Chapter 1 – Creating customer value and engagement

What is marketing

Deals with customers Managing profitable customer relationships Goals: Attract new customers by promising superior values and keep and grow current

customers by delivering satisfaction. “the process by which companies create value for customers and build strong customer

relationships in order to capture value from customers in return” 5 step model of the marketing process 1. Understand the market place and customer needs and wants2. Design a customer driven marketing strategy 3. Construct an integrated marketing program that delivers superior value4. Build profitable relationships and create customer delight5. Capture value from customers to create profits and customer equity.

Marketing management orientations

1. The production concept - consumers will favour products that are available and highly affordable - management should focus on improving production and distribution efficiency

2. The product concept - consumers will favour products that offer the most in quality, performance and

innovative features - marketing strategy focus on making continuous product improvements

3. The selling concept - Consumers will not buy enough of the firm’s products unless it undertakes a

large-scale selling and promotion effort. - Typically practiced with unsought goods - High risks: focuses on creating sales transactions rather than on building long-

term, profitable customer relationships - Aim is to sell rather than making what the market wants

4. The marketing concept- Achieving organizational goals depends on knowing the needs and wants of

target markets- Delivering the desired satisfactions better than competitors do

Customer needs, wants and demands Needs – State of felt deprivationWants – Form human needs take as they are shaped by culture and individual personality. eg: An American needs food but wants a Big Mac, French fries, and a soft drinkDemands – Wants backed by buying power

Customer relationship management

- Process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, engaging and growing customers

- Customer-perceived value the customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers

- Customer satisfaction depends on the product’s perceived performance relative to a buyer’s expectations

Consumer-generated marketing: - Consumers play a bigger role in shaping their own brand experiences and those

of others - Example: Starbucks: they collect ideas from their customers on new products,

store changes etc. Market segmentation – Division of market into distinct groups à different needs, characteristics, age, gender etc. Market targeting – Process of evaluating each market segment’s attractiveness and selecting 1 or more segments to enter Market position – arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the mind’s of target consumers Differentiation – begins positioning process.

SUMMARY OF CHAPTER 1

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Objective 1: Define marketing and outline the steps in the marketing process. Key term: marketing - Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.- Involves 5 steps:

marketers need to understand the marketplace and customer needs and wants marketers design a customer-driven marketing strategy with the goal of

getting ,keeping and growing target customers Marketers construct a marketing program that actually delivers superior value Building profitable customer relationships and creating customer delight The company reaps the rewards of strong customer relationships by capturing value

FROM customers. Objective 2: Explain the importance of understanding customers and the market place and identify the 5 core marketplace concepts Key terms: needs, wants, demands, market offerings, marketing myopia, exchange, market - Understanding a customer’s want need and demand help companies design want-satisfying offerings and build value-laden customer relationships by which they can capture customer lifetime value and greater share of customer. Result à increased long-term customer equity for the firm - the value proposition is fulfilled through a market offering (delivers customer value and satisfaction resulting in long-term exchange relationships with customers. Objective 3: identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy Key terms: Marketing management, production concept, product concept, selling concept, marketing concept, societal marketing concept - Company must divide do market segmentation and select which will be their target market. - must decide how it will appeal to this target market: differentiation + market position- marketing management can adopt 1 of the 5 competing market orientations.- The societal marketing concept holds that generating customer satisfaction + long run societal well being through sustainable marketing strategies is keyed to both, achieving the company’s goals and fulfilling its responsibilities. Objective 4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return

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Key words: Customer relationship management, Customer perceived value, customer satisfaction, customer-managed relationships, consumer-generated marketing, partner relationship management, customer lifetime value, share of customer, customer equity - Costumer relationship management (CRM) is the process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. - Aim of CRM: produce high customer equity- They want to acquire profitable customers + build relationships that will grow “share of customer”- Different types of customers require different relationship management strategies - Captures value from customers in the form of profits and customer equity - Companies must work closely with marketing partners (inside and outside the company) - Must be good at partner relationship management Objective 5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships Key words: internet - Marketers must emphasize the value in their propositions.- Challenge: Balance a brand’s value proposition with current times + enhance long term quality - Boom: Technologic development (internet etc.)- Led to new approaches for marketers to target their consumers + build closer relationship (connected globally) - Marketers are re-examining their ethical and societal responsibilities - Corporate Social Responsibility

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