Global Edition Marketing: Creating and Capturing Customer Value

Global Edition
Chapter 1
Marketing:
Creating and Capturing Customer Value
Copyright
Copyright© 2012 Pearson
Education Education, Inc.
©2014 by Pearson
1- 1
Publishing as Prentice Hall
Creating and Capturing Customer
Value
Topic Outline
• What Is Marketing?
• Understanding the Marketplace and Customer Needs
• Designing a Customer-Driven Marketing Strategy
• Preparing an Integrated Marketing Plan and Program
• Building Customer Relationships
• Capturing Value from Customers
• The Changing Marketing Landscape
Copyright ©2014 by Pearson Education

Marketing is…
a process by which companies create value for

customers and build strong customer
relationships to capture value from customers in
return.
•Process = steps
•Purposes: CUSTOMER(S)
– create value
– build strong relationships
– Capture value
What Is Marketing?
Marketing is
a process by which companies create value

for customers and build strong customer
relationships to capture value from
customers in return.

What Is Marketing?
AMA definition
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.
.

Marketing Process
Core marketing concepts
What is Marketing? Core Marketing

Concepts
CV
Copyright © 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002696/Armstrong/Principles of Marketing/6e
1. Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
• States of deprivation
Needs • Physical—food, clothing, warmth, safety

• Social—belonging and affection
• Individual—knowledge and self-expression
Wants • Form that needs take as they are shaped by culture

and individual personality
Demands • Wants backed by buying power

Discussion question
What is the difference between needs,

wants and demands?
Give specific examples
9
Understanding the Marketplace
and Customer Needs
• Market offerings are some

combination of products,
services, information, or
experiences offered to a
market to satisfy a need or
want
• Marketing myopia is
focusing only on existing
wants and losing sight of
underlying consumer
needs

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
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Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
• Value and
satisfaction
Marketers
• Set the right level of
expectations
• Not too high or low

and Customer Needs
Exchange
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.
Marketing actions try to create, maintain,
grow exchange relationships.
Exchanges, transactions and
relationships
A Actual Potential
market buyers buyers
•These buyers share a particular need or

want that can be satisfied through exchange
relationships.
and Customer Needs
Markets are the set of actual and
potential buyers of a product

Managing customer demand:
Sources of demand
New customers
(potential customers)
A marketing
organisation’s demand
comes from two
groups…
Repeat customers
(existing customers)
Copyright © 2012
Copyright Pearson
© 2015 Pearson AustraliaEducation, Inc.
(a division of Pearson Group Pty Ltd) – 9781486002696/Armstrong/Principles of Marketing/6e
Australia
1- 17
Managing customer demand
Finding, increasing and retaining

demand
Marketing
decisions
Changing or reducing demand
Copyright © 2012
Copyright Pearson
© 2015 Pearson AustraliaEducation, Inc.
(a division of Pearson Group Pty Ltd) – 9781486002696/Armstrong/Principles of Marketing/6e
Australia
1- 18
2. Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Market segmentation refers to dividing the

markets into segments of customers
Target marketing refers to which segments to

go after

Marketing Strategy
Choosing a Value Proposition
Value Proposition
Set of benefits or values
a company promises to deliver
to customers to satisfy their needs
should differentiate brands and position
them in the marketplace
• FB “connect and share with the people in your life,”
• YouTube “provides a place for people to connect,
inform, and inspire others across the globe.”
Marketing Strategy
Marketing Management Orientations
Productio Product Selling Marketing Societal

n concept concept concept concept concept

Designing a Customer-Driven
Marketing Strategy
Production concept
consumers will favor products
that are available and highly affordable

Marketing Strategy
Product concept
consumers favor products that offer
the most quality, performance, and features.
Focus is on continuous product
improvements.

Marketing Strategy
Selling concept
consumers will not buy enough of the firm’s
products unless it undertakes a large scale
selling and promotion effort

Marketing Strategy
Marketing concept
knowing the needs and
wants of the target
markets and delivering
the desired satisfactions
better than competitors do

Marketing Strategy
Societal marketing
make good marketing
decisions by considering
consumers’ wants and long-
term interests
company’s requirements
society’s long-run interests

Marketing Strategy

3. Preparing an Integrated
Marketing Plan and Program
The marketing mix: set of tools (four Ps) the
firm uses to implement its marketing
strategy. It includes product, price,
promotion, and place.
Integrated marketing program:
comprehensive plan that communicates
and delivers the intended value to chosen
customers.
4.Building Customer Relationships
Customer Relationship Management (CRM)
• The overall process of
building and maintaining
profitable customer
relationships by delivering
superior customer value and
satisfaction

Building Customer Relationships
Relationship Building Blocks:
Customer Value and Satisfaction
Customer- Customer
perceived value satisfaction
The key to building • The difference • The extent to
lasting customer between total which a
relationships is to customer value product’s
and total perceived
create superior customer cost performance
customer value and matches a
satisfaction buyer’s
expectations
Strategy of Relationship Building
The key to
building right
relationship with
right customers
Or, different types of

customers require different
engagement and
relationship management
strategies.
The Changing Nature of Customer
Relationships
• Relating with more carefully selected
customers uses selective relationship
management to target fewer, more
profitable customers
• Relating more deeply and interactively by
incorporating more interactive two way
relationships through blogs, Websites,
online communities and social networks

Customer Relationship Levels and Tools
Basic
Relationships
Full
Partnerships

The Changing Nature of Customer
Relationships
Customer-managed relationships
Customers, empowered by today’s new
digital technologies,
interact with companies and each other to shape
their relationships with brands.

Partner relationship management involves

working closely with partners in other
company departments and outside the
company to jointly bring greater value to
customers

Partner Relationship Management
• Partners inside the company is every functional area
interacting with customers
– Electronically
– Cross-functional teams

Partner Relationship Management
Marketers connect with their suppliers,

channel partners, and competitors by
developing partnerships
Supply chain is a channel that stretches from
raw materials to components to final products
to final buyers

Capturing Value from Customers
Creating Customer Loyalty and 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
Customer equity
the total combined
customer lifetime
values of all of the
company’s
customers

Growing Share of Customer
Share of customer/Share of wallet

the portion of the customer’s purchasing
that a company gets in$ its product categories
Viettel VinaPhone

Building Customer Equity
• 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

The Changing Marketing
Landscape
Changing Economic Environment
• New consumer frugality
• Marketers focus on value for the customer

Landscape
Digital Age
• Online marketing is the fastest-growing
• Click- and- mortar companies evolved

Landscape
• Not-for-profit marketing
growth
• Rapid Globalization
• Sustainable marketing

So, What Is Marketing?
Pulling It All Together

Week 1 supplementary reading
Louth, John D. 1966 “The changing face of marketing,”

McKinsey Quarterly, September 1966.
http://www.mckinsey.com/insights/marketing_sales/the_
changing_face_of_marketing
“This article from the McKinsey Quarterly archive

analyzes six major changes that promised to transform
future marketing efforts. These forces have largely
proved to be as influential as predicted and continue to
shape today’s challenges.”
Suggested online resources
Open source websites
Australian Marketing Institute, http://www.ami.org.au or AMI Facebook,
https://www.facebook.com/australianmarketinginstitute
The Body Shop, Social and environmental reporting page,
http://www.thebodyshop.com.au/about-us/social-and-environmental-re
porting.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

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Global Edition

Copyright ©2014 by Pearson Education

a process by which companies create value for

a process by which companies create value

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

What is Marketing? Core Marketing

Needs • Physical—food, clothing, warmth, safety

Wants • Form that needs take as they are shaped by culture

Demands • Wants backed by buying power

Copyright ©2014 by Pearson Education

What is the difference between needs,

• Market offerings are some

Copyright ©2014 by Pearson Education

In the broadest sense, Goods

Products & brands

Copyright © 2012 Pearson Education, Inc.

Copyright ©2014 by Pearson Education

•These buyers share a particular need or

Copyright ©2014 by Pearson Education

Finding, increasing and retaining

Changing or reducing demand

Market segmentation refers to dividing the

Target marketing refers to which segments to

Copyright ©2014 by Pearson Education

Productio Product Selling Marketing Societal

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Or, different types of

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Partner relationship management involves

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Marketers connect with their suppliers,

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Share of customer/Share of wallet

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Copyright ©2014 by Pearson Education

Louth, John D. 1966 “The changing face of marketing,”

“This article from the McKinsey Quarterly archive

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