Marketing: Creating Customer Value

• Marketing involves creating value for customers and building strong customer relationships
• It focuses on capturing value from customers in return

Objectives of marketing

• Define marketing and outline the steps in the marketing process
• Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts
• Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy
• Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return
• Describe the major trends and forces that are changing the marketing landscape in this age of relationships

Marketing Overview

• Marketing engages customers and manages profitable relationships
• It aims to create value for customers and capture value in return
• Amazon is customer-obsessed, focusing on value, engagement, and relationships
• Customers reward Amazon with loyalty and repeat purchases

Amazon's Customer Obsession

• Amazon focuses on customer value, engagement, and relationships
• Amazon's revenues have more than doubled in three years, it earns $283,000 every minute of every day
• It accounts for 45% of all U.S. online sales
• Amazon's founder, Jeff Bezos, emphasizes "obsess over customers."
• Amazon personalizes customer experiences with tailored home pages
• It provides selections, value, low prices, and convenience
• Customers can discover new products and research alternatives on Amazon
• Amazon allows other retailers to sell products on its platform, and makes returns easy for customers
• Innovations like 1-Click ordering, Dash Buttons and Amazon Echo enhance convenience
• They use Amazon Prime offers fast, free delivery
• Amazon is testing delivery drones, robots, and driverless vehicles
• Amazon Physical Stores complement online presence

Defining Marketing

• Marketing is engaging customers and managing profitable relationships
• The goal is to attract new customers and retain existing ones
• Marketing is critical for all types of organizations, including non-profits
• Marketing involves more than just selling and advertising
• It is about satisfying customer needs and creating value
• A marketing mix includes tools that engage customers and build relationships
• Marketing is a social and managerial process of exchanging value
• Marketing builds value-laden exchange relationships with customers

The Marketing Process

• The marketing process is a five-step model for creating and capturing customer value
• Includes understanding the marketplace and customer needs
• Requires designing a customer value-driven marketing strategy
• Constructing an integrated marketing program that delivers superior value
• Requires engaging customers to build profitable relationships
• Capturing value from customers to create profits and customer equity

Understanding the Marketplace and Customer Needs

• Marketers must understand customer needs, wants, and the marketplace
• Includes needs, wants, and demands, market offerings, value and satisfaction, exchanges and relationships, and markets

Customer Needs, Wants, and Demands

• Human needs are states of felt deprivation
• They include physical, social, and individual needs
• Wants are shaped by culture and personality
• Demands are wants backed by buying power
• Understanding customer needs, wants, and demands is essential for companies
• Companies conduct research and analyze data to understand customers
• Amazon's Jeff Bezos used a customer-facing email for feedback
• Airbnb's CEO Brian Chesky stays in host locations to understand customer concerns
• Starbucks CEO Kevin Johnson works in his local storefronts to connect with his customer base

Market Offerings

• Market offerings fulfill needs and wants
• They can be products, services, information, or experiences
• Marketing myopia occurs when sellers focus on their products rather than customer needs
• Smart marketers create brand experiences
• The Walt Disney World Resort creates magical moments for visitors
• They focus on every detail to make visits memorable
• They train employees to be enthusiastic, knowledgeable, and helpful to guests

Customer Value and Satisfaction

• Customers choose offerings based on value and satisfaction expectations
• Satisfied customers are more likely to buy again
• Dissatisfied customers often switch to competitors
• Marketers must set expectations appropriately
• Customer satisfaction is crucial for building customer relationships

Exchanges and Relationships

• Marketing occurs when people satisfy needs through exchange relationships
• Exchange involves obtaining something by offering something in return
• Marketers create and maintain desirable exchange relationships
• Companies build customer relationships by delivering superior value

Markets

• A market is the set of actual and potential buyers of a product or service
• Marketing manages markets for profitable customer relationships
• Includes research, product development, communication, distribution, pricing, and service

Designing a Customer Value-Driven Marketing Strategy

• It involves choosing target markets and value propositions
• Marketing management is choosing target markets and building relationships

Selecting Customers to Serve

• Companies must decide whom to serve
• Market segmentation divides the market into segments
• Target marketing selects which segments to pursue
• Companies should select customers they can serve well and profitably
• It requires customer management and demand management

Choosing a Value Proposition

• A value proposition differentiates and positions a brand in the marketplace
• It is the set of benefits that satisfy customer needs
• Value propositions answer "Why should I buy your brand?"

Marketing Management Orientations

• Philosophies that guide marketing strategies, and give weight to customer satisfaction, organizational and societal interests
• Include production, product, selling, marketing, and societal marketing concepts

The Production Concept.

• Consumers favor available and affordable products
• Focuses on production and distribution efficiency
• Can lead to marketing myopia

The Product Concept

• Consumers favor products with the most quality, performance, and features
• Focuses on continuous product improvements
• Can also lead to marketing myopia

The Selling Concept

• Consumers will not buy enough without large-scale selling and promotion
• It is practiced with unsought goods
• It focuses on short-term sales rather than relationships

The Marketing Concept

• Achieving goals depends on knowing the needs and wants of target markets
• Delivering desired satisfactions better than competitors
• Customer focus and value are paths to sales and profits, and the idea of a customer "department"

Societal Marketing Concept

• Marketing should deliver value in ways that maintain consumers' and society's well-being
• It calls for sustainable marketing

Preparing an Integrated Marketing Plan and Program

• A marketing strategy outlines how to serve customers
• An integrated marketing program delivers intended value
• The marketing mix consists of product, price, place, and promotion
• Marketers blend the marketing mix to deliver value
• Marketers are involved in Product, Price, Place and Promotion

Managing Customer Relationships and Capturing Customer Value

• Involves customer relationship management and capturing value from customers

Customer Relationship Management

• Managing customer relationships is essential
• CRM builds long lasting customer relationships
• It delivers superior customer value and satisfaction
• It involves acquiring, engaging, and growing customers

Relationship Building Blocks: Customer Value and Satisfaction

• Superior customer value and satisfaction are key
• Satisfied customers are more loyal
• Attracting and retaining customers is difficult
• Customer-perceived value is the benefits relative to costs
• Customer satisfaction is performance matching expectations