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1MARKETING AN INTRODUCTIONArmstrong/KotlerMarketingCreating and Capturing Customer ValueCopyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Outline What is Marketing?Understanding the Marketplace and CustomerNeedsDesigning a Customer-Driven Marketing StrategyPreparing an Integrated Marketing Plan andProgramBuilding Customer RelationshipsCapturing Value from CustomersThe Changing Marketing Landscape1- 2Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

What is MarketingMarketing is managing profitable customerrelationshipsMarketing is a social and managerial process bywhich individuals and organizations obtain whatthey need and want through creating andexchanging value with others1-3Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Marketing Process1- 4Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Understanding The Marketplace andCustomer Concepts1. Needs, Wants, and Demand2. Market offerings (Products, service,and experiences)3. Value and satisfaction4. Exchanges and relationship; and5. Markets1-5Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Customer Needs, Wants, and DemandsNeedsWantsDemands1- 6Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Discussion QuestionDescribe acollege educationin terms ofwants, needs,and demands?1- 7Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Market OfferingsCustomer needs and wants are fulfilledthroughmarketofferings1-8Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Exchanges and relationshipsExchange is the act of obtaining a desiredobject fromsomeone byofferingsomething inreturn1-9Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

A Modern Marketing System1- 10Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Designing a Customer Driven MarketingStrategyMarketingmanagement is theart and science ofchoosing targetmarkets and buildingprofitablerelationships withthem.1 - 11Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Two Questions for MarketersWhatmarketswill weserve?How canwe servethesecustomersbest?1- 12Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Designing customer driven marketingstrategy Selecting customerMarket segmentationTarget MarketingMarketing managementis customermanagement anddemand management Value PropositionSet of benefits or valuesdelivered to customersto satisfy their needsAnswers why a customershould buy your brandrather than acompetitor’s13Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall1- 13

Discussion QuestionWhy is itimportant to amarketer todecide whichcustomers theywill serve?1- 14Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Marketing Management OrientationMarketing strategies are guided by a particularphilosophy / concept; The production Concept – oldest orientation The Product Concept – Good products will sell The Selling Concept – focus on selling andpromotion effortsThe above three practices lack the customerfocus and value and thus tend to fail1- 15Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Marketing ConceptThe Marketing Management philosophy thatholds that achieving organizational goalsdepends on knowing the needs and wants ofthe target markets and delivering desiredsatisfactions better than competitors do.Note: In this concept customer focus andvalue are the paths to sales and profit unlikeothers.1- 16Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Marketing Management conceptMarketingConceptSocietalMarketingConcept1- 17Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Societal Marketing ConceptThe idea that a company’s marketing decisionsshould consider consumer’s wants, thecompany’s requirements, consumers’ long runinterests and society’s long run interests.1- 18Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Preparing an Integrated Marketing Plan andProgramPricePlacePromotionProduct1- 19Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Building Customer RelationshipsCustomer Relationship Management is theoverall processof building andmaintainingprofitablecustomerrelationshipsby deliveringsuperior customer value and satisfaction.1 - 20Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Customer Relationship ManagementRelationship building blocks; Customer value – A customer buys from thefirm that offers the highest perceivedvalue. Customer satisfaction – It depends on theproduct’s perceived performance relativeto a buyer’s expectation.1 - 21Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Customer ValueBenefitsCosts1- 22Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Customer Satisfaction and RelationshipsBasic relationshipsFull partnershipsFrequency marketing programsClub marketing programs1- 23Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The changing nature of customer relationship Relating with more carefully selectedcustomers Relating more deeply and interactively1- 24Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Partner Relationship Management Partner inside the company – David Packard,late cofounder of Hewlett Packard, wisely said,“Marketing is far too important to be left onlyto marketing department”. All departmentsjoin the cause of creating value for customers Marketing Partners outside the firm –Suppliers, channel partners and evencompetitors are considered in deliveringcustomer value1- 25Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Discussion QuestionWhat companiesdo you personallyfeel relate to youdeeply andinteractively?1- 26Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Capturing Value from Customers The first four steps in the marketing processinvolve building customer relationships bycreating and delivering superior customervalue. The final step involves capturing value inreturn in the form of current and future sales,market share, and profits.1- 27Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Capturing Value from CustomersCreatingCustomerLoyalty andRetentionGrowingShare ofCustomerBuildingCustomerEquity1- 28Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Customer Loyalty and Retention Satisfied customers remain loyal and talkfavorably to others about the company and itsproducts. Its five times cheaper to keep an old customerthan to acquire a new one. Loosing the customer means losing the entirestream of purchases that customer wouldmake over a lifetime of patronage.Discuss the Case of Stew Leonardo1- 29Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Growing Share of Customer Good Customer Relationship Managementcan help marketers to increase their share ofcustomer – the share they get of thecustomer’s purchasing in their productcategories for ex., Supermarkets andRestaurants want to get more “share ofstomach” Car companies want to increase“share of garage” and airlines want greater“share of travel”1- 30Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Building Customer Equity Customer equity is the total combinedcustomer lifetime values of all the company’scurrent and potential customers. As such it’sthe future value of the company’s customerbaseDiscuss the case of Cadillac and BMW carcompanies.1- 31Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Customer Relationship Groups1- 32Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Changing Marketing LandscapeEconomic environmentDigital ageRapid globalizationNot-for-profit marketing1- 33Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Marketing Process1- 34Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Building Customer Relationships Customer Relationship Management is the overall process of building and maintaining profitable customer relationships by delivering superior customer