CHAPTER 1 Creating and Capturing Customer Value with Duane Weaver

2 2 Copyright © 2015 Pearson Canada Inc. Learning Outline 1. What is Marketing? 2. What is a market? 3. Outline the steps in the marketing process. 4. Identify the five core marketplace concepts. 5. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 6. Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. 7. Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

3 Copyright © 2015 Pearson Canada Inc. 1-3 What is Marketing? Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

4 Copyright © 2015 Pearson Canada Inc. 1-4 What is Marketing? “…managing profitable customer relationships” Armstrong, et al., (2015, p. 5) “…a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others.” Armstrong, et al., (2009, p. 7) Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

5 Copyright © 2015 Pearson Canada Inc. 1-5 What is a Market? Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

6 Copyright © 2015 Pearson Canada Inc. 1-6 What is a Market? The set of actual and potential buyers of a product, service or experience. Also seen traditionally as a marketplace where the business transaction (or trade) is enacted between buyers and sellers. For example: A bizarre Flea market Farmer’s market Retail Store Wholesale Outlet Online Internet Store Cell Phone’s digital radio waves In Marketing when we talk about potential markets we usually are referring to a set of buyers. These people share a need or want that can be satisfied through exchange relationships. Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

7 Copyright © 2015 Pearson Canada Inc. 1-7 What is successful Marketing? Attracting new customers by promising and delivering superior value. Building long-term relationships with customers by delivering continued customer satisfaction. Creating, building and managing these relationships profitably over time. Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

8 Copyright © 2015 Pearson Canada Inc. Marketing and Marketing Process Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

9 Copyright © 2015 Pearson Canada Inc. 5 Core Concepts 1.Needs, wants, and demands 2.Market offerings 3.Value and satisfaction 4.Exchanges and relationships 5.Markets Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

10 Copyright © 2015 Pearson Canada Inc. Core Concept 1 Needs: Deprived of physical, social, individual basics Wants: Needs influenced by culture and individual personality Demand: Sum of wants and buying power Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

11 Copyright © 2015 Pearson Canada Inc. Core Concept 2 Needs: Deprived of physical, social, individual basics Wants: Needs influenced by culture and individual personality Demand: Sum of wants and buying power Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

12 Copyright © 2015 Pearson Canada Inc. Core Concept 3 Needs: Deprived of physical, social, individual basics Wants: Needs influenced by culture and individual personality Demand: Sum of wants and buying power Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

13 Copyright © 2015 Pearson Canada Inc. Core Concept 4 Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

14 Copyright © 2015 Pearson Canada Inc. Core Concept 5 Market: Buyers of a product Common wants and needs satisfied through exchange Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

15 Copyright © 2015 Pearson Canada Inc. Core Concept 5 Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

16 Copyright © 2015 Pearson Canada Inc. Winning marketing strategies formed by answering: 1.What customers will we serve? target market 2.How can we best serve these customers? value proposition This is achieved by: Market Segmentation: Dividing the market into groups of customers Target Marketing: Selecting one or more segments to serve Customer-Driven Marketing Strategy Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

17 Copyright © 2015 Pearson Canada Inc. Customer-Driven Marketing Strategy Value Proposition: The benefits promised to deliver to consumers Differentiates brands within the marketplace Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

18 Copyright © 2015 Pearson Canada Inc. The societal orientation of marketing is often discussed in the context of the “triple bottom line” – that being financial performance, health and safety for stakeholders, and high environmental standards. More simply put a focus on profit, as well as people and planet. Customer Driven Marketing Strategy: Marketing Management Orientations Strategies based upon one or more orientations: Production Concept (process efficiencies..leverage) Product Concept (design benefits/efficencies) Selling Concept (market push – pushing it out) Marketing Concept (market pull – meeting demands) Societal Marketing Concept (triple bottom line) Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

19 Copyright © 2015 Pearson Canada Inc. Customer Driven Marketing Strategy Integrated marketing plan: Analyzes firm’s current situation Transforms the marketing strategy into action Describes the four P ( marketing mix ) strategies: Product Price Place (Distribution) Promotion Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

20 Copyright © 2015 Pearson Canada Inc. Customer Relationship Management Building and maintaining profitable customer relationships delivering superior customer value and satisfaction Deals with all aspects of acquiring, keeping, and increasing customers Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

21 Copyright © 2015 Pearson Canada Inc. Customer-Perceived Value: Customer’s evaluation of the difference between all benefits and costs of a marketing offer relative to those of the competitors Customer Relationship Management Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

22 Copyright © 2015 Pearson Canada Inc. Customer Relationship Management Customer Satisfaction: Extent to which the product’s perceived performance matches a buyer’s expectations Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

23 Copyright © 2015 Pearson Canada Inc. Customer Relationship Management Customer Lifetime Value The value of the entire stream of purchases that the customer would make over a lifetime of patronage Share of CustomerThe portion of the customer’s purchasing that a company gets in their product categories Customer EquityThe total combined customer lifetime values of all the company’s current and potential customers Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

24 Copyright © 2015 Pearson Canada Inc. Trends in Marketing Landscape Uncertain economic environment Advancing digitized communication Rapid globalization Corporate Social responsibility Not-for-profit marketing Marketing Market Mktg Process5 ConceptsCustomer Driven Relationship Mgmt. Trends

25 Copyright © 2015 Pearson Canada Inc. Review 1.Define Marketing and a Market 2.Identify the five core marketplace concepts 3.Identify elements of a customer-driven marketing strategy 4.Discuss customer relationship management and identify strategies for creating value for and capturing value from customers 5.Describe the major trends and forces that are changing the marketing landscape