Creating and Capturing Customer Value

Creating and Capturing Customer Value: Topic Outline

• Key areas include defining marketing, understanding the marketplace and customer needs, designing a customer-driven strategy, and preparing an integrated marketing plan
• Additional components involve building customer relationships, capturing value from customers, and understanding the changing marketing landscape

What is Marketing?

• Marketing is a process where companies create customer value and build strong relationships in order to capture value in return

The Marketing Process

• Begins with understanding the marketplace and customer needs/wants; then, designing a customer-driven marketing strategy
• Constructing an integrated marketing program that delivers superior value is part of the process
• This leads to building profitable relationships and creating customer delight
• Ultimately, the goal is to capture value from customers to create profits and customer equity

Understanding the Marketplace and Customer Needs: Core Concepts

• It is important to consider customer needs, wants, and demands
• Market offerings, value and satisfaction, exchanges and relationships, and markets are core concepts to note

Customer Needs, Wants and Demands

• Needs are states of deprivation including physical (food, clothing, safety), social (belonging, affection), and individual (knowledge, self-expression) needs
• Wants are the form needs take as they are shaped by culture and individual personality
• Demands are wants backed by buying power

Understanding the Marketplace and Customer Needs

• Market offerings are combinations of products, services, information or experiences that are 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

Customer Value and Satisfaction Expectations

• Marketers must set the right level of expectations for customers
• It is important to ensure expectations are not too high or too low with value and satisfaction

Understanding the Marketplace and Customer Needs

• Exchange is the act of obtaining a desired object from someone by offering something in return
• Markets are the set of actual and potential buyers of a product

Designing a Customer-Driven Marketing Strategy

• Marketing management involves choosing target markets and building profitable relationships
• It requires answering the questions: "What customers will we serve?" and "How can we best serve these customers?"

Selecting Customers to Serve

• Market segmentation divides markets into segments of customers
• Target marketing is the process of selecting segments to pursue

Selecting Customers to Serve

• Demarketing is marketing to reduce demand temporarily or permanently
• The aim of demarketing is to reduce or shift demand, rather than destroy it

Choosing a Value Proposition

• Value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs

Marketing Management Orientations

• Key concepts include production, product, selling, marketing, and societal concepts

Marketing Management Orientations

• Production concept is the idea that consumers will favor products that are available or highly affordable

Marketing Management Orientations

• Product concept is the idea that consumers will favor products that offer the most in quality, performance, and features
• Organizations should devote its energy to making continuous product improvements

Marketing Management Orientations

• Selling concept is the idea that consumers will not buy enough of a firm's products unless it undertakes a large-scale selling and promotion effort

Marketing Management Orientations

• Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do

Marketing Management Orientations

• Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers' wants, company requirements, consumers' long-term interests, and society's long-run interests

Designing a Customer-Driven Marketing Strategy

• Marketing strategy takes into consideration society (human welfare), consumers (want satisfaction), and company (profits)

Preparing an Integrated Marketing Plan and Program

• The marketing mix is the set of tools (four Ps) firms use to implement its marketing strategy
• This includes product, price, promotion, and place
• An integrated marketing program is a comprehensive plan that communicates and delivers intended value to chosen customers

Building Customer Relationships

• Customer Relationship Management (CRM) is the overall process of building and maintaining profitable customer relationships
• It involves delivering superior customer value and satisfaction

Relationship Building Blocks: Customer Value and Satisfaction

• Customer-perceived value is the difference between total customer value and total customer cost
• Customer satisfaction is the extent to which a product's perceived performance matches a buyer's expectations

Customer Relationship Levels and Tools

• Strategies includes basic relationships and full partnerships

The Changing Nature of Customer Relationships

• Selected customers are carefully selected to manage relationships which targets fewer and more profitable customers
• Relationships are two-way and interactive through blogs, websites, online communities, and social networks

Building Customer Relationships

• Partner relationship management involves working closely with partners in other departments and outside the company to jointly bring greater value to customers

Partner Relationship Management

• Partners inside the company include every function area interacting with customers electronically and with cross-functional teams
• Partners outside the company is how marketers connect with suppliers, channel partners, and competitors to develop partnerships

Partner Relationship Management

• Supply chain is a channel that stretches from raw materials to components to final products to final buyers
• It is important to consider supply management, strategic partners and strategic alliances

Capturing Value From Customers

• Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage

Capturing Value from Customers

• Share of customer is the portion of the customer's purchasing that a company gets in its product categories

Capturing Value From Customers

• Customer equity is the total combined customer lifetime values of a company's customers

Building Customer Equity

• Building the right relationships with the right customer involves treating customers as assets that need to be managed and maximized
• Different types of customers require different relationship management strategies and building the right relationship with the right one

The Changing Marketing Landscape: Major Developments

• Digital age, rapid globalization, ethics and social responsibility, and not-for-profit marketing