Marketing Creating and Capturing Customer Value Chapter 1-1 Copyright © 2012 Pearson Canada Inc Previewing the Concepts Define marketing and the marketing process Understand customers and identify the five core marketplace concepts Identify elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide strategy Discuss customer relationship management and identify strategies for creating value for and capturing value from customers Describe the major trends and forces that are changing the marketing landscape 1-2 Copyright © 2012 Pearson Canada Inc What Is Marketing? • Simple definition: – Marketing is managing profitable customer relationships • Goals: 1.Attract new customers 2.Keep and grow current customer base 1-3 Copyright © 2012 Pearson Canada Inc Marketing Defined • Marketing: – The process of creating value for customers and building strong relationships to capture value from customers in return 1-4 OLD view of marketing: NEW view of marketing: Making a sale “telling and selling” Satisfying customer needs Copyright © 2012 Pearson Canada Inc The Marketing Process • A simple model of the marketing process: 1-5 Copyright © 2012 Pearson Canada Inc Core Concepts • Marketers must understand five core customer and marketplace concepts: – Needs, wants, and demands – Market offerings – Value and satisfaction – Exchanges and relationships – Markets 1-6 Copyright © 2012 Pearson Canada Inc Needs, Wants, and Demands • Need: – State of felt deprivation • Wants: – Form that a human need takes, as shaped by culture and individual personality • Wants + Buying Power = Demand 1-7 Copyright © 2012 Pearson Canada Inc Market Offerings • Needs and wants are fulfilled through market offerings: – Combination of products, services, information, or experiences offered to a market to satisfy a need or want 1-8 Copyright â 2012 Pearson Canada Inc Marketing Myopia Marketing Myopia: – Mistake of focusing on specific products a company offers rather than the benefits and experiences produced by the products – They focus on the “wants” and lose sight of the “needs” 1-9 Copyright © 2012 Pearson Canada Inc Customer Value and Satisfaction • Care must be taken when setting expectations for market offerings: – If expectations are too low, offering may fail to attract enough buyers – If expectations are too high, buyers will be disappointed - 10 Copyright © 2012 Pearson Canada Inc Marketing Management Orientations • Organizations design and carry out marketing strategies under five concepts: – Production Concept – Product Concept – Selling Concept – Marketing Concept – Societal Marketing Concept - 18 Copyright © 2012 Pearson Canada Inc The Marketing Concept • Selling and marketing concepts contrasted: - 19 Copyright © 2012 Pearson Canada Inc The Societal Marketing Concept • Societal Marketing Strategy considers: – consumers’ wants – company needs – consumers’ and society’s long-run interests – Calls for sustainable marketing, socially and environmentally responsible marketing - 20 Copyright © 2012 Pearson Canada Inc The Integrated Marketing Plan • Transforms the marketing strategy into action • Includes the marketing mix and four Ps of marketing: – Product – Price – Place (Distribution) – Promotion - 21 Copyright © 2012 Pearson Canada Inc Building Customer Relationships • Customer Relationship Management (CRM): – Building and maintaining profitable customer relationships by delivering superior customer value and satisfaction – Deals with all aspects of acquiring, keeping, and growing customers – Customer value and satisfaction are key - 22 Copyright © 2012 Pearson Canada Inc Customer-Perceived Value • Customer-Perceived Value: – Customer’s evaluation of the difference between all benefits and costs of a marketing offer relative to those of the competitors - 23 Copyright © 2012 Pearson Canada Inc Customer Satisfaction • Customer Satisfaction: – Extent to which the product’s perceived performance matches a buyer’s expectations • High customer satisfaction = consumer loyalty • Exceeding expectations • Profitability? - 24 Copyright © 2012 Pearson Canada Inc Customer Relationships • Firms may choose to build relationships at different levels • Loyalty and retention programs build relationships and may include: - 25 Copyright © 2012 Pearson Canada Inc Changing Nature of Relationships • • • • Deeper, direct and lasting relationships Two-way customer relationships Market via attraction, not intrusion Consumer-generated marketing is a significant marketing force - 26 Copyright © 2012 Pearson Canada Inc Partner Relationship Management • Partners inside the firm: – Cross-functional customer teams • Partners outside the firm: – Supply chain management - 27 Copyright © 2012 Pearson Canada Inc Capturing Value From Customers • Value is captured from customers via current and future sales, market share, and profit – Superior customer value leads to highly satisfied loyal customers who buy more – Key outcomes of customer value include customer loyalty and retention, share of market, share of customer, and customer equity - 28 Copyright © 2012 Pearson Canada Inc Customer Loyalty and Retention • Customer Lifetime Value: – The value of the entire stream of purchases that the customer would make over a lifetime of patronage • Share of Customer: – The portion of the customer’s purchasing that a company gets in their product categories - 29 Copyright © 2012 Pearson Canada Inc Customer Equity • Customer Equity: – The total combined customer lifetime values of all the company’s current and potential customers • Manage equity by: – Classifying customers by projected loyalty and potential profitability – Manage each group accordingly - 30 Copyright © 2012 Pearson Canada Inc Changing Marketing Landscape • • • • The uncertain economic environment The digital age Rapid globalization Sustainable marketing – call for more social responsibility • Growth of not-for-profit marketing - 31 Copyright © 2012 Pearson Canada Inc Reviewing the Concepts Define marketing and the marketing process Understand customers and identify the five core marketplace concepts Identify elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide strategy Discuss customer relationship management and identify strategies for creating value for and capturing value from customers Describe the major trends and forces that are changing the marketing landscape - 32 Copyright © 2012 Pearson Canada Inc ... Concept – Marketing Concept – Societal Marketing Concept - 18 Copyright © 2 012 Pearson Canada Inc The Marketing Concept • Selling and marketing concepts contrasted: - 19 Copyright © 2 012 Pearson... changing the marketing landscape 1- 2 Copyright © 2 012 Pearson Canada Inc What Is Marketing? • Simple definition: – Marketing is managing profitable customer relationships • Goals: 1. Attract new... responsible marketing - 20 Copyright © 2 012 Pearson Canada Inc The Integrated Marketing Plan • Transforms the marketing strategy into action • Includes the marketing mix and four Ps of marketing: