marketing: creating and capturing customer value

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Creating and Capturing Customer Value
What Is Marketing?
Designing a Customer-Driven Marketing Strategy
Preparing an Integrated Marketing Plan and Program
Building Customer Relationships
Topic Outline
What Is Marketing?
Old sense of marketing- making a sale “telling and selling”.
New sense of marketing is satisfying customer needs.
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Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Marketing: is a total system of business activities designed to plan, price, promote and distribute want- satisfying products to target markets to achieve organizational objectives.
This definition has two significant implications:
The entire system of business activities should be customer oriented. Customer wants must be recognized and satisfied.
Marketing should start with an idea about a want – satisfying product and should not end until the customer wants are completely satisfied, which may be sometime after the exchange is made.
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Specify what we mean by “product” and “customer”.
Product is used as a generic term to describe what is being marketed – whether it is a good, service, idea, person or place.
The term consumer and customer often used interchangeably.
Customer is the individual or organization that actually makes the purchase decision.
Consumer is the individual or organizational unit that uses or consumes a product.
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THE MARKETING PROCESS
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Marketing is the process of determining customer wants and then developing a product to satisfy that need and also yield a satisfactory profit. In this the company adjusts its supply to the will of the consumer demand. It is externally focused.
Selling is producing a product and then trying to persuade customers to purchase it -- in effect, trying to alter consumer demand to fit the firm’s supply of the product. It is internally focused.
DIFFERENCES BETWEEN MARKETING
Difference between selling and marketing
In selling
Emphasis is on the product.
Company first makes the product and then figures out how to sell it.
Management is sales – volume oriented.
Planning is short run oriented, in terms of today’s products and markets.
In marketing
Emphasis is on customer wants.
Company first determines customer’s wants and then figure out how to make and deliver a product to satisfy those wants.
Management is profit – oriented.
Planning is long run oriented in terms of new products, tomorrows markets and future growth.
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starting point focus means ends
The
Selling
Concept
The
Marketing
concept
Factory existing selling profits
Market customer integrated profits
Understanding the Marketplace
and Customer Needs
Market offerings
and Customer Needs
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and Customer Needs
Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want.
Not limited to physical products – also includes services for example banking, air travel, hotel stays.
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.
Is focusing only on existing wants and losing sight of underlying consumer needs.
They forget that a product is only a tool to solve a consumer problem.
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and Customer Needs
Exchange is the act of obtaining a desired object from someone by offering something in return.
Marketing can occur anytime one social unit (person or organization) strives to exchange something of value with another social unit.
The essence of marketing is a transaction or exchange.
Marketing occurs when people decide to satisfy needs and wants through exchange relationships.
Suppose you want some clothes. You can make them yourself, or you can steal them or you can offer some thing of value to a person who will exchange the clothes for what you offer.
and Customer Needs
Exchanges are carried out by business firms, and also by non-business organizations and even individuals.
Four conditions must exist for an exchange to be able to occur:
Two or more people or organizations must be involved.
The parties must be involved voluntarily.
Each party must have something of value to exchange, and the parties must believe they will each benefit from the exchange.
The parties must be able to communicate with each other.
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and Customer Needs
Markets are the set of actual and potential buyers of a product.
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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?
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Market segmentation refers to dividing the markets into segments of customers
Target marketing refers to which segments to go after
Market segmentation and target marketing are two steps of the marketing process. Although the two go hand-in-hand, there are distinct differences between them, as market segmentation must take place before a target market is determined.
Market segmentation occurs when a company decides that they want to identify a specific type of consumer to which they can market their product or service. A target market is determined once the company identifies which consumers to sell to.
Selecting Customers to Serve
Market segmentation is the process of dividing a market into distinct subsets that behave in the same way or have similar potential for your product/service. Segmenting is done by demographics (age, sex, income, race, etc.), geographic (international, city, state, national, climate, etc.), psychographics (personality, lifestyle, political party, etc.), behavioral characteristics (consumption status, brand loyalties, shopping habits, etc.) , and by sought after benefits that can better the lives of your segmented market with your product/service.
Through this process you are able to target market to the specific segmented market fit for your product/service
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Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it.
These marketers seek fewer customers and reduced demands.
For example: amusement parks overcrowded in summers, so trouble meeting demands, then company practice demarketing, to reduce number of customers.
Selecting Customers to Serve
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
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Marketing Management Orientations
Production concept is the idea that consumers will favor products that are available or highly affordable.
Management should focus on improving production and distribution efficiency.
This concept is one of the oldest orientation that guides sellers.
Company focus on their own operations and not focusing on real objective.
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.
Focus is on making continuous product improvements & product quality.
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.
Focus is on creating sales transactions rather than on building long term profitable customer relationship.
The aim is to sell what the company makes rather than making what the market wants.
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.
Customer focus and value are the paths to sales and profits.
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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.
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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.
Preparing an Integrated Marketing Plan and Program
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The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
It deals with the aspects of acquiring, keeping and growing customers.
Customer Relationship Management (CRM)
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. Customer perceived value: For example, Do Ammar Bilal black label dress shirts, really provide superior quality and that sophisticated look that make them worth the higher price? Its all the matter of personal value perceptions.
Customer satisfaction: if the product performance falls short of expectations, the customer is dissatisfied.
If performance matches expectation the customer is satisfied.
If performance exceeds expectations, the customer is highly satisfied or delighted.
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Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers.
Once firm identify profitable customers firms can create attractive offers to capture these customers and earn their loyalty.
For example consumer electronics retailer best buy recently rolled out a new “customer centricity” strategy that distinguishes between its best customers called angels and less profitable ones called demons. The aim is to embrace the angels while ditching the demons.
Relating more deeply and interactively by incorporating more interactive two way relationships through emails, blogs, Websites, video sharing to online communities and social networks such as face book and you tube.
The Changing Nature of Customer Relationships
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Marketers cannot work alone, they must work closely with variety of marketing partners.
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: rather than assigning sales and marketing people to customers P&G assigns “customer development teams” consists of sales and marketing people, operation specialists, market and financial analyst and others coordinate the efforts of P&G departments.
Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships
Partner Relationship Management
Marketing channels consist of distributors, retailers, and other who connect the company to its buyers.
Supply chain is a channel that stretches from raw materials to components to final products to final buyers.
For example supply chain for personal computers consists of suppliers of computer chips and other components, the computer manufacturer, the distributors, retailers and others who sell the computers.
Supply chain management many companies today are strengthening their connections with partners all along the supply chain.
Success at building customer relationships also rests on how well their entire supply chain performs against competitors supply chains.
Partner Relationship Management
Capturing Value from Customers
The final step involves capturing value in return in form of current and future sales, market share, profits.
It creates highly satisfied customers who stay loyal, who buy and continue to buy the company brands.
This creates greater long run return for the firms.
Good customer relationship management creates customer delight.
Delighted customers remain loyal and talk favorably to others about the company and its products.
Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of
patronage.
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Share of customer is the portion of the customer’s purchasing that a company gets in its product categories.
To increase share of customers firms can offer great variety to current customers.
For Amazon.com, online book seller, in order to increase share of customer offers music, videos, gifts, toys, consumer electronics, office products, home improvements items, lawn and garden products, apparel and accessories, jewelry, tools and even groceries. This way it captures a greater share of each customers spending budget.
Growing Share of Customer
Customer equity is the total combined customer lifetime values of all of the company’s customers.
The only value your company will ever create is the value that comes from customers – the ones you have now and the ones you have in the future.
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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
Building Customer Equity
BUILDING THE RIGHT RELATIONSHIP WITH THE RIGHT CUSTOMERS
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The Changing Marketing Landscape

marketing: creating and capturing customer value

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