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Learning Objectives
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-driven marketing strategy
and discuss the marketing
management orientations that guide
marketing strategy.
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 Learning Objectives
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.

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 Marketing
Marketing involves creating value for
customers and building strong
customer relationships in order to
capture value from customers in
return.
Goals:
Attract new customers by promising
superior value
Keep and grow current customers by
delivering satisfaction
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Forms of Marketing

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Figure 1.1 - The Marketing Process:
Creating and Capturing Customer
Value

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 Understanding the
Marketplace
and Customer Needs
Core customer and marketplace
concepts
Needs, wants, and demands
Market offerings (products, services,
and experiences)
Value and satisfaction
Exchanges and relationships
Markets

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Customer Needs, Wants,
and Demands

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 Market Offerings
Combination of products, services,
information, or experiences
Offered to a market to satisfy a need or
want
Entitiesproducts, services, persons,
places, organizations, information, and ideas
Marketing myopia: Paying more
attention to the specific products a
company offers than to the benefits and
experiences produced by these products

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 Customer Value and
Satisfaction
Customers form expectations about the
value and satisfaction of market offerings.
Satisfied customers buy again and spread the
word.
Dissatisfied customers switch to competitors
and criticize the product to others.
Setting low expectations may satisfy those
who buy but fail to attract enough buyers.
Setting high expectations may disappoint
buyers.

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 Exchanges and
Relationships
Exchange is the act of obtaining a
desired object from someone by
offering something in return.
Marketing consists of creating,
maintaining, and growing desirable
exchange relationships with target
audiences.
Marketers build strong relationships by
consistently delivering superior
customer value.
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 Markets
Set of all actual and potential buyers of
a product or service
Consumers market:
Search for products
Interact with companies to obtain
information
Make purchases
Customer-managed relationships are
important as customers are empowered
and marketing is made a two-way affair.

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Figure 1.2 - A Modern Marketing
System

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Designing a Customer-Driven
Marketing Management
Marketing management: Choosing
target markets and building
profitable relationships with them
Basic factors to design a winning
marketing strategy:
Target market
Value proposition

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Designing a Customer-Driven
Marketing Strategy
Selecting customers to serve
Choosing a value proposition
5 Marketing management
orientations
1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
5. Societal marketing concept

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 5 Marketing management
orientations
Production concept
The production concept holds that
consumers will favor products that are
available and highly affordable.
Therefore, management should focus
on improving production and
distribution efficiency.

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 5 Marketing management
orientations
Product concept
The product concept holds that
consumers will favor products that offer
the most in quality, performance, and
innovative features. Under this concept,
marketing strategy focuses on making
continuous product improvements.

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 5 Marketing management
orientations
Selling concept
The selling concept holds that
consumers will not buy enough of the
firms products unless it undertakes a
large-scale selling and promotion effort.

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 5 Marketing management
orientations
Marketing concept
The marketing concept holds that
achieving organizational goals depends
on knowing the needs and wants of target
markets and delivering the desired
satisfactions better than competitors do.
Under the marketing concept, customer
focus and value are the paths to sales and
profits. Instead of a product-centered
make and sell philosophy, the
marketing concept is a customer-centered
sense and respond philosophy.
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 5 Marketing management
orientations
Societal marketing concept
The societal marketing concept
questions whether the pure marketing
concept overlooks possible conflicts
between consumer shortrun wants and
consumer longrun welfare. The societal
marketing concept holds that marketing
strategy should deliver value to
customers in a way that maintains or
improves both the consumers and the
societys wellbeing.

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 Figure 1.3 - The Selling and
Marketing Concepts Contrasted

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Figure 1.4 - Three Considerations
Underlying the Societal Marketing
Concept

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 Marketing Mix ( 4 Ps)
Set of marketing tools the firm uses
to implement its marketing strategy
Product
Price
Place
Promotion
Each tool should be blended/mixed
into a comprehensive integrated
marketing program.
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 Customer Relationship
Management
Delivering superior customer value and
satisfaction to build and maintain
profitable customer relationships
Customer-perceived value: Customers
evaluation of the difference between all the
benefits and costs of a marketing offer
relative to those of competing offers
Customer satisfaction: Extent to which a
products perceived performance matches
a buyers expectations

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Customer Relationship
Levels
and Tools

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 Customer-Engagement
Marketing
Customer-engagement marketing
involves fostering direct and continuous
customer involvement in shaping brand
conversations, experiences, and
community.
Greater consumer empowerment means
that companies should rely on
marketing by attraction.
The key is to find ways to enter
consumers conversations with
engaging and relevant brand messages.
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 Consumer-Generated
Marketing
Brand exchanges created by
consumers
Consumers play an increasing role in
shaping their own brand experiences
and those of other consumers.
Occurs through:
Uninvited consumer-to-consumer
exchanges
Invitation of consumers by companies
Asking for new product and service ideas
Asking to play an active role in shaping ads
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 Partner Relationship
Management
Working closely with partners both
inside and outside the company to
jointly bring more value to customers
Partners inside the firmcross-
functional teams
Partners outside the firmsuppliers,
channel partners

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Creating Customer Loyalty
and Retention
Keeping customers loyal proves
economical to the company.
Customer lifetime value: Value of
the entire stream of purchases a
customer makes over a lifetime of
patronage
Customer defections can be costly
Can lose that customers lifetime value

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 Share of Customer
Portion of the customers purchasing
that a company gets in its product
categories
Increased by:
Having good customer relationship
management
Offering greater variety to current
customers
Creating programs to cross-sell and up-
sell to market more products and
services to existing customers
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 Customer Equity
Total combined customer lifetime
values of all of the companys
current and potential customers
Helps to measure the future value of
the companys customer base
Increases when the loyalty of the
firms profitable customers increases
Better measure of a firms
performance than current sales or
market share
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Figure 1.5 - Customer
Relationship Groups

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 Butterflies
Like strangers, "butterflies" are not loyal.
However, they are potentially profitable
because there is a good fit between the
company's offerings and their needs.
Like real butterflies, this type of customer
will come and go without becoming a
permanent, loyal consumer of a company's
products. Companies should create
satisfying and profitable transactions
with them, and then cease investing in them
until the next time around.

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 True Friends
The final type of customers is "true
friends." They are both profitable and
loyal. There is a strong fit between
their needs and the company's
offerings, so the company should
make continuous relationship
investments in an effort to go beyond
satisfying and to delight these
customers. A company should try to
delight true friends so that they will tell
others about their good experiences with
the company.
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 Strangers
"Strangers" have low potential
profitability and loyalty. A
company's offerings do not fit well with
a stranger's wants and demands.
Companies should not invest in
building a relationship with this type of
customers.

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 Barnacles
Another type of customer in which a
company should not invest is the
"barnacle." Barnacles are highly loyal
but not very profitable because there is
a limited fit between their needs and
the company's offerings. The company
might be able to improve barnacles'
profitability by selling them more, raising
their fees, or reducing service to them.
However, if they cannot be made
profitable, they should be "fired."
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 The Changing Marketing
Landscape
Digital age
Changing economic environment
Growth of not-for-profit marketing
Rapid globalization
Call for more ethics and social
responsibility

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 The Digital Age: Online, Mobile,
and Social Media Marketing
Digital and social media marketing:
Engaging consumers via their digital
devices using digital marketing tools and
social media
Mobile marketing: Using mobile
channels to stimulate immediate buying,
make shopping easier, and enrich the
brand experience
Blending the new digital approaches with
traditional marketing creates a smoothly
integrated marketing strategy and mix.
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 Changing Economic
Environment
The Great Recession from 2008 to
2009 undermined consumer
confidence.
Post-recession era
Consumers have become more frugal.
New consumer spending values
emphasize simpler living.
Marketers are focusing on practicality
and durability in their product offerings
and marketing pitches.
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 Growth of Not-for-Profit
Marketing
Not-for-profits face stiff competition
for support and membership.
Sound marketing can help them
attract membership, funds, and
support.

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 Rapid Globalization and
Societal Marketing
Managers around the world are
taking both local and global views of
the companys:
Industry
Competitors
Opportunities
Corporate ethics and social
responsibility have become
important for every business.

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Figure 1.6 - An Expanded
Model of
the Marketing Process

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