marketing

2. Chapter 1
Marketing: Creating and Capturing
Customer Value

3. What is Marketing?
‘Meeting customer needs profitably’
 Old sense of marketing - telling and selling.
 New sense of marketing - satisfying customer
needs.
 The process by which companies create
value for customers and build strong
customer relationships in order to capture
value from customers in return.

4. The Marketing Process
DESIGN INTEGRATED
UNDERSTAND
CUSTOMER MARKETING
MKT PLACE,
DRIVEN PROGRAM THAT
CUSTOMER NEEDS
MARKETING DELIVERS
AND WANTS
STRATEGY SUPERIOR VALUE
CAPTURE VALUE BUILD
FROM PROFITABLE
CUSTOMERS TO RELATIONSHIP
CREATE PROFITS AND CREATE
AND CUSTOMER CUSTOMER
EQUITY DELIGHT

5. Customer Needs, Wants & Demands
• Basic human requirements
Needs • Physical—food, clothing, warmth, safety
• Social—belonging and affection
• Individual—knowledge and self-expression
• Form that needs take as they are
Wants shaped by culture and individual
personality
Demands • Wants backed by buying power

6. Realization Direction
Deficiency Need Want
Backed by
buying power
Demand
• Examples
• I need food but want fish and chips
• I need a place to live but want a flat
• I need a vacation but want to go to Naran
• I need education but want to pursue BBA
• I need clothing but want designer clothes.

7. Market Offerings
Products, Services & Experiences
 Market offerings - combination of products,
services, information, or experiences offered to a
market to satisfy a need or want.

8.  Market offerings include:
 Products – cars, computers, watches, cosmetics etc.
 Services – airline, hotels, car rental, barbers, bankers,
lawyers, repair people etc.
 Information – education, product manuals, X-ray etc.
 Experiences – amusement parks, cinemas, football &
cricket leagues, travel tales etc.
 Persons – artists, musicians, high profile professionals,
politicians etc.
 Places – cities, states, regions shopping malls etc.
 Organizations – universities, multinational companies
etc.
 Ideas – AIDS, dengue, polio, anti-smoking campaigns
etc.

9. Marketing Myopia
Failure to recognize the ‘scope of the business’
 Product-oriented rather than customer-oriented
management endangers future growth. e.g. railway,
movies etc.
 Customers do not buy products, they buy solution or
benefit.
The needs would stay the same but the wants
would change

10. Exchange
 Exchange is the act of obtaining a desired object
from someone by offering something in return.
The essence of marketing is a transaction or
exchange.
Marketing occurs when people decide to satisfy
needs and wants through exchange relationships.

11. Market
 Markets are the set of actual and potential buyers of a
product.
 These buyers share a particular need or want that can
be satisfied through exchange relationships.

12. Designing a customer-driven
marketing strategy
 Marketing management is the art and science of
choosing target markets and building profitable
relationships with them.
 Find, attract, keep & grow target customers by
creating, delivering & communicating superior
customer value.
 The marketing manager must answer:
 What customers will we serve? (Target market)
 How can we best serve these customers? (Value
proposition)

13. Selecting customers to serve
‘You can’t keep everybody happy’
‘By trying to serve all the customers, they may
not serve any customers well’
 Market segmentation refers to dividing the
markets into segments of customers.
 Target marketing refers to which segments to go
after.
 Market segmentation must take place before a
target market is determined.

14.  Market segmentation is the process of dividing a
market into separate subsets that behave in the
same way.
 Segmenting is done by:
 Demographics - age, sex, income, race etc.
 Geographic - international, city, state, national, climate,
etc.
 Psychographics - personality, lifestyle, political party, etc.
 Behavioral characteristics - consumption status, brand
loyalties, shopping habits, etc.

15. Demarketing
 In case of excess demand, companies may practice
demarketing to:
 Reduce the number of their customers
 Shift their demand temporarily or permanently
 Example – WAPDA, Sui Gas

16. Choosing a value proposition
‘Differentiating & Positioning yourself in the market’
 The value proposition is the set of benefits or
values a company promises to deliver to customers
to satisfy their needs.
 It answers customer’s question – ‘why I should buy
your brand rather than a competitor’s?’
 Example: Nokia is connecting people, where as
Apple iphone is touching is believing.

17. Marketing management orientations
Production Product Selling Marketing Societal
concept concept concept concept concept

18. Production concept
 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.
 This concept is one of the oldest orientation that
guides sellers.
 Although useful in some situations such as highly
competitive, price sensitive markets but can lead
to marketing myopia.

19. Product concept
 Product concept is the idea that consumers will
favor products that offer the most quality,
performance, and features.
 Organization should therefore devote its energy
to:
 Design, pack and price the product attractively
 Place it in convenient distribution channels
 Bring it to the attention of people
 Convince buyers that it is a better product

20. Selling concept
 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.
 Focus is on creating sales transactions rather than
on building long term profitable customer
relationship.
 The aim is to sell what the company makes rather
than making what the market wants.

21.  Marketing concept is the idea that achieving
organizational goals depends on knowing the
needs and wants of the target markets and
delivering the desired satisfactions better than
competitors do.
 Customer focus and value are the paths to sales
and profits.
 The job is not to find the right customers for your
product but to find the right products for your
customers.

22. Societal marketing
 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.
 Examples:
 Bottled water companies contribute to global warming.
 Fast food affects society’s health in the long run.

23. Society
(Human welfare)
Societal
marketing
concept
Consumers Company
(Want satisfaction) (Profits )

24. Preparing an Integrated Marketing
Plan and Program
 Marketing mix is the set of tools classified as 4Ps:
 Product – a need satisfying market offering
 Price – the charge for the offering
 Place – the availability of the offering
 Promotion – communicating with the customers
 Integrated marketing program is a
comprehensive plan that communicates and
delivers the intended value to chosen customers.

25. Customer Relationship Management (CRM)
 The overall process of building and maintaining profitable
customer relationships by delivering superior customer
value and satisfaction.
 It deals with the aspects of acquiring, keeping and growing
customers.

26. Relationship Building Blocks:
Customer Value and Satisfaction
Customer- Customer
perceived value satisfaction
• The customer’s • The extent to which
evaluation of a product’s
difference between perceived
all the benefits and performance
all the costs of a matches a buyer’s
marketing offer expectations
relative to those of
competing offers.

27. Customer Value & Satisfaction
 Customers form expectations about the value and
satisfaction that various marketing offerings will
deliver and buy accordingly.
 Satisfied customers buy again and tell others.
 Dissatisfied customers often switch to competitors
and pass on their bad experience.
 Marketers must set the right level of expectations
to ensure customer satisfaction.
 Customer satisfaction leads to customer
relationships

28. Customer satisfaction
 Performance < Expectation = Dissatisfied 
 Performance = Expectation = Satisfied
 Performance > Expectation = Delighted 

29. Customer Relationship Levels and Tools
Full Partnerships -
Basic Relationships - company with few
company with many customers and high
low margin customers margins
Tools: brand building Tools: one to one
advertising, sales communication,
promotion, website etc. customized
communication

30. The changing nature of Customer Relationships
 Relating with more carefully selected customers
 Today marketers engage in selective relationship
management by targeting fewer, more profitable
customers.
 Relating more deeply & interactively
 Marketers are using more interactive two way
relationships through emails, blogs, websites, video
sharing to online communities and social networks such
as face book and you tube.
 This has led to rise in Consumer -Generated
Marketing.

31. Partner relationship management
 Partners inside the company is every function area
interacting with customers
 Partners outside the company is how marketers
connect with their suppliers, channel partners,
and competitors by developing partnerships

32. Creating Customer Loyalty & Retention
 The final step involves capturing value in return in
form of current and future sales, market share,
profits.
 It creates highly satisfied customers who stay loyal,
who buy and continue to buy the company brands.
 This creates greater long run return for the firms.
 Good customer relationship management creates
customer delight.
 Delighted customers remain loyal and talk
favorably to others about the company and its
products.

33. Customer equity
 Customer equity is the total combined customer lifetime
values of all of the company’s customers.
 The only value your company will ever create is the value
that comes from customers – the ones you have now and
the ones you have in the future.
 The more loyal the firms profitable customers, the higher
the firms customer equity.

34. The changing marketing landscape
Rapid
Digital age
globalization
Ethics and
Not-for-profit
social
marketing
responsibility