Marketing: Creating and

Capturing Customer Value

Copyright 2003 Prentice-Hall, Inc.

The New Economy

Substantial increase in buying power
A greater variety of goods and services
A greater amount of information about practically
anything
A greater ease in interacting and placing and
receiving orders
An ability to compare notes on products and services
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The New Economy

Companies can send ads, coupons, samples,
information to targeted customers.
Companies can customize offerings and services
to individual customers.
The Internet can be used as a communication
channel for purchasing, training, and recruiting.

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How business and marketing

are Changing

Changing technology (i.e. internet)

Globalization (i.e. chinese products)
Customer empowerment (i.e. associations, laws, green number)
Customization (taylor made product and message)
Heightened competition domestic and foreign brands / powerful
retailers
Retail transformation giant retailers and category killers
Disintermediation & Reintermediation Amazon, eBay, ETrade,
etc.

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Goals of Marketing

Creating and capturing customer value

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P&G

Your clothes can outlast your cravings

Tide knows Fabric Best

Rich visual imagery and meaningful emotional connections
Tide let women focus on lifes important things

Your work your play clothes . Yup they re the same clothes

http://www.adforum.com/creative-work/ad/player/66947
12
http://current.effie.org/winners/showcase/2007/1675

Its about bringing relationship mindset in everything you do

Difference between smelling like a mom and a women

If we are going to make one big bet on our futureright

here, right nowId say that the smart money is on
building (customer) relationships P&G chief Global
Marketer , Jim Stengel
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 Why was Tide perceived in consumers minds

as being an arrogant, masculine brand?
Who is the main market for Tide?

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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 8

What Is Marketing?
The Marketing Process

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I -Understanding the Marketplace and

Customer Needs

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Market Offerings
Customer needs and wants are fulfilled
through market offerings.

Market Offerings Products , Services, and

Experiences
Banking , Hotel stays , Air Travel
Destination Branding : Kerala Gods Country

Market Offerings also include other entities like

Persons , places , Organization , information & Ideas

Marketing of Ideas Awareness about AIDs

Marketing Myopia Mistake of paying more attention to the specific

products they offer than the benefits and experience produced by these
products.

Smart Marketers look beyond the attributes of the

Product and services : Brand Experience
Disney world , IPL , Amusement Parks
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Avoiding Marketing Myopia

Broadly define company goals toward customer needs.
We are a telephone company. or We are a
communications company.
Airlines: We are in the airline business. or We are in
the transportation business.

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Customer Value and Satisfaction

Value and Satisfaction that various Market offerings will
bring
Value Tangible and intangible benefits and costs to customers
Customer value triad QSP (Quality , Service & Price )

Customer Value = Benefits - Costs

Subjective assessments of relative benefits & costs

Satisfaction reflects a persons comparative judgment

from the products perceived performance in relation
to his/her expectation
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Marketers must be careful to set the right level of satisfaction

A waste
of money?

NOW,THATS
REAL VALUE!

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Exchange and Relationships

Marketing occurs when people decide to satisfy needs and wants
through exchange Relationship
Exchange and Relationships
Exchange It is the core concept of marketing. It is a process of
obtaining a desired product from someone by offering something
in return.
Marketers tries to bring about a response to some market
offering
Relationships: Marketing consists of actions taken to build and
maintain desirable exchange relationships with target Audiences.
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Markets
A Physical place where
buyers and sellers
gathered to buy and sell
goods .
These buyers share a
particular need or want
that can be satisfied
through exchange
relationships

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Understanding the Marketplace and

Customer Needs
Markets are the set of actual and
potential buyers of a product

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II: Designing a customer Driven

Marketing Strategy
Marketing Management is an art and science of
choosing target markets & building Profitable
relationships.
Marketing Managers aim: to find, attract, keep ,and
grow target customers by creating , Delivering and
communicating superior customer value.
Winning Strategy:
What customers we will serve?
Whats our value Proposition ?

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Designing a customer driven market

strategy
Selecting customers to serve

Market Segmentation
Dividing a market into
customer categories

Target Marketing
Selecting a category of customers
with similar wants and needs who
are likely to respond to the same
products
Copyright 2003 Prentice-Hall, Inc.

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Designing a customer Driven

Marketing Strategy
Choosing a Value proposition : set of benefits or values it
promises to deliver to consumers to satisfy their needs
Nokia N95 Its not one thing its Many
TCS
- Promise that we Deliver
Archies says you care
McDonalds I am Loving it
Land Rover Go Beyond

Value propositions differentiate one Brand from Other

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Marketing Management
Orientations
Alternative concepts under which organizations design and
carry out their Marketing strategies

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The Production Concept

Holds that consumers will favor

products that are available and
affordable.
Implies work towards mass
production and low cost
Goal: Produce all that is possible
You can have any color you want
as long as its black.
Make the best product you can
and people will buy it.

PRODUCERS

Lenovo Dominates the highly

competitive price sensitive Chinese
market thru low labor cost and high
production efficiency.

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The Product Concept

Assumes customers favor products that
offer the most quality, performance, and
features.
Implies firm should strive to continually upgrade product and
product features.
Personal Digital assistants ( PDAs), by apple in 1992Newton,
a hand held computer that had pen based interface and could
send faxes , take notes and organize your life
It was big (not suitable for pocket), pricy (about $700 for the first
model and as much as $1,000 for later), new (no market
familiarity) and had software problems (notably, its handwriting
recognition was fairly inaccurate and was skewered in the

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The Selling Concept

Inside-out perspective: Assumes people need to be sold on
whatever it is the firm has decided to offer. : Decide what to
produce; : Figure out how to get people to buy what you have.
Implies lots of selling/promotional activities are needed to
move product
In 2002 , the database software company Oracle had many
unhappy customers who were pushed to by more software than
they needed by strong-armed sales force

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The Marketing Concept

Holds that achieving organizational
goals depends upon knowing the needs
and wants of target markets and
delivering the desired satisfactions more
effectively and efficiently than do
competitors.
Companies lauded for Marketing
activities
P&G ( Household products ) , J&J ( Baby
and medical supplies ) , Kraft General
foods, Gap Inc. , Coca Cola , Mc Donald's
( Fast food ) , Nestle ( Food Products ) ,
GE ( Diversified consumer and Industrial
products and Financial services)

Copyright 2003 Prentice-Hall, Inc.

Marketing is identifying and

meeting human and social
needs

More car per Car

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Designing a Customer-Driven
Marketing Strategy
Societal marketing concept is the idea that a company should
make good marketing decisions by considering consumers
wants, the companys requirements, consumers long-term
interests, and societys long- run interests

Project Drishti by P&G in collaboration with

National Association of Blind.
Project Open Minds aim to educate
working children
Marico prevention of heart care through
promotion of saffola
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Designing a Customer-Driven
Marketing Strategy

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Marketing Concept Vs. Selling

Concept
Selling Concept

Marketing Concept:
Begin with customer
needs
Long run view
Proper Planning and
feedback
Adapt to the Environment
Develop 4 Ps in light of
customer needs
Customer Wants Focus
Have what you can get
rid of

Begin with what firm

wants to produce
Short run view
Informal Planning and
feedback
Little adaption to the
Environment
Given products, persuade
customers to buy
Sales Volume Focus
Get rid of what you
have.
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Figure : Contrasts Between the Sales Concept and

the Marketing Concept

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Preparing an Integrated Marketing

Plan and Program
Marketing Mix
The Four Ps

roduct
ricing

lace
(Distribution)

romotion
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III-Preparing an Integrated
Marketing Plan and Program
Integrated Marketing : when all companys departments
work together to serve the customers interest, the result
is integrated marketing e.g HP Xerox factory
managers in cleanness , Xerox accountant about billing
accuracy and promptness
To foster team work among all departments the
company carries out
External marketing people outside the company
Internal marketing is the task of hiring , training , and
motivating able employees who want to serve customers well

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IV- Building Customer Relationships

Customer Relationship Management (CRM)

The overall process of

building and maintaining
profitable customer
relationships by delivering
superior customer value
and satisfaction

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Building Customer Relationships

Relationship Building Blocks: Customer
Value and Satisfaction

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Building Customer Relationships

Customer Relationship Levels and Tools

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Building Customer Relationships

The Changing Nature of Customer
Relationships
Relating with more carefully selected
customers uses selective relationship
management to target fewer, more profitable
customers
Relating more deeply and interactively by
incorporating more interactive two way
relationships through blogs, Websites, online
communities and social networks
e.g Best Buy customer centricity strategy :
Angels & Demons
An American multinational consumer electronics corporation headquartered in
Richfield, Minnesota, a Minneapolis suburb. It operates in the United States,
Puerto Rico, Mexico, Canada, and China

Copyright 2003 Prentice-Hall, Inc.

Relating More Deeply and

Interactively
Relating with customer in a deeper and
meaningful way
Explosive advances in Internet &
technologies
Marketing by Intrusion to Marketing by
Attraction
Toyota the fifth largest advertiser spends
$3.1 billion a year on media advertising
Nike - $ 700 million (33% on television and
other traditional media )
Creating community with customers ; Nike new more
interactive media include in-person events and
other activities designed to build brand community
and deeper customer relationships
Nike town running club & Ipod linked Nike shoes
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Contest for consumer generated commercials: More

active role in shaping brand messages & Ads

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v-Capturing Value from

Customers
Creating Customer Loyalty and
Retention
Customer lifetime value is
the value of the entire
stream of purchases that the
customer would make over a
lifetime of patronage
Mobilink Club Red

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Capturing Value from Customers

Creating Customer Loyalty and Retention

Copyright 2003 Prentice-Hall, Inc.

Capturing Value from Customers

Growing Share of Customer

Share of customer is the portion of the

customers purchasing that a company gets
in its product categories
Amazon.com , Online book seller : Leveraging relationship with 66 million
customers to increase its share of each customers purchase
No offers : music , videos , gifts , toys , consumer electronics, office products,
home improvement items, lawn & garden products , apparel & accessories ,
jewelry, tools & even groceries

Copyright 2003 Prentice-Hall, Inc.

Capturing Value from Customers

Customer equity is the total
combined customer lifetime values of all of
the companys customers
Building the right relationships with the
right customers involves treating
customers as assets that need to be
managed and maximized
Different types of customers require
different relationship management
strategies
Build the right relationship with the
right customers :
Customer relationship groups
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