Chapter One

Creating and Capturing

Customer Value

Chapter 1- slide 1
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

Chapter 1- slide 2
 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

Chapter 1- slide 3
 Understanding the Marketplace
and Customer Needs
Core Concepts
• Customer needs, wants, and
demands
• Market offerings
• Customer Value and satisfaction
• Exchanges and relationships
• Markets

Chapter 1- slide 4
 Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

•States of deprivation

Needs •Physical—food, clothing, warmth, safety

•Social—belonging and affection
•Individual—knowledge and self-expression

Want •Form that human needs take as they are shaped by

culture and individual personality

s
Demands •Human wants backed by buying power

Chapter 1- slide 5
 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
Chapter 1- slide 6
 Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
• Value and
satisfaction

Marketers
• Set the right level of
expectations
• Not too high or low

Chapter 1- slide 7
Understanding the Marketplace
and Customer Needs
Exchange is the act of obtaining a
desired object from someone by
offering something in return
 Understanding the Marketplace
and Customer Needs

Markets are the set of actual and

potential buyers of a product or
service
 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?

Chapter 1- slide 10
 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

Chapter 1- slide 11
 Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve

Demarketing is marketing to reduce

demand temporarily or
permanently; the aim is not to
destroy demand but to reduce or
shift it

Chapter 1- slide 12
 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

Chapter 1- slide 13
 Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations

Production Product Selling Marketing Societal

concept concept concept
concept concept

Chapter 1- slide 14
 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

Chapter 1- slide 15
 Designing a Customer-Driven
Marketing Strategy

Marketing Management Orientations

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.
Chapter 1- slide 16
 Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations

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

Chapter 1- slide 17
 Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations

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

Chapter 1- slide 18
 Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations

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
Chapter 1- slide 19
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
Chapter 1- slide 20
Building Customer Relationships
Customer Relationship Management
(CRM)

• The overall process of building

and maintaining profitable
customer relationships by
delivering superior customer
value and satisfaction

Chapter 1- slide 21
Building Customer Relationships
Relationship Building Blocks: Customer
Value and Satisfaction

Customer Customer
perceived value satisfaction
• The • The extent
difference to which a
between product’s
total perceived
customer performanc
value and e matches
total a buyer’s
customer expectatio
cost ns
Chapter 1- slide 22
Building Customer Relationships
Customer Relationship Levels and Tools

Basic
Relationshi
ps

Full
Partnershi
ps
Chapter 1- slide 23
 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
Chapter 1- slide 24
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

Chapter 1- slide 25
 Building Customer Relationships
Partner Relationship Management
• Partners inside the company is
every function area interacting
with customers
– Electronically
– Cross-functional teams
• Partners outside the company is
how marketers connect with
their suppliers, channel partners,
and competitors by developing
Chapter 1- slide 26
Building Customer Relationships
Partner Relationship Management

• Supply chain is a channel that

stretches from raw materials to
components to final products to
final buyers
• Supply management
• Strategic partners
• Strategic alliances

Chapter 1- slide 27
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

Chapter 1- slide 28
 Capturing Value from Customers
Growing Share of Customer

Share of customer is the portion of

the customer’s purchasing that a
company gets in its product
categories

Chapter 1- slide 29
 Capturing Value from Customers

Customer equity is the total

combined customer lifetime
values of all of the company’s
customers
 Capturing Value from 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

Chapter 1- slide 31