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Chapter 1
Marketing: Creating
Customer Value and
Engagement
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What is Marketing?
 What is YOUR definition of “Marketing”?
 Think about key words to describe
marketing.

4Ps: Marketing mix

variables
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Definition of Marketing (AMA,

2013)
Marketing is 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.
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Definition of Marketing (Textbook)

Marketing is the process by which
companies engage customers, build strong
customer relationships, and create
customer value in order to capture value
from customers in return.
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How Do We Determine Value?

 Think about one “customer value”
experience/episode.
 What made you perceive that it provided
good value?
 Share Your Value Experience.
Customer’s “Perceived” Value

 Value: “Good for the money”

 Value: What you receive – What you paid
(Exchange)
 Value = Total Benefits – Total Costs
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 Q: Would “cheap price” lead to customer’s

perceived value?
 ANSWER
 Example?
 Q: Can customers perceive “value” when the
price is high?
 ANSWER
 Example?
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 Do you know who owns Genesis Motor G90?

 2008: Genesis launched @ $32,000
 2015: G90 introduced as a full-size luxury car @60-70K
competing with BMW 7 series, and Lexus LS.
 Challenge to change people’s perception
 Efforts to detach image from Hyundai
 In 2016
 Created Genesis Motor, a part of Hyundai Motors Group
 Separate dealership as a subset inside the existing Hyundai
Dealership
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Exercise:
 Find an example of products/services that
are perceived as “value”.
 List at minimum five total benefits/total
costs all together.
 Who are their competitors? How does this
product/service compare to the
competitors?
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 Value is about perceptions:

Harris Teeter
 When the line gets long….
 About your company: “Value
proposition”
 Value proposition = a set of
benefits to be delivered to
customers to satisfy their needs
 Uber
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Relating AMA’s Marketing Definition

to 4Ps
AMA: Creating, communicating,
delivering and exchanging offerings that
have value for customers, clients,
partners, and society at large.
Creating value: Product – Price
Communicating value: Promotion
Delivering value: Place (distribution)
Relationship Marketing
 Shift from “Transaction-based Marketing”
to “Relationship Marketing”
 Definition of Relationship Marketing
 Why relationship marketing? Benefits of
customer retention?
 Answers - Benefits:
 Repurchase
 WOM
 Buy more, buy more frequently, buy at a higher price
 It costs 5 times less to serve existing customers than acquiring
new customers.
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 It’s getting tough to

acquire new customers
these days. Why?
 ANSWER
 Example: Discover card (
www.donotcall.gov –
2008)
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 Leaky Bucket: Customer acquisition +

Customer Retention

 Example:
 SU
 Compassion International
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CRM: “Customer Relationship

Management”
 CRM Database (e.g., Salesforce – Salesforce demo by
technologyAdvice)
 Airline frequent flyer program
 Grocery Store’s Bonus Card
 Benefits of CRM?

 Answers:
 Rewards that make customers stick (e.g., Frequent flyer
program)
 Present customized offerings (e.g., cat toys for cat owners)
 Information about potential market growth
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Customer Lifetime Value

 Example: When a customer walks out of a grocery
store, the store loses $50,000 in revenue.
Customer on average spends $100 a week for 50
weeks a year and stays in the relationship for 10
years.

 Select a retailer and calculate how much you are

worth to that retailer if you continue to shop there for
the rest of your life (your customer lifetime value).
What factors should you consider when deriving an
estimate of your lifetime value to a retailer?
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Customer Satisfaction
 What is definition of customer
satisfaction?
 Write down your satisfactory
experience.
 Customer Satisfaction
 Satisfaction: pleasurable feeling as a result of comparison
between company’s performance and customer’s
expectations
 Com’s Performance > Customer Expectation = Satisfaction
 Management of performance
 Management of expectations: Is lowering expectation a
good strategy?
 How do customers form their expectations?
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 Raising customer expectation without

enhancing the company’s performance leads
to dissatisfaction.
 Case: Zappos.com – Setting “reasonable”
expectation & beating the expectation
 Case: Vet Dr. for Sunshine
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Marketing Management
Orientations

Producti Marketin
on Product g Societal
Selling
concept: concept: concept: concept:
concept
Availabili Quality Custome Society
ty r
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Societal Marketing
 Businesses (marketing) today consider the
interests of the society.
 The impact of business on people’s lives
 Verizon: Paid volunteer days (6)
 Examples? (e.g., McDonald’s planning to
reduce the use of antibiotics in its global
beef supply in the next few years)
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 Societal Marketing Concept:

Linking Company (Profit) – Consumers
(Satisfaction/Value) – Society (Human
welfare)
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 Gillette Toxic Masculinity

“We believe: the best men can be”

 Upsetting the core audience (i.e., men)

 Riding the wave of social justice (“me too movement”)
 Drawing attention (publicity → sales
increase/decrease?)
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 Nike Ad narrated by Colin Kaepernick

 Colin Kaepernick (NFL player) knelt down
during national anthem in protest (An unarmed
black man shot by police)
 Nike had Colin Kaepernick in its ad
 People’s reaction:
 Upset with Nike & burned Nike shoes, etc.
 Supporters
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Customer Engagement
 Customer Engagement Marketing: Find ways to
have customers involved in the brand/company
experience or the brand message
 Jet Blue: Holding a contest (“Go Get Gifted”) turning
5 winners into holiday presents by flying them to their
loved ones and gift wrapping them from head to toe.
 Other examples?
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 Consumer-Generated Content/Marketing (vs.

Traditional Promotion)
 Positive
 Negative (e.g., “Tide Pod Challenge”)
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Review
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Case: Chick-Fila-A