MARKETING : CREATING,

DELIVERING AND CAPTURING

CUSTOMER VALUE

By: Gaurav Awasthi

What is Marketing?Many People think of marketing only as Selling

and Advertising.No Wonder - Because we bombarded with TV

Commercials, direct mail offers, sales calls everyday.

However Selling and Advertising are only the tip of the marketing iceberg.

Marketing must not be understood in the old sense – “Telling and Selling”- but in the new sense of Satisfying Customer Needs.

If the marketer understand consumer needs; develop products that provide superior customer value; and prices, distributes and promotes them effectively, these products will sell easily.

Marketing DefinedAccording to Management Guru Peter

Drucker “ The Aim of Marketing is to make selling Unnecessary.”

We Define Marketing as the process by which companies create value for the customers and build strong customer relationships in order to capture value from the customer in return.

In the first four steps, companies work to understand consumers, create customer value, and build strong Customer relationship

The Marketing Process

Understand the Marketpla

ce and

customer needs and want

s

Design a customer drive

n marketing strategy

Construct an

integrated marketing program that delivers

superior

value

Build profitable relationshi

ps and

create

customer delig

ht

Capture valu

e from customers to creat

e profit and custome

r equit

y

Create Value for customer and Build Customer Relationships

Capture Value From Customer in Return

In the final step companies reap the reward of creating superior customer value by capturing value from the customer in the form of sales, profits and long term customer equity.

1. 2. 3. 4.

5.

1. Understanding the Marketplace and Customer NeedsMarketing is all about creating value for the

Customer.So as a first step in the Marketing Process, the

company must fully understand consumers and the marketplace in which it operates.

We now examine five core customer and marketplace concepts:a) Needs, wants and Demandsb) Market Offerings (product, services and

experiences)c) Value and Satisfactiond) Exchange and Relationshipse) Markets

1.(a) Customer Needs, Wants and DemandsThe most basic concept underlying marketing is that of

human need.Needs are states of felt deprivation.They include basic Physical Needs for food, clothing,

warmth and safety; Social Needs for belonging and affection and Individual Needs for knowledge and self expression.

Wants are the form human needs take as they are shaped by culture and individual personality. E.g. An Indian in Kolkata needs food but wants a bowl of Rice and Fish.

When backed by buying power, wants become Demands.Given the wants and resource, people demand products with

benefits that add up to the most value and satisfaction.

Outstanding marketing companies go extraordinary lengths to learn customer needs, wants and Demands. E.g. at southwest airlines, all senior executives, handle bags, check in passengers and serves as flight attendants once in every quarter.

1(b) Market Offerings – Products, Services, and ExperiencesConsumer needs and wants are fulfilled

through Market Offerings - some combination of products, services, information, or experiences offered to satisfy a need or want.

Market offering examples are banking, air travel, tourism etc

E.g. in case of tourism the market offering is an entire travel experience like MP Tourism’s The Heart of India.

Market offering also include Ideas. E.g. Tata Tea’s “Jago Re” Campaign to promote good governance and responsibility.

Many sellers make the mistake of paying more attention to the specific product they offer than to the benefits and experiences produced by these products. These sellers suffer from Marketing Myopia. E.g. Manufacturer of Drill Bits think that the customers need drill bits but what customer need is a hole. Smart Marketers look beyond and create Brand Experience e.g. IPL Experience.

1 (c) Customer Value and SatisfactionQ. How do customer choose among many

market offerings?Ans. Customer form expectations about the

value and satisfaction that various market offerings will deliver and buy accordingly.

Satisfied customers buy again and tell others about their good experience, dissatisfied one’s switch to competitor’s product.

Marketers, hence must be careful to set right expectations.Too Low – fail to attract enough customersToo High – Customers will be disappointed

1 (d) Exchanges and Relationships “Marketing occur when people decide to

satisfy needs and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return.”

The marketer tries to bring about a response to a market offering and it could more than just buying e.g. Politician want votes, Orchestra wants an audience

Marketing consists of actions taken to build and maintain desirable exchange relationships with target audience.

The goal is to build strong relationships with the customers.

1 (e) MarketsThe concept of exchange and relationships

lead to the concept of a market. A Market is the set of actual and potential

buyers of the product. These buyers share a particular need or want that can be satisfied through exchange relationships.

Suppliers

Company

Competitors

MarketingIntermediaries

Consumers

A Modern Marketing System

2. Designing a Customer – Driven Marketing StrategyOnce the company fully understands

consumers and the market place, it needs to design a customer-driven marketing strategy.

A winning marketing strategy must contain answers to the following questions:a) What customers we will serve (what’s

our target market)?b) How can we serve these customers

best (What’s our value proposition)?c) What would be my marketing

orientation?

2 (a) Selecting Customers to serveMarketing managers know

that they cannot serve all customers in everyway.

Hence select only those customers which you can serve well and profitably. E.g. Apple, Vertu

The Company must first decide who it will serve. It does this by dividing the market into segments of customers(Market segmentation).

And select which segments it will go after (Target Marketing).

A Vertu Diamond Encrusted Phone

2 (b) Choosing a Value PropositionThe Company must also decide how it will

serve the targeted customers.How it will differentiate and position in

the marketplace.“ A company’s value proposition is the

set of benefits or values it promises to deliver to consumers to satisfy their needs”.

E.g. with cell phones, Nokia is “Connecting People – anyone, anywhere” whereas with Apple’s iPhone, “ Touching is Believing”

2 (c) Marketing Management OrientationsThese are the philosophies that guides the marketing strategy

formulation

Production Concept:

The idea that consumers will favour products

that are available and

highly affordable and

that organization

should therefore focus on improving

production and distribution efficiency

Product Concept:

The idea that consumers will favor products that offer the most quality, performance and features and that the organization

should devote its energy to

making continuous

product improvement.

Selling Concept:

The idea that consumers will not buy

enough of the firm’s

products unless it

undertakes a large-scale selling and promotion

effort.

Marketing Concept:

It holds that achieving

organizational goals depends

on knowing the needs and wants of target

markets and delivering the

desired satisfaction

better than the competitors

do.

Societal Marketing Concept:

The idea that company’s marketing decisions

should consider consumer’s wants, the company’s

requirements, consumers

long-run interests, and society’s long run interests.

3. Preparing an Integrated Marketing Plan and ProgramNow the marketer develops an integrated

marketing program that will actually deliver the intended value to the target customers.

Its transforming Marketing Strategy into action.

It consists of firm’s marketing mix i.e. 4Ps.

Product:The firm must first create a

need satisfying market offering

Price:IT must

decide how much it will charge for

that offering

Place: How it will make the offering

available to target

consumers

Promotion:It must

communicate with customer

about the merits of offering.

The firm must blend all these marketing mix tools into a comprehensive Integrated marketing plan

4. Building Customer RelationshipsThe previous three steps lead up to this most important

step: building profitable customer relationships.CRM is not merely a data management activity.It deals with all aspects of acquiring, keeping and growing

customers.Companies interact with customers at many levels. E.g.

At one extreme HUL does not interact with individual customers of surf but works through brand-building, mass media advertising and on the other extreme it customer team works in full partnership with Walmart, Big-bazar etc.

Companies also go for more selective relationship management and interact at very deep level with customers.

Companies also need to work with Partners inside and outside the company.

5. Capturing Value from CustomersThis final step involves capturing value in

return in the form of current and future sales, market share and profits.

Highly satisfied customers -> long run profits

Good customer relationship creates customer delight.

Companies create Loyalty programs and look for customers lifetime value: Customer Equity.

Beyond simply retaining customers CRM could help marketers increase share of wallet.

It is essential to build right relationship with the right customers.

Queries and Doubts?

Thank You Very Much…