0. Marketing
and Customer Value
Marketing: Managing Profitable Customer Relationships
Chapter 1
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

1. What is Marketing? Marketing Defined:
“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others”
Marketing is about managing profitable customer relationships
Attracting new customers
Retaining and growing current customers

2. The Marketing Process
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3. Core Marketing Concepts

4. Understanding the Marketplace
Core Concepts
Need
State of felt deprivation
Example: Need food
Wants
The form of needs as shaped by culture and the individual
Example: Want a Big Mac
Demands
Wants which are backed by buying power
Needs, wants, and demands
Marketing offers: including products, services and experiences
Value and satisfaction
Exchange, transactions and relationships
Markets

5. Want Need Example: Need is for love—a very basic need.
Want is for a product to help us satisfy a need.
The specific way a person satisfies a need depends on his or her unique history, learning experiences, and cultural environment.
Need

6. Understanding the Marketplace
Core Concepts
Marketing offer
Combination of products, services, information or experiences that satisfy a need or want
Offer may include services, activities, people, places, information or ideas
Needs, wants, and demands
Marketing offers: including products, services and experiences
Value and satisfaction
Exchange, transactions and relationships
Markets

7. Understanding the Marketplace
Core Concepts
Value
Customers form expectations regarding value
Marketers must deliver value to consumers
Satisfaction
A satisfied customer will buy again and tell others about their good experience
Needs, wants, and demands
Marketing offers: including products, services and experiences
Value and satisfaction
Exchange, transactions and relationships
Markets

8. Value and Satisfaction
Perceived Value
The customer’s evaluation of the difference between benefits and costs.
Customers often do not judge values and costs accurately or objectively.
Customer Satisfaction
Product’s perceived performance relative to customer’s expectations.

9. Customer Satisfaction
Performance
Expected
level
DISSATISFACTION
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.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

10. Discussion Question: Customer Satisfaction
When have you, personally, been extremely satisfied or dissatisfied with a product? Why?
Why is it so difficult for companies to deliver value to consumers?
Having students discuss their experience brings out product, pricing, promotion and distribution issues. It also highlights the importance of service and how every company is a service company. Ask them how many people they informed when dissatisfied vs. the number they informed when satisfied (dissatisfied is usually higher). You can also introduce perceived value here. It is also useful on the third question to talk about research and understanding needs, the difficulty in managing costs while delivering quality.
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11. Understanding the Marketplace
Core Concepts
Exchange
The act of obtaining a desired object from someone by offering something in return
One exchange is not the goal, relationships with several exchanges are the goal
Relationships are built through delivering value and satisfaction
Needs, wants, and demands
Marketing offers: including products, services and experiences
Value and satisfaction
Exchange, transactions and relationships
Markets

12. Understanding the Marketplace
Core Concepts
Market
Set of actual and potential buyers of a product
Marketers seek buyers that are profitable
Needs, wants, and demands
Marketing offers: including products, services and experiences
Value and satisfaction
Exchange, transactions and relationships
Markets

13. Elements of a Modern Marketing System

14. Marketing Management
Marketing management is the art and science of choosing target markets and building profitable relationships with them.
This definition must include answers to two questions:
What customers will we serve?
How can we serve these customers best?

15. Selecting Customers and Creating Value
Customer Management
What customers will we serve?
Marketers select customers that can be served profitably
Value Proposition
How can we serve these customers best?
Includes the set of benefits or values a company promises to deliver to consumers to satisfy their needs

16. Marketing Management orientations
PRODUCTION CONCEPT
PRODUCT CONCEPT
SELLING CONCEPT
MARKETING CONCEPT
SOCIETAL CONCEPT
Over time five alternative concepts have developed under which organizations design and carry out their marketing strategies.

17. Production Concept
Consumers will favor products that are available and affordable
Improve production and distribution
Management should focus on improving production and distribution efficiency.

18. Product Concept
Consumers will favor products that offer the most in quality, performance, and innovative features
Make continuous product improvements
Under this concept, marketing strategy focuses on making continuous product improvements.

19. Selling Concept
Consumers will not buy enough without a large scale selling and promotion effort
Push for more sales
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.

20. Marketing Concept
Focus on satisfying the needs and wants of target markets.
«Find right customers for your product» VS
«Find right products for your customers»
Under the marketing concept, 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.
Customer-driven marketing is about understanding customer needs and creating products and services that meet existing and latent needs.
Deliver satisfaction better than competitors.

21. The Selling and Marketing Concepts Contrasted

22. Societal Marketing Concept
Deliver value to customers to improve their AND the society’s well being.
Balance short-run and long-run welfare.
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 the society’s well being.

23. The Marketing Plan Transforms the marketing strategy into action
Includes the marketing mix and the 4P’s of marketing
Product
Price
Place
Promotion

24. The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion, and place.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

25. Building Customer Relationships
CRM – Customer relationship management
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.

26. Not All Customers are Equal
Basic Relationships
Low-margin customers
Full Partnerships
Key customers
Selective relationship management
Weeding out unprofitable customers

27. Capturing Value from Customers
Key Concepts
Customer delight leads to emotional relationships and loyalty
Customer Lifetime Value shows true worth of a customer
Customer Loyalty and Retention
Share of Customer
Customer Equity

28. Capturing Value from Customers
Key Concepts
Share of customer’s purchase in a product category.
Achieved through offering greater variety, cross-sell and up-sell strategies.
Customer Loyalty and Retention
Share of Customer
Customer Equity

29. Share of customer Sales to your firm
Share of customer is the portion of the customer’s purchasing that a company gets in its product categories

30. Capturing Value from Customers
Key Concepts
The combined customer lifetime values of all current and potential customers.
Measures a firm’s performance, but in a manner that looks to the future.
Choosing the “best” customers is key
Customer Loyalty and Retention
Share of Customer
Customer Equity

31. Marketing Landscape Challenges Growth of the Internet
Advances in telecommunications, information, transportation
Customer research and tracking
Product development
Distribution
New advertising tools
24/7 marketing through the Internet
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
Marketing relationships

32. Marketing Landscape Challenges
Geographical and cultural distances have shrunk
Greater market coverage
More options for purchasing and manufacturing
Increased competition from foreign competitors
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
Marketing relationships

33. 65%
McDonald’s gets 65 percent of its revenues from outside the United States.
McDonald’s gets 65 percent of its revenues from outside the United States.

34. Marketing Landscape Challenges
Marketers need to take great responsibility for the impact of their actions
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
Marketing relationships

35. Marketing Landscape Challenges
Many organizations are realizing the importance of strategic marketing
Performing arts
Government agencies
Colleges
Hospitals
Politicians
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
Marketing relationships

36. Marketing Landscape Challenges
Profits through managing long-term customer equity
Improve customer knowledge
Target profitable customers
Keep profitable customers
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
Marketing relationships

37. What is Marketing
The process of building profitable customer relationships by creating value for customers and capturing value in return