Creating and Capturing Customer Value

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Tamsin Hawkins
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1 Creating and Capturing Customer Value Topic Outline What Is Marketing? Understand the Marketplace and Customer Needs Designing a Customer-Driven Marketing Strategy Preparing an Integrated Marketing Plan and Program Building Customer Relationships Capturing Value from Customers The Changing Marketing Landscape

2 What is Marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-2

What is Marketed? Goods/ commodity Services/ Car wash Events/ World Cup Experiences/ 40 ys.

5 Definition PRODUCT: A product is anything that can be offered to satisfy a need or want. Products are a bundle of solutions Products may be physical goods, services or ideas.

6 Definition VALUE: Value is the consumer s estimate of the product's overall capacity to satisfy his or her needs. Value is the satisfaction of customer requirements at the lowest possible cost of acquisition, ownership and use.

7 Definition Transaction: is a trade of values between two or more parties. A transaction involves several dimensions: -at least two things of value. -agreed upon conditions. -a time of agreement. -a place of agreement.

8 Marketing Process

9 Understanding the Marketplace and Customer Needs. Core Concepts Needs, wants, and demands Market Offerings and brands Value and satisfaction Marketing channels Markets Exchange and relationships Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-9

10 Customer Needs, Wants, and Demands Needs Physical food, clothing, warmth, safety Social belonging and affection Individual knowledge and self-expression Wants Form that needs take as they are shaped by culture and individual personality Demands Wants backed by buying power Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 1- slide #

11 Market Offerings and Brands Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want Marketing myopia the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products. A brand is an offering from a known source. A brand name such as McDonald s carries many associations in people s minds that make up its image: hamburgers, cleanliness, convenience, courteous service, and golden arches. All companies strive to build a brand image with as many strong, favorable, and unique brand associations as possible. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-11

12 Customer Value and Satisfaction Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the products to others. Note: Marketers must be careful to set the right level of expectations Plz. discuss..

14 Exchange Exchange is the act of obtaining a desired object from someone by offering something in return There are five conditions for exchange: 1. There are at least two parties. 2. Each party has something that might be of value to the other party. 3. Each party is capable of communication and delivery. 4. Each party is free to accept or reject the exchange offer. 5. Each party believes it is appropriate or desirable to deal with the other party. Exchange: Process + Agreement = Transaction

16 A Modern Marketing System

17 Designing a Customer-Driven Marketing Strategy Marketing management is the art and science of choosing target markets and building profitable relationships with them What customers will we serve? How can we best serve these customers?

18 Designing a Customer-Driven Marketing Strategy 1. Selecting Customers to Serve Market segmentation refers to dividing the markets into segments of customers Target marketing refers to which segments to go after Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it

19 Designing a Customer-Driven Marketing Strategy 2. Choosing a Value Proposition The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs Example: BMW: Promises the ultimate driving machine. Iphone: touching is believing. Nokia: connecting people anyone, anywhere, and

20 Designing a Customer-Driven Marketing Strategy 3. Marketing Management Orientations Product ion concept Product concept Selling concept Marketi ng concept Societal concept

21 Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Production concept The production concept is one of the oldest concepts in business. It holds that consumers prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution.

22 Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Product concept The product concept proposes that consumers favor products offering the most quality, performance, or innovative features..

23 Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Selling concept The selling concept holds that consumers will not buy enough of the organization s products unless it undertakes a large scale selling and promotion effort. It is practiced most aggressively with unsought goods goods buyers don t normally think of buying such as insurance and when firms with overcapacity aim to sell what they make, rather than make what the market wants.

24 Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Marketing concept The marketing concept emerged in the mid The job is to find not the right customers for your products, but the right products for your customers.

25 Marketing Management Orientations Production concept Product Concept Selling concept Marketing Concept Societal Marketing Concept

26 Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers wants, the company s requirements, consumers longterm interests, and society s long-run interests

27 Preparing an Integrated Marketing Plan and Program The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion, and place. Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers.

29 Building Customer Relationships Customer Relationship Management (CRM) The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction

30 Building Customer Relationships Relationship Building Blocks: Customer Value and Satisfaction Customer value: A customer buys from the firm that offer the highest perceived value. Customer perceived Value: The customer evaluation of the difference between all the benefits and all the cost of a marketing offer relative to those of competing offers. Customerperceived value The difference between total benefits Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer satisfaction The extent to which a product s perceived performanc e matches Chapter 1- slide #

32 Building Customer Relationships Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 1- slide #

33 Building Customer Relationships Partner Relationship Management Partners inside the company is every function area interacting with customers Electronically Cross-functional teams Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships

34 Building Customer Relationships Partner Relationship Management Supply chain is a channel that stretches from raw materials to components to final products to final buyers Supply management Strategic partners Strategic alliances

35 Capturing Value from Customers Creating Customer Loyalty and Retention Growing Share of Customer Building Customer Equity

36 1. Customer Loyalty and Retention Satisfied customers remain loyal. Talk favorably to others about the company and its products. Its five times cheaper to keep an old customer than to acquire a new one. Loosing the customer means losing the entire stream of purchases that customer would make over a lifetime of patronage. Customer lifetime value: The value of the entire stream of purchases that customer would make over a lifetime of patronage.

37 2. Growing Share of Customer Good Customer Relationship Management can help marketers to increase their share of customer the share they get of the customer s purchasing in their product categories for ex., Supermarkets and Restaurants want to get more share of stomach Car companies want to increase share of garage and airlines want greater share of travel Share of Customer: The portion of the customer s purchasing that a company gets in its product categories.

38 3. Building Customer Equity Customer equity: is the total combined customer lifetime values of all the company current and potential customers.

39 The Changing Marketing Landscape 1. The Digital Age 2. Rapid Globalization 3. The call for more ethics and social responsibility 4. The Growth of not for Profit Marketing