Chapter 1: Marketing, Creating and Capturing Customer Value

Partner Relationship Management

Working closely with partners in other company departments and outside the company to jointly bring greater value to customers

Customer-Perceived Value

The customer's evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. These are 'perceived' values because customers often do not judge values and costs accurately or objectively.

Customer Satisfaction

The extent to which a product's perceived performance matches a buyer's expectations.

Customer Relationship Management (CRM)

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Perhaps the most important concept of modern marketing.The key to building lasting customer relationships is to create superior customer value and satisfaction.

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.

Share of Customer

The portion of the customer's purchasing that a company gets in its product categories.

Exchange

The act of obtaining a desired object from someone by offering something in return.

Marketing Management

The art and science of choosing target markets and building profitable relationships with them. Marketing management is customer management and demand management.

Customer-Driving Marketing

Understanding customer needs even better than customers themselves do and creating products and services that meet existing and latent needs, now and in the future.

What are the five core customer and marketplace concepts?

1. Needs, wants, and demands 2. Market Offering (products, services, and experiences) 3. Value and Satisfaction 4. Exchanges and Relationships 5. Markets

What are the five ways in which the Marketing Landscape can change?

1. The Uncertain Economic Environment: Changes in the economy can change how consumers buy products. 2. The Digital Age: Quicker communication between companies and customers is possible with the advances in technology and through the internet. 3. Rapid Globalization: Global marketing partners and global competition is more relevant now more than ever. 4. The call for more ethics and social responsibility: This has become a hot topic for every new business as they need to cooperate with the social standards. 5. The growth of not-for-profit marketing: Not-for-profit companies have now joined the marketing field.

What are the five steps in The Marketing Process?

1. Understand the marketplace and customer needs and wants. 2. Design a customer-driven marketing strategy. 3. Construct an integrated marketing program that delivers superior value. 4. Build profitable relationships and create customer delight. 5. Capture value from customers to create profits and customer equity.

The Marketing Concept

A philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do. Focuses on the market and customer needs, and the profits are gained through integrated marketing and high customer satisfaction. This is an outside-in perspective that is very customer driven.

Customer-Generated Marketing

Brand exchanges created by consumers themselves - both invited and uninvited - by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers.

Choosing a Value Proposition

Company must decide how it will differentiate and position itself in the marketplace. A brand's value proposition is the set of benefits or values it promises to deliver to consumer's to satisfy their needs.

Selecting Customers to Serve

Company must decide whom it serve by dividing the market into segments of customers (market segmentation), and selecting which segments to go after (target marketing). It is impossible to serve all customers.

Demands

Human wants that are backed by buying power.

What is Marketing?

Marketing is managing profitable customer relationships and satisfying customer needs. 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.

Customer-Managed Relationships

Marketing relationships in which customers, empowered by today's new digital technologies, interact with companies and with each other to shape their relationships with brands. Due to greater consumer control, companies can no longer rely on marketing intrusion but must practice marketing by attraction.

What are the five alternative concepts under which organizations design and carry out their marketing strategies?

Production, product, selling, marketing, and societal marketing concepts.

Sustainable Marketing

Socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Companies should balance three consideration in setting their marketing strategies: company profits, consumer wants, and society's interests.

Market Offerings

Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Not limited to physical products, can include services, which are activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything.

Needs

States of felt deprivation. They include physical needs (food, warmth, and safety); social needs (belonging and affection), and individual needs (knowledge and self expression).

Wants

The form human needs take as they are shaped by culture and individual personality.

The Societal Marketing Concept

The idea that a company's marketing decisions should consider consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests.

The Selling Concept

The idea that consumer will not buy enough of the firm's products unless it undertakes a large-scale selling and promotion effort.Typically practiced with unsought goods like insurance or blood donations. Focuses on the factory and existing products, and the profits are gained through selling and promoting and higher sales volume. This is an inside-out perspective. Such aggressive selling can carry high risks however; Loss of focus on building long-term customer relationships, and the company will focus on the company's current products more than what the market actually wants.

The Production Concept

The idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency. While useful in some situations, the production concept can lead to marketing myopia. Companies adopting this orientation run a major risk of focusing too narrowly on their own operations and losing sight of the real objective - satisfying customer needs and building customer relationships.

The Product Concept

The idea that consumers will favor products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous product improvements. However, focusing only on the company's products can also lead to marketing myopia.

Markets

The set of all actual and potential buyers of a product or service.

Marketing Mix

The set of marketing tools the firm uses to implement its marketing strategy. Classified into four broad groups (The four-P's of Marketing): Product, Price, Place, and Promotion. A firm must blend each marketing mix tool into a comprehensive Integrated Marketing Program that communicates and delivers the intended value to chosen customers.

Customer Equity

The total combined customer lifetime values of all of the company's customers. Companies should view customers as assets that must be managed and maximized. Customers can be classified into four relationship groups based on potential profitability and projected loyalty: strangers, butterflies, true friends, and barnacles. Different types of customers require different relationship management strategies and the goal is to build the right relationships with the right customers. Strangers show low potential profitability and little projected loyalty. Butterflies are potentially profitable but not loyal. True friends are both profitable and loyal. Barnacles are highly loyal but not very profitable.

Customer Lifetime Value (CLV)

The value of the entire stream of purchases that the customer would make over a lifetime of patronage.