Chapter One

Creating & Capturing Customer

Value

Copyright © 2009 Pearson Education, Inc.  

Chapter 1- slide 1
Publishing as Prentice Hall
 What Is Marketing?
Broadly defined, marketing is a social and managerial process by which
individuals and organizations obtain what they need and want through creating
and exchanging value with others.
Marketing is a process by which companies create value for customers and build
strong customer relationships to capture value from customers in return.
Finally, Marketing is managing profitable customer relationships.
 Understanding the Marketplace
& Customer Needs
Five Core Concepts: Marketers need to understand
customer needs and wants and the marketplace in
which they operate.

• Customer needs, wants, & demands

• Market offerings
• Customer Value and satisfaction
• Exchanges and relationships
• Markets
Customer Needs, Wants, & Demands
 Market offerings
• Market offerings are some combination of products,
services, or experiences offered to a market to satisfy a
need or want. More broadly, market offerings also
include other entities, such as persons, places,
organizations, information, and ideas.

• Marketing myopia is focusing only on existing wants

and losing sight of underlying consumer needs.
Customer Value & Satisfaction
Exchange, Relationships & Markets
Exchange is the act of obtaining a desired object from
someone by offering something in return.

Marketing consists of actions taken to build and

maintain desirable exchange relationships with target
audiences involving a product, service, idea, or other
object.

Markets are the set of actual and potential buyers of a

product or service
 Designing a Customer-Driven
Marketing Strategy
Marketing management is the art and science of choosing
target markets and building profitable relationships with them.

The marketing manager’s aim is to find, attract, keep, and grow

target customers by creating, delivering, and communicating
superior customer value.

To design a winning marketing strategy, the marketing manager

must answer two important questions:
– What customers will we serve? (target market)
– How can we best serve these customers? (value proposition)
 Selecting Customers to Serve

Market segmentation refers to dividing the markets into

segments of customers

Target marketing refers to which segments to go after

Demarketing is marketing to reduce demand temporarily

or permanently; the aim is not to destroy demand but to
reduce or shift it
 Choosing a Value Proposition

• Why should I buy your brand rather than a competitor’s?

• The value proposition is the set of benefits or values a

company promises to deliver to customers to satisfy their
needs- how it will differentiate and position itself in the
marketplace.
Marketing Management Orientations
What philosophy should guide these marketing strategies?
What weight should be given to the interests of
customers, the organization, and society?
 Marketing Management Orientations

 Production concept is the idea that consumers will

favor products that are available and highly affordable
and that the organization should therefore focus on
improving production and distribution efficiency.

 It is useful in these situations; low labor costs, high

production efficiency, and mass distribution.

 It can lead to marketing myopia.

 Marketing Management Orientations
Product concept is the idea that consumers will favor
products that offer the most quality, performance, and
features. Organizations should therefore devote its
energy to making continuous product improvements.

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. The aim often is
to sell what the company makes rather than making
what the market wants.
 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.
It starts with a well-defined market, focuses on customer
needs, and integrates all the marketing activities that affect
customers.
The job is not to find the right customers for your product but
to find the right products for your customers.
 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.
 Preparing an Integrated Marketing
Plan & Program
• 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. To deliver on its value proposition, the
firm must first create a need satisfying market offering
(product). It must decide how much it will charge for the
offering (price) and how it will make the offering available to
target consumers (place). Finally, it must communicate with
target customers about the offering and persuade them of its
merits (promotion).

• Integrated marketing program is a comprehensive plan that

communicates and delivers the intended value to chosen
customers.
 Building Customer Relationships
• Customer Relationship Management (CRM) is the overall
process of building and maintaining profitable customer
relationships by delivering superior customer value and
satisfaction. It deals with all aspects of acquiring, keeping,
and growing customers.
• Relationship Building Blocks: Customer Value & Satisfaction
 Building Customer Relationships
Customer Relationship Levels & Tools
• A company with many low-margin customers may seek to
develop basic relationships with them.
• In markets with few customers and high margins, sellers want
to create full partnerships with key customers.

• Many companies offer frequency marketing programs that

reward customers who buy frequently or in large amounts.
• Other companies sponsor club marketing programs that offer
members special benefits and create member communities.
 Building Customer Relationships
Partner Relationship management involves working
closely with partners in other company departments
and outside the company to jointly bring greater value
to customers
• Partners inside the company is every function area
interacting with customers
– Electronically
– Cross-functional teams
• Partners outside the company is how marketers
connect with their suppliers, channel partners, and
competitors by developing partnerships
 Building Customer Relationships
Partner Relationship Management
• Supply chain is a channel that stretches from raw materials
to components to final products to final buyers
• Supply management
• Strategic partners
• Strategic alliances

Creating Customer Loyalty & Retention

Customer lifetime value is the value of the entire stream of
purchases that the customer would make over a lifetime
of patronage.
 Capturing Value from Customers
Building Customer Equity

• Customer equity is the total combined customer lifetime

values of all of the company’s 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