Chapter 1 - Marketing Creating Customer Value and Engagement.pdf

Principles of Marketing Nineteenth Edition, Global Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2024 Pearson Educ...

Principles of Marketing Nineteenth Edition, Global Edition Chapter 1 Marketing: Creating Customer Value and Engagement Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objectives 1.1 Define marketing and outline the steps in the marketing process. 1.2 Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. 1.3 Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 1.4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. 1.5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Marketing Strategy Adventure: Let’s Start a Business! Let’s start a business! An essential component of a successful business is crafting and executing the right marketing strategy. Throughout this course, we will use concepts we have learned to develop this strategy together. Here are three business proposals to consider: 1. Trendy Café with Instagrammable Interiors 2. Sustainable Lifestyle Brand 3. Adventure Tours https://content.fortune.com/wp-content/uploads/2018/07/starting-ne w-business-e1530648542386.jpg Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Trendy Café with Instagrammable Interiors Category Food and Drink Concept ▪ Open a café that focuses on creating a visually appealing atmosphere with unique, photogenic food and drink options. ▪ The café can offer artisanal coffees, specialty teas, and creative desserts. ▪ Emphasize a unique interior design that encourages social media sharing, with themed décor and seasonal menu items to keep the experience fresh and exciting. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Sustainable Lifestyle Brand Category Lifestyle and Fashion Concept ▪ Start a sustainable fashion brand focusing on eco-friendly clothing and accessories made from organic and recycled materials. ▪ Highlight the brand's commitment to ethical production practices and environmental conservation. ▪ Use storytelling and transparency to connect with environmentally conscious consumers. ▪ Leverage social media and influencer partnerships to promote the brand and consider hosting pop-up shops and events to engage directly with customers. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Adventure Tours Category Travel and Experiences Concept ▪ Organize thrilling urban adventure tours in Bangkok. Offer guided explorations of hidden alleys, rooftop bars, and unconventional spots. Highlight vibrant street art, secret gardens, and lesser-known historical sites. ▪ Create unique itineraries for an immersive experience of Bangkok’s urban culture and history. For example: o Street Art Exploration o Rooftop Bar Hopping o Hidden Alleys and Markets o Historical Tours o Night Tours o Nature Walks Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Marketing Strategy Adventure: Let’s Start a Business! Let’s conduct a survey to decide which type of business our class will start: 1. Trendy Café with Instagrammable Interiors 2. Sustainable Lifestyle Brand 3. Adventure Tours Copyright © 2024 Pearson Education Ltd. All Rights Reserved. First Stop: Emirates Emirates is not just offering a way to connect people from Point A to Point B but aims to be the catalyst to connect with people’s dreams, hopes, and aspirations. Emirates has emphasized customer engagement and relationships, and customers are willing to pay a premium for “The Emirates Experience.” Iain Masterton/Alamy Stock Photo Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 1 Define marketing and outline the steps in the marketing process. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is Marketing? (1 of 2) The set of strategies and activities by which companies acquire and engage customers, build strong customer relationships, and create superior customer value in order to capture value from customers in return. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is Marketing? (2 of 2) Marketing is all around you, in good old traditional forms and in a host of newer forms, from websites and mobile apps to online videos and social media. Cathy Yeulet/123 R F Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Figure 1.1 The Marketing Process: Creating and Capturing Customer Value Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 2 Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs (1 of 5) Needs are states of felt deprivation (“pain point”). Wants are the form human needs take as they are shaped by culture and individual personality. Demands are human wants that are backed by buying power. Staying close to customers: Starbucks C E O Kevin Johnson regularly spends time in local Starbucks stores, working the counter, brewing coffee, handing out orders, wiping tables, and chatting with customers. He wants to understand “what it means to A P Photo/Ted S. Warren be human in a digital age.” Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs (2 of 5) Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing myopia—paying more attention to the specific products than to the benefits and experiences produced (“I think is a great product, everyone should think so as well…” Marketing ideas and causes: Singapore’s Land Transport Authority launched the #SaferRoadsForAll campaign, which featured a video to increase public understanding of the rules and guidelines that motorists and cyclists should follow to maintain road Arterra Picture Library/Alamy Stock Photo safety. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Real Marketing 1.1: Mahali Mzuri: An Immersive Experience at the World’s Number-One Hotel Marketing experiences: When it comes to delivering unforgettable experiences, few travel and hospitality businesses can match Kenya’s Mahali Mzuri safari camp, recently named by Travel + Leisure magazine as the “#1 hotel in the world.” Adam Slama Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs (3 of 5) Customers form expectations about the value and satisfaction of market offerings. – Satisfied customers buy again – Dissatisfied customers switch to competitors Exchange is the act of obtaining a desired object from someone by offering something in return. Marketing actions try to create, maintain, and grow desirable exchange relationships. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs (4 of 5) A market is the set of actual and potential buyers. Consumers market when they: search for products interact with companies to obtain information make purchases Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Understanding the Marketplace and Customer Needs (5 of 5) Figure 1.2 A Modern Marketing System Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 3 Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy and Plan (1 of 6) Marketing management is the art and science of choosing target markets and building profitable relationships with them. What customers will we serve (target market)? How can we best serve these customers (value proposition)? How can these 2 concepts relate to our class business? Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy and Plan (2 of 6) Value propositions: A brand’s value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs. Value propositions: JetBlue promises “award-winning service from award-winningly nice humans.” “Just Alright Doesn’t Fly Here.” Courtesy of JetBlue Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy and Plan (3 of 6) Figure 1.3 Selling and Marketing Concepts Contrasted Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy and Plan (4 of 6) Production concept Product concept Selling concept Marketing concept Societal Marketing concept The societal marketing concept: Jeni’s Splendid Ice Creams, L L C Jeni’s Splendid Ice Creams does more than just make good ice cream. It makes “ice creams created in fellowship with growers, makers, and producers from around the world all for the love of you.” Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy and Plan (5 of 6) Societal marketing: The company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. Figure 1.4 Three Considerations Underlying the Societal Marketing Concept Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Designing a Customer Value-Driven Marketing Strategy and Plan (6 of 6) The marketing mix is comprised of a set of tools known a the four Ps: Product Price Promotion Place Integrated marketing program—a comprehensive plan that communicates and delivers intended value Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (1 of 9) Customer relationship management—the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (2 of 9) Relationship Building Blocks Customer-perceived value – The difference between total customer perceived benefits and customer cost (think about sales discounts – we all want a deal) Customer satisfaction – The extent to which perceived performance matches a buyer’s expectations Perceived value: Some owners consider a Patek Philippe watch a real bargain, even at prices ranging from $20,000 to $1,000,000 or more. “You never actually own a Patek Philippe. You merely look after it for the next generation.” Courtesy of Patek Philippe Geneva Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (3 of 9) Customer-Engagement Marketing Fosters direct and continuous customer involvement in shaping brand conversations, experiences, and community. Engaging customers: Rather than using intrusive, hard-sell product pitches, Innocent Drinks interacts with customers in humorous ways, Martin Lee/Alamy Stock Photo inspiring conversations and fostering relationships. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (4 of 9) Consumer-Generated Marketing Brand exchanges created by consumers themselves. Consumers are playing an increasing role in shaping brand experiences. Customer-generated content: Heinz invited people across five continents The Kraft Heinz Company to “draw ketchup.” Most drew Heinz. Many of the sketchers and their sketches—both sophisticated and amateurish— were featured in an online video and on digital billboards. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (5 of 9) Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Relationship marketing tools: The American Airlines AAdvantage program promotes customer loyalty through numerous membership benefits. At the same time, it allows American to profit from multiple revenue streams. Ian Dagnall/Alamy Stock Photo Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (6 of 9) Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage. Customer lifetime value: To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Rule #1—The customer is always right. Rule #2—If the customer is ever wrong, reread Rule #1. Courtesy of Stew Leonard’s Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (7 of 9) Share of customer is the portion of the customer’s purchasing that a company gets in its product categories. Indicates customer loyalty and potential for growth. It can be increased through strategies like cross-selling and up-selling, which in turn enhances the Customer Lifetime Value (CLV). Let’s say a customer spends $100 per month on coffee. They spend $70 at Starbucks, $20 at Dunkin’ Donuts, and $10 at local coffee shops. In this scenario: Starbucks has a 70% share of the customer’s coffee spending. Dunkin’ Donuts has a 20% share. The local coffee shops have a 10% share. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (8 of 9) Customer equity is the total combined customer lifetime values of all of the company’s customers. Customer Equity is the sum of the Lifetime Value (LTV) of all customers, representing the total value a customer base brings to a company. It reflects the company’s future profitability based on its existing customer relationships. A higher customer equity indicates a more valuable customer base. Apple’s wide range of products and services, designed for customers at various life stages, boosts customer equity by building strong brand loyalty. The Apple ecosystem promotes long-term engagement, ensuring steady revenue throughout a customer's life. Mark Andrews/Alamy Stock Photo Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Managing Customer Relationships and Capturing Customer Value (9 of 9) Figure 1.5 Customer Relationship Groups & I how do you convert ther Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. The Changing Marketing Landscape (1 of 5) Digital Age Changing Economic Environment Growth of Not-for-Profit Marketing Rapid Globalization Sustainable Marketing Copyright © 2024 Pearson Education Ltd. All Rights Reserved. The Changing Marketing Landscape (2 of 5) We live in the age of Internet of Things, where everything is connected to everything else. Digital and social media marketing involves using digital marketing tools such as websites, social media, mobile ads and apps, online videos, email, and blogs that engage consumers anywhere, at any time, via their digital devices. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. The Changing Marketing Landscape (3 of 5) Social media provide exciting opportunities to extend customer engagement and get people talking about a brand. Mobile marketing: Using mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience. o Mobile marketing is a strategy that uses mobile devices to promote products and services. It includes various forms like SMS, MMS, in-app, and location-based marketing. Big Data and A I: Brands can use big data to gain deep customer insights, personalize marketing offers, and improve customer engagements and service. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Digital and Social Media Marketing Online brand communities: Sephora’s Beauty Insider Community is a thriving online community where customers can ask questions, share ideas and reviews, post photos, and get beauty advice and inspiration from other enthusiasts. Manuel Esteban/Shutterstock; Eyal Dayan Photography Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Real Marketing 1.2: Zoom: A Winning Product and Agile Marketing in the Digital Age Real-time marketing: A strategy that adapts and tailors marketing messages in response to real-time events, trends, or customer behaviors. This approach helps brands present relevant messaging that caters to an audience’s current wants, needs, or interests. Video conferencing app Zoom has made skillful use of real-time social media marketing to create a fresh, relevant brand personality and spark real-time Seemanta Dutta/Alamy Stock Photo engagement. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. The Changing Marketing Landscape (4 of 5) Not-for-profit marketing is growing, as sound marketing can help organizations attract membership, funds, and support. Not-for-profit marketing: Make-A-Wish® skillfully markets its mission to “create life-changing wishes for children with critical illnesses.” Since its founding, Make-A-Wish has fulfilled more than 520,000 wishes to children at dark times in their lives, bringing them welcome rays of light Make-A-Wish America and hope that can play an important part in their healing. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. The Changing Marketing Landscape (5 of 5) Rapid Globalization: Managers around the world are taking both local and global views of the company’s o Industry o Competitors o Opportunities Sustainable Marketing: Corporate ethics and social responsibility have become important for every business (covered in more depth in Chapter 20). Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Sustainable Marketing: The Call for More Environmental and Social Responsibility Today’s consumers expect marketers to be socially and environmentally responsible. Sustainable marketing: Ben & Jerry’s three-part “linked prosperity” mission drives it to make fantastic ice cream (product mission), manage the company for sustainable financial growth (economic mission), and use the company in “innovative ways to make the world a better place” (social mission). Both Ben & Jerry’s and its products are “Made Ben & Jerry’s Homemade Inc. of Something Better.” Copyright © 2024 Pearson Education Ltd. All Rights Reserved. So, What Is Marketing? Pulling It All Together Figure 1.6 An Expanded Model of the Marketing Process Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Discussion Question (1 of 2) What are the major changes taking place in the marketing arena? Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Discussion Question (2 of 2) What skills will you develop by studying marketing? Copyright © 2024 Pearson Education Ltd. All Rights Reserved.