1.

Marketing: Creating Customer Value and Engagement

In the first chapter, we covered the following topics –

• What is Marketing - Which means an activity and a process for creating, communicating, delivering the offers
that have value for customers partners and society.
• Core of Marketing –
1. Needs – Basic requirements are called needs.
2. Wants – Directed toward specific type of items are called wants.
3. Demands – Wants backed by ability to pay is called demand.
• Marketplace - A place where buyers and sellers meet for their needs, wants, and demands.
• Market offerings - Which consist of products, services, information, or experiences offered to the market for
satisfying the needs and wants.
• Marketing Myopia - Which means a situation where a company making a mistake on focusing more in one
specific product which they are offering instead of the benefits and experience produced by these products.
• The Concept of Exchange – Which means offering something in return having same value.
• Satisfaction – Fulfillment of Expectation is called satisfaction.
• Value – Value is anything which is worth according to money.
• Brand – Offerings from known source is called Brand.
• Marketing Management Orientations – There are five types of marketing management orientations
1. The Production Concept – Build profit through volume.
2. The Product Concept – Product quality are important part of
this marketing strategy.
3. The Selling Concept – Focuses on larges selling and promotion.
4. The Marketing Concept – Focuses on finding right product for
customer.
5. The Societal Concept – Focuses on consumers wants along
with the society’s long run interest.
• Customer Relationship Management – Process of building and maintaining profitable customer relationship
by delivering good customer value and satisfaction.
• Capturing Values from Customer –
I. Customer Loyalty – Customer remain loyal and talk in a favor of
the product.
II. Share of Market - Out of the whole purchase, how much are from
one company defines the market share.
III. Customer Equity – The more loyal customer, the more is customer
equity.
• The Marketing Process – There are five steps in the marketing process -
I. Step I – understand the marketplace and customers’ needs and wants
II. Step II – form a customer driven marketing strategy.
III. Step III – making marketing plan that delivers superior value.
IV. Step IV – building profitable relationship and create customer delight.
V. Step V – capture feedback from customer for creating profit and customer
equity.
• Holistic Marketing Dimensions – Under this strategy, several departments work together to pursue a common
goal i.e., great customer experience and positive brand image. There are mainly four components of holistic
marketing – (a) Internal Marketing (b) Integrated Marketing (c) Relationship Marketing (d) Socially
Responsible Marketing.
 2. Company and Marketing Strategy

The Boston Consulting Group Approach (BCG Growth – share matrix)

The BCG growth – share matrix is a planning tool provides visual representation of a company’s
offerings in an attempt to help in making product related decisions about what product to keep, which product to sell
or stop producing and what product to invest in. The BCG growth – share matrix is classified into four categories i.e.,
“dogs”, “cash cow”, “stars” and a “question mark”. Each category has its own meaning –

I. Dog - If a product has a little share of market and not gaining any growth, then it should be considered as a
“dog” and should be put up for sale. Dog found at the lower right quadrant of the grid and not generated much
money for the company. Due to this that product becomes a liability for the company which drains resources.
For this reason, company should sell that product or stop producing that product.

II. Cash Cow – Product with low growth area but still has a large market share are considered as “cash cow” and
should be taken advantage for long as long as possible. Cash cow represented in the lower left quadrant.
Generally, most of the times these products have higher return than market growth. Thus, high share, low
growth cash cow products provide cash opportunity to reinvest in high share, high growth products “stars”
with greater future ability.

III. Stars – Products with high growth area with large market share are considered as a “star” and should be
deserve more investment. Stars represented in the upper left quadrant, which generates a lot of income but
also it requires large amount of cash. If stars can maintain its position as a market leader it eventually becomes
a cash cow when the growth rate of the whole market goes down.

IV. Question Mark – Products with high growth area in market but uncertainty in market share is considered
under “question mark”. Question mark represented in the upper right quadrant of the grid. These types of
products can expand rapidly but it requires large amount of company’s resources. Products in this quadrant
should be examined frequently and closely to see if they are worth maintaining or not.
High

Star Question Mark

Market Growth

Low

Cash Cow Dog

High Low
Market Share
 3. Analyzing the Marketing Environment
Basically, there are two types of marketing environment: -

1. The Micro – Environment

2. The Macro – Environment

(1) The Company’s Micro – Environment

All the factors of which have an impact on the company’s business's ability to attract and service to its customers
is known as company’s Micro – Environment. Such as the company, Suppliers, Marketing Intermediaries and Publics.

• The Company - The marketing managers must communicate with the other departments also. They must think
about other departments of the company, like Top-level management, Finance, R&D, Purchasing, HR,
Accounting, etc. All these departments are interconnected that work together inside the company.
• The Suppliers – Suppliers are key to the company's customer value delivery network. They supply the
production resources. Therefore, supplier issues can create problem in marketing. So, Marketers must monitor
suppliers supply costs and availability of raw material for smooth marketing.
• Marketing Intermediaries – The company also depends on the marketing intermediaries for the promotion,
sale, and distribution of its products to the end consumers. They include of wholesalers, retailers, logistics
providers, marketing service agencies, and financial institutions.
• Competitors – Companies have no single best competitive marketing strategy. Each company should compare
its size and industry position to its competitors. A company must offer more value and satisfaction than its
competitors. Companies gain strategic advantage by putting their offerings strongly against its competitors'.
• Publics – Marketing environment includes several publics. A public is any group that affects an organization's
goals. There are seven types of publics – (i) Government (ii) Media (iii) Financial publics (iv) Internal publics (v)
Citizen – action publics (vi) Local publics (vii) General publics.
• Customers – The goal of the whole value-delivering network is to connect and build a strong relationship with
target customers. The company may target consumer, commercial, government, reseller, foreign, etc.
markets.

(2) The Company’s Macro – Environment

All the external factors and forces that is not controlled by the company and which influence its development and
production is known as company’s Macro – Environment. Such as Demographic Environment, Economic Environment,
Natural Environment, Technological Environment, Political Environment and Cultural Environment.

• Demographic Environment – Demographics environment involve people, and we know that people make
markets. Therefore, demographic changes may bring major business implications. Thus, every marketer must
monitor demographic trends and market shifts.
• Economic Environment – The market relies on both people and their purchasing power. The economic
environment affects consumer spending and purchasing power. So, economic factors can have dramatic effect
on consumers spending and buying behavior.
• Natural Environment – Natural environment includes natural factors that company uses as inputs that
affecting their marketing activities. Nowadays, organizations trying to develop environmentally sustainable
strategies that not only eco-friendly but also eco-sustainable for the nature.
• Technological Environment – As technology is growing rapidly, it also opens up new markets and new
demands. Therefore, every company must stay ahead of the competition and update their own technology
when it gets old.
• Political Environment – Government laws and agencies influence various organizations and individuals. So,
political developments may affect marketing decisions. Every marketer must analyze political environment.
• Cultural Environment - Cultural environment consists institutional and other forces that affect society’s value,
perception, preferences, and behaviors. So, every marketer must make plan according to the culture of the
society where the business take place.
4. Managing Marketing Information to Gain Customer Insights

Marketers must first understand the customers’ needs and wants to create value and build meaningful
relationships. Marketing information provides customer insights. These customer insights help companies to develop
a competitive advantage.

Managing Marketing Information

• MIS (Marketing Information System) - Gives information to marketers and other management, as well as
suppliers, resellers, and marketing service agencies to generate market insights.

Developing Marketing Information

• Marketers get information from – Internal Data, Marketing Intelligence and Marketing Research
1. Internal Data - Collect customer and market data from the company's internal network.
2. Marketing Intelligence - Systematic collection and analysis of customer, competitor, and
market data which is available already publicly in the market.
3. Marketing Research - Collecting, creating, evaluating, and reporting marketing data relevant
to a particular marketing issue that a business is experiencing.

Defining the Problem and Research Objectives

• Exploratory Research – Collecting preliminary data which help to define problems and suggest solutions.
• Descriptive Research - Describe marketing issues, situations, or markets, such as a product's market potential
or consumers demographic and attitude towards product.
• Causal Research - Marketing research is used to examine ideas about cause-and-effect relationship.

Developing The Research Plan

• Secondary Data – Consists of information that already exist in market and acquired for some another purpose.
• Primary Data – Information collected for special or specific purpose. Designing a primary data gathering
requires decisions on Research Approaches, Contact Methods, Sampling Plan and Research instruments.
A. Research Approaches – It includes observation, surveys, and experiments.
B. Contact Methods – Information’s collected through by mails, interviews, or online research.
C. Sampling Methods - Group of people chosen for marketing research who are good
representation of the whole population.
D. Research Instruments – Collecting information’s through Questionnaires.

Implementing the Research Plan

Following are the steps of implementing the research plan –

(1) Collecting the Information

(2) Processing the information
(3) Analyzing the information
(4) Interpret findings
(5) Draw Conclusion
(6) Report to Management
 5. Consumer Markets and Consumer Buyer Behavior

Consumer Behavior - Refers to the behavior of final consumers who buy goods and services for their personal use.

Consumer Market - The term "consumer market" is used to describe the end consumers' individual purchases.

The Model of Buyers Behavior

The model of buyers Behavior consists of three steps i.e., The Environment, Buyers black box and Buyers Responses.

1. The Environment - The environment consists of Marketing stimuli (4 P’s) given by the company as well as
other factors. The decision to buy or not is influenced by their views, values, and desire.
2. Buyer’s Black Box - When making a purchase, the customer considers past experience, beliefs, desires, and
goals. The buyer's "black box" includes buyers characteristics and buyers’ decision process towards the
product and value creation.
3. Buyer’s Response - Product performance after purchase can affect purchasers' reactions.

Factors Influencing Consumer Behavior

• Cultural Factors – Cultural factors may influence buyers’ decision. It includes culture, sub-culture, and social
class of consumers.
➢ Culture – Culture of the family and other institution affect the buying behavior of a person. Culture
includes family values, perceptions, needs, and behavior.
➢ Subculture – Subcultures are communities within a culture with similar life experiences and situations.
Religion, Geographical factors, etc. are also affect the buying decisions of the buyer.
➢ Social Class – Social classes are divisions of society whose members share values, interests, and
actions. Social class like upper class, middle class, etc. may also influence the buyer’s decision.
• Social Factor – Consumers behavior also may be influenced by social factors such as Reference group, Family,
and role & status.
➢ Reference Group – It includes all groups influencing one’s attitude and behaviors (i.e., Primary Group
and Secondary Group).
➢ Family – Family is the most important factor for different behavior. It consists of Family of orientation
and Family of procreation.
➢ Role and Status – Role and status is also affecting consumers buying decision. Such as managers have
different demand and sports persons have different demand.
• Personal Factor – Buyer’s occupation, age and stage, economic situation, lifestyle, and personality also
influence buying decisions.
➢ Occupation - Occupation is also affects consumers buying decision. Such as blue color job persons
have different demand and White color job persons have different demand.
➢ Economic Situations – Persons economic situation also effect buying decision. Low-income group
have different choices while high level groups have different choices.
➢ Personality – Personality also influences buying behavior of persons choice. Such as someone likes
branded cloths while someone prefer buying local cloths.
• Psychological Factor – Buyer’s psychology like motivation, perception, learning, etc. also influence buyers
buying decisions.
➢ Motivation – It refers to the consumers' subconscious motivations.
Maslow’s Hierarchy of Needs – It states that a person first tries to satisfy the most important
need and when the first one fulfilled, it will stop being a motivator and then the person tries for his
second need.
➢ Perception – It refers to how people select, analyze, and evaluate information to construct a
viewpoint.
➢ Learnings - It refers to the change in behavior of an individual from an experience.
➢ Belief – A descriptive opinion of a person about something.
Buying Decision Behavior

Buying behavior are four types –

1. Complex Buying Behavior – In this situation, consumer is very much involved in a purchase and sees big
differences between brands, they will act differently when they go to shopping.
2. Dissonance-reducing buying behavior – In this situation, consumer is very involved in purchasing but
they don't see much difference between brands.
3. Habitual buying behavior – In this situation, when consumers aren't very involved and there's not much
difference between brands, they tend to buy the same things over and over again.
4. Variety-seeking buying behavior - In this situation, consumers aren't very involved but see big
differences between brands.

The Buyer Decision Process

Buying decision process have five different stages-

❖ Stage I: Need Recognition – Occurs when a buyer realizes a problem or need. This need can be
triggered by Internal stimuli or External stimuli.
❖ Stage II: Information Search – The point when the buyer decides to look for more information about
the desired product.
❖ Stage III: Alternative Evaluation – A situation where the buyer uses information to compare
different brands in the choice set.
❖ Stage IV: Purchase Decision – A point when consumer decides to buy his most preferred brand. This
decision may be affected by two factors – (i) Attitude of others and (ii) Unexpected situational
factors.
❖ Stage v: Post purchase Behavior – It is a stage where consumer decides to take further action based
on how happy or unhappy, he is with his purchase.

7. Customer-Driven Marketing Strategy:

Creating Value for Target Customers

Market Segmentation

The method through which companies use to divide large, diverse markets into smaller markets that can be
reached more easily and effectively with goods and services that meet consumers specific needs.

• Segmenting consumer markets – Segmenting consumer market divided into four different segments-
1. Geographic Segmentation – Markets divided on the basis of Country, State, Cities, Regions, etc. are
known as geographic segmentation.
2. Demographic Segmentation – Markets divided on the basis of Age, Gender, Income, Occupation and
Generation.
3. Psychographic Segmentation – Markets divided on the basis of Lifestyle and Personality is known as
Psychographic Segmentation.
4. Behavioral Segmentation – Markets divided on the basis of Loyalty, Occasion, Benefits, Usages Rate,
etc. known as behavioral Segmentation.
• Segmenting Business Market – Like customer market business market is also uses same variables to segment
their markets. They also segmented geographically, demographically or user status. But they uses some
additional variables like purchasing approach, Situational factors, operating characteristics, etc.
 • Segmenting international markets – Those companies which operate their businesses in different countries
they also segment their business on the basis of countries culture, economic conditions, geographic location
and political legal factors.
➢ Intermarket or Cross market Segment - Despite being in different countries, intermarket
segmentation separates consumers into groups with similar requirements and purchasing habits.
• Requirements for Effective Segmentation – For effective segmentation, market segments must be –
▪ Measurable: The segments can be judged by their size, purchasing power, and profiles.
▪ Accessible: The target market segments can be effectively served.
▪ Differentiable: The segments respond differently to different elements of marketing mix and
programs.
▪ Actionable: Attracting and satisfying segments can be done effectively.

Market Targeting

A group of customers with similar requirements or characteristics that a company serves is called market
targeting.

Evaluating Market Segments

A company must consider three factors when considering market segments:

1. Size & Growth of the segment

2. Segment structural attractiveness
3. Company objectives and resources

Target Marketing Strategies

Market targeting can be done on a variety of levels –

• Undifferentiated Marketing – One offer that covers the entire market. (e.g. – Toothpaste, Sugar, Dish soap)
• Differentiated Marketing - Focuses on various market segments and creates unique offerings for each.
(e.g.- Tide, Honda)
• Concentrated Marketing – Unique needs of their target market. (e.g.- Fitness Bands)
• Micro Marketing – Focuses on individuals needs and wants. (e.g. - Rolls-Royce)
I. Local Marketing – It include customizing brands and promotions for local customers.
II. Individual Marketing – It involves customizing marketing programs for specific customers.

Differentiation and Positioning

• Differentiation – Process of developing a product or service distinct from others to improve its
attractiveness to a specific target market.
• Positioning – The place of any product it occupies in consumers mind in comparison to other products is
known as positioning.

Choosing a Differentiation and Positioning Strategy

• Identifying a set of possible competitive advantages to build a position – For differentiating and positioning
itself company must provide superior customer value to gain the competitive advantage.
• Choosing the right competitive advantages – Company must choose its positioning products. They must
choose which differences to promote.
• Selecting an overall positioning strategy – Brand positioning is called Brand Value. It is a mix of benefits on
which a brand is positioned.
• Developing a positioning statement – The statement that describes brand positioning by using the form:
To (Target segment/need) our (brand) is (concept) that (point of difference).