1. CHAPTER ONE Marketing: Creating and Capturing Customer Value
Lecturer: NNA
Mkt: 202
Ch 1 -1

2. Copyright © 2011 Pearson Education
What Is Marketing?
Note to Instructor:
The text gives some excellent examples of companies that are successful in marketing. These examples include:
Wal-Mart which has become the world’s largest retailer—and the world’s largest company—by delivering on its promise, “Save money. Live Better.”
At Disney theme parks, “imagineers” work wonders in their quest to “make a dream come true today.”
Apple fulfills its motto to “Think Different” with dazzling, customer-driven innovation that captures customer imaginations and loyalty. Its wildly successful iPod grabs more than 70 percent of the music player market; its iTunes music store captures nearly 90 percent of the song download business.
Discussion Question
Ask students for other examples of either national or local companies who are excellent at marketing and ask how they reflect the definition given in this slide.
Marketing is a process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.
Ch 1 -2
Copyright © 2011 Pearson Education

3. What Is Marketing? (cont)
Ch 1 -3
Copyright © 2011 Pearson Education

4. Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands
Needs
States of deprivation
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
Ch 1 -4
Copyright © 2011 Pearson Education

5. Understanding the Marketplace and Customer Needs
Market Offerings: Products, Services and Experiences
Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy its needs or wants.
Ch 1 -5
Copyright © 2011 Pearson Education

6. Understanding the Marketplace and Customer Needs
Customer Value and Satisfaction
Customers
Value and satisfaction
Marketers
Set the right level of expectations
Not too high or low
Discussion Question
Why do marketer’s not always understand customer needs? How can they better identify customer needs?
Marketer’s often work in a vacuum and do not consider the customer’s needs as much as they should. Future chapters will talk about market research and marketing information, important tools for understanding customer’s needs. Students might be familiar with survey research or focus groups as techniques for gathering information or they might be asked for their zip code when they purchase in certain retailers
Ch 1 -6
Copyright © 2011 Pearson Education

7. Understanding the Marketplace and Customer Needs (cont)
Exchanges and relationships
Exchange is the act of obtaining a desired object from someone by offering something in return.
Marketers aim at building strong relationships by consistently delivering superior customer value.
Note to Instructor
Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object.
Beyond simply attracting new customers and creating transactions, the goal is to retain customers and grow their business with the company.
Ch 1 -7

8. Understanding the Marketplace and Customer Needs
A market is the set of actual and potential buyers of a product.
Ch 1 -8
Copyright © 2011 Pearson Education

9. 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?
Note to Instructor
By trying to serve all customers, marketers may not serve any customers well. Instead, the company wants to select only customers that it can serve well and profitably. For example, Jashanmal stores, which sell some of the world’s top brands, profitably target affluent professionals; the 5–10 Riyal/Dirham stores profitably target families with lower incomes.
Ch 1 -9

10. Designing a Customer-Driven Marketing Strategy (cont)
Segmentation
Process of dividing the market into subsets of consumers with common needs or characteristics
Targeting

11. Designing a Customer-Driven Marketing Strategy (cont)
Segmentation
Targeting
The selection of one or more of the segments to pursue

12. Designing a Customer-Driven Marketing Strategy (cont)
Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it.
Why De-Market??
Shortage of supply
Want to promote newer products
The company is not having enough sales with the current product
Note to Instructor
Value propositions: Land Rover lets you “Go Beyond”—to “get a taste of adventure, whatever your tastes.”
Ch 1 -12

13. Designing a Customer-Driven Marketing Strategy (cont)
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.
BMW: Value proposition: Ultimate Driving Machine
Lexus: value proposition: delivering quality, zero defects in manufacturing, superior personal post purchase service
Note to Instructor
Value propositions: Land Rover lets you “Go Beyond”—to “get a taste of adventure, whatever your tastes.”
Ch 1 -13

14. Designing a Customer-Driven Marketing Strategy (cont)
Marketing Management Orientations (5 alternative concepts)
Production concept
Product concept
Selling concept
Marketing concept
Societal concept
Ch 1 -14

15. The Production Concept
Assumes that consumers are interested primarily in product availability at low prices
Marketing objectives of the companies:
Cheap, efficient production
Intensive distribution
Market expansion (don’t focus on product innovation or product expansion)

16. The Product Concept
Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features
Marketing objectives:
Quality improvement
Addition of features
Tendency toward Marketing Myopia:
A short-sighted and inward looking approach to marketing that focuses on the needs of the company instead of defining the company and its products in terms of the customers' needs and wants.

17. The Selling Concept
Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so
Marketing objectives:
Sell, sell, sell
Lack of concern for customer needs and satisfaction

18. The Marketing Concept
Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition
Marketing objectives:
Make what you can sell
Focus on buyer’s needs

19. Designing a Customer-Driven Marketing Strategy (cont)
The Selling and Marketing Concepts Contrasted
Ch 1 -19

20. Designing a Customer-Driven Marketing Strategy (cont)
Marketing Management Orientations
The societal marketing concept is the idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-term interests.
e.g Ethical marketing:
Green marketing
Discussion Questions
What companies can you identify with social Marketing?
What do these companies do that ties to the societal marketing concept?
Students might be familiar with many different companies that practice societal marketing through their Corporate Social Responsibility (CSR) initiatives. Students might be familiar with local retailers who are also involved in societal marketing. They will note that these companies donate, contribute, or offer services to charities and not-for-profit organizations. This weblink is a youtube ad for bank Med which taps caring for the environment and pollution.
Ch 1 -20

21. Designing a Customer-Driven Marketing Strategy (cont)
Note to Instructor
The National Bank of Kuwait (NBK) focuses both on making profit and helping society by engaging in activities such as feeding the poor in the month of Ramadan and arranging a walkathon every year to increase health awareness. This weblink takes you to NBK’s Corporate social responsibility report.
Discussion Question
Ask students about other companies that have had serious problems with their products? How have these companies bounced back?
Ch 1 -21
Copyright © 2011 Pearson Education

22. 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.
Ch 1 -22

23. Building Customer Relationships
Customer relationship management (CRM): The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
Ch 1 -23
Copyright © 2011 Pearson Education
Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise. Delighted customers not only make repeat purchases, they become willing marketing partners and “customer spokespersons” who spread the word about their good experiences to others.
Real Marketing 1.1 presents Etisalat (weblink) as a company that knows how to satisfy and delight it’s customers. Etisalat was the winner of the Best in Dubai award for customer service. This category was created to recognize those companies that really care for the customer, and take efforts to exceed their expectations time and again.

24. Building Customer Relationships
Relationship Building Blocks: Customer Value and Satisfaction
Customer- perceived value
The difference between total customer value and total customer cost
Customer satisfaction
The extent to which a product’s perceived performance matches a buyer’s expectations
Notes to Instructor
For example, consider why visitors may choose to stay at the Burj Al Arab hotel in Dubai, given its prices are so much higher than other hotels in the same area. In fact, it is one of the most expensive hotels in the world, with the lowest priced suites starting at AED 6,500 per night (US$1,750) and the most expensive being the Royal Suite, which is so luxurious that it includes its own cinema, marble bathrooms, and chauffeur-driven Rolls Royce service, costing up to AED 100,000 (US$27,000) per night. The hotel is not just for the super rich—it is also used by ordinary visitors. The reason they are willing to pay such high prices is that they perceive a stay at the hotel as the ultimate luxury treat, a once-in-a-lifetime experience.
Ch 1 -24

25. Building Customer Relationships
Basic Relationships
Full Partnerships
Note to Instructor
Basic Relationships are often used by a company with many low-margin customers For example, Coca-Cola does not phone or call on all of its consumers to get to know them personally. Instead, Coca-Cola creates relationships through brand-building advertising, sales promotions, and its Web site (
Full Partnerships are used in markets with few customers and high margins, sellers want to create full partnerships with key customers. For example, Coca-Cola customer teams work closely with large distributors and retailers.
Discussion Question
Ask students what frequency or club marketing programs they belong to and why?
Ch 1 -25

26. Building Customer Relationships
The Contemporary Nature of Customer Relationships
Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers.
Relating more deeply and interactively by incorporating more interactive, two way relationships through blogs, websites, online communities and social networks.
Note to Instructor
Nike has recently shifted a bigger chunk of its media budget toward new, more direct interactions with consumers. Nike’s new media include not only the Internet, but also in-person events and other activities designed to build brand community and deeper customer relationships. In March 2010, Nike Middle East ran a region-wide football initiative designed to give young players the chance to train like their favorite stars. The scheme was open to all young footballers, with regional competition finals in Dubai. A select handful of winners from the competition finals won the opportunity to go to Juventus FC in Italy to continue their training.
Discussion Question
Ask students how marketers have used facebook, myspace, linkedin or other social networks for marketing purposes. Ask them about YouTube and how that has changed marketing.
Ch 1 -26

27. Capturing Value from Customers
Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage.
Customer equity is the total combined customer lifetime values of all of the company’s customers.
Note to Instructor
Stew Leonard’s is an interesting example. Stew Leonard, who operates a highly profitable four-store supermarket in Connecticut and New York, says that he sees $50,000 flying out of his store every time he sees a sulking customer. Why? Because his average customer spends about $100 a week, shops 50 weeks a year, and remains in the area for about 10 years. If the marketing process, the company creates value for target customers and builds strong relationships with them. To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Rule 1—the customer is always right. Rule 2—If the customer is ever wrong, reread Rule 1.
You can find videos of Leonard’s stores on youtube.com which will give the students an idea of the atmosphere.
Discussion Question
Ask students if they know of other retailers that build this kind of exciting environment.
Ch 1 -27

28. Capturing Value from Customers
Building Customer Equity
Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized.
Different types of customers require different relationship management strategies.
Note to Instructor
A visit to the Coke Web site always offers examples of building customer equity. They usually have a unique way of engaging the customer whether it be online games, music studios, or virtual worlds.
Ch 1 -28
Copyright © 2011 Pearson Education

29. Capturing Value from Customers
Customer Relationship Groups

30. So, What Is Marketing? Pulling It All Together
Ch 1 -30
Copyright © 2011 Pearson Education