Marketing:

1
Creating and Capturing
Customer Value

“It’s good and good

for you”
Cont…

 You already know a lot about marketing—it’s

all around you:
– products at your nearby shopping mall
– ads that fill your TV screen and magazines, or
stuff your mailbox
– imaginative web sites and mobile phone apps
– blogs, online videos, and social media
OBJECTIVE 1:
WHAT IS THE MARKETING?

 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.
 The twofold goal of marketing is to:
– attract new customers by promising superior value
– grow current customers by delivering satisfaction
 Marketing, more than any other business function,
deals with customers.
Cont…

 creating value for customers

– Customer Value is the perception of what a product or
service is worth to a Customer, Worth means whether
the Customer feels s/he or he got benefits and
services over what s/he paid”
 capturing value from customers
– Get money for customers wallet
– Earn profit
TRADITIONAL CONCEPT OF
MARKETING

 According to the traditional concept, marketing

means selling goods and services that have
been produced.
 Thus, all those activities which are concerned
with persuasion and sale of goods and
services, are called marketing.
This concept follows

1. The main focus of this concept is on product

2. All efforts of the marketing people are
concentrated on selling the product.
3. The ultimate goal of all marketing activity is to
earn profit through maximization of sales.
MODERN CONCEPT OF MARKETING

 The modern concept of marketing considers

the consumers’ wants and needs.
 Thus, marketing starts with identifying
consumer needs,
Class exercise

 Followings are the statements related to

different concept of marketing.
 Identify those pertain to modern concept by
mentioning ‘MCM’ and traditional concept by
mentioning ‘TCM’ in the specified box given
against each statement.
The Marketing Process
Cont….

 The marketing process involves five steps.

– The first four steps create value for customers.
– First, marketers need to understand the marketplace
and customer needs and wants.
– Next, marketers design a customer-driven marketing
strategy with the goal of getting, keeping, and growing
target customers.
– In the third step, marketers construct a marketing
program that actually delivers superior value.
Cont…

 All of these steps form the basis for the

fourth step, building profitable customer
relationships and creating customer delight.
 In the final step, the company reaps the
rewards of strong customer relationships by
capturing value from customers.
In summery

 In the first four steps, companies work to

understand consumers, create customer value,
and build strong customer relationships. In the
final step, companies reap the rewards of
creating superior customer value.
 By creating value for consumers, they in turn
capture value from consumers in the form of
sales, profits, and long-term customer equity.
 OBJECTIVE 2:
UNDERSTANDING THE MARKETPLACE AND
CUSTOMER NEEDS

 As first, marketers need to understand customer

needs and wants and marketplace in which they
operate.
 We examine five customers and marketplace
concepts:
1. Needs, wants, and demands;
2. Market offerings (products, services, and experiences)
3. Value and satisfaction
4. Exchanges and relationships; and
5. Markets.
Customer Needs

 The most basic concept underlying marketing is

that of human needs.
 Human needs are states of felt deprivation.
– They include basic physical needs for food, clothing,
warmth, and safety; social needs for belonging and
affection; and individual knowledge and self
expression
 Marketers did not create these needs; they are
a basic part of the human makeup
 Wants

 Wants are the form human needs take as they are

shaped by culture and individual personality.
 For example:
 Somalis needs food but wants breads, Rice and Pasta
 An American needs food but wants a Big Mac, French
fries, and a soft drink
 Ethiopians needs food but wants DAAFI, Midmida &
red meat
Demand

 Wants are shaped by one’s society and are

described in terms of objects that will satisfy
those needs.
 When backed by buying power, wants
become demands.
 Given their wants and resources, people
demand products with benefits that add up to
the most value of satisfaction
Customer Needs, Wants, and
Demands
Summery

 Marketing is all about creating value for customers.

So, as the first step in the marketing process, the
company must fully understand consumers and the
marketplace in which it operates.
 Discussion Question
– 1) Give an example of a product (good or service) you
purchased recently
– 2) Tell how that product satisfied a need, want or demand.
Market Offerings

 Consumers needs and wants are fulfilled

through market offerings—some combination
of products, services, information, or
experiences offered to a market to satisfy a
need or a want.
 Market offerings also include other entities,
such as persons, places, organizations,
information, and ideas.
Cont…

 Many sellers make the mistake of paying

more attention to the specific products they
offer than to the benefits and experiences
produced by these products. These sellers
suffer from 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 Value and Satisfaction

 Consumers usually face a broad array of

products and services that might satisfy a
given need.
– How do they choose among these many market
offerings?
 Customers form expectations about the value
and satisfaction that various market offerings
will deliver and buy accordingly.
Cont…

 Satisfied customers buy again and tell others about

their good experiences.
 Dissatisfied customers often switch to competitors and
disparage the product to others.
 Marketers must be careful to set the right level of
expectations.
– If they set expectations too low, they may satisfy those who
buy but fail to attract enough buyers.
– If they set expectations too high, buyers will be disappointed.
 Discussion Question
 what are those exceptional value and satisfaction you
gained those purchased items we discussed earlier?
Exchanges and Relationships
 Marketing occurs when people decide to satisfy
their needs and wants through exchange
relationships.
 Exchange is the act of obtaining a desired object
from someone by offering something in return.
 Companies want to build strong relationships by
consistently delivering superior customer value.
Markets

 The concepts of exchange and relationships

lead to the concept of a market.
– A market is the set of actual and potential buyers
of a product or service.
 These buyers share a particular need or
want that can be satisfied through exchange
relationships.
 Figure 1.2 shows the main elements in a marketing
system.
 Marketers are no longer asking only
– “How can we influence our customers?” but also “How can our
customers influence us?” and even “How can our customers
influence each other?”
Summery

 Outstanding marketing companies go to great lengths

to learn about and understand their customers’ needs,
wants, and demands.
 This understanding helps them to design want-
satisfying market offerings and build value-laden
customer relationships by which they can capture
customer lifetime value and greater share of customer.
 The result is increased long-term customer equity for
the firm.
 Cont…

 The core marketplace concepts are FIVE.

– Wants are the form taken by human needs when shaped by
culture and individual personality.
– When backed by buying power, wants become demands.
– Companies address needs by putting forth a value proposition,
a set of benefits that they promise to consumers to satisfy their
needs.
– The value proposition is fulfilled through a market offering, which
delivers customer value and satisfaction, resulting in long-term
exchange relationships with customers.
OBJECTIVE 3:
DESIGNING A CUSTOMER VALUE-DRIVEN
MARKETING STRATEGY

 Discussion Question
– Ask students: describe a market segment you are
a part of for a specific product or services such
as, stationary, athletic or clothing
 Cont…

 Marketing management is the art and science of choosing target

markets and building profitable relationships with them.
– To design a winning marketing strategy, the marketing manager
must answer two important questions
1. What customers will we serve?
2. How can we best serve these customers?
 The marketing manager’s aim is to find, attract, keep, and grow
target customers by creating, delivering, and communicating
superior customer value.
Selecting Customers to Serve

 The compony most first decide whom it will serve.

 It does this by dividing the market into segments of
customers (market segmentation) and selecting
which segments it will go after (target marketing)
 Market segmentation refers to dividing the
markets into segments of customers.
 Target marketing refers to which segments to go
after.
Choosing a Value Proposition

 A brand’s value proposition is the set of

benefits or values it promises to deliver to
customers to satisfy their needs.
 Facebook helps you “connect and share with
the people in your life”
 Discussion Question
– List value propositions your compony offers
Marketing Management
Orientations

 There are five alternative concepts under

which organizations design and carry out
their marketing strategies: the production,
product, selling, marketing, and societal
marketing concepts.
Production concept or Philasophy

 The idea that consumers will favor products

that are available and highly affordable;
therefore, the organization should focus on
improving production and distribution
efficiency.
Product concept or Philosophy

 The idea that consumers will favor products

that offer the most quality, performance,
and features; therefore, the organization
should devote its energy to making
continuous product improvements.
Selling concept or philosophy

 The idea that consumers will not buy enough

of the firm’s products unless the it
undertaking a large scale selling and
promotion effort.
Marketing concept or philosophy

 A philosophy in which achieving

organizational goals depends on knowing
the needs and wants of target markets
and delivering the desired satisfactions
better than competitors do.

 Let’s focus on Marketing and Selling

Philosophy
There are main difference btw
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. This set includes product, price,
promotion, and place.
 An integrated marketing program is a
comprehensive plan that communicates and
delivers the intended value to chosen
customers.
OBJECTIVE: 4
BUILDING CUSTOMER RELATIONSHIPS

 The first three steps in the marketing process—

understanding the marketplace and customer
needs, designing a customer value-driven
marketing strategy, and constructing a
marketing program—all lead up to the fourth
and most important step: building and
managing profitable customer relationships.
Cont….

 Customer relationship management is the

overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction.
– The key to building lasting customer relationships is
to create superior customer value and satisfaction.
– Satisfied customers are more likely to be loyal
customers and give the company a larger share of
their business.
Cont…

 Building Customer Relationships

– Customer Relationship Management
– Engaging Customers
– Partner Relationship Management
 Capturing Value from Customers
– Creating Customer Value Loyalty & Retention
– Growing Share of Customer
– Building Customer Equity
OBJECTIVE 5:
THE CHANGING MARKETING
LANDSCAPE

 There are major trends and forces that are

changing the marketing landscape in this age
of relationships.
 The Changing Marketing Landscape
– The Digital Age
– Not-for-Profit
– Rapid Globalization
– Sustainable Marketing
So, What Is Marketing? Pulling It All
Together
What next!

End
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