01 - UOW - MARK 101 - Customer Value

Chapter 1
Marketing: Creating
and capturing
customer value
Cover image: © VLADGRIN/Shutterstock.com

Marketing: Creating and capturing customer value
Learning objectives
Objective 1 Define marketing and outline the steps in the marketing

process.
Objective 2 Explain the importance of understanding customers and
the marketplace, and identify the five core marketplace
concepts.
Objective 3 Identify the key elements of a customer-driven
marketing strategy and discuss the marketing
management orientations that guide marketing strategy.
Objective 4 Discuss customer relationship management and identify
strategies for creating value for customers and capturing
value from customers in return.
Objective 5 Describe the main trends and forces that are changing
the marketing landscape in this age of relationships.
Copyright © 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002696/Armstrong/Principles of Marketing/6e 2
What is Marketing? Marketing defined
We define marketing as the activity, set of

institutions, and processes for creating,
communicating, delivering, and exchanging
offerings that have value for customers, clients,
partners, and society at large.
See American Marketing Association,
<http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx >,
accessed January 2014
A model of the marketing process
Understanding the marketplace & customer needs
As a first step, marketers need to understand

customer needs, wants and demands, and
the marketplace within which they operate.
Customer needs, wants and demands
a) Needs
b) Wants
c) Demands
Core marketing concepts
What is Marketing? Core Marketing Concepts

CV
Discussion question
What is the difference between

needs, wants and demands?
Give specific examples
8
Market offerings: Goods, services and experiences
A market offering is a product that is some combination of goods,
services and experiences that can be offered to a market to satisfy a
need or want.
In the broadest sense, Goods

market offerings
Services/experiences
include…
Persons
Places
Organisations
Information
Ideas
Market offerings: Products, services and other
market offerings
Social causes
Services
Products & brands
Copyright © 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002696/Armstrong/Principles of Marketing/6e
10
Exchanges, transactions and relationships
Exchange is the act of obtaining a desired object from

someone by offering something in return.
A transaction is a trade between two parties that

involves at least two things of value, agreed-upon
conditions, and a time and place of agreement.
Exchanges, transactions and relationships
A market Actual buyers Potential buyers
These buyers share a particular need or want that can be

satisfied through exchange relationships.
Elements of a modern marketing system
Designing a customer-driven marketing strategy
Marketing management is the art and science

of choosing target markets and building
profitable relationships with them.
Designing a customer-driven marketing strategy
To design a winning marketing strategy, the marketing manager

must answer two important questions:
What customers will we serve?

(i.e. Who is our target market?)
How can we serve these customers best?

(i.e. What is our value proposition?)
Discussion question
Why is it important to a
marketer to decide which
customers they will serve?
Managing customer demand: Sources of demand
New customers
(potential customers)
A marketing
organisation’s demand
comes from two
groups…
Repeat customers
(existing customers)
Managing customer demand
Finding, increasing and

retaining demand
Marketing
decisions
Changing or reducing
demand
Managing customer demand
Managing customer demand: De-marketing
Many service firms & not-for-

profit organisations need to
engage in de-marketing…
Permanently: to
discourage anti-social
behaviours.
Temporarily: to cope with

peak demand periods &
overfull demand.
The value proposition
is the set of benefits or values

The marketing that it promises to deliver to
organisation’s customers to satisfy their needs
value
proposition…
should differentiate brands and

position them in the marketplace
Marketing management orientations
Five concepts or philosophies guide marketing efforts:
Production concept: focus on production &

distribution efficiency
Product concept: focus on continuous product

improvements
Selling concept: focus on large-scale selling and

promotion (used extensively with unsought goods)
Marketing concept: focus on understanding customer

needs and wants, and delivering satisfaction efficiently
Societal marketing concept: deliver value in ways

that maintain both the consumer’s and society’s
wellbeing
Preparing an integrated marketing program
builds customer relationships by

transforming the marketing
strategy into action
The marketing
program…
consists of the firm’s marketing

mix – that is, the set of marketing
tools the firm uses to implement
its marketing strategy
The extended marketing mix
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.
Relationship building blocks: Customer value
and satisfaction
Perceived Customer
Value
value satisfaction
The customer’s evaluation of the

difference between all the Depends on the product’s
benefits and the costs of a perceived performance relative
market offering relative to those to a buyer’s expectations.
of competing offerings.
Customer relationship levels and tools
Marketers can build relationships at different levels depending on
the target market…
Basic relationship
Full partnership
Frequency marketing programs
Club marketing programs
Frequency marketing programs
Frequency marketing/Loyalty marketing

programs
Operate on a quasi-club basis. Members are
issued with a card and accrue points for every
purchase made using the card. These points can
subsequently be exchanged for goods, bonuses or
cash.
Discussion question
How many loyalty cards do you

carry in your wallet? Of these, how
many do you personally feel relate
to you deeply and interactively?
The changing nature of relationships
Relating more carefully with selected

customers
Relating more deeply and interactively
Customer-managed relationships
Online social networks
Consumer-generated marketing
Relationship marketing: Customer lifetime value
Customer lifetime
value (CLV): refers to
the value of an entire
stream of purchases
that the customer
would make over a
lifetime of patronage
Capturing value from customers
Creating Building the

customer Growing share Building right
loyalty & of customer customer equity relationship with
retention customers
Building the right relationship with the right
customers
The changing marketing landscape
The uncertain world economy
Measuring marketing’s contribution to organisational

performance
Growth of not-for-profit marketing
The digital age
Rapid globalisation
Sustainable marketing: the call for social responsibility
The changing marketing landscape: The digital age
The IT explosion is accelerating the rate of change and the

emergence of new global competitors as various markets
become attractive due to the lower costs offered to many
industries by technology such as the internet.
So, what is marketing? Pulling it all together
Suggested online resources
Open source websites
Australian Marketing Institute, http://www.ami.org.au or AMI Facebook,
https://www.facebook.com/australianmarketinginstitute
Marketing Association of NZ, http://www.marketing.org.nz
The Body Shop, Social and environmental reporting page,
http://www.thebodyshop.com.au/about-us/social-and-environmental-
reporting.aspx
Articles
‘The art of creating a magnetic value proposition’ (includes many
examples), https://www.helpscout.net/blog/value-proposition
Videos
Heart of Selling: How to Identify Your Prospect’s Real Needs (6
minutes), http://www.youtube.com/watch?v=7tuIZUswQTg
Sony case study in relationship marketing & social media (2 minutes),
http://www.karmarama.com/case-studies/sony
Copyright ©2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002696/Armstrong/Principles of Marketing/6th edition
39
Chapter 1
The End
Cover image: © VLADGRIN/Shutterstock.com

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Chapter 1

Cover image: © VLADGRIN/Shutterstock.com

Objective 1 Define marketing and outline the steps in the marketing

We define marketing as the activity, set of

As a first step, marketers need to understand

What is Marketing? Core Marketing Concepts

What is the difference between

In the broadest sense, Goods

Products & brands

Exchange is the act of obtaining a desired object from

A transaction is a trade between two parties that

A market Actual buyers Potential buyers

These buyers share a particular need or want that can be

Marketing management is the art and science

To design a winning marketing strategy, the marketing manager

What customers will we serve?

How can we serve these customers best?

Finding, increasing and

Many service firms & not-for-

Temporarily: to cope with

is the set of benefits or values

should differentiate brands and

Production concept: focus on production &

Product concept: focus on continuous product

Selling concept: focus on large-scale selling and

Marketing concept: focus on understanding customer

Societal marketing concept: deliver value in ways

builds customer relationships by

consists of the firm’s marketing

Customer relationship management (CRM) is the

The customer’s evaluation of the

Frequency marketing programs

Club marketing programs

Frequency marketing/Loyalty marketing

How many loyalty cards do you

Relating more carefully with selected

Relating more deeply and interactively

Online social networks

Creating Building the

Measuring marketing’s contribution to organisational

Growth of not-for-profit marketing

The digital age

Sustainable marketing: the call for social responsibility

The IT explosion is accelerating the rate of change and the

Cover image: © VLADGRIN/Shutterstock.com

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