1.

0 Marketing: Creating customer value and

engagement
Saturday, 20 August, 2016
11:51 AM

Define Marketing
What are the 3 factors have forced marketers to embrace a global
marketplace?

1.0 What is marketing?

The process by which companies create value for customers and

build strong customer relationships in order to capture value from
customers in return.
o
It building profitable, value-laden exchange relationships with
customer.
Marketing process and capturing customer value
o
1st -4th steps: companies work to understand consumers,
create customer value, and build strong customer relationship.
o
5th steps: companies reap the rewards of creating superior
customer value in the form of sales, profits and long term customer
equity

1.1 Understanding the marketplace and

customer need
Saturday, 20 August, 2016
12:28 PM

Define marketing myopia. Explain the importance of avoiding marketing

myopia.

1.1.1 Customer needs, wants and demands

Company conducts customer research, analyse customer data,

observe customer shop and interact either offline or online to
understand their customer needs, wants and demand.
Consumers' needs and want are fulfilled through market offering,
include
o
Physical products
o
Services: activities or benefit, e.g. banking, airline, hotel
o
Information or experiences
o
Places: tourism destination

1.1.2 Market offering - products, service, and experiences

Market offerings are some combination of products, services,

information, or experiences offered to a market to satisfy a need or want.
Marketing myopia is the mistake of seller paying more attention to
specific products a company offers than to the benefits and experiences
produced by these products.
o
It only focus in existing want and lose the sight of customer
needs.
o
Trouble if new product serves the customer's need better or
less expensive. Customer will have the same need but will want the
new product.
o
Marketing myopia can be avoided by defining their goals so
that they can focus on fulfilling consumer needs. For example
finding innovative ways to reach new markets with existing goods
and services.

1.1.3 Customer value and satisfaction

Customer form expectation about the value and satisfaction of

market offering delivered and buy accordingly. Satisfied customers will
buy again and share experiences. Dissatisfied customer often switch to
competitors and disparage the product to others.
Right level of expectation is important.
o
If too low, they may satisfy buyer but fail to attract enough
buyer.
o
If too high, buy disappointed.
Customer value and customer satisfaction are key building blocks
for developing and managing customer relationships.

1.1.4 Exchanges and relationships

Market occurs when people decide to satisfy their needs and wants
through exchange relationships.
Exchange is the act of obtaining a desired object from someone by
offering something in return.
Marketing consists of actions taken to create, maintain, and grow
desirable exchange relationships with target audiences involving a
product, service, idea, and other object.

1.1.5 Markets

Is the set of actual and potential buyers of a product or service.

Marketing means managing markets to bring profitable customer
relationship by running marketing activities: consumer research,
product development, communication, distribution, pricing, and service.

If a customer is willing and able to buy a need or a want, it means

that they have a demand for the need or a want.

State of deprivation
Physical - food, cloth, shelter, safety, water
Social - belonging and affection
Individual - knowledge and self-expression

A want is a product desired by a customer that is not required for us

to survive. Want is the complete opposite of need, which is essential for
our survival.

1.2 Designing a customer value driven

marketing strategy
Saturday, 20 August, 2016
1:56 PM

Marketing strategy answer:

o
What is the target market?
Divide the market to segment (market segmentation) and

select which segment to go after (target marketing).

Market segmentation refers to dividing the markets

into segments of customers.

Target marketing refers to which segments to go after.

o
What is the value proposition?
Company must differentiate and position itself in the

marketplace.
A brand's value proposition is the set of benefits or values it

promises to deliver to consumers to satisfying needs. e.g.: BMW

promises "the ultimate driving machine".
Value proposition differentiate one brand from another.

1.2.1 Selecting customer to server

1.2.2 Choosing a value proposition

1.2.3 Market management orientation:

5 concepts when designing and carrying marketing strategies:

o
Production
The idea that consumers will favor products that are available

and highly affordable; therefore, the organization should focus on

improving production and distribution efficiency.
E.g.: Computer maker Lenovo and home appliance maker

Haier dominate highly competitive, price sensitive Chinese market

through low labour cost, high production efficiency and mass
productions. But must be ware of marketing myopia.
o
Product
The idea that consumers will favor products that offer the

most quality, performance, and features; therefore the

organization should devote its energy to making continuous
product improvement.
o
Selling
The idea that consumers will not buy enough of the firm's

products unless the firm undertakes a large-scale selling and

promotion effort. The aim often is to sell what the company makes
rather than making what the market wants.
o
Marketing
A philosophy in which achieving organizational goals depends

on knowing the needs and wants of target markets and delivering

the desired satisfactions better than competitors do. The job is not
to find the right customers for your product but to find the right
products for your customers.
o
Societal marketing
The idea that a company's marketing decision should

consider consumer's wants, the company's requirements.

Consumers' long run interests, and society's long run interests.

1.3 Preparing an integrated marketing plan

and program
Saturday, 20 August, 2016
7:54 PM

Marketing strategy outlines which customers to serve and how to create

value for these customers.
Marketer then develop integrated marketing program to deliver intended
value to target customers.
Marketing program build customer relationships by transforming
marketing strategy into action.
Marketing mix is a set of marketing t tools that firm uses to implement its
marketing strategy.
To deliver value proposition, the company
o
1st create need satisfying market offering (product)
o
2nd decide how it charge the offering (price)
o
3rd decide how make the offering available to target customer
(place)
o
Finally, engage target consumers, communicate about the offering,
and persuade consumers of the offer's merit (promotion)
Company will integrate marketing mix into marketing program to
communicate and deliver value to chosen customers.

1.4 Buiding customer relationship

Saturday, 20 August, 2016
8:29 PM

1.4.1 Customer relationship management

Is the overall process of building and maintaining profitable customer

relationships by delivering superior customer value and satisfaction.

1.4.1.1 Relationship building block: customer value and satisfaction

Customer value and satisfaction are the key building for lasting customer
relationship.
Customer perceived value : The customer's evaluation of the difference
between all the benefits and all the costs of marketing offer relative to those
of competing offers. Customers often do not judge value and cost
accurately they judge on perceived value. Customer might see the value as:
o
Product at affordable price
o
Pay more get more
Customer satisfaction depends on the product's perceived performance
relative to buyer's expectations.
o
Dissatisfied: product's performance fall short of expectation
o
Satisfied: if performance meet expectation
o
Highly satisfied or delighted: performance exceed expectation
o
The higher level of customer satisfaction lead to greater customer
loyalty, in return better company performance.
o
Delighted customers not only repeat purchase but also become
willing marketing partners and customer evangelists who share their
good experience.

1.4.1.2 Customer relationship level and tools

Companies can build many level of customer relationship based on their

nature of target market.
o
Basic relationship: for low margin customer. E.g.: Procter &
Gamble's Tide detergent sell to consumers
o
Full partnership: for few customers and high margin. E.g.: Procter &
Gamble's sales representatives work closely with Walmart and large
retailers to sell Tide.
o
Frequency marketing program: to build stronger bond with customer
and reward customer who buy frequently or in large amount. E.g.:
Airline offer frequent-flyer programs, hotels give room upgrade
o
Club marketing program: offer members special benefits and create
member communities.

1.4.2 Engaging customer

Old marketing involved marketing brands to consumers, but new

marketing is customer engagement marketing, fostering direct and
continuous customer involvement in shaping brand conversations,
experiences and community.
Customer engagement marketing sell a brand to consumers and make the
brand meaningful to the consumers' conversation and lives.
Internet and social media boost the customer engagement marketing,
where consumers now are better informed, more connected, and more
empowered.
Thus, marketers embrace customer relationship management and
customer managed relationship where customer connect with companies
and with each other to help forge their own brand experiences.
Now marketers need to practice marketing by attraction, create market
offerings and messages that engage consumers rather than interrupt them.
E.g. companies use Twitter to start conversation with their customer,
address customer service issues, research customer reactions, and drive
traffic to relevant articles, wen and mobile marketing, contest, video, and
other brand activities.
Consumer generated marketing is the brand exchanges created by
consumers themselves, both invited and uninvited by which consumers are
playing an increasing role in shaping their own brand experiences and those
of other consumers. E.g.:
o
Uninvited consumer-to-consumer exchanges in blogs, video sharing
sites, social media or other digital forums.

Companies invite consumers play an active role in shaping products

and brand content.

1.4.3 Partner relationship management

Partner relationship management means working closely with partners in

other company departments and outside the company to jointly bring
greater value to customers.
Traditionally, marketers understand customer and representing customer
needs to different departments. But, nowadays, marketers must partner
with suppliers, channel partners, and other outside the company.
Marketing channel include distributors, retailers and other who connect
the company to its buyers.
Supply chain has a longer channel, stretching from raw materials to
components to final products that are carried to final buyers.
How well the entire supply chain perform against competitors' supply
chain will determine the success of delivering customer value.

1.5 Capturing value from customers

Sunday, 21 August, 2016
10:27 PM

Creating customer value would in return:

Customer loyalty and retention

o
The aims of customer relationship management not only make
customer satisfaction but also customer delight.
o
Satisfied customers will remain loyal and talk favourably to other
about the company and its products.
o
Loyal customers spend more and stay longer.

Losing a customer not only mean losing a single sale, but losing the
entire stream of purchases that customer would make a life time of
patronage (i.e. customer lifetime value).
o
E.g.: Starbucks create customer delight by creating an emotional
relationship with a brand that keeps customers come back.
Grow share market and customer
o
Customer relationship management help to increase share of
customer (the portion of the customer's purchasing that a company
gets in its product categories).
o
Greater offer, has the program to cross-sell and up-sell to market
more products and services to existing customer can increase share of
customer.
o
E.g.: Amazon's one stop shopping and recommendation system
recommend related products that might be of interest has increase up
to 30 percentage of all sales.
Customer equity
o
The ultimate aim of customer relationship management is to
produce high customer equity. Customer equity is the total combined
customer lifetime values of all of the company's current and potential
customers.
o
The more loyal the form's profitable customers, the higher its
customer equity.
o
Customer equity may be a better measure if a firm's performance
than current sales or market share. Sales and market share reflect the
past, but customer equity suggest the future.
o
Not all customer or loyal customer can profitable. Company need to
classify customer according to their potential profitable and manage its
relationship accordingly.
o
Customer relationship group: customers is classified into 4
relationship group according to their profitability and projected loyalty.
It identify different type of customer require different engagement and
relationship management strategies, and build the right relationship
with the right customers.
Stranger: low potential profitability and little projected loyalty.

There are little fit between the company's offerings and their
needs. Do not invest them, make money on every transaction.
Butterflies: Potentially profitable but not loyal. Good fit

between the company's offering and their needs. Only can enjoy
short while and then they gone. Convert the relationship into loyal
customer but it rarely success.
True friends: both profitable and loyal. A strong fit between

their needs and the company's offerings. Continuous invest to

delight these customer and nurture, retain, and grow them. Turn
true friends to true believers, who come back regularly and tell
other about their good experiences with the company.
Barnacles: highly loyal but not very profitable. There is

limited fit between their needs and the company's offerings. Can
improve their profitability by selling them more, raising their fees,
or reducing service to them. If they can't make profit, they should
fire them.
o

1.6 The changing marketing landscape

Sunday, 21 August, 2016
11:49 PM

Major trends and forces that change the marketing landscape and challenging
marketing strategy:

Digital age: online, mobile and social media marketing

o
Digital and social media marketing is the use of digital marketing
tools such as websites, social media, mobile apps and ads, online
video, email and blogs that engage consumers anywhere, at any time,
via their digital devices.
o
At the most basic level, marketers set up company and brand
website to provide information and promote the company's products.
The website serves as online brand communities, where customer can
congregate and exchange brand related interest and information.
o
Beyond brand websites, companies integrate social and mobile
media into their marketing mixes.
o
Social media extend customer engagement and get people talking
about a brand.
o
Marketers use mobile channels to stimulate immediate buying,
make shopping easier, enrich the brand experience.
The changing economic environment

In adjusting to new economy, companies tempted to cut marketing

budget and slash prices.
o
Cutting costs and offering selected discount could damage long
term images and customer relationships.
o
The challenge is to balance brand's value proposition with the
current time while also enhancing its long term equity.
Growth of not-for-profit marketing
o
Marketing has become a major part of strategies of many not-forprofit organization.
Rapid globalization
o
It is increasingly taking a global, view of the company's industry,
competitors and opportunities.
Sustainable marketing
o
Sustainable marketing presents both opportunities and challenges
for marketers. They seek ways to profit by serving immediate needs
and the best long run interests of their customers and communities.
o

1.7 Marketing, put it all together

Sunday, 21 August, 2016
11:50 PM