CHAPTER ONE

CREATING AND CAPTURING CUSTOMER

VALUE
 CREATING AND CAPTURING
CUSTOMER VALUE
Topic Outline
• Define marketing and outline the steps in the
marketing process
• 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
 WHAT IS MARKETING?

• Marketing is managing profitable customer

relationships
– Attracting new customers
– Retaining and growing current customers
• “Marketing” is NOT synonymous with “sales”
or “advertising”
 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.
Marketing consists of the strategies and tactics used to identify,
create and maintain satisfying relationships with customers that
result in value for both the customer and the marketer .
THE MARKETING PROCESS
UNDERSTANDING THE MARKETPLACE
AND CUSTOMER NEEDS
Core Concepts:
• Customer needs, wants, and demands
• Market offerings
• Customer Value and satisfaction
• Exchanges and relationships
• Markets
UNDERSTANDING THE MARKETPLACE
AND CUSTOMER NEEDS
Customer Needs, Wants, and Demands
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
UNDERSTANDING THE MARKETPLACE
AND CUSTOMER NEEDS
Customer Value and Satisfaction
Expectations
UNDERSTANDING THE MARKETPLACE
AND CUSTOMER NEEDS
• Exchange is the act of obtaining a desired object from
someone by offering something in return
• Markets are the set of actual and potential buyers of a product
or service
 MARKETS

“The set of all actual and potential buyers of a product or

service.”
Types of Market
Pure competition Many buyers and many seller trading in a
uniform commodity e.g. wheat, vegetables etc
Monopolistic competition Many buyers and sellers who trade over
a range of prices
Oligopolistic competition Few sellers who are highly sensitive to
each other pricing and marketing strategies
Pure Monopoly Market consist of one seller
 DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
• Marketing management is the art and science of choosing
target markets and building profitable relationships with them
– What customers will we serve?
– How can we best serve these customers?
 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.

De-marketing is marketing to reduce demand temporarily or

permanently; the aim is not to destroy demand but to reduce or
shift it
 DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Choosing a Value Proposition
The value proposition is the set of benefits or values a company
promises to deliver to customers to satisfy their needs.
 DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Marketing Management Orientations
 DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Marketing Management Orientations

Production concept is the idea that consumers will favor

products that are available or highly affordable.

Product concept is the idea that consumers will favor products

that offer the most quality, performance, and features.
Organizations should therefore devote its energy to making
continuous product improvements.
 DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
• 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
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.
 DESIGNING A CUSTOMER-DRIVEN
MARKETING 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.
 PREPARING AN INTEGRATED
MARKETING
PLAN AND PROGRAM
• 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.

• Integrated marketing program is a comprehensive plan that

communicates and delivers the intended value to chosen customers.
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
BUILDING CUSTOMER RELATIONSHIPS

Customer Relationship Levels and Tools

BUILDING CUSTOMER RELATIONSHIPS

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
BUILDING CUSTOMER RELATIONSHIPS

Partner relationship management:

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

• Partners inside the company is every function area interacting

with customers
– Electronically
– Cross-functional teams
BUILDING CUSTOMER RELATIONSHIPS

• Partners outside the company is how 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
• Supply management
• Strategic partners
• Strategic alliances
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

Growing Share of Customer:

Share of customer is the portion of the customer’s purchasing
that a company gets in its product categories.
CAPTURING VALUE FROM CUSTOMERS

Customer equity is the total combined customer lifetime values

of all of the company’s customers

Building Customer Equity:

• Building the 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
– Build the right relationship with the right customers
THE NEW MARKETING LANDSCAPE

Major Developments
Thank You