Principles of Marketing Part 1 : Creating and Capturing Customer Value

Questions to design a winning marketing strategy ?

- What customers will we serve ? (target market) - How can we serve these customers best ? (our value proposition)

Selecting Customers to Serve

- market segmentation - selection of which segments it will go after

Five steps of 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 customer s to create profits and customer equity

Marketing Concept

A philosophy that holds that achieving organisational goal depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

Customer Value

Attracting and retaining customers. A customer buys from the firm that offers the highest customer-perceived value. => subjective

Core marketing activities

Consumer research, product development, communication, distribution, pricing, and service

Zappos.com

Created in 1999, passion for customer service. Zappos doesnt spend a lot on advertising, relies on customer service so good that customers come back and tell their friends about it. Free delivery, free returns, 365 day return policy. => cheaper to convince people to buy again, rather than convince new customers. Purchased by Amazon in 2009. HR : each new hire is required to go through 4 weeks of customer loyalty training. Bribes 2K to quit. 1% takes the incentive.

Choosing a Value Proposition

Differentiation and positioning "why should the customer buy our brand?"

Southwest Airlines

Herb Kelleher, founder "We don't have a marketing department, we have a customer department"

Customer Needs

Human needs are states of felt deprivation.

What is Marketing ?

Marketing is managing profitable customer relationships. The aim of marketing is to create value and capture value from customers. Attract new customers by promising superior value and keep and grow current customers by delivering satisfaction

Customer-managed relationship

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. People today want a voice and a role in the brand experience => co creation.

Market Offerings

Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Types of consumers

Strangers, butterflies, true friends, barnacles Strangers : low potential profitability and little projected loyalty => dont invest Butterflies : potentially profitable but not loyal. effort to make them more loyal are rarely successful True friends : both profitable and loyal. Strong fit between their needs and the company's offerings. Nurture them Barnacles : highly loyal but not very profitable. E.g. smaller bank customers who bank regularly but do not generate enough returns to cover the costs of maintaining their accounts

Exchange

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

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.

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.

Production Concept

The idea that consumers will favour products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency.

Product Concept

The idea that consumers will favour products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous improvements.

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. e.g. unsought goods : donations, insurance

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.

Customer Relationship Management

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Managing detailed info about individual customers.

Share of customer

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

Market

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

Customer equity

The total combined customer lifetime values of all the company's customers.

Customer satisfaction

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

Marketing : Creating Customer Value and Relationships

Today's marketing is all about creating customer value and building profitable customer relationships. It starts with understanding consumer needs and wants, determining which target markets the organization can serve best, and developing a compelling value proposition by which the organization can attract and grow valued consumers. If the organization does these things well, it will reap the rewards in terms of market share, profits, and customer equity.

Preparing an Integrated Marketing Plan and Program

Transforming the marketing strategy into action. "marketing mix" Four Ps : Product : create a need-satisfying Price Place Promotion : persuade its merits

Customer Wants

Wants are the form human needs take as they are shaped by culture and individual personality. An American needs food but wants a Big Mac.

Customer Demands

When backed by buying power, wants become demands.