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Chapter One
Creating and Capturing Customer
Value
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 1
What Is Marketing?
Marketing is a process by which
companies create value for customers and
build strong customer relationships to
capture value
from customers in
return
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 2
What Is Marketing?
The Marketing Process
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 3
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
Needs
• States of deprivation
• Physical—food, clothing, warmth, safety
• Social—belonging and affection
• Individual—knowledge and self-expression
Wants
• Form that needs take as they are shaped by culture
and individual personality
Demands
• Wants backed by buying power
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 4
Understanding the Marketplace
and Customer Needs
• Market offerings are some
combination of products,
services, information, or
experiences offered to a
market to satisfy a need or
want
• Marketing myopia is
focusing only on existing
wants and losing sight of
underlying consumer
needs
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 5
Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
• Value and
satisfaction
Marketers
• Set the right level of
expectations
• Not too high or low
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 6
Understanding the Marketplace
and Customer Needs
Exchange is the act of obtaining a desired
object from someone by offering
something in return
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Chapter 1- slide 7
Understanding the Marketplace
and Customer Needs
Markets are the set of actual and
potential buyers of a product
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Chapter 1- slide 8
Market
Market - buyers
who share a
particular need
or want that can
be satisfied by a
company’s products
or services.
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Actual
Buyers
Potential
Buyers
Chapter 1- slide 9
Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Demarketing is marketing to reduce demand
temporarily or permanently; the aim is not
to destroy demand but to reduce or shift it
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Publishing as Prentice Hall
Chapter 1- slide 10
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production
concept
Product
concept
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Selling
concept
Marketing
concept
Societal
concept
Chapter 1- slide 11
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
• Value Proposition: A company’s value
proposition is the set of benefits or values
it promises to deliver to consumers to
satisfy their needs.
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Publishing as Prentice Hall
Chapter 1- slide 12
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production concept is the idea that
consumers will favor products that are
available or highly affordable
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 13
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
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.
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 14
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
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
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 15
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
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
Copyright © 2010 Pearson Education, Inc. competitors do
Chapter 1- slide 16
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Contrast between Sales Concept &
Marketing Concept
Starting Point
Factory
Focus
Products
Means
Ends
Selling &Promoting
Profits through
sales volume
a. THE SELLING CONCEPT
Target
Customer
Integrated
Market
Needs
Marketing
Profits through
customer satisfaction
b. THE MARKETING CONCEPT
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 17
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
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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Chapter 1- slide 18
Designing a Customer-Driven
Marketing Strategy
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Chapter 1- slide 19
Integrated Marketing Plan
& Program
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Chapter 1- slide 20
4Ps of Marketing
4Pss Provide
Four Cs of Marketing




Customer solution (Product)
Customer cost (Price)
Convenience (Placement)
Communication (Promotion)
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Chapter 1- slide 21
Building Customer Relationships
Customer Relationship Management (CRM)
• The overall process of building and
maintaining profitable customer relationships
by delivering superior customer value and
satisfaction.
• Customer Perceived Value: The customers
evaluation of the difference between all the
benefits & all the costs of a market offering
relative to those of competing products.
Copyright © 2010 Pearson Education, Inc.
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Chapter 1- slide 22
Building Customer Relationships
• Customer Satisfaction depends on a product’s
perceived performance relative to a buyer’s
expectations.
Performance = Expectation
Customer Satisfaction= Customer Loyalty= Better
Performance
• Customer delight- promising only what a
company can deliver, & then delivering more
than promised.
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Chapter 1- slide 23
Changing Nature of Customer
Relationships
• Relating with More Carefully selected Customers:
- Selective Relationship Management
Weeding out losing customers &
targeting & pampering winning ones
• Relating More Deeply and Interactively:
New Technologies have profoundly changed the ways in
which people relate to one another.
Using direct marketing tools such as telephone, mail order
catalogs Eg Dell & Amazon.
Copyright © 2010 Pearson Education, Inc.
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Chapter 1- slide 24
Changing Nature of Customer
Relationships
• Consumer-Generated Marketing:
Marketing messages, ads, and other brand
exchanges created by consumer
themselves.
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Chapter 1- slide 25
Partner Relationship Management
• Partners Inside the company.
• Marketing Partners Outside the firm.
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Chapter 1- slide 26
Creating Customer Loyalty &
Retention
“ losing customers does not mean losing a
single sale but in fact losing the entire stream
of purchases that the customer would make
over a lifetime”.
• Customer lifetime value: The value of the
entire stream of purchases that a customer
would make over a lifetime of patronage.
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Chapter 1- slide 27
Customer Equity
• Companies should not just acquire customers, but keep & grow
them as well.
• The ultimate aim of customer relationship management is to
produce high customer equity.
• Customer Equity is the combined customer lifetime values of all
the company’s current & potential customers.
• It is a better measure of a firms performance than current sales
or market share.
More Loyal firm’s
Profitable customers
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=
Higher firm’s
Customer Equity
Chapter 1- slide 28
Building Right relationships with
Right customers
Which customers should the company
acquire & retain?
• The company can classify customers
according to their potential profitability &
projected loyalty manage its relationships
with them accordingly.
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Publishing as Prentice Hall
Chapter 1- slide 29
Customer Relationship Groups
•
•
•
•
Strangers
….
Butterflies ….
True Friends ….
Barnacles ….
Low profitability/ Less Loyal.
Profitable/ not Loyal
Profitable/ Loyal
Not Profitable/ Highly Loyal
• Different types of customers require different
relationship strategies, therefore goal is to :
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Chapter 1- slide 30
Customer Relationship Groups
High
Profitability
Low
Butterflies
True Friends
Good fit between company’s
offerings & customer needs;
Good fit between company’s
offerings & customer needs;
High profit potential
Strangers
Little fit between company’s
Profitability offerings & customer needs;
Lowest profit potential
Short- term customers
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Highest profit potential
Barnacles
Limited fit between company’s
offerings & customer needs;
Low profit potential
Long-term customers
Projected Loyalty
Chapter 1- slide 31