Marketing Creating and Capturing Customer Value Bluefield College

Marketing Creating and Capturing Customer Value Bluefield College August 31, 2010

What Is Marketing? Simple definition: Marketing is managing profitable customer relationships. Goals: 1. 2. Attract new customers by promising superior value. Keep and grow current customers by delivering satisfaction. Comprehensive definition 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. OLD view of marketing: NEW view of marketing: Making a sale—“telling and selling” Satisfying customer needs

A Simple Model of the Marketing Process

Core Marketing Concepts § Marketers must understand five core customer and marketplace concepts: – Needs, wants, and demands. – Market offerings. – Value and satisfaction. – Exchanges and relationships. – Markets.

Needs, Wants, and Demands § Need: State of felt deprivation including physical, social, and individual needs. • Physical needs: Food, clothing, shelter, safety. • Social needs: Belonging, affection. • Individual needs: Learning, knowledge, self-expression. § Wants: Form that a human need takes, as shaped by culture and individual personality. § Wants + Buying Power = Demand.

Market Offerings Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing offers fulfill needs and wants Market offerings are not limited to physical products, and things aren’t always what they seem to be. UNCF powerfully markets the idea that “A mind is a terrible thing to waste. ”

Customer Value and Satisfaction § Care must be taken when setting expectations for market offerings: – If performance is lower than expectations, satisfaction is low. – If performance is higher than expectations, satisfaction is high. § Advertising sets expectations, and marketers must be careful not to promise too much.

Exchanges and Relationships § Exchange: – Act of obtaining a desired object from someone by offering something in return. § Relationships: – Marketing actions build and maintain relationships with target audiences involving an idea, product, service, or other object. – Marketers build strong relationships by consistently delivering superior customer value.

What Is a Market? § A market: – Is the set of actual and potential buyers of a product. • These people share a need or want that can be satisfied through exchange relationships.

Marketing Management § The art and science of choosing target markets and building profitable relationships with them. – Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value. – Designing a winning marketing strategy requires answers to the following questions: 1. What customers will we serve? — What is our target market? 2. How can we best serve these customers? — What is our value proposition?

Selecting Customers to Serve § Selecting Customers to Serve – Market segmentation: • Dividing the market into segments of customers. – Target marketing: • Selecting one or more segments to cultivate. § Choosing a Value Proposition: – The set of benefits or values a company promises to deliver to consumers to satisfy their needs. • Value propositions dictate how firms will differentiate and position their brands in the marketplace.

Marketing Management Orientations § Organizations design and carry out their marketing strategies under five alternate concepts: – Production Concept. – Product Concept. – Selling Concept. – Marketing Concept. – Societal Marketing Concept.

The Selling and Marketing Concepts § The marketing concept: – A marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors.

Considerations Underlying the Societal Marketing Concept

The Societal Marketing Concept § The societal marketing concept: – A company’s marketing decisions should consider consumer’s wants, the company’s desires, consumers’ long-run interests and society’s long-run interests. Johnson & Johnson’s credo stresses putting people before profits —the societal marketing concept in action. The Body Shop is another example of firm which practices the societal marketing concept.

The Integrated Marketing Plan § Transforms the marketing strategy into action. § Includes the marketing mix and 4 Ps of marketing: – Product. – Price. – Place (Distribution). – Promotion.

Customer Relationship Management The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. § Customer relationship management (CRM): – Deals with all aspects of acquiring, keeping, and growing customers. – Customer value and satisfaction are key.

Customer Perceived Value Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers. § Customer perceived value: – Perceptions may be subjective. – To some customers “value” might mean paying more to get more.

Customer Satisfaction Extent to which the product’s perceived performance matches a buyer’s expectations. – High levels of customer satisfaction often leads to consumer loyalty. – Some firms seek to DELIGHT customers by exceeding expectations. – Profitability must be considered.

Changing Nature of Relationships § Firms may choose to build relationships at different levels. § Loyalty and retention programs build relationships and may include: – Frequency marketing programs. – Club marketing programs. § Customer profitability analysis eliminates losing customers and selects profitable ones with whom relationships should be developed. § Firms now relate more deeply and interactively via blogs, social network Web sites, email, and video sharing. § Embracing customer-managed relationships requires marketing via attraction rather than intrusion. § Consumer-generated marketing has become a significant marketing force. – Doritos fan-generated commercial

Marketing in Action H. J. Heinz attempted to harness consumergenerated marketing and received 8, 000 entries in a homemade ad contest for its ketchup brand on You. Tube.

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, retention, share of market, share of customer, & customer equity. § 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. § Customer Equity – The total combined customer lifetime values of all the company’s current and potential customers.

Customer Relationship Groups

An Expanded Model of the Marketing Process