Marketing: An Introduction
Fourteenth Edition
Chapter 01
Marketing: Creating
Customer Value and
Engagement
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Objectives Outline (1 of 4)
1.1 Define marketing and outline the steps in the marketing
process.
1.2 Explain the importance of understanding the marketplace
and customers and identify the five core marketplace
concepts.
1.3 Identify the key elements of a customer value-driven
marketing strategy and discuss the marketing management
orientations that guide marketing strategy.
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Objectives Outline (2 of 2)
1.4 Discuss customer relationship management and identify
strategies for creating value for customers and capturing
value from customers in return.
1.5 Describe the major trends and forces that are changing
the marketing landscape in this age of relationships.
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First Stop: Amazon
Amazon does much more
than just sell goods online.
It engages customers and
creates satisfying customer
experiences. “The thing that
drives everything is creating
genuine value for
customers,” says Amazon
founder Jeff Bezos.
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Objective Outline 1-1
• Define marketing and outline the steps in the marketing
process.
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What Is Marketing?
• Marketing is engaging customers and managing profitable
customer relationships.
• Goals of Marketing
– Attract new customers by promising superior value
– Keep and grow current customers by delivering
satisfaction
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Forms of Marketing
Traditional
• Making a sale
• Abundance of products in the nearby shopping centers
• Television, magazine, and direct-mail ads
Contemporary
• Satisfying customer needs
• Imaginative Web sites and mobile phone apps, blogs,
online videos, and social media
• Reach customers directly, personally, and interactively
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Figure 1.1 The Marketing Process:
Creating and Capturing Customer
Value
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Objective Outline 1-1 Summary
• Marketing creates value for customers
– understand marketplace and customers
– design a customer value-driven marketing strategy
– construct a marketing program
– engage customers, build relationships
• Captures value from customers
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Objective Outline 1-2
• Explain the importance of understanding the marketplace
and customers and identify the five core marketplace
concepts.
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Understanding the Marketplace and
Customer Needs
• Five core customer and marketplace concepts:
– Needs, wants, and demands
– Market offerings
– Value and satisfaction
– Exchanges and relationships
– Markets
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Customer Needs, Wants, and
Demands (1 of 2)
Needs
• States of felt deprivation
– Physical needs—food, clothing, warmth, and safety
– Social needs—belonging and affection
– Individual needs—knowledge and self-expression
Wants
• Form taken by human needs when shaped by culture and
individual personality
Demands
• Human wants that are backed by buying power
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Customer Needs, Wants, and
Demands (2 of 2)
Staying close to customers:
Target’s energetic new CEO
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Market Offerings
• Products, services, information, or experiences
– Offered to satisfy a need or want
• Marketing myopia—paying more attention to the specific
products than to the benefits and experiences produced
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Customer Value and Satisfaction
• Customers form expectations about the value and
satisfaction of market offerings.
– Satisfied customers buy again
– Dissatisfied customers switch to competitors
• Setting the right level of expectations
– Low expectations may fail to attract buyers
– High expectations may disappoint buyers
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Exchanges and Relationships
• Exchange is the act of obtaining a desired object by
offering something in return.
• Marketing consists of creating, maintaining, and growing
desirable exchange relationships.
– Strong relationships are built by consistently delivering
superior customer value.
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Markets
• All actual and potential buyers of a product
• Sellers and Consumers market
• Customer-managed relationships
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Figure 1.2 A Modern Marketing
System
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Objective Outline 1-2 Summary
• Customers needs, wants, and demands
• Customer lifetime value and share of customer
• Long-term customer equity
• Other marketplace concepts
– market offerings
– value and satisfaction
– exchange and relationships
– markets
• Value proposition
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Objective Outline 1-3
• Identify the key elements of a customer value-driven
marketing strategy and discuss the marketing
management orientations that guide marketing strategy.
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Designing a Customer Value-Driven
Marketing Strategy (1 of 4)
• Customer value-driven marketing strategy
– Once a company fully understands its consumers and
the marketplace, it must decide which customers it will
serve and how it will bring them value.”
• Marketing management: Choosing target markets and
building profitable relationships
• Designing a winning marketing strategy
– Target market?
– Value proposition?
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Designing a Customer Value-Driven
Marketing Strategy (2 of 4)
• 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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Designing a Customer Value-Driven
Marketing Strategy (3 of 4)
Choosing a value
proposition—the company
must decide how it will
differentiate and position
itself in the marketplace.
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Designing a Customer Value-Driven
Marketing Strategy (4 of 4)
• Marketing management orientations
– Production concept
– Product concept
– Selling concept
– Marketing concept
– Societal marketing concept
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Figure 1.3 The Selling and Marketing
Concepts Contrasted
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Figure 1.4 Three Considerations
Underlying the Societal Marketing
Concept
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Preparing an Integrated Marketing
Plan and Program
• Major marketing mix tools
• Four Ps of marketing
– Product
– Price
– Place
– Promotion
• Marketing mix tools should be blended into a
comprehensive integrated marketing program.
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Objective Outline 1-3 Summary
• Market segmentation
• Target marketing
• Differentiation and positioning
• Production and product concepts
• Selling and marketing concepts
• Societal marketing concept
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Objective Outline 1-4
• Discuss customer relationship management and identify
strategies for creating value for customers and capturing
value from customers in return.
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Customer Relationship Management
• Delivering superior customer value and satisfaction to build
and maintain profitable customer relationships
– Customer-perceived value: Customer’s evaluation of
a marketing offer relative to those of competing offers
– Customer satisfaction: Extent to which a product’s
perceived performance matches a buyer’s expectations
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Customer Relationship Levels and
Tools (1 of 2)
Levels
• Basic relationships
• Low-margin customers
• Full partnerships
• High-margin customers
Tools
• Frequency marketing programs
• Loyalty rewards programs
• Club marketing programs
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Customer Relationship Levels and
Tools (2 of 2)
JetBlue’s TrueBlue loyalty program: Relationship marketing
tools
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Customer-Engagement Marketing
• Customer-engagement marketing makes the brand a
meaningful part of consumers’ conversations and lives.
• Greater consumer empowerment means that companies
must practice marketing by attraction.
• Marketers must find ways to enter consumers’
conversations with engaging and relevant brand
messages.
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Consumer-Generated Marketing
• Brand exchanges created by consumers
– Consumers play an increasing role in shaping their own
brand experiences and those of other consumers.
• Uninvited and Invited
– Consumer-to-consumer exchanges
– Consumers invited by companies
New product and service ideas
Active role in shaping ads
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Partner Relationship Management
• Working closely with partners both inside and outside the
company to jointly bring more value to customers
– Partners inside the firm—cross-functional teams
– Partners outside the firm—suppliers, channel partners
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Creating Customer Loyalty and
Retention
• Keeping customers loyal makes good economic sense.
• Customer lifetime value is the value of the entire stream
of purchases a customer makes over a lifetime of
patronage.
• Customer defections can be costly
– Can lose that customer’s lifetime value
– May cause other customers to defect
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Growing Share of Customer
• Portion of the customer’s purchasing in their product
categories
• Share of Customer is increased by:
– Good customer relationship management
– Offering greater variety to current customers
– Creating programs to cross-sell and up-sell to existing
customers
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Building Customer Equity (1 of 2)
• Total combined customer lifetime values of all of the
company’s customers
• Measures the future value of the company’s customer
base
• Increases when the loyalty of the firm’s profitable
customers increases
• Better measure of a firm’s performance than current sales
or market share
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Customer Equity (2 of 2)
•
Cadillac: Managing Customer Equity
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Figure 1.5 Customer Relationship Groups
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Objective Outline 1-4 Summary
• Customer relationship management
• Customer-engagement marketing
• Customer equity
• Customer value and satisfaction
• Creating value for customers and capturing value from
customers in return.
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Objective Outline 1-5
• Describe the major trends and forces that are changing the
marketing landscape in this age of relationships.
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The Changing Marketing Landscape
• Digital Age
• Changing Economic Environment
• Growth of Not-for-Profit Marketing
• Rapid Globalization
• Sustainable Marketing
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The Digital Age: Online, Mobile, and
Social Media Marketing (1 of 2)
• Digital and social media marketing: Engaging
consumers via their digital devices using digital marketing
tools
• Mobile marketing: Using mobile channels to stimulate
immediate buying, make shopping easier, and enrich the
brand experience
• Blending the new digital approaches with traditional
marketing creates a smoothly integrated marketing
strategy and mix.
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Social Media Marketing (2 of 2)
• Online social media provide a digital home for people to
connect and share important information and life’s
moments.
• Social media offer an ideal platform for real-time marketing
and engagement.
– Facebook, Twitter, Snapchat, and smaller more
focused sites.
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Big Data and Artificial Intelligence (AI)
• Marketers can now amass mountains of data
• Brands can use big data to:
– gain deep customer insights,
– personalize marketing offers,
– and improve customer engagements and service.
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Growth of Not-for-Profit Marketing
Sound marketing can help not-for-profits attract
membership, funds, and support.
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Rapid Globalization and Sustainable
Marketing
• Managers around the world are taking both local and
global views of the company’s:
– Industry
– Competitors
– Opportunities
• Corporate ethics and social responsibility have become
important for every business.
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Objective Outline 1.5 Summary
• Online, mobile, and social media marketing
• Post-recession economy
• Not-for-profit marketing
• Connecting globally
• Ethical and societal responsibilities
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Figure 1.6 An Expanded Model of the
Marketing Process
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Objectives Outline (3 of 4)
1.1 Define marketing and outline the steps in the marketing
process.
1.2 Explain the importance of understanding the
marketplace and customers and identify the five core
marketplace concepts.
1.3 Identify the key elements of a customer value-driven
marketing strategy and discuss the marketing management
orientations that guide marketing strategy.
Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved
Objectives Outline (4 of 4)
1.4 Discuss customer relationship management and identify
strategies for creating value for customers and capturing
value from customers in return.
1.5 Describe the major trends and forces that are changing
the marketing landscape in this age of relationships.
Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved
Copyright
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