Chapter 1: Creating Customer Value and Engagement PDF

Chapter 1: Creating Customer Value and Engagement “The aim of marketing is to make selling unnecessary” True or False?  What is Marketing? The process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from c...

Chapter 1: Creating Customer Value and Engagement “The aim of marketing is to make selling unnecessary” True or False?  What is Marketing? The process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return Keywords Create Customer Value Capture Value in Return FIVE CORE CONCEPTS 1. Needs, wants and demands 2. Market offerings 3. Value and satisfaction 4. Exchanges and relationships 5. Markets  Need, Want and Demand Concept Definition Example Need Basic deprivation that people have I want food/shelter/transport Needs shaped by culture and Want individual personality Demand I want “Kachhi Biriyani” Kachhi Mayer Dowa Bhai Kachhi Ghor Demand Want backed by buying power BDT350 BDT150 Market Offerings Needs and Wants are fulfilled by product offering Combination of product, services, information and experiences Focus should not be on product/service, but on the overall benefit or experience Value and Satisfaction Satisfaction- When Benefit – Cost = Value customers feel that the product/service has met their Involves both monetary and expectation. non-monetary aspects When performance surpasses People usually refer to expectation, satisfaction is “perceived value” high and vice versa Key for developing and managing customer relationship Exchanges and Relationship Marketing occurs when people decide to satisfy their needs and wants through exchange relationships Obtaining a desired object from someone by offering something in return Does not only mean buying/selling of products and services  Market The buyers have Set of all actual specific need or Marketing is a and potential wants, satisfied two-way buyers through mechanism; exchanges and buyers also relationships carry out Interact with marketing. companies Search for product Purchase Modern Marketing System Company Marketing Final Suppliers Consumer Intermediari es s Competito rs Major Environmental Forces *Each Party in the system adds value. *For a firm to become successful at building profitable customer relationships, the entire system needs to serve the needs of final consumers. Modern Marketing System Bata Leather Final Regional Consume Firms Dealers rs Apex, Bay Technological Major Environmental Economic Forces Political Cultural 2. Customer Value-Driven Marketing Strategy Marketing Management: The art and science of choosing target markets and building profitable relationships with them. To design a winning 1. What customers will 2. How can we serve marketing strategy, we serve (what’s our these customers best the marketing target market)? (what’s our value manager must answer proposition)? two important questions:  Selecting Customers to Serve Segmentation: Breaking down the market into distinct groups with similar needs or characteristics (e.g., based on demographics, geographic, psychographic factor). Target Marketing: Deciding which segments to target. Smartphone Market Demographic (age, income, gender etc.) Age: Teenagers vs. Professionals vs. Elderly Deciding which segment to target Geographic (Based on location) and design strategies: Target Location: Urban vs Rural Marketing Psychographic (personality, lifestyle, values) Tech-enthusiasts vs minimalists  Value Proposition The set of benefits or values a company promises to deliver to customers to satisfy their needs. Helps to differentiate one brands from another Value proposition answers “Why should I buy your brand rather than a competitor’s?” Concepts Definition Examples -Assumes customers prefer available and affordable products. Ford Motor (Early 1900s) Production Focuses on high production efficiency and wide distribution. Concept - Can lead to marketing myopia. (BlackBerry Phone) -Assumes customers favor the best products. Emphasizes product Apple Products Product quality, performance, and features. Concept - Will not work if other elements (price, place, promotion) fails. Selling -Assumes customers will not buy enough without a strong sales Insurance Concept effort. Relies on aggressive selling and promotion. -Centers on understanding customer needs and delivering superior Pet hostels value. Assumes achieving organizational goals depends on Marketing satisfying customer needs better than competitors. Concept -In many cases, however, customers don’t know what they want or even what is possible. -Considers society's long-term interests along with customer needs BRAC Societal and company profits. Promotes sustainable and ethical marketing H&M, Zara, M&S Marketing practices. The Body Shop Concept - Balance company profit, consumer wants, and society’s interest. 3. Preparing an Integrated Marketing Plan and Program Marketer develops an integrated marketing program to deliver the intended value to target customers by utilizing the marketing mix Marketing mix: Set of tools the firm uses to implement its marketing strategy. The four Ps of Marketing Product Price Promotion Place  4. Managing Customer Relationships and Capturing Customer Value Customer relationship management: the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Two key elements: Value and Satisfaction Customer perceived value: customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers. Coffee from Gloria Jeans vs. Regular Café vs. Local Tea Stalls Toyota vs. Volvo vs. BMW  Customer Satisfaction The extent to which a product’s perceived performance matches a buyer’s expectations. Satisfied or Delighted customer become loyal to the brand and spreads positive word-of-mouth about. Example: Unilever Pureit. Perceived Perceived Perceived performance falls performance performance short of matches exceeds expectations: expectations: expectations: Dissatisfied Satisfied Delighted  Customer Engagement and Today’s Digital and Social Media The old marketing involved marketing brands to consumers. The new marketing is customer-engagement marketing—fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community. Consumer-generated marketing: 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. Invited : Invited to test a product/to share story/usage experience Uninvited : Users sharing positive/negative review on social media/blogs with other users.  5. Capturing Value from Customers Value: Sales, Market Share, Profit “it’s five times cheaper to keep an old customer than acquire a new one” Loyalty and Retention is important! Losing a customer means losing the entire stream of purchases that the customer would make over a lifetime of patronage, known as Customer Lifetime Value. Think about your purchase from the local pharmacy or grocery store  Growing Share of Customer Increased Share of Good Customer Customer (The portion of Relationship Management the customer’s purchasing that a company gets in its product categories)  Building Customer Equity The total combined customer lifetime values of all of the company’s customers. “The value of a company comes from the value of its current and future customers.” More Loyal Customers = Higher Customer Equity. Customer Equity: Possibly a better predictor of firm performance than sales or market share