Chapter 01

Chapter 1
Marketing: Creating and

capturing customer value
What is marketing?
⚫ Marketing is managing profitable
customer relationships
⚫ Wal-Mart- “Save money. Live better”.

⚫ Apple- “Think different”.
Marketing
⚫ Marketing: is the process by which
companies create value for customers
and build strong customer relationships in
order to capture value from customers in
return
Marketing process
Construct an
Understand the integrated
Design a
marketplace marketing
customer-drive
and customer program that
n marketing
needs and delivers
strategy
wants superior value
Capture value from Build profitable

customers to create profits relationships and create
and customer equity customer delight
1. Understanding the marketplace
and customer needs
⚫ 5 core customer and marketplace
concepts:
1. Customer needs, wants and demands
2. Market offerings
3. Customer value and satisfaction
4. Exchanges and relationships
5. Markets
1. Customer needs, wants and
demands
⚫ Needs - state of felt deprivation for basic

items such as food and clothing and complex
needs such as for belonging. i.e. I am hungry.
⚫ Wants - form that a human need takes as
shaped by culture and individual personality.
i.e. I want a hamburger, French fries, and a
soft drink.
⚫ Demands - human wants backed by buying
power. i.e. I have money to buy this meal.
2. Market offerings
⚫ Market offerings: are some combination
of products, services, information or
experiences offered to a market to satisfy
a need or want
⚫ Marketing myopia: the mistake of paying

more attention to the specific products a
company offers than to the benefits and
experiences produced by these products
3. Customer value and satisfaction
⚫ Customers form expectations about the

value and satisfaction about market
offerings
⚫ Marketers must be careful about setting

expectations- not too low, not too high.
How Do Consumers Choose
Among Products and Services?
Value Gained From Owning a Product and
Costs of Obtaining the Product is
Customer Value
Product’s Perceived Performance in Delivering Value

Relative to Buyer’s Expectations is
Customer Satisfaction
9
4. Exchanges and relationships
⚫ Exchange: the act of obtaining a desired

object from someone by offering
something in return
⚫ Marketing consists of actions taken to

build and maintain desirable exchange
relationships with target audiences
involving products, services, ideas.
Who Purchases Products and
Services?
People Who
Exhibit Need Market – Buyers who
Ethical Actual
share a particular need
Factors
or want that can be
Situational Buyers
satisfied through
Unexpected
exchange or
Resources to
relationships.
Exchange
Money
Attitudes
of Potential
Others Buyers
Willingness to
Exchange
11
5. Market
⚫ Market: the set of all actual and potential
buyers of a product or service
2. Designing a customer-driven
marketing strategy
Marketing Management: The art and science of choosing target markets and
building profitable relationships with them
⚫ Selecting customers to serve
⚫ Market segmentation
⚫ Target marketing
⚫ Demarketing: marketing to reduce demand temporarily or permanently; the aim is

not to destroy demand but to reduce or shift it.
•Why De-Market
•Shortage of supply
•Want to promote newer products
•The company is not having enough sales with the current product
⚫ Choosing a value proposition- set of benefits and values it promises to deliver..

● BMW- the ultimate driving machine
● Nokia- connecting people
● Apple Iphone- touching is believing
Marketing Management Orientations
Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept

14
Production Concept
⚫ Assumes that consumers are interested
primarily in product availability at low
prices
⚫ Improve production and distribution
⚫ Marketing objectives of the companies:
◦ Cheap, efficient production
◦ Intensive distribution
◦ Market expansion (don’t focus on product
innovation or product expansion)
Product Concept
• Consumers favor products that offer
the most quality, performance, and
innovative features.
⚫ Marketing objectives:
◦ Quality improvement
◦ Addition of features
◦ Tendency toward Marketing Myopia
Selling Concept
• Consumers will buy products only if
the company promotes/ sells these
products.
⚫ Assumes that consumers are unlikely to
buy a product unless they are aggressively
persuaded to do so
◦ Sell, sell, sell
◦ Lack of concern for customer needs and
satisfaction
Marketing Concept
• Focuses on needs/ wants of target
markets & delivering satisfaction better
than competitors.
◦ Make what you can sell
◦ Focus on buyer’s needs
Marketing and Sales Concepts
Contrasted
Starting
Focus Means Ends
Point
Selling Profits
Existing
Factory and through
Products Promoting Volume
The Selling Concept
Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction
The Marketing Concept

19
Societal Marketing Concept: idea that a
company’s marketing decisions should consider consumers’ wants, the
company’s requirements, consumers’ long-term interests, and society’s
long-term interests
Ethical Marketing, Green Marketing

Society
(Human Welfare)
Societal
Marketing
Concept
Consumers Company
(Want Satisfaction) (Profits)
20
3. Preparing an integrated marketing
plan and program
The marketing program builds customer
relationship by transforming marketing strategy
into action. It consists of marketing mix.
⚫ Marketing mix tools: 4Ps
⚫ Create a need for market offerings

⚫ Decide how much should be charged
⚫ How it will make offerings
⚫ Communicate with target customers
4. Building customer relationships
⚫ CRM – Customer relationship management . . .
“is the overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction.”
◦ Customer perceived value- customer’s evaluation of the

difference between all the benefits and the cost of a
marketing offerings relative to those of competing offers.
◦ Customer satisfaction
◦ Partner relationship management- inside partners and

outside partners
5. Capturing value from customers
⚫ Creating customer loyalty and retention
◦ Customer Lifetime Value (CLV)- value of the entire stream
of purchases that the customer would make over a lifetime
of patronage.
⚫ Growing share of customer

◦ Cross-selling
⚫ Building customer equity- is the total combined CLV

of all the company’s current and potential customers.
⚫ Building the right relationship with right customers-

some loyal customer can be unprofitable and disloyal
customer can be profitable
Customer relationship groups
Projected loyalty
High True
profitability Butterflies
Potential profitability
friends
Low Strangers Barnacles

profitability
Short term Long term

customers customers

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Chapter 1

Marketing: Creating and

⚫ Wal-Mart- “Save money. Live better”.

Capture value from Build profitable

⚫ Needs - state of felt deprivation for basic

⚫ Marketing myopia: the mistake of paying

⚫ Customers form expectations about the

⚫ Marketers must be careful about setting

Product’s Perceived Performance in Delivering Value

⚫ Exchange: the act of obtaining a desired

⚫ Marketing consists of actions taken to

⚫ Selecting customers to serve

⚫ Demarketing: marketing to reduce demand temporarily or permanently; the aim is

⚫ Choosing a value proposition- set of benefits and values it promises to deliver..

Societal Marketing Concept

The Selling Concept

The Marketing Concept

Ethical Marketing, Green Marketing

⚫ Marketing mix tools: 4Ps

⚫ Create a need for market offerings

◦ Customer perceived value- customer’s evaluation of the

◦ Partner relationship management- inside partners and

⚫ Growing share of customer

⚫ Building customer equity- is the total combined CLV

⚫ Building the right relationship with right customers-

Low Strangers Barnacles

Short term Long term

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