Creating customer relationships and value

through marketing

ACC1008 Marketing Management | Lecture 1

Image source: http://fabrikbrands.com/how-to-define-brand-values/
 2.
Lecture Outline

▧ Definition of marketing
▧ The marketing process
▧ Understanding the marketplace and customer needs
▧ Designing a customer-driven marketing strategy
▧ Building customer relationships
▧ Capturing value from customers
▧ The changing marketing landscape

Source: Principles of Marketing An Asian Perspective, 2017

 What is Marketing?

Marketing is a process by which companies communicate and create value for

customers.

Goals of marketing is to attract new customers by promising superior value, plus

retaining and growing existing customer base through products/services
satisfaction.

Hence, capturing values from sustainable strong customer relationships to win

over competitions in exchange for profits for the organisation and benefits to its
stakeholders, the economy and society at large.
Internal organisational influencing factors

Customer Human
Support Resource

Management

Manufacturing
Finance
and Logistics
Board of
Directors

Business and
Information
Research
Development System

Brand,
Marketing,
Sales and
Retail
External influencing elements
Ownership, Alliances, Partnerships and Relationships

Policy +
Regulatory

Organisational:
Board of Technological
directors,
Shareholders

Societal

Economical:
Competitions,
Environmental Suppliers +
Other
Customers organisations
(Users, End-
users,
Advocates +
Deterrents)
 What warrant marketing activities?

Market demands
and/or gaps

▧ Unmet, ▧ In-demand
unsatisfied needs A marketplace for
communication exchange
platform

Organisational Customer needs

offerings and wants

▧ Ability and desire to meet needs

 Differences between a customer and consumer
The person who buys the products/services from a seller is known as the Customer
(Buyer or Client). The person who uses the products/services is known as
a Consumer. Customer can be a consumer too, at the same time, a consumer also
can be a purchaser or customer.
▧ Who should be the target audience for a company, customer or consumer?
BASIS FOR
CUSTOMER CONSUMER
COMPARISON

Meaning The purchaser of goods The end user of goods

or services is known as or services is known as
the Customer. a Consumer.

Resell A customer can be a No

business entity, who can
purchase it for the
purpose of resale.

Purchase of goods Yes Not necessary

Purpose Resale or Consumption Consumption

Price of product or Paid by the customer May not be paid by the

service consumer

Person Individual or Individual, Family or

Organization Group of people

Source: https://keydifferences.com/difference-between-customer-and-consumer.html
 The marketing process (What to do?)
By creating value for customers, companies in return capture value from customers
in the form of sales, profits, market shares and long-term customer equity.

Capture
Understand Build
Design a value from
the Construct an profitable
customer- customers to
marketplace integrated relationships
driven create
and marketing and create
marketing profits and
customer programme customer
strategy customer
needs delight
equity

Understand customers, create customer value and Reap the rewards of

build strong customer relationships. creating superior
customer value.
 3.
Understanding the marketplace
and customer needs

Customer Market Customer Exchanges

needs, wants value and and Market
offerings
and demands satisfaction relationships
 Modern marketing ecosystem
Company and its competitors promote their respective offers and messages to the
consumers.

Each party in the system adds value for the next tier. A company’s success is
dependent on not only its own actions, products/services but also on how well the
entire ecosystem serves the needs of the final customers/consumers.

Company
(Marketer)
Marketing Customers
Suppliers Intermediaries Consumers

Competitors
Exchanges and relationships

Exchange is the act of obtaining a

desired product or service from
someone and/or organisation by
offering something in return.

A sustainable, trusting relationship,

quality products and services create
repeat customers.

Except for situation where certain

organisations are sole proprietors of
business like electricity, gas,
transportation and so on.
 Customer purchase behaviours

Needs Wants Demands

Physical: Influenced by culture, Buying power and ability.

Food, Health, Shelter, Safety.
Social:
Emotional, belonging,
affections.
Individual:
Esteem, knowledge,
experiences, expressions.
personal experiences
and individual Autonomy, choice,
personality. purpose, stimulation,
contributions,
Leisure, relaxation, communication, sharing,
pleasure, joy, attention, effectiveness.
appreciation, self-care.
 Needs and Wants
Does marketing persuade people to buy the ‘wrong’ things?
Can marketing create needs?

▧ Need ▧ Want
Market offerings

Market offerings are a

combination of products, services,
information, experiences offered
to a particular market to satisfy a
need, want or gap.
 What is a market?

A market is the set of actual and

potential buyers of a product,
service or experiences.

These customers share a particular

need or want that can be satisfied
through exchange relationships.

Whole Population
Propensity to spend

Potential
Customers Potential
Consumers
 Customer value and satisfaction

Customers’ value,
satisfaction and
expectations.

Marketing efforts
to set the right level
of product/service
expectations.

Image source: http://matt.might.net/articles/work-life-balance/

 Market myopia
Danger of marketing myopia by focusing on existing wants and lost sight of
underlying consumer needs, when better product/service appears on the market.

To look beyond the attributes of a product/service by orchestrating several

products/services to create brand experiences for consumers.

Product
Product
benefits, Offer
attributes
experiences superior
Look beyond and existing to and
and customer
customer
customer value
wants
needs
 4.
Designing a customer-centric
marketing strategy

Marketing Market Demarketing Value Marketing

management segmentation proposition strategy
Marketing management

The art and science of identifying

target markets while establishing
profitable, sustainable
relationships with them.

▧ What customers to serve?

▧ Why this target group?
▧ How best to serve these customers?
▧ Where to reach these customers?

Image source: TechFunnel..com

Customer targeting and selection

Market segmentation refers to

sorting of the market into
categorisation of customers.

Target marketing refers to the

selection of audiences to promote to.

Image source: isngs.com

 Value proposition
An organisation must decide how it will serve its targeted customers.

How it will differentiate and position itself in the marketplace.

Such value propositions will differentiate one brand from another.

Differentiating
product/service
Value from
proposition: competitors “Why should I
Product/service buy your brand
benefits that Comprises of Answers over a
satisfy customer competitor?’
needs
Positioning the
product/service
 Value proposition

Sheng Siong Market Place

▧ Low-priced ▧ Premium-priced
▧ Self-service ▧ Full-service
▧ No-frills concept ▧ Wide range of
international brand
Demarketing a demand

Demarketing is a marketing process

to reduce demand temporarily or
permanently.

The aim may not to eliminate

demands totally but to reduce or
shift it.

Images source: https://amwebstrategies.com/tag/demographics/

 Marketing strategy
Building customer profiles for marketing strategies.

Source: Alane Matthews Web Strategies

 What drives the target audience?
Once you have a better idea about who your target audience is or is not:
▧ What is important to your audience?
▧ Are your customers trying to solve a certain problem? If so, what are the
challenges they face?
▧ What benefits of your product or service solves their problems?
▧What drives them to make buying decisions?
▧ Where do they get their information?
▧ Who do they trust?
▧ Where do they currently get your product or service from?
▧ What are your competitors doing successfully and what are they failing at?

Production Product Selling Marketing Societal

concept concept concept concept concept

Source: Alane Matthews Web Strategies and Pearson Education Inc.

5 key marketing strategies
Production concept
Customers favour products that are accessible, mass produced or highly
affordable. Focus on improving production and distribution efficiency.

Product concept
Customers favour products that offer the most quality, performance,
features and continuous product improvements.

Selling concept
Customers will not buy high quantity of products except for large scale sales
or promotional effort.

Marketing concept
Organisational goals are dependent on understanding the needs of the
target market and serving customers better than competitors.

Societal marketing
Good marketing decisions based on customer needs and long-term
interests, organisation's business requirements and society’s long-run
interests.

Source: https://www.alamy.com/stock-photo-production-concept-64424560.html
Reaching the right target audience

The marketing mix is a set of tools to

implement marketing strategy and
outreach programme.

Integrated marketing programme is a

comprehensive plan that
communicates the intended
organisational brand and
product/service value to target
audience.

Image source: marketingmix.co.uk

 Uniqlo’s marketing strategy
Building customer profiles for marketing strategies.

Mass Fashionista
▧ Basic casual ▧ Special designer collections
▧ Wide varieties ▧ Limited edition

Image source: Uniqlo

Uniqlo’s marketing strategy
 5.
Building customer relationships
 Relationships building block
Customer Value
A customer buys from an organisation that offers the highest customer perceived
value (Benefits and cost of offer) relative to those of competing offers.

Customer Satisfaction
Satisfaction depends on the product’s perceived performance relative to a
buyer’s expectations.

Customer

Benefits and Competing

costs of the Companies
offers
market offering

Perceived value of
marketing offer
 Partner relationship management

Partner relationship management involves collaborations with other companies

to jointly deliver greater values to customers.

These affiliated partners or alliances can be suppliers, channel partners, cross-

products/services providers.

External:
Internal:
o Suppliers
o Finance
o Distributors
o Accounting Types of partners o Advertising
o Manufacturing
agencies
o Customer care
o Affiliated
o Retail
industries
Customer relationship management

Customer relationship management

is the process of acquiring,
maintaining and retaining profitable
customer relationships by delivering
not just superior product/service
performance but additional
incentives like loyalty programme,
birthday treats, special members’
sales promotion, frequent fliers and
so on.

Image source: CIO.com

5 tiers of customer relationships

Image source: marketingforbeginner.blogspot.com

 Changing nature of customer relationships

Today’s companies are building more direct and lasting relationships with fewer and
carefully selected profitable customers with attractive offers to earn their loyalty.

New digital technologies and social network tools have changed how people relate to
one another, affecting how customers relate to companies and their products/services.

▧ Relating with more carefully selected customers

▧ Relating more deeply and interactively
▧ Two-way customer relationships
▧ Consumer generated marketing
▧ Empowerment

Image source: https://www.fieldez.com/customer-service-in-2018-for-field-service-management/

 6.
Capturing value from customers
 Customer loyalty and retention

Customer lifetime value is the projected total economic value a customer brings
to the business over their ‘lifetime’. (The duration of time they will spend with
the organisation, from first interaction to final purchase).

Growing share of customer through greater varieties of offerings from cross-

selling to up-selling to bundling of products/services.

Source: https://www.pixelunion.net/blog/customer-lifetime-value-the-only-metric-you-need/
Customer loyalty and retention

Customer equity is the total

combined customer lifetime values of
all of the organisation's customers.

▧ Emphasise on the significance of

customer loyalty to the brand.

▧ Emphasise on value that is created

by having as many customers as
possible paying as high price as
possible for the product/service.

Image source: http://pranabusinessconsulting.com/brand-equity_vs_customer-equity/

 Building customer equity

Not all customers are good investments. Some loyal customers can be unprofitable
as compared to disloyal irregular customers.

Different types of customers require different relationship management strategies.

▧ Cultivate the right relationships

with the right customers.

▧ Treat customers as assets to be

managed and maximised.

▧ Deploy different relationship

management strategies for different
target groups.

Image source: http://pranabusinessconsulting.com/brand-equity-vs-consumer-equity/

 Is the Value:
Transformational?
Relevant?
Impactful?
Meaning?
Sustainable?
 Market-oriented and consumer-centric

Embed an innovation process to explore market potentials and customer needs,

co-create with users with feedbacks during development process.

Transformational marketing therefore ensures that products and services are

geared to the market and consumers in response to changes and future trends.

Transformative marketing is the confluence of an organisation’s strategies,

concepts, offerings, marketing activities, measurement metrics and
reflection/growth programmes.
Evolution of market orientation
Four eras in the history of American business

▧ Production era focused on small

production and people has fewer choices.

▧ Sales era focused on mass production

and sales people were hired to sell.

▧ Marketing era shifted from company-

oriented to consumer-oriented.
Marketing activities occur before
production.

▧ Customer relationship era is market

oriented, uncover needs of customers.
Establish long-term relationships with
customer.
Hypothetical evolution of a local business transformation

r upt iv e Innovation
Dis

Image source: Hitechofficeproducts.com and Christensen, Clayton M. (2003)

The evolving marketing landscape

Digital Age

Rapid
Globalisation

Ethics and
Social
Responsibility

Non-profit
Marketing

Image source: https://ideate.co.za/the-new-marketing-landscape-7-brands-that-are-getting-it/

 Pulling it all together
Understand Capture
Build
the Design a value from
Construct an profitable
marketplace customer- customers to
integrated relationship
and centric create profits
marketing and create
customer marketing and
programme customner
needs and strategy customer
delight
wants equity

Research customers and Select customers to
the marketplace serve: Market
segmentation and
Manage marketing targeting
information and
customer data Decide on a value
proposition:
Differentiation and
positioning
Product and service Customer relationship Create satisfied loyal
design to build strong management: Build customers
brand strong relationship with
selected customers Capture customer
Pricing to create real lifetime value
value Partner relationship
management: Build Increase share of
Distribution to mange strong relationships with market, share of
demand and supply marketing partners customer
chain

Promotion to
communicate the value
proposition

Harness marketing technology Manage global markets Ensure ethical and social responsibility

Create value for customers and build customer relationships Capture value from customers in return