Marketing Lecture 1 (Slides)

Learn Different Next Gen Education
Chapter 1
Marketing:
Creating & Capturing
Customer Value
1-1
Creating and Capturing Customer

Value
Topic Outline
• What Is Marketing? • Building Customer Relationships
• Understand the Marketplace and Customer • Capturing Value from Customers

Needs • The Changing Marketing Landscape
• Designing a Customer-Driven Marketing
Strategy
• Preparing an Integrated Marketing Plan and

Program
1-2
WHAT IS MARKETING?
• A simple definition of marketing is managing profitable customer relationships.
• Marketing must both attract new customers and grow the current customers.
• Every organization must perform marketing functions, not just for-profit companies.
• Nonprofits (colleges, hospitals, churches, etc.) also must perform marketing.
• Most people think of marketing as selling and advertising – “telling and selling.”
• Marketing must focus on satisfying customer needs.
1-3
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
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WHAT IS MARKETING?
The Marketing Process
1-5
• In the first four steps, companies work to understand consumers, create

customer value, and build strong customer relationships
• In the final step, companies reap the rewards of creating superior customer
value. By creating value for consumers, they in turn capture value from
consumers in the form of sales, profits, and long-term customer equity.
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Understanding the Marketplace and

Customer Needs
Customer Needs, Wants, and Demands
Needs
• States of deprivation
• 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
1-7
Five core customer and marketplace

concept are critical:
(1) needs, wants, and demands; (2) marketing

offers (products, services, and experiences); (3)
value and satisfaction; (4) exchanges and
relationships; and (5) markets.
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• The most basic concept underlying marketing is that of human needs.
• Human needs are states of felt deprivation. They include physical, social,
and individual needs. These needs were not created by marketers; they are a
basic part of the human makeup.
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• Wants are the form human needs take as they are shaped by culture
and individual personality. An American needs food but wants a Big
Mac.
• When backed by buying power, wants become demands.
• The best marketing companies go to great lengths to learn and

understand their customers’ needs, wants, and demands.
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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
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• Needs and wants are fulfilled through market offerings – some

combination of products, services, information, or experiences offered to a
market to satisfy a need or want.
• Market offerings include products and services – activities or benefits

offered for sale that are essentially intangible and do not result in the
ownership of anything.
• Marketing myopia occurs when a company becomes so taken with their

own products that they lose sight of underlying customer needs.
1-12

Customer Needs
Customer Value and Satisfaction Expectations
Customers
• Value and
satisfaction
Marketers
• Set the right level of
expectations
• Not too high or low
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Customer Value and Satisfaction
• Customers form expectations about the value and satisfaction that various
market offerings will deliver and buy accordingly.
• Satisfied customers buy again and tell others about their good experiences.
• Dissatisfied customers switch to competitors and disparage the product to

others.
• Customers value and customers satisfaction are key building blocks for
developing and managing customer relationships.
1-14

Customer Needs
Exchange is the act of obtaining a desired object from someone
by offering something in return
• Marketing consists of actions taken to build and

maintain desirable exchange relationships with
target audiances.
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Customer Needs
Markets are the set of actual and potential buyers of a product
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• Marketing means managing markets to bring about profitable

customer relationships.
• Figure 1.2 shows the main elements in a modern marketing system.
1-17
Designing a Customer-Driven Marketing

Strategy
Marketing Management is the art and science of choosing target
markets and building profitable relationships with hem
o What customers will we serve?
o How can we best serve these customers?
1-18
• The marketing manager must answer two important questions:
• What customers will we serve (what’s out target market)?
• How can we serve these customers best (what’s out value

proposition)?
1-19

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
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Selecting Customers to Serve

• A company must decide whom it will serve.
• It does this by dividing the market into segments of customers (market segmentation) and
selecting which segments it will go after (target marketing).
• Marketing managers know they cannot serve all customers. By trying to do so, they end up not
serving any well.
• Marketing managers must decide which customers they want to target and on which level,
timing, and nature of their demand.
• Marketing management is customer management and demand management.
1-21

Strategy
Choosing a Value Propesition
Value proposition: Set of benefits or

values a company promises to deliver
to customers to satisfy their needs
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• (BMW promises “the ultimate driving machine.”)
• Such value propositions differentiate one brand from another.
1-24

Strategy
Marketing Mangement Orientations
Production Product Selling Marketing Societal

concept concept concept concept concept
1-24
• Marketing management wants to design strategies that will build

profitable relationships with target consumers. But what philosophy
should guide these marketing strategies?
• There are five alternative concepts under which organizations design

and carry out their marketing strategies:
1-25

Strategy
Production concept is the idea that consumers will favor products that
are available or highly affordable
• Management should focus on improving production and distribution

efficiency
1-26

Strategy
Production concept is the idea that consumers will favor products that
offer the most quality, performance, and features. Organization should
therefore devote its energy to making continuous product
improvements.
1-27

Strategy
Marketing Management Orientations
Selling concept is the idea that consumers will not buy enough of the
firm’s products unless it undertakes a large scale selling and promotion
effort
1-28
• The concept is typically practiced with unsought goods – those that

buyers do not normally think of buying, such as insurance or blood
donations.
• These industries must be good at tracking down prospects and selling

them on product benefits.
1-29

Strategy
Marketing concept is the idea that achieving

organizational goals depends on knowing the
needs and wants of the target markets and
delivering the desired satisfaction better than
competitors do
1-30
• Under the marketing concept, customers focus and value are the
paths to sales and profits.
• Rather than a “make and sell” philosophy, it is a customer-centered

“sense and respond” philosophy.
• The job is not to find the right customers for your product but to find
the right products for your customers.
1-31
• Customer-driven companies research current customers deeply to learn

about their desires, gather new product and service ideas, and test
proposed product improvements.
• Customer-driven marketing is understanding customer needs even

better than customers themselves do and creating products and services
that meet existing and latent needs.
1-32

Strategy
Societal marketing concept is the idea that a company

should make good marketing decisions by considering
consumers’ wants, the company’s requirements,
consumers’ long-term interests, and society’s long-run
interests
1-33
• The societal marketing concept questions whether the pure marketing

concept overlooks possible conflicts between consumer short‑run
wants and consumer long‑run welfare.
• The societal marketing concept holds that marketing strategy should

deliver value to customers in a way that maintains or improves both
the consumer’s and society’s well‑being.
1-34

Strategy
1-35
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.
1-36
• The company’s marketing strategy outlines which customers the

company will serve and how it will create value for these customers.
• Next, the marketer develops an integrated marketing program that will

actually deliver the intended value to target customers.
• The marketing program consists of the firm’s marketing mix, the set of
marketing tools the firm uses to implement its marketing strategy.
1-37
• The marketing mix tools are classified into

the four Ps of marketing: product, price,
place, and promotion.
• The firm blends all of these marketing mix

tools into a comprehensive integrated
marketing program that communicates and
delivers the intended value to chosen
customers.
1-38
Building Customer Relationships

Customer Relationship Management (CRM)
• The overall process of building and

maintaining profitable customer
relationships by delivering superior
customer value and satisfaction
1-39
• Customer relationship management is the most important concept of

modern marketing.
• Customer relationship management is the overall process of

building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction.
• It deals with all aspects of acquiring, keeping, and growing customers.
1-40
Building Customer Relationships

Relationship Building Blocks: Customer Value and Satisfaction
Customer- perceived Customer

value satisfaction
• The difference • The extent to which

between total a product’s
customer value and perceived
total customer cost performance
matches a buyer’s
expectations
1-41
• The key to building lasting customer relationships is to create superior

customer value and satisfaction.
Customer Value
• Customer-perceived value is the customer’s evaluation of the difference

between all the benefits and all the costs of a market offering relative to those
of competing offers.
• Customers often do not judge values and costs “accurately” or “objectively.”

Instead, customers act on perceived value.
1-42
• Customer Satisfaction
• Customer satisfaction depends on the product’s perceived performance

relative to a buyer’s expectations.
• If the product’s performance falls short of expectations, the customer is

dissatisfied. If performance matches expectations, the customer is satisfied.
If performance exceeds expectations, the customer is highly satisfied or
delighted.
1-43
• Although the customer-centered firm seeks to deliver high customer

satisfaction relative to competitors, it does not attempt to maximize
customer satisfaction.
• A company can always increase customer satisfaction by lowering its

price or increasing its services. But this may result in lower profits.
• The purpose of marketing is to generate customer value profitably.
1-44
CAPTURING VALUE FROM

CUSTOMERS
• The first four steps in the marketing process involve building
customer relationships. The final step involves capturing value in
return.
• By creating superior customer value, the firm creates highly

satisfied customers who stay loyal and buy more.
1-45
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
1-46
Creating Customer Loyalty and Retention

• The aim of customer relationship management (CRM) is to create not just customer
satisfaction, but customer delight.
• This means that companies must aim high in building customer relationships.
• Customer delight creates an emotional relationship with a product or service, not just a
rational preference.
• Companies are realizing that losing a customer means losing more than a single sale. It
means losing customer lifetime value.
1-47

Growing Share of Customers
Share of customer is the portion of the

customer’s purchasing that a company gets in
its product categories
1-48
Customer equity is the total combined

customer lifetime values of all of the
company’s customers
1-49
Building Customer Equity

• Companies want not only to create profitable customers, but to “own” them for life,
capture their customer lifetime value, and earn a greater share of their purchases.
What is Customer Equity

• Customer equity is the total combined customer lifetime values of all of the
company’s current and potential customers.
• Clearly, the more loyal the firm’s profitable customers, the higher the firm’s
customer equity.
• Customer equity may be a better measure of a firm’s performance than current

sales or market share.
1-50

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
1-51
So, What Is Marketing? Pulling It All Together
1-52
• Marketing is the process of building profitable customer

relationships by creating value for customers and capturing value in
return.
• The first four steps in the marketing process create value for
customers.
• The final step in the process allows the company to capture value
from customers.
1-53
• When building customer and partner relationships, companies must

harness marketing technology, take advantage of global opportunities,
and act in an ethical and socially responsible way.
• Figure 1.6 provides a road map to future chapters of this text.
1-54
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall
1-55

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Learn Different Next Gen Education

Creating and Capturing Customer

• What Is Marketing? • Building Customer Relationships

• Understand the Marketplace and Customer • Capturing Value from Customers

• Preparing an Integrated Marketing Plan and

• Nonprofits (colleges, hospitals, churches, etc.) also must perform marketing.

• Marketing must focus on satisfying customer needs.

• In the first four steps, companies work to understand consumers, create

Understanding the Marketplace and

Demands • Wants backed by buying power

Five core customer and marketplace

(1) needs, wants, and demands; (2) marketing

Customer Needs, Wants, and Demands

• The most basic concept underlying marketing is that of human needs.

Customer Needs, Wants, and Demands

• When backed by buying power, wants become demands.

• The best marketing companies go to great lengths to learn and

Understanding the Marketplace and

• Marketing myopia is focusing only on existing

• Needs and wants are fulfilled through market offerings – some

• Market offerings include products and services – activities or benefits

• Marketing myopia occurs when a company becomes so taken with their

Understanding the Marketplace and

Customer Value and Satisfaction

• Dissatisfied customers switch to competitors and disparage the product to

Understanding the Marketplace and

• Marketing consists of actions taken to build and

Understanding the Marketplace and

• Marketing means managing markets to bring about profitable

• Figure 1.2 shows the main elements in a modern marketing system.

Designing a Customer-Driven Marketing

o What customers will we serve?

o How can we best serve these customers?

• The marketing manager must answer two important questions:

• What customers will we serve (what’s out target market)?

• How can we serve these customers best (what’s out value

Designing a Customer-Driven Marketing

Market segmentation refers to dividing the markets into segments of

Target marketing refers to which segments to go after

Selecting Customers to Serve

• Marketing management is customer management and demand management.

Designing a Customer-Driven Marketing

Value proposition: Set of benefits or

• (BMW promises “the ultimate driving machine.”)

• Such value propositions differentiate one brand from another.

Designing a Customer-Driven Marketing

Production Product Selling Marketing Societal

• Marketing management wants to design strategies that will build

• There are five alternative concepts under which organizations design

Designing a Customer-Driven Marketing

• Management should focus on improving production and distribution

Designing a Customer-Driven Marketing

Designing a Customer-Driven Marketing

• The concept is typically practiced with unsought goods – those that

• These industries must be good at tracking down prospects and selling

Designing a Customer-Driven Marketing

Marketing concept is the idea that achieving

• Rather than a “make and sell” philosophy, it is a customer-centered

• Customer-driven companies research current customers deeply to learn

• Customer-driven marketing is understanding customer needs even

Designing a Customer-Driven Marketing

Societal marketing concept is the idea that a company

• The societal marketing concept questions whether the pure marketing

• The societal marketing concept holds that marketing strategy should