Chapter 1

“Today’s successful
companies have one thing

in common: they are
strongly customer focused
and heavily committed to
marketing”
Chapter 1
Marketing:
Creating and Capturing Customer Value
Principles of Marketing
Philip Kotler, Gary Armstrong
A presentation by Saima Siddiqui

Creating and Capturing Customer Value
Topic Outline
• What Is Marketing?
• Understand 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
Creating and Capturing Customer Value 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
More than just blast out

Telling and selling? messages to the masses
No! Satisfying customer – Marketers reach you
needs is the priority directly, personally,
today. interactively.

What Is Marketing?
The Marketing Process

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
Wants • Form that needs take as they are shaped by culture and individual
personality
Demands • Wants backed by buying power

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

and Customer Needs
Customer Value and Satisfaction
Customers
• Value and
satisfaction
Marketers
• Set the right level of
expectations
• Not too high or low

and Customer Needs
Exchange is the act of obtaining a desired

object from someone by offering something
in return
Marketers want to build and
maintain strong exchange
relationships by continuously
delivering superior customer
value

and Customer Needs
Markets are the set of actual and potential
buyers of a product
Arrows represent
relationships that must be
developed and managed to
create customer value and
profitable customer
relationships
Designing a Customer Value-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?

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

Marketing Strategy
Choosing a Value Proposition
Value – The tangible or intangible benefits a

customer receives from buying a product or service
Value proposition – Set of benefits or values a
company promises to deliver to customers to satisfy
their needs

Marketing Strategy
Marketing Management Orientations
Production Product Selling Marketing Societal

concept concept concept concept concept

Marketing Strategy
Production concept is the idea that consumers will

favor products that are available or highly
affordable

Marketing Strategy
Product concept is the idea that consumers will

favor products that offer the most quality,
performance, and features. Organization should
therefore devote its energy to making
continuous product improvements.

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 Strategy
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

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

Marketing Strategy

Preparing an Integrated Marketing Plan
and Program
Integrated marketing program: comprehensive plan

that communicates and delivers the intended value
to chosen customers. The plan is executed via using
the marketing mix.
The marketing mix: set of tools (four Ps) the firm uses
to implement its marketing strategy. It includes
product, price, promotion, and place.

Building Customer Relationships
Customer Relationship Management
The overall process of building and maintaining

profitable customer relationships by delivering
superior customer value and satisfaction

Relationship Building Blocks: Customer Value
and Satisfaction
Customer- Customer
perceived value satisfaction
• Customer’s • The extent to
evaluation of the which a
difference product’s
between total perceived
customer value performance
and total matches a
customer cost buyer’s
expectations

Customer Relationship Levels and Tools
Basic
Relationships
Full
Partnerships

Today’s Changing Nature of Customer
Engagement
• Yesterday’s companies focused more on mass

marketing to broad segments of customers at arm’s
length
• Today’s marketers go for interactive marketing
using online, mobile and social media marketing

Today’s Changing Nature of Customer
Engagement
Customer Relationship Customer-managed
Management (CRM) Relationships
Customer-managed relationships
Marketing relationships in which
customers, empowered by today’s new
digital technologies, interact with
companies and with each other to shape
their relationships with brands.

Customer-engagement marketing
Consumer-generated marketing
Marketers utilize fan-made ads to create
buzz in social media, to play an active
role in shaping ads and brand content, to
contribute in designing new product.

Partner relationship management

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

Partner Relationship Management
• Working closely with others inside and

outside of the company.
• In today’s more connected world every
functional area of a company can connect
with the customers.
• Marketers must also partner with suppliers,
channel partners and others outside the
company.

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

Customer Equity
Customer equity is the total combined customer

lifetime values of all of the company’s customers

The Changing Marketing Landscape
Uncertain Economic Environment

• New consumer frugality
• Marketers focus on value for the customer

Digital Age
• People are connected continuously to people and

information worldwide
• Marketers have great new tools to communicate
with customers
• Internet + mobile communication devices creates
environment for online marketing

• Rapid Globalization
• Sustainable Marketing
• Not-for-Profit Marketing


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“Today’s successful

companies have one thing

A presentation by Saima Siddiqui

Creating and Capturing Customer Value 2

Marketing is a process by which companies create

More than just blast out

Creating and Capturing Customer Value 3

Creating and Capturing Customer Value 4

Needs • Physical—food, clothing, warmth, safety

Demands • Wants backed by buying power

Creating and Capturing Customer Value 5

• Market offerings are some combination of products,

Creating and Capturing Customer Value 6

Creating and Capturing Customer Value 7

Exchange is the act of obtaining a desired

Creating and Capturing Customer Value 8

Marketing management is the art and science of

Creating and Capturing Customer Value 10

Market segmentation refers to dividing the markets

Target marketing refers to which segments to go

Creating and Capturing Customer Value 11

Value – The tangible or intangible benefits a

Creating and Capturing Customer Value 12

Production Product Selling Marketing Societal

Creating and Capturing Customer Value 13

Production concept is the idea that consumers will

Creating and Capturing Customer Value 14

Product concept is the idea that consumers will

Creating and Capturing Customer Value 15

Selling concept is the idea that consumers will not

Creating and Capturing Customer Value 16

Marketing concept is the idea that achieving

Creating and Capturing Customer Value 17

Societal marketing concept is the idea that a

Creating and Capturing Customer Value 18

Creating and Capturing Customer Value 19

Integrated marketing program: comprehensive plan

Creating and Capturing Customer Value 20

The overall process of building and maintaining

Creating and Capturing Customer Value 21

Creating and Capturing Customer Value 22

Creating and Capturing Customer Value 23

• Yesterday’s companies focused more on mass

Creating and Capturing Customer Value 24

Creating and Capturing Customer Value 25

Creating and Capturing Customer Value 26

Partner relationship management

Creating and Capturing Customer Value 27

• Working closely with others inside and

Creating and Capturing Customer Value 28

• Customer lifetime value is the value of the entire

Creating and Capturing Customer Value 29

Share of customer is the portion of the customer’s

Creating and Capturing Customer Value 30

Customer equity is the total combined customer

Creating and Capturing Customer Value 31

Uncertain Economic Environment

Creating and Capturing Customer Value 32

• People are connected continuously to people and