Magement Summary

CHAPTER 1

Marketing: Creating and Capturing Customer Value

Previewing the Concepts

1. Define marketing and the marketing process.

2. Explain the importance of understanding customers and identify the five core marketplace concepts.

3. Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide strategy.

4. Discuss customer relationship management and identify strategies for creating value for and capturing value from customers.

5. Describe the major trends and forces that are changing the marketing landscape.

CASE STUDY

P&G’s Tide – Building Relationships

Value Creation for Tide

 History: Tide is an innovative brand, historically positioned on the basis of superior functional performance.

 At Issue: Competitors can copy product benefits quickly, but can not copy feelings toward the brand.

 Challenge: Understand what the brand means to consumers and how it fits into their lives.

 Goal: “Speak eye-to-eye with consumers.”

Building Relationships

 Research Process: Explored the emotional connections women have with their laundry via consumer immersion.

 Findings: Women are linked emotionally to clothing. Fabrics allow women to express their attitudes, personality, and multiple facets of being female.

 “Tide Knows Fabrics Best” campaign featured rich visual imagery and meaningful emotional connections.

 Result: 7% sales increase.

What Is Marketing?

Simple definition:

Marketing is managing profitable customer relationships.

Goals:

1. Attract new customers by promising superior value.

2. Keep and grow current customers by delivering satisfaction.

Marketing Defined

 Marketing is the activity, set of instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

OLD view of marketing:

Making a sale—“telling and selling”

NEW view of marketing:

Satisfying

customer needs

The Marketing Process

A simple model of the marketing process:

► Understand the marketplace and customer needs and wants.

► Design a customer-driven marketing strategy.

► Construct an integrated marketing program that delivers superior value.

► Build profitable relationships and create customer delight.

► Capture value from customers to create profits and customer quality.

Needs, Wants, and Demands

 Need:

State of felt deprivation including physical, social, and individual needs.

► Physical needs:

• Food, clothing, shelter, safety

► Social needs:

• Belonging, affection

► Individual needs:

• Learning, knowledge, self-expression

Need/Want Fulfillment

 Needs and wants are fulfilled through a Marketing Offer:

► Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Market Offerings

 Products:

► Persons, places, organizations, information, ideas.

 Services:

► Activity or benefit offered for sale that is essentially intangible and does not result in ownership.

 Brand experiences:

► “. . . dazzle their senses, touch their hearts, stimulate their minds.”

Marketing Myopia

 Marketing myopia:

► Occurs when sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products.

► They focus on the “wants” and lose sight of the “needs.”

Customer Value and Satisfaction

 Care must be taken when setting expectations:

► If performance is lower than expectations, satisfaction is low.

► If performance is higher than expectations, satisfaction is high.

Exchanges and Relationships

 Exchange:

► Act of obtaining a desired object from someone by offering something in return.

 Relationships:

► Marketing actions build and maintain relationships with target audiences involving an idea, product, service, or other object.

What Is a Market?

 A market:

► Is the set of actual and potential buyers of a product.

► These people share a need or want that can be satisfied through exchange relationships.

Modern Marketing Systems

 Main elements in a modern marketing system include:

► Suppliers

► Company (marketer)

► Competitors

► Marketing intermediaries

► Final users (consumers)

 Major environmental forces affect each element.

Marketing Management

 The art and science of choosing target markets and building profitable relationships with them.

► Requires that consumers and the marketplace be fully understood.

► Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value.

 Designing a winning marketing strategy requires answers to the following questions:

1. What customers will we serve?

— What is our target market?

2. How can we best serve these customers?

— What is our value proposition?

Selecting Customers to Serve

 Market segmentation:

► Dividing the market into segments of customers.

 Target marketing:

► Selecting one or more segments

to cultivate.

Demand Management

 Demand management

► Finding and increasing demand, also changing or reducing demand, as in demarketing.

 Demarketing

► Temporarily or permanently reducing the number of customers or shifting their demand.

Choosing a Value Proposition

 The set of benefits or values a company promises to deliver to consumers to satisfy their needs.

► Value propositions dictate how firms will differentiate and position their brands in the marketplace.

Marketing Management Orientations

 Organizations design and carry out their marketing strategies under five alternate concepts:

► Production Concept

► Product Concept

► Selling Concept

► Marketing Concept

► Societal Marketing Concept

The Marketing Concept

 The marketing concept:

► A marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors.

The Integrated Marketing Plan

 Transforms the marketing strategy into action.

 Includes the marketing mix and 4 Ps of marketing:

Product

Price

Place (Distribution)

Promotion

Building Customer Relationships

 Customer relationship management:

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

• CRM deals with all aspects of acquiring, keeping, and growing customers.

• Customer value and satisfaction are key.

Customer Perceived Value

 Customer perceived value:

Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers.

• Perceptions may be subjective

• Consumers often do not objectively judge values and costs.

Customer Satisfaction

 Customer satisfaction:

Dependent on the product’s perceived performance relative to a buyer’s expectations.

• Customer satisfaction often leads to consumer loyalty.

• Some firms seek to DELIGHT customers by exceeding expectations.

Customer Relationships

 Loyalty and retention programs build relationships and may feature:

Financial Benefits

• E.g., frequency marketing programs

Social Benefits

• E.g., club marketing programs

Structural Ties

 Focus is on relating directly to profitable customers, for the long term.

Changing Nature of Relationships

 Selective relationship management:

Customer profitability analysis eliminates losing customers and selects profitable ones.

 Relating more deeply and interactively via blogs, social network Web sites, email, and video sharing.

Marketing by attraction vs. intrusion.

 Increased amounts of consumer generated marketing.

Partner Relationship Marketing

 Marketing partners help create customer value and assist in building customer relationships.

 Partners inside the firm:

All employees customer focused

Teams coordinate efforts toward customers

 Partners outside the firm:

Supply chain management

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