping and managing customer relationships"

E2,han!e$ an) Re.at%n$hp$

E2,han!e is the act o! otaining a desired o/ect !romsomeone ( o!!ering something in return"

Marketing consists o! actions taken to uild and maintaindesirale echange relationships with target audiences"

P" FAe( )erm:2change

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PP) 1-1=

Mar'et$

; *ar'et is the set o! actual and potential u(ers o! a product"

Marketing means managing markets to ring aout pro!itale customer relationships"

.igure 1"0 shows the main elements in a modern marketings(stem"

P" FAe( )erm: Market

P" G.igure 1"0: ;Modern MarketingS(stem


Use *utsie +%ample 1 an ( here

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DESIGNING A CUSTOMER4DRIVEN MARKETING

STRATEG5

Mar'etn! *ana!e*ent is de!ined as the art and scienceo! choosing target markets and uilding pro!italerelationships with them"

)he marketing manager must answer two important#uestions:

1" %hat customers will we ser*e 8what>s our targetmarket9&0" How can we ser*e these customers est 8what>s our

*alue proposition9&

Chapter D/ecti*e 3

P" GAe( )erm:MarketingManagement


Use Discussing the Concepts , here

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Se.e,tn! C#$t%*er$ t% Sere

; compan( must decide "ho it will ser*e"

It does this ( di*iding the market into segments o!

customers 8market segmentation9 and selecting whichsegments it will go a!ter 8target marketing 9"

Marketing managers know the( cannot ser*e all customers"( tr(ing to do so, the( end up not ser*ing an( well"

Demarketing is the act o! purpose!ull( reducing the numer o! customers or to shi!t their demand temporaril( or permanentl("


Use Application Question ( hereUse Think-Pair-Share , here

Tr%#-.e$h%%tn! Tp

emarketing is alwa(s a prolem !or students" Mosto! them ha*e not (et encountered an(thing like it")he light ul seems to go on, though, when (outalk aout +ational Parks and how crowded the( get,and e!!orts to get people to go see them during o!!- peak tra*el times" Ha*ing students come up withtheir own eamples will increase the le*el o! understanding

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Marketing management is customer management andeman management.

Ch%%$n! a Va.#e Pr%p%$t%n

; compan(>s $alue proposition is the set o! ene!its or *alues it promises to deli*er to consumers to satis!( their needs" 8M% promises $the ultimate dri*ing machine"'9

Such *alue propositions ifferentiate one rand !rom

another"

Mar'etn! Mana!e*ent Orentat%n$

Marketing management wants to design strategies that will uild pro!itale relationships with target consumers" utwhat philosoph' should guide these marketing strategies&

P" ;d: and Jo*er

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)here are !i*e alternati*e concepts under whichorganiations design and carr( out their marketingstrategies:

1) The Production Concept

)he pr%)#,t%n ,%n,ept holds that consumers will !a*or products that are a*ailale and highl( a!!ordale"

Management should !ocus on impro*ing production anddistriution e!!icienc("

2) The Product Concept

)he pr%)#,t ,%n,ept holds that consumers will !a*or products that o!!er the most in #ualit(, per!ormance, and

inno*ati*e !eatures"

Under this concept, marketing strateg( !ocuses on makingcontinuous product impro*ements"

3) The Selling Concept

)he $e..n! ,%n,ept holds that consumers will not u(enough o! the !irm>s products unless it undertakes a large-scale selling and promotion e!!ort"

)he concept is t(picall( practiced with unsought goods@ those that u(ers do not normall( think o! u(ing, such asinsurance or lood donations"

)hese industries must e good at tracking down prospectsand selling them on product ene!its"

4) The Marketing Concept

)he *ar'etn! ,%n,ept holds that achie*ing organiationalgoals depends on knowing the needs and wants o! targetmarkets and deli*ering the desired satis!actions etter thancompetitors do"

Under the marketing concept, customer !ocus and *alue arethe paths to sales and pro!its"

It *iews marketing not as $hunting,' ut as $gardening"'

P" ,1=Ae( )erms:Production Concept,Product Concept,Selling Concept,Marketing Concept

P" 1=.igure 1"3: )heSelling andMarketing ConceptsContrasted

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)he /o is not to !ind the right customers !or (our product ut to !ind the right products !or (our customers"

Customer-ri$en companies research current customersdeepl( to learn aout their desires, gather new product and

ser*ice ideas, and test proposed product impro*ements"

Customer-ri$ing marketing is understanding customer needs e*en etter than customers themsel*es do andcreating products and ser*ices that meet eisting and latentneeds"

5) The Societal Marketing Concept

)he $%,eta. *ar'etn! ,%n,ept #uestions whether the puremarketing concept o*erlooks possile con!licts etween

consumer short-run "ants and consumer long-run "elfare"

)he societal marketing concept holds that marketingstrateg( should deli*er *alue to customers in a wa( thatmaintains or impro*es oth the consumer>s an the societ'swell-eing"

Ae( )erm: SocietalMarketing Concept

P" 11Photo: Customer-

ri*en Marketing

P" 11.igure 1"4:ConsiderationsUnderl(ing theSocietal MarketingConcept

P" 10;d: Kohnson 6Kohnson


Use Discussing the Concepts hereUse Aitional Pro)ect ( hereUse /ocusing on +thics here

Use Web Resource ( here Tr%#-.e$h%%tn! Tp

Societal marketing is also something that can e alittle unclear to students" %h( should !ast !oodchains, !or instance, e responsile !or the nation>soesit( 8/ust one *er( topical discussion point9&Understanding how one should alance the need !or pro!its with what some might consider eing $so!t'issues can e di!!icult at times" ;nd that can e madee*en more di!!icult among the politicall(-astutestudents, as the( can easil( lead the class into a le!t

*ersus right discussion on indi*idual *ersuscorporate *ersus go*ernmental responsiilit(" )r( tonot let that happen, instead !ocusing on howcompanies can actuall( increase their re*enue and pro!its ( showing that the( care aout their customers and their communities" +ewman>s Dwn isa rand that could e discussed, as most pro!its aredonated to charities, and the( ha*e mo*ed strongl(

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into ensuring a sustainale en*ironment"

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PREPARING AN INTEGRATED MARKETING PLAN

AND PROGRAM

)he compan(>s marketing strateg( outlines whichcustomers the compan( will ser*e and how it will create*alue !or these customers"

+et, the marketer de*elops an integrated marketing program that will actuall( deli*er the intended *alue totarget customers"

)he marketing program consists o! the !irm>s marketing mi%, the set o! marketing tools the !irm uses to implementits marketing strateg("

)he marketing mi tools are classi!ied into the four Ps o! marketing: product, price, place, and promotion"

)he !irm lends all o! these marketing mi tools into acomprehensi*e integrate marketing program thatcommunicates and deli*ers the intended *alue to chosencustomers"

Re$%#r,e$+ App.,at%n$

Use /ocusing on Technolog' here



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P" 10

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PP) 1-03

PP) 1-04

BUILDING CUSTOMER RELATIONSHIPS

C#$t%*er Re.at%n$hp Mana!e*ent

Customer relationship management is the most importantconcept o! modern marketing"

C#$t%*er re.at%n$hp *ana!e*ent is the o*erall processo! uilding and maintaining pro!itale customer relationships ( deli*ering superior customer *alue andsatis!action"

It deals with all aspects o! ac#uiring, keeping, and growingcustomers"

Relationship Building Blocks: Custoer !alue and

Satis"action

)he ke( to uilding lasting customer relationships is tocreate superior customer *alue and satis!action"

C#$t%*er Va.#e/ )his is the customer>s e*aluation o! thedi!!erence etween all the ene!its and all the costs o! amarket o!!ering relati*e to those o! competing o!!ers"

Customers o!ten do not /udge *alues and costs $accuratel('or $o/ecti*el("'

Customers act on ,#$t%*er per,ee) a.#e"

C#$t%*er Sat$(a,t%n/ C#$t%*er $at$(a,t%n depends onthe product>s percei*ed per!ormance relati*e to a u(er>sepectations"

I! the product>s per!ormance !alls short o! epectations, thecustomer is dissatis!ied" I! per!ormance matchesepectations, the customer is satis!ied" I! per!ormanceeceeds epectations, the customer is highl( satis!ied or delighted"

;lthough the customer-centered !irm seeks to deli*er highcustomer satis!action relati*e to competitors, it does notattempt to a#ii$e customer satis!action"

Chapter D/ecti*e 4

P" 13Ae( )erms:CustomerJelationshipManagement,Customer-Percei*edValue

P" 14;d: iJoot Jooma

P" 14Ae( )erm:CustomerSatis!action

P" 15Photo: Jit-Carlton

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PP) 1-05

; compan( can alwa(s increase customer satis!action (lowering its price or increasing its ser*ices" ut this ma(result in lower pro!its"

)he purpose o! marketing is to generate customer *alue

pro!ital("

Custoer Relationship %e&els and Tools

Companies can uild customer relationships at man( le*els"

;t one etreme, a compan( with man( low-margincustomers ma( seek to de*elop basic relationships withthem"

;t the other etreme, in markets with !ew customers and

high margins, sellers want to create full partnerships withcustomers"

Man( companies o!!er fre0uenc' marketing programs thatreward customers who u( !re#uentl( or in large amounts"

Companies sponsor club marketing programs that o!!er memers special ene!its and create memer communities"8.or eample, Harle(-a*idson sponsors the Harle(Dwners 7roup LH"D"7""9

P" 1BPhoto: H"D"7"

P" 1B

PP) 1-0B

The Chan!n! Nat#re %( C#$t%*er Re.at%n$hp$

Nesterda(>s ig companies !ocused on mass marketing to allcustomers at arm>s length"

)oda(>s companies are uilding deeper, more direct, andmore lasting relationships with care!ull( selected customers"

Relating 'ith More Care"ull( Selected Custoers

Called selecti$e relationship management , man( companiesnow use customer pro!itailit( anal(sis to weed out losingcustomers and to target winning ones !or pampering"

Relating More eepl( and *nteracti&el(

)oda(>s marketers are incorporating interacti*e approachesthat help uild targeted, two-wa( customer relationships"

Increasingl(, marketers are using new communications

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approaches in uilding closer customer relationships"

Consumers ha*e more in!ormation aout rands than e*er e!ore"

Companies can no longer rel( on marketing ( intrusion"

Companies must practice marketing ( attraction @creatingmarket o!!erings and messages that n%.e consumersrather than interrupt them"

C%n$#*er4!enerate) *ar'etn! has ecome a signi!icantmarketing !orce"

P" 1GPhoto: +ike

P" 1Ae( )erm:Customer-7eneratedMarketing


Use Application Question , here

Use Real arketing 1.1 an 1.( hereUse 2ieo Case hereUse Discussing the Concepts 3 hereUse Small 4roup Assignment 1 an ( hereUse Aitional Pro)ect , hereUse Think-Pair-Share hereUse Web Resource , here

P" 1PP) 1-0F

PP) 1-0G

PP) 1-0

Partner Re.at%n$hp Mana!e*ent

Partners *nside the Copan(

2*er( emplo(ee must e customer !ocused"

a*id Packard, late co-!ounder o! Hewlett-Packard, said,$Marketing is !ar too important to e le!t onl( to themarketing department"'

)oda(, !irms are linking all departments in the cause o! creating customer *alue"

Jather than assigning onl( sales and marketing people to

customers, the( are !orming cross-!unctional customer teams"

Marketing Partners +utside the ,ir

Marketing channels consist o! distriutors, retailers, andothers who connect the compan( to its u(ers"

P" 1Ae( )erm: PartnerJelationship

Management

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)he suppl' chain descries a longer channel, stretching!rom raw materials to components to !inal products that arecarried to !inal u(ers"

)hrough suppl' chain management , man( companies toda(

are strengthening their connections with partners all alongthe suppl( chain"

P" 01

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P" 01

CAPTURING VALUE 6ROM CUSTOMERS

)he !irst !our steps in the marketing process in*ol*e uilding customer relationships" )he !inal step in*ol*escapturing *alue in return"

( creating superior customer *alue, the !irm creates highl(satis!ied customers who sta( lo(al and u( more"

Creatn! C#$t%*er L%3a.t3 an) Retent%n

)he aim o! customer relationship management is to createnot /ust customer satis!action, ut customer delight"

)his means that companies must aim high in uildingcustomer relationships"

Customer delight creates an emotional relationship with a product or ser*ice, not /ust a rational pre!erence"

Companies are realiing that losing a customer meanslosing more than a single sale" It means losing ,#$t%*er.(et*e a.#e/

P" 00Photo: Steweonard

P" 00

Ae( )erm:Customer i!etimeValue


Use arketing b' the 5umbers hereUse 6ni$iual Assignment 1 hereUse Web Resource here

P" 00

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Gr%7n! Share %( C#$t%*er

Share %( ,#$t%*er is de!ined as the share the compan(gets o! customers purchasing in their product categories"8)hus, anks want to increase $share o! wallet"'9

B#.)n! C#$t%*er E8#t3

Companies want not onl( to create pro!itale customers, ut

P" 00

Ae( )erm: Share o!Customer

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to $own' them !or li!e, capture their customer li!etime*alue, and earn a greater share o! their purchases"

-hat *s Custoer ./uit(0

C#$t%*er e8#t3 is the total comined customer li!etime*alues o! all o! the compan(>s current and potentialcustomers"

Clearl(, the more lo(al the !irm>s pro!itale customers, thehigher the !irm>s customer e#uit("

Customer e#uit( ma( e a etter measure o! a !irm>s per!ormance than current sales or market share" Building the Right Relationships 'ith the Right

Custoers

+ot all customers, not e*en all lo(al customers, are goodin*estments"

.igure 1"5 classi!ies customers into one o! !our relationshipgroups, according to their pro!itailit( and pro/ected lo(alt("

$Strangers' show low potential pro!itailit( and little pro/ected lo(alt(" )he relationship management strateg( !or these customers is simple: on>t in*est an(thing in them"

$utter!lies' are potentiall( pro!itale ut not lo(al" )hecompan( should use promotional lites to attract them,create satis!(ing and pro!itale transactions with them, andthen cease in*esting in them until the net time around"

$)rue !riends' are oth pro!itale and lo(al" )here is astrong !it etween their needs and the compan(>s o!!erings")he !irm wants to make continuous relationship in*estmentsto delight these customers and retain and grow them"

$arnacles' are highl( lo(al ut not *er( pro!itale" )hereis a limited !it etween their needs and the compan(>so!!erings"

Important point: i!!erent t(pes o! customer re#uiredi!!erent relationship management strategies"

)he goal is to uild the right relationships with the right

;d: Cadillac

P" 03Ae( )erm:Customer 2#uit(

P" 04.igure 1"5:CustomerJelationship 7roups

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P" 04

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customers.

THE CHANGING MARKETING LANDSCAPE

)his section looks at !our ma/or de*elopments: the new

digital age, rapid gloaliation, the call !or more ethics andsocial responsiilit(, and the growth in not-!or-pro!itmarketing"

The D!ta. A!e

)he recent technolog( oom has created a digital age"

)he most dramatic new technolog( is the Internet"

e(ond competing in traditional market places, companies

now ha*e access to eciting new market spaces"

)he Internet has now ecome a gloal phenomenon"

)he numer o! Internet users worldwide now stands atalmost 1"0 illion and will reach an estimated 3"4 illion (0=15"

Dnline marketing is now the !astest growing !orm o! marketing"

In addition to the $click-onl(' dot-coms, most traditional$rick-and-mortar' companies ha*e now ecome $click-and-mortar' companies"

Some B5 percent o! ;merican online users now use theInternet to shop"

P" 05Ae( )erm: Internet

Chapter D/ecti*e 5

P" 0B;d: unkin> onuts

App.,at%n$+ Re$%#r,e$

Use Discussing the Concepts 7 hereUse 2ieo Case here

Tr%#-.e$h%%tn! Tp

)raditional-age undergraduates ha*e spent their entire li*es with technolog(, and so some o! themcan actuall( snicker when the discussion turns tohow technolog( has changed usiness in general andmarketing more speci!icall(" ; discussion o! thedi!!iculties o! connecting to consumers without theInternet is warranted" How would the studentsapproach a one-on-one relationship with millions o!

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customers i! the( didn>t ha*e email or the Internet or last !aes&

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Rap) G.%-a.9at%n

Marketers are now connected globall' with their customersand marketing partners"

;lmost e*er( compan(, large or small, is touched in somewa( ( gloal competition"

;merican !irms ha*e een challenged at home ( theskill!ul marketing o! 2uropean and ;sian multinationals"

Mconald>s now ser*es 50 million customers dail( in31,B== restaurants worldwide@some B5 percent o! its

re*enues come !rom outside the United States"

)oda(, companies are u(ing more supplies andcomponents aroad"

The Ca.. (%r M%re Eth,$ an) S%,a. Re$p%n$-.t3

Marketers are eing called upon to take greater responsiilit( !or the social and en*ironmental impact o! their actions"

Corporate ethics and social responsiilit( ha*e ecome hottopics !or almost e*er( usiness"

.orward-looking companies *iew sociall( responsileactions as an opportunit( to do well ( doing good"

The Gr%7th %( N%t4(%r4Pr%(t Mar'etn!

)he nation>s nonpro!its !ace sti!! competition !or supportand memership" Sound marketing can help them to attractmemership and support"

SO+ WHAT IS MARKETING& PULLING IT ALL

TOGETHER

Marketing is the process o! uilding pro!itale customer relationships ( creating *alue !or customers and capturing*alue in return"

P" 0FPhoto: Mconald>s

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)he !irst !our steps in the marketing process create *alue for customers"

)he !inal step in the process allows the compan( to capture*alue from customers"

;!ter the marketing strateg( is de!ined, the marketing program is de*eloped, which consists o! the !our Ps"

%hen uilding *alue !or customers, companies must utiliemarketing technolog(, go gloal in oth selling andsourcing, and act in an ethical and sociall( responsile wa("

.igure 1"B shows a model o! the marketing process"

P" 0.igure 1"B: ;n2panded Model o!the MarketingProcess

Re$%#r,e$+ App.,at%n$Use 6ni$iual Assignment ( hereUse Compan' Case here

END O6 CHAPTER MATERIAL

D$,#$$n! the C%n,ept$

1" %hat is marketing and what is its primar( goal& 8;;SC: Communication9

Ans"er8

Marketing is managing pro!itale customer relationships" )he two!old goal o! marketing is toattract new customers ( promising superior *alue and to keep and grow current customers ( deli*ering satis!action" Hence, marketing is de!ined as the process ( which companiescreate *alue !or customers and uild strong customer relationships in order to capture *alue!rom customers in return. )oda(, marketing must e understood not in the old sense o! making a sale ut in the new sense o! satisf'ing customer nees" I! the marketer understandsconsumer needsE de*elops products and ser*ices that pro*ide superior customer *alueE and prices, distriutes, and promotes them e!!ecti*el(, this goal will e achie*ed easil("

0" Compare and contrast customer needs, wants, and demands" escrie the need *ersus thewant !or the !ollowing products: 7atorade, +ike shoes, and iPod" 8;;CS: CommunicationEJe!lecti*e )hinking9

Ans"er8

)he most asic concept underl(ing marketing is that o! human needs" Human nee)$ arestates o! !elt depri*ation" )he( include asic ph'sical needs !or !ood, clothing, warmth, and

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sa!et(E social needs !or elonging and a!!ectionE and ini$iual needs !or knowledge andsel!-epression" )hese needs were not created ( marketersE the( are a asic part o! thehuman makeup" Want$ are the !orm human needs take as the( are shaped ( culture andindi*idual personalit(" %ants are shaped ( one>s societ( and are descried in terms o! o/ects that will satis!( needs" %hen acked ( u(ing power, wants ecome )e*an)$"

7i*en their wants and resources, people demand products with ene!its that add up to themost *alue and satis!action"

.or 7atorade, there is a ph(sical need !or h(dration, and the consumer wants a 7atorade asthe need satis!ier" Nou might ask students wh( 7atorade& )he answer might e that theconsumer saw an ad, that a team?school had 7atorade a*ailale, or that the consumer pre!ersthe taste" .or +ike the need is a ph(sical need !or athletic shoes or the ps(chological need !or status" .or an iPod, the need is likel( a more hedonic one !or entertainment or indi*idual sel!-epression"

3" 2plain how a compan( designs a customer-dri*en marketing strateg(" 8;;CS:

Communication9

Ans"er8

)o design a customer-dri*en marketing strateg(, the marketing manager must answer twoimportant #uestions: What customers "ill "e ser$e #"hats our target market&9 and :o" can"e ser$e these customers best #"hats our $alue proposition&9 )he compan( must !irst decide"ho it will ser*e@that is, the target market" It does this ( di*iding the market into segmentso! customers 8market segmentation9 and selecting which segments it will go a!ter 8target marketing 9" Some people think o! marketing management as !inding as man( customers as possile and increasing demand" ut marketing managers know that the( cannot ser*e allcustomers in e*er( wa(" ( tr(ing to ser*e all customers, the( ma( not ser*e an( customerswell" Instead, the compan( wants to select onl( customers that it can ser*e well and pro!ital(" Ultimatel(, marketing managers must decide which customers the( want to targetand on the le*el, timing, and nature o! their demand" Simpl( put, marketing management iscustomer management and eman management " )he compan( must also decide how it willser*e targeted customers@how it will ifferentiate an position itsel! in the marketplace" ;compan(>s $alue proposition is the set o! ene!its or *alues it promises to deli*er toconsumers to satis!( their needs"

4" %hat are the !i*e di!!erent marketing management orientations& %hich orientation do (ou elie*e (our school !ollows when marketing itsel!& 8;;CS: CommunicationE Je!lecti*e)hinking9

;nswer:

)he !i*e alternati*e concepts under which organiations design and carr( out their marketingstrategies are: the production, product, selling, marketing ! and societal marketing concepts")he pr%)#,t%n ,%n,ept holds that consumers will !a*or products that are a*ailale andhighl( a!!ordale" )here!ore, management should !ocus on impro*ing production and

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distriution e!!icienc(" )he pr%)#,t ,%n,ept holds that consumers will !a*or products thato!!er the most in #ualit(, per!ormance, and inno*ati*e !eatures" Under this concept,marketing strateg( !ocuses on making continuous product impro*ements" )he $e..n!,%n,ept holds that consumers will not u( enough o! the !irm>s products unless it undertakesa large-scale selling and promotion e!!ort" )he *ar'etn! ,%n,ept holds that achie*ing

organiational goals depends on knowing the needs and wants o! target markets anddeli*ering the desired satis!actions etter than competitors do" Under the marketing concept,customer !ocus and *alue are the paths to sales and pro!its" Instead o! a product-centered$make and sell' philosoph(, the marketing concept is a customer-centered $sense andrespond' philosoph(" )he $%,eta. *ar'etn! ,%n,ept #uestions whether the pure marketingconcept o*erlooks possile con!licts etween consumer short-run "ants and consumer long-run "elfare. )he societal marketing concept holds that marketing strateg( shoulddeli*er *alue to customers in a wa( that maintains or impro*es oth the consumer>s an the societ's well-eing"

Students> responses will *ar( when discussing their school>s marketing" Man( students at a

large state school might !eel a it o! the production concept, since the school pro*idesa!!ordale education !or a large numer o! students" I! a school tends to market *er(inno*ati*e programs and markets itsel! on its high standings and selecti*it(, students mightsee their college as !ollowing the product concept" )he selling concept might come through i! students !eel their school has a strong recruitment program which reaches man( high schoolstudents" Students might mention the marketing concept i! the( !eel the school is customer dri*en and ases its programs and o!!erings on student !eedack" ; !ew students mightmention the societal marketing concept i! their school o!!ers programs or research that reall(helps societ("

5" 2plain the di!!erence etween share of customer and customer e0uit'" %h( are theseconcepts important to marketers& 8;;CS: CommunicationE Je!lecti*e )hinking9

Ans"er8

Share %( ,#$t%*er is the share a usiness gets o! the customer>s purchasing in their productcategories" .or eample, consumers purchase !inancial ser*ices !rom anks and other !inancial institutions such as insurance companies" Man( insurance companies now o!!er anking and in*estment ser*ices to capture a greater share o! an indi*idual consumer>s purchases o! these o!!erings" Increasing share o! customer is one wa( to increase acustomer>s li!etime *alue@the *alue to a compan( o! a satis!ied, lo(al customer o*er his or her li!etime" )o increase share o! customer, !irms can o!!er greater *ariet( to currentcustomers or create programs to cross-sell and up-sell in order to market more products andser*ices to eisting customers" Customer equity is the total comined customer li!etime *alueso! all o! the compan(>s current and potential customers" Clearl(, the more lo(al the !irm>s pro!itale customers, the higher the !irm>s customer e#uit(" Customer e#uit( ma( e a etter measure o! a !irm>s per!ormance than current sales or market share" %hereas sales andmarket share re!lect the past, customer e#uit( suggests the !uture"

Understanding these concepts is important to marketers ecause de*eloping marketing



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acti*ities that create *alue !or customers should, ultimatel(, create *alue in return, in the !ormo! current and !uture sales, market share, and pro!its" ( creating superior customer *alue,the !irm creates highl( satis!ied customers who sta( lo(al and u( more" )his, in turn, meansgreater long-run returns !or the !irm"

B" How has the Internet changed consumers& Marketers& 8;;CS: Communication9

Ans"er8

)he eplosi*e growth in computer, communications, and other digital technologies has had ama/or impact on the wa(s companies ring *alue to their customers" Perhaps the mostdramatic new digital technolog( is the Internet, with usage growing phenomenall(worldwide" Marketers ha*e new wa(s to learn aout and track customers and to create products and ser*ices tailored to indi*idual customer needs" )he Internet is helping marketersto communicate with customers in large groups or one-to-one" )his digital shi!t means thatmarketers can no longer epect consumers to alwa(s seek them out, nor can the( alwa(s

control con*ersations aout their rands" )he phenomenal surge and meltdown o! the $dot-coms' has resulted in a new *ersion o! the Internet@a $second coming' o! the %e o!tenre!erred to as Web (.;" %e 0"= in*ol*es a more reasoned and alanced approach tomarketing online" It also o!!ers a !ast-growing set o! new %e technologies !or connectingwith customers, such as %elogs 8logs9 and *logs 8*ideo-ased logs9, social networkingsites, and *ideo-sharing sites" )he interacti*e, communit(-uilding nature o! these newtechnologies makes them ideal !or relating with customers"

App.3n! the C%n,ept$

1" ;sk !i*e usiness people !rom di!!erent industries 8!or eample, !ood ser*ice, retailing,

consumer product manu!acturing, industrial product manu!acturing, education, and so on9what the( think marketing is" 2*aluate their de!initions and discuss whether or not the( areconsistent with the goal o! creating customer *alue and managing pro!itale customer relationships" 8;;CS: CommunicationE Je!lecti*e )hinking9

Ans"er8

Students> responses will *ar( and the( will likel( !ind that de!initions o! marketing will di!!er among the usiness people the( speak to" Students should demonstrate an understanding o! the goal o! managing pro!itale customer relationships ( attracting new customers withsuperior *alue and keeping and growing current customers ( deli*ering satis!action"

Students should e ale to distinguish whether or not the organiation a usiness personrepresents is working to achie*e that goal"

0" In a small group, de*elop a marketing plan !or a pet oarding ser*ice" %ho is (our targetmarket& How will (ou enale customers to get the est *alue& e!ine what (ou mean (*alue and de*elop the *alue proposition o! (our o!!ering !or this target market" 8;;CS:CommunicationE Je!lecti*e )hinking9

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Ans"er8

Students> responses will *ar(" Dne ke( *ariale is how their target market de!ines $*alue"'Some pet owners might want asic !ood and shelter !or their pets while the( are awa(,whereas others ma( want enriching eperiences and pampering !or their elo*ed pets" Still

others ma( want con*enience, such as that o!!ered ( recent oarding !acilities appearing atma/or airports" Jegardless, the groups must decide how the usiness will ser*e targetedcustomers to achie*e the *alue epected@how it will ifferentiate an position itsel! in themarketplace" Its $alue proposition is the set o! ene!its or *alues it promises to deli*er toconsumers to satis!( their needs"

3" e!ine the di!!erent relationship le*els companies can uild with customers" Pick a compan(and descrie the t(pes o! relationships (ou ha*e with it" 8;;C;: CommunicationEJe!lecti*e )hinking9

Ans"er8

Companies can uild customer relationships at man( le*els, depending on the nature o! thetarget market" ;t one etreme, a compan( with man( low-margin customers ma( seek tode*elop basic relationships with them" .or eample, man( consumer packaged-goodsmanu!acturers de*elop relationships with customers at this le*el, and marketers do not get toknow customers personall(" Howe*er, dataases allow marketers to send targeted messages,such as direct mail coupons, to customers" ;t the other etreme, in markets with !ewcustomers and high margins, sellers want to create full partnerships with ke( customers" .or eample, P67 customer teams work closel( with ma/or retail customers, such as %al-Mart"It>s unlikel( students will ha*e a personal eample o! a relationship with a compan( at thisle*el" )oda(, most leading companies are de*eloping customer lo(alt( and retention programs through fre0uenc' marketing programs" Students will likel( ha*e se*eral eampleso! these 8!or eample, Suwa(, Pia Hut, and Smoothie Aing cardsE !re#uent !l(er programs9" Dther companies sponsor club marketing programs that o!!er memers special ene!its and create memer communities" .or eample, Harle(-a*idson sponsors theHarle( Dwners 7roup 8H"D"7"9, which pro*ides *alue through shared common passion,magaines, a roadside assistance program, and other amenities"

6%,#$ %n Te,hn%.%!3

2mracing the marketing concept is one thingE implementing it is another" How do marketersknow what consumers> needs and wants are so that the( can de*elop a marketing strateg( andmi to satis!( those needs and wants& Jesearch, o! course" ut that takes time and resources, soman( companies are turning to the Internet to get continuous, timel(, and inno*ati*e in!ormation!rom customers" .or eample, so!tware maker S;P de*eloped its usiness Process 2pert 8PO9communit( ( which customers share !eedack in !orums, logs, and articles" Proctor 6 7amlewants (ou to $Share Nour )houghts' at http:??www"pg"com?getintouch?s(t"/html" ut i! (ou ha*e


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a reall( good idea, perhaps (ou should look into licensing with P67 8seehttps:??secure3"*erticali"net?pg-connection-portal?ct?noauth?PortalHome"do9"

1" 2plore the %e sites o! other companies to learn how the( get !eedack !rom customers"Start ( clicking on $Contact Us,' then dig deepl( to see i! (ou can !ind a place where each

compan( seeks or accepts !eedack and ideas" %rite a rie! report o! what (ou !ind"8;;CS: CommunicationE Use o! I)9

Ans"er8

%hile all ha*e addresses and phone numers, students will see that some sites ha*e muchmore than that so customers can pro*ide !eedack as well as interact with other customers".or eample, ;pple o!!ers a discussion !orum on its $;pple iscussions' page athttp:??discussions"apple"com?inde"/spa&categor(I1" ike P67, 7eneral Mills seeksinno*ati*e ideas through its %orldwide Inno*ation +etwork 87-%I+9 !ound athttp:??www"generalmills"com?corporate?openQinno*ation?inde"asp" Students will likel( !ind

man( other eamples" I! the( !ind companies that ha*e no place to enter !eedack, that>s aninteresting discussion in itsel!"

0" iscuss other wa(s in which usinesses can use the Internet to create greater customer *alue"8;;CS: CommunicationE Je!lecti*e )hinking9

Ans"er8

Dne wa( usinesses can create greater customer *alue is to use the Internet as an electronicstore where customers can order products" Howe*er, man( products, such as consumer packaged goods and ser*ices, are not !easil( distriuted this wa(" )hese t(pes o! usinesses!ind other wa(s to o!!er added *alue to customers on their %e sites, such as recipes, productuse ideas, and articles o! interest to their customers"

6%,#$ %n Eth,$

id (ou dri*e a car toda(& Use a laptop computer& u( a product in a store& I! so, (ou emittedcaron dioide 8CD09 and created a caron !ootprint" ;ll o! us do that e*er( da(" Indi*iduals andcompanies emit caron dioide in e*er(da( acti*ities" Man( consumers !eel ad aout doingthisE others epect companies to take action" %hat>s the answer& Jeducing caron emissions isone solution, ut another one is to o!!set (our caron emissions ( purchasing caron o!!sets andrenewale energ( certi!icates 8J2Cs9" Indi*idual consumers do this, and companies are !locking

to purchase caron o!!sets !or themsel*es or to o!!er to their customers, resulting in an estimatedR1== million market" ;nd eperts predict eponential growth o*er the net !ew (ears" ;irlinesroutinel( o!!er !l(ers the option o! pa(ing a !ew etra dollars to o!!set their caron emissions" .or eample, Ketlue ;irwa(s introduced its


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1" earn more aout caron o!!sets and discuss !our eamples o! how usinesses are usingthem" In (our opinion, are these companies emracing the societal marketing concept&8;;CS CommunicationE Je!lecti*e )hinking9

Ans"er8

Caron o!!sets occur when an indi*idual or usiness pa(s mone( to o!!set the caronemissions resulting !rom their acti*ities" Some eamples o! companies o!!ering these tocustomers are ell, 7eneral 2lectric, ;mtrak, Volkswagen, ;llstate, and most airlines, toname onl( a !ew" elta ;irlines, !or instance, o!!ers customers o!!sets !or R5"5= on domestic!lights and R11 on international !lights" Volkswagen ga*e its customers !ree caron creditsthat would o!!set their caron emissions !or one (ear o! dri*ing and o!!ered more (ears !or consumers to purchase" Most companies turn to third parties, such as Caron!und"org and)erraPass, to roker these echanges" )hese organiations purchase o!!sets !or companiesand indi*iduals to counter their emissions, thus ecoming $caron-neutral"'

0" Dne criticism o! caron o!!setting is that companies are not reall( helping the en*ironmental ( changing their own eha*iorE instead the(>re merel( u(ing $en*ironmental pardons"' o(ou think caron o!!sets are a responsile solution to en*ironmental concerns& %rite a rie! essa( deating this issue" 8;;CS: CommunicationE 2thical Jeasoning9

Ans"er8

Students> opinions will *ar( as there is considerale contro*ers( surrounding caron o!!sets")he $en*ironmental pardons' criticism is a *alid one" Howe*er, the other side o! the coin isthat the o!!sets mone( is put into e!!orts that trul( reduce CD0 le*els around the world, andthat ene!its the entire planet"

;nother issue is that man( pro/ects recei*ing !unding would ha*e taken place without theadditional !unding !rom caron o!!sets, which means the condition o! $additionalit(' set (the United +ations is not met" Some interesting articles on this topic can e !ound athttp:??www"usinessweek"com?magaine?content?=FQ13?4=0F=5F"htm and http:??www"csmonitor"com?0==G?=50?p=Gs=1-com*"html"

)he .ederal )rade Commission is concerned aout the en*ironmental claims marketers makeaout their $caron-neutral' status and are reeamining its en*ironmental marketingguidelines, re!erred to as the 7reen 7uides, with speci!ic emphasis on caron o!!sets andrenewale energ( certi!icates" ; workshop was held in earl( 0==G, and comments can e*iewed at http:??www"!tc"go*?os?comments?caronworkshop?inde"shtm"

Mar'etn! -3 the N#*-er$

How much are (ou worth to a gi*en compan( i! (ou continue to purchase its rand !or the rest o! (our li!e& Man( marketers are grappling with that #uestion, ut it>s not eas( to determine howmuch a customer is worth to a compan( o*er his or her li!etime" Calculating customer li!etime*alue can e *er( complicated" Intuiti*el(, howe*er, it can e a !airl( simple net present *alue

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calculation" )o determine a asic customer li!etime *alue, each stream o! pro!it is discounted ack to its present *alue 8PV9 and then summed" )he asic e#uation !or calculating net present*alue 8+PV9 is:

%here,

t - time o! the cash !low

5 - total customer li!etime

r - discount rate

C t - net cash !low 8the pro!it9 at time t 8)he initial cost o! ac#uiring a customer would ea negati*e pro!it at time ="9

+PV can e calculated easil( on most !inancial calculators or ( using one o! the calculatorsa*ailale on the Internet, such as the one !ound at

http:??www"in*estopedia"com?calculator?+etPresentValue"asp" .or more discussion o! the!inancial and #uantitati*e implications o! marketing decisions, see ;ppendi 0, Marketing ( the +umers"

1" ;ssume that a customer shops at a local grocer( store spending an a*erage o! R15= a week and that the retailer earns a 5 percent margin" Calculate the customer li!etime *alue i! thisshopper remains lo(al o*er a 1=-(ear li!e-span, assuming a 5 percent annual interest rate andno initial cost to ac#uire the customer" 8;;CS CommunicationE ;nal(tic Jeasoning9

Ans"er8

; customer who shops at this store and spends an a*erage o! R15= a week will spend RF,G== per (ear 8one (ear 50 weeks9" ;t a 5 percent margin, this customer (ields R3= per (ear !or this retailer 8RF,G== ="=5 R3=9" D*er a 1=-(ear li!e-span o! shopping at this store, with a5 percent annual interest rate and no initial cost to ac#uire this customer, this customer isworth o*er R3,=== in pro!its"

0" iscuss how a usiness can increase a customer>s li!etime *alue" 8;;CS: CommunicationEJe!lecti*e )hinking9

Ans"er8

Je*enues, costs, and retention are the most important *ariales that a usiness can in!luence"Companies can increase re*enues generated ( a customer ( increasing sales o! current products, cross-selling, and up-selling" Cross-selling is o!!ering other products to currentcustomers" Up-selling is encouraging customers to $trade-up' to more pro!itale o!!erings o! thecompan(" .or eample, the retailer can encourage customers to purchase gourmet !ood items or

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higher-margin non-!ood products, such as health and eaut( aides" ;nother wa( to increasere*enues generated ( a customer is through re!errals to others" Jeducing costs in order toincrease margins is another wa( to increase customer li!etime *alue" .inall(, a usiness canincrease a customer>s li!e@that is, retain them as lo(al customers !or a longer period"

C%*pan3 Ca$e N%te$

B#.)4A4Bear: B#.)4A4Me*%r3

S3n%p$$

)his case illustrates the success that uild-;-ear %orkshop has achie*ed since its !ounding in1B" ; detailed description is gi*en o! the uild-;-ear retail eperience and wh( it is that oth parents and children are drawn to this concept" Personaliation, and not /ust customiation, is thedri*ing !orce"

)he case also highlights how !ounder Maine Clark sta(s in touch with the customer and theemplo(ees" .or Clark, management-(-walking-around is more than /ust a wa( to super*iseoperations" It is a wa( o! conducting her own market research" Clark has also emraced thenetworking capailities o! the Internet as a wa( o! keeping in touch with the customer"

.uture prospects !or uild-;-ear>s continued success are also discussed"

Tea,hn! O-e,te$

)he teaching o/ecti*es !or this case are to:

1" Introduce students to the concept o! customer *alue creation and its central role inmarketing"0" ;llow students to anal(e uild-;-ear>s product o!!ering in depth"3" Introduce the concepts in*ol*ed in customer relationship management"4" Introduce the concepts o! customer li!etime *alue and customer e#uit("5" ;llow students to de*elop speci!ic recommendations !or uild-;-ear>s !uture"

D$,#$$%n "#e$t%n$

1" 7i*e eamples o! needs, wants, and demands that uild-;-ear customers demonstrate,di!!erentiating each o! these three concepts" %hat are the implications o! each on uild-

;-ear>s actions&

The purpose of this 0uestion is to force stuents to consier "hether or not it is important for a compan' to ifferentiate bet"een nees! "ants! an emans. =' the te%tbook efinition! =uil-A-=ear customer nees might inclue8

• belonging>)oining the =uil-A-=ear ?club.@

• affection>creating an caring for another being.

• self-e%pression>the abilit' to create a prouct that reflects elements of the self.

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Stuents shoul consier ho" "ants iffer from these funamental nees. =asicall'! the'ma' nee to belong! but coul fulfill that nee through an' number of outlets. =ase oncultural an personalit' factors! the' e$elop a specific esire to belong to the =uil-A- =ear club. 6n the same manner! affection an self-e%pression can be fulfille in $arious

"a's. Wh' o =uil-A-=ear customers esire to fulfill these through nees "ith =uil-A- =ears prouct offering9 Stuents shoul outline specific elements of =uil-A-=earsoffering that fulfill each of the abo$e-note nees.

Demans are ifferentiate from "ants b' the bu'ing po"er of the =uil-A-=earscustomer base. To "hat e%tent cano =uil-A-=ear customers eman the things that the' "ant9 6f the' are coming to =uil-A-=ear! then the' ha$e the mone'. Therefore! the'are emaning it. =ut the 0uestion remains>to "hat e%tent9

6t is important for a compan' like =uil-A-=ear to istinguish bet"een these threeconcepts. Core nees must be ientifie first. Then! e$er' element of the prouct offering

shoul be create "ith the intention of fulfilling one of these nees! thus generating "ants an esires "ithin the consumer base. The compan' must then unerstan "hat it is that customers might "ant that is not being offere>in essence! are the' emaning something9 a%ine Clark an her team ha$e taken careful measures to unerstan the specifics of "hat customers are emaning8 "hat is "orking in the stores! "hat isnt! an "hat the' "ant that is not being supplie.

0" In detail, descrie all !acets o! uild-;-ear>s product" %hat is eing echanged in auild-;-ear transaction&

Stuents shoul be able to ientif' that =uil-A-=ears ?prouct@ is multi-facete. 6t canalso be anal'Be on ifferent le$els! from the most concrete to the most abstract8

• The specifics of the tangible item. This "oul inclue the $arious options for the

basic stuffe animal>the clothing! $oice bo%! name! an birth certificate.

• The e%perience. This "oul inclue the abilit' to customiBe an personaliBe each

part of the prouct. 6t also inclues being a part of the creati$e process an coming a"a' "ith an item that is a piece of the customer. The store ambience an e$en "aiting in line are also part of the e%perience.

That "hich the prouct is being e%change for shoul also be iscusse. This "oul

efinitel' inclue the price of the bear. =ut it "oul to some e%tent also inclue other cost factors gi$en up b' the customer as ientifie in the response to 0uestion .

3" %hich o! the !i*e marketing management concepts est descries uild-;-ear %orkshop&

The marketing concept. a%ine Clark has $er' clearl' taken =uil-A-=ear to high le$elsof financial success b' kno"ing an unerstaning the nees an "ants of the customers.

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The goals of the organiBation are epenent upon that. Clearl'! the business strateg'ispla'e b' =uil-A-=ear fits the marketing concept better than it oes the prouction! prouct! or selling concepts. Also! there is no information in the case that "oul lea the stuent to belie$e that =uil-A-=ear is focuse on the "elfare of societ'.

4" iscuss in detail the *alue that uild-;-ear creates !or its customers"

Stuent responses or iscussion of this 0uestion shoul incorporate a complete list of customer benefits as "ell as customer costs #$alue being of function of benefits minuscosts&. =' this point! the benefits shoul be easil' ientifie as the' ha$e alrea' comeout in ans"ering the pre$ious 0uestions. The benefits recei$e b' the customer coul beientifie in terms of nee"ant fulfillment. :o"e$er! the cost factor has not beeniscusse. The most ob$ious cost is the monetar' price! "hich ranges from 1; toup"ars of ,;. *ther costs inclue time #"aiting in line! that of actuall' going throughthe builing process& an effort #the mental effort in$ol$e "ith so man' choices of builing this bear& e%pene. This shoul be an interesting iscussion in that the $er'

things that on the surface are consiere to be costs for so man' customers! in this case!are actuall' benefits.

The stuents shoul consier a comparison bet"een the $alue formula for =uil-A-=ear an that of a substitute like 2ermont Te' =ear. *ne thing that ma' come out strongl' isthat 2ermont customers ma' not $ie" the time an effort e%pene as a benefit. The' rather orer one an ha$e it sent! or step in to a store! take a bear off the shelf! an beone "ith it. *n the other han! "h' is a 2ermont customer "illing to pa' three to fi$etimes the price of a =uil-A-=ear9

5" Is uild-;-ear likel( to e success!ul in continuing to uild customer relationships&%h( or wh( not&

A couple of issues shoul be consiere here. As mentione in the case! the to' inustr'is fickle. The popularit' of to's comes an goes as trens an fas. 6n fact! it might beinteresting to iscuss ho" man' top selling to's toa' "ere top sellers 1; 'ears ago!much less (; or ,; 'ears ago. 2er' fe" to's make it from one generation to the ne%t. Po"er Rangers are still out there! but harl' the rage the' once "ere. +$en blue chipbrans like =arbie e$entuall' sho" signs of age #its sales ha$e been ecreasing in recent 'ears face "ith ne"er ?in@ olls like the =ratB line&.

=ut the thing that shoul come out here is that =uil-A-=ear is not )ust a to' compan'. 6t is an entertainment compan'! a theme-park-like e%perience. At the core of its success hasbeen a%ine Clarks strategic $ision an her uncann' abilit' to pa' attention to the real benefits that customers are seeking. As long as she an the compan' can continue to successfull' o that! then the' shoul be able to e$ol$e an aapt to the trens as the'happen. The insie of a =uil-A-=ear store ma' therefore look $er' ifferent in (; 'ears.

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In))#a. A$$!n*ent$

1.Companies are realiing that losing a customer means more than losing a single sale" It

means losing a stream o! re*enue !rom that customer o*er their li!etime" Jeread the stor(o! Stew eonard 8under Capturing Value !rom Customers, p" 019" 8D/ecti*e 49

Is it possile to take his idea o! $the customer is alwa(s right' too !ar so that it ecomes anegati*e on the compan(& %h( or wh( not&

0" Marketing acti*ities ( not-!or-pro!it organiations has increased sustantiall( in recent(ears" Drganiations such as hospitals and churches now spend signi!icant monies to gettheir indi*idual messages out and draw in new customers, clients, memers, etc" iscusswhere or not (ou consider this a good long-term strateg( to grow the usiness" 8D/ecti*e59

Thn'4Par4Share

Consider the !ollowing #uestions, !ormulate and answer, pair with the student on (our right,share (our thoughts with one another, and respond to #uestions !rom the instructor"

1" How is marketing di!!erent !rom selling& 8D/ecti*e 190" o marketers create needs& 8D/ecti*e 093" %hat is eus> *alue proposition& 8D/ecti*e 094" %hat are two companies with which (ou ha*e an emotional ond& escrie that ond"

8D/ecti*e 49

O#t$)e E2a*p.e$

1" .i*e core customer and marketplace concepts are critical to success: 819 nees! "ants!an emansE 809 marketing offers #proucts! ser$ices! an e%periences&E 839 $alue an satisfactionE 849 e%changes an relationshipsE and 859 markets"

)ake a look at Sea Ja( oats 8Use Web Resource 3 here9" ;nswer the !ollowing#uestions" 8D/ecti*e 09

a" %hat needs, wants, and?or demands is Sea Ja( attempting to !ill& " escrie their marketing o!!ers"c" escrie the relationships the( ha*e with their customers"

d" %hat are their markets&

P%$$-.e S%.#t%n/

a" Sea Ja( is primaril( appealing the wants" Want$ are the !orm human needs take asthe( are shaped ( culture and indi*idual personalit(" )he( are pro*iding productsthat allow people the opportunit( to escape their e*er(da( li*es and eistences" )hese

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are not traditional needs the( are appealing to" +o one nee)$ a oat to sustain their eistence" Jememer, human nee)$ are states o! !elt depri*ation"

" Mar'et %((ern!$ are some comination o! products, ser*ices, in!ormation, or eperiences o!!ered to a market to satis!( a need or want" Sea Ja( pro*ides a widerange o! oats designed to 8hope!ull(9 satis!( the di*ergent wants o! their target

market"c" )hrough a re*iew o! the wesite, (ou will realie that Sea Ja( makes a strong e!!ortto maintain close relationships with their customers" )he annual ;#uaPalooa is onegood eample o! Sea Ja(>s relationship uilding e!!orts"

d" Sea Ja(>s markets are #uite *aried" epending on the sie and t(pe o! oat, their markets co*er !rom the casual !amil( weekend oater to the success!ul usiness or corporate t(pe looking !or a crewed (acht"

0" Dne o! the great new $marketplaces' o! our time is ea(" Spend some time on the ea(wesite 8www"ea("com9" .ind a product that (ou are interested in and !ollow the idding" How much would (ou e willing to pa(& Consider the !ollowing #uestions"

8D/ecti*e 09a" How is ea( pro*iding *alue to its customers& " escrie the relationship the( ha*e with their customers"c" %hat are their markets&

P%$$-.e S%.#t%n/

a" ; compan(>s $alue proposition is the set o! ene!its or *alues it promises to deli*er toconsumers to satis!( their needs" ea( pro*ides *alue ( pro*iding its clients with aneas(, sa!e, and eciting method ( which to u( and sell merchandise"

" ea( takes great e!!ort to maintain a close, almost personal relationship with their customers" )he( continuall( pro*ide (ou with updates on items (ou are watching,selling, or idding on" ;dditionall(, the( pro*ide (ou with in!ormation aout new or additional ser*ices that ma( e o! interest to (ou, ased on (our pre*ious histor( withthem"

c" )heir markets are di*erse" ( a casual perusal o! sellers, (ou will !ind that their markets co*er the range !rom e*er(da( indi*iduals looking to unload an old pair o! /eans to larges ookstores selling hundreds o! items a da( 8such as */ooksLwww"*/ooks"com9"

We- Re$%#r,e$

1" http:??04F"prenhall"com)his is the link to the Prentice Hall support link"

0" http:??pg"com?productQcard?prodQcardQmainQtide"shtml)his link will pro*ide (ou with more in!ormation on P67>s )ide"

3" www"harle(-da*idson"com

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http://www.ebay.com/http://www.vjbooks.com/http://247.prenhall.com/http://pg.com/product_card/prod_card_main_tide.shtmlhttp://www.harley-davidson.com/http://www.ebay.com/http://www.vjbooks.com/http://247.prenhall.com/http://pg.com/product_card/prod_card_main_tide.shtmlhttp://www.harley-davidson.com/


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)his is the home page !or Harle(-a*idson" Here (ou will also !ind a discussion o!H"D"7"

4" www"stewleonards"comJead more aout Stew eonard>s legendar( ser*ice here"

5" www"seara("comHere (ou will !ind all needed in!ormation pertaining to Sea Ja( oats"
http://www.stewleonards.com/http://www.searay.com/http://www.stewleonards.com/http://www.searay.com/

Kotler POM 13e

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