Lecture 2 Marketing Creating and Capturing Customer Value

Lecture 2 Marketing: Creating and Capturing Customer Value

Recap • Marketing is a process by which companies create value and build strong relationships in order to capture value from customer in return. • Marketing Process – Step 1: Understanding the marketplace and customer needs and wants – Step 2: Design a customer Driven Marketing Strategy – Step 3: Construct an integrated marketing program that delivers superior value – Step 4: Build profitable relationships and create customer delight – Step 5: Capture value from customers to create profits and customer equity

Step 1: Understanding the marketplace and customer needs and wants • Need, want and Demand – Need: State of felt deprivation – Want: The form human needs take as shaped by culture and personality – Demands: Human wants that are backed by buying power • Market Offering – Combination of products, services, information or experiences that satisfy a need or want – Offer may include services, activities, people, places, information or ideas • Value & Satisfaction – Customers form expectations regarding value – Marketers must deliver value to consumers – A satisfied customer will buy again and tell others about their good experience • Market – Set of actual and potential buyers of a product

Step 2: Design a customer Driven Marketing Strategy 1. What customers will we serve? – Marketers select customers that can be served profitably • Value Proposition 2. How can we serve these customers best? – Includes the set of benefits or values a company promises to deliver to consumers to satisfy their needs

Step 2: Design a customer Driven Marketing Strategy • • • Philosophies for designing Marketing Strategy Production concept Product concept Selling concept Marketing concept Societal concept

Step 2: Design a Customer Driven Marketing Strategy • Production concept: – Consumers favor product that are easily available and affordable – Production and operations efficiency – Example: Lenovo – Customer satisfaction may be overlooked

Step 2: Design a customer Driven Marketing Strategy • Product Concept – Consumer will favor products that offer the most in quality , performance and innovative features. – Marketing Myopia – Kodak , Nokia

Step 2: Design a Customer Driven Marketing Strategy • Selling Concept – Emphasizes large scale selling and promotion effort – Example: Insurance companies – Overlooks relationship building – Sell what you make rather than what market wants

Step 2: Design a Customer Driven Marketing Strategy • Marketing Concept – Holds that organizational goals depends on knowing the needs & wants of target markets & Deliver them the desired satisfaction better than competitors. – Example: Diet Coke – May overlook society

Step 2: Design a Customer Driven Marketing Strategy • Societal Concept – Marketing strategy should deliver value to customers in a way that maintains or improves both consumer and society wellbeing. – Example: Johnson and Johnson’s

Step 3: Construct an integrated marketing program that delivers superior value • Integrated Marketing is an approach to creating a unified and seamless experience for consumers to interact with the brand/enterprise • Marketing Mix Tools – Product – Price – Place – Promotion

Step 4: Build profitable relationships and create customer delight • CRM: The Overall process of building and maintaining profitable relationships by delivering superior customer value and satisfaction. • Customer Value – Customer's evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competiting offers – Irrationality of customer • Customer Satisfaction – The extent to which a product’s perceived performance matches a buyer expectation – High satisfaction leads to high loyalty

Step 4: Build profitable relationships and create customer delight

Step 4: Build profitable relationships and create customer delight • Partner Relationship Management – Inside partners – a holistic approach to marketing – Outside partners – distributors, retailers

Step 5: Capture value from customers to create profits and customer equity • Customer Loyalty and Retention – Creating delight – Capitalizing on stream of purchases • Share of Customer: A company’s share in customer’s purchasing in their product category Example: Amazon • Customer Equity: It is the total combined Customer lifetime values of all of the company’s customers. • Better measure of profitability than current sales