Marketing: Creating Customer Value and Engagement Study Guide

Fundamentals of Marketing: Creating Customer Value and Engagement

  • Definition of Marketing:

    • Marketing is the set of strategies and activities by which companies:

      • Acquire and engage customers

      • Build strong customer relationships

      • Create superior customer value

      • Capture value from customers in return

    • Traditional Definition: Marketing is managing profitable customer relationships.

    • Twofold Goal of Marketing (mục tiêu kép):

      1. Attract new customers by promising superior value.

      2. Keep and grow current customers by delivering satisfaction.

The Five-Step Marketing Process

  • Overview: The marketing process is a five-step model designed to create and capture customer value.

  • Step 1: Understand the marketplace and customer needs and wants.

  • Step 2: Design a customer value-driven marketing strategy.

  • Step 3: Construct an integrated marketing program that delivers superior value.

  • Step 4: Engage customers, build profitable relationships, and create customer delight.

  • Step 5: Capture value from customers to create profits and customer equity.

  • Key Distinction / Exam Keywords:

    • Steps 1–4: Create value for customers and build customer relationships.

    • Step 5: Capture value from customers in return.

Understanding the Marketplace and Customer Needs

  • Customer Needs, Wants, and Demands:

    • Needs:

      • States of felt deprivation for basic items such as food and clothing.

      • Five Types of Needs:

        1. Physical needs: Food, clothing

        2. Safety needs: Protection from physical harm and economic threat

        3. Social needs: Love, friendship, belonging

        4. Ego needs: Status, recognition, self-esteem

        5. Self-development needs: Knowledge, achievement, creativity

    • Wants:

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

      • Forces Influencing Wants:

        1. Socio-cultural forces: Reference group, friends, social class, language, region

        2. Institutions: Families, school, business

        3. Individual: Personality, lifestyle

      • Exam Keywords: Shaped by culture + individual personality

    • Demands:

      • Human wants that are backed by buying power. When backed by buying power, wants become demands.

      • Exam Keywords: Wants backed by buying power

  • Market Offerings:

    • Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

    • Marketing Myopia:

      • Paying more attention to specific products than to the benefits and experiences produced.

      • Key Idea: Focus on the product instead of the benefits and experiences.

  • Customer Value and Satisfaction:

    • Customers form expectations about the value and satisfaction of market offerings.

    • Satisfied Customers: Buy again.

    • Dissatisfied Customers: Switch to competitors.

    • Customer Delight: Occurs when perceived performance exceeds expectations.

  • Exchanges and Relationships:

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

    • Marketing actions strive to create, maintain, and grow desirable exchange relationships.

  • Market:

    • A market is the set of actual and potential buyers.

    • Consumers perform marketing activities when they:

      1. Search for products

      2. Interact with companies to obtain information

      3. Make purchases

Managing Customer Relationships and Capturing Customer Value

  • Customer Relationship Management (CRM):

    • The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

    • Customer-Perceived Value:

      • The difference between total customer perceived benefits and customer cost.

      • Customer-Perceived Value=Total Customer Perceived Benefits−Customer Cost\text{Customer-Perceived Value} = \text{Total Customer Perceived Benefits} - \text{Customer Cost}

      • Exam Keywords: Perceived benefits – Customer cost

    • Customer Satisfaction:

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

      • Exam Keywords: Perceived performance matches expectations

  • Customer Engagement Marketing:

    • Fosters direct and continuous customer involvement in shaping brand conversations, experiences, and community.

  • Customer-Generated Marketing:

    • Refers to brand exchanges created by consumers themselves.

    • Consumers increasingly play an active role in shaping brand experiences.

  • Partner Relationship Management:

    • Involves working closely with partners inside the company and outside the company to jointly bring greater value to customers.

Capturing Value from Customers

  • Customer Lifetime Value (CLV):

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

    • Key Idea: Keep customers coming back.

  • Growing Share of Customer:

    • Share of Customer is the portion of the customer's purchasing that a company gets in its product categories.

    • Key Idea: Increase the share of a customer's purchases that the company captures.

  • Building Customer Equity:

    • Customer Equity is the total combined customer lifetime values of all of the company's customers.

    • Key Idea: Increase the long-term value of the company's customer base.

Customer Relationship Groups Framework

  • Classification Criteria:

    • Customers are classified based on Potential Profitability and Projected Loyalty.

  • Group Breakdown & Strategies:

    • Strangers:

      • Potential Profitability: Low

      • Projected Loyalty: Short-term

      • Strategy: No fit – Don't invest

    • Butterflies:

      • Potential Profitability: High

      • Projected Loyalty: Short-term

      • Strategy: Good fit – Capture value quickly – Transactional

    • True Friends:

      • Potential Profitability: High

      • Projected Loyalty: Long-term

      • Strategy: Strong fit – Build strong relationship – Turn into true believers

    • Barnacles:

      • Potential Profitability: Low

      • Projected Loyalty: Long-term

      • Strategy: Limited fit – Highly problematic

  • Decision Logic Rules:

    • High Profitability+Long-Term Loyalty→TRUE FRIENDS\text{High Profitability} + \text{Long-Term Loyalty} \rightarrow \text{TRUE FRIENDS}

    • High Profitability+Short-Term Loyalty→BUTTERFLIES\text{High Profitability} + \text{Short-Term Loyalty} \rightarrow \text{BUTTERFLIES}

    • Low Profitability+Long-Term Loyalty→BARNACLES\text{Low Profitability} + \text{Long-Term Loyalty} \rightarrow \text{BARNACLES}

    • Low Profitability+Short-Term Loyalty→STRANGERS\text{Low Profitability} + \text{Short-Term Loyalty} \rightarrow \text{STRANGERS}

The Changing Marketing Landscape

  • Five Major Trends and Forces:

    1. Digital Age

    2. Changing Economic Environment

    3. Growth of Not-for-Profit Marketing

    4. Rapid Globalization

    5. Sustainable Marketing

  • 1. The Digital Age: Online, Mobile, and Social Media Marketing:

    • Internet of Things (IoT): Environment where everything is connected to everything else.

    • Digital and Social Media Marketing: Utilizing digital marketing tools (websites, social media, mobile ads and apps, online videos, email, blogs) to engage consumers anywhere, at any time, via digital devices.

    • Social Media: Provides opportunities to extend customer engagement and get people talking about a brand.

    • Mobile Marketing: Utilizing mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience.

    • Big Data and Artificial Intelligence (AI):

      • Big Data: Enables brands to gain deep customer insights, personalize marketing offers, and improve customer engagement and service.

      • Artificial Intelligence (AI): Technology involving machines that think and learn like humans.

    • Online Brand Communities: Digital spaces where customers can ask questions, share ideas and reviews, post photos, and get advice and inspiration from other enthusiasts.

  • 2. Changing Economic Environment:

    • Focuses on delivering value and encouraging sensible consumption.

  • 3. Growth of Not-for-Profit Marketing:

    • Sound marketing techniques assist non-profit organizations in attracting membership, funds, and support.

  • 4. Rapid Globalization:

    • Managers globally take both local and global views of the company's industry, competitors, and opportunities.

  • 5. Sustainable Marketing:

    • Corporate ethics and social responsibility are vital for modern businesses.

    • Consumers expect marketers to be socially and environmentally responsible.

    • Key Idea: Call for increased environmental and social responsibility.

Key Multiple-Choice Concepts

  • Market Segmentation:

    • Dividing the market into various groups of customers is known as market segmentation.

  • Artificial Intelligence:

    • The technology that involves machines that think and learn like humans is known as artificial intelligence (AI).

  • Primary Marketing Goal:

    • Marketing creates superior customer value in order to capture value from customers in return.

Comprehensive Summary Checklist

  • Fundamentals & Process:

    • Definition of Marketing & Twofold Goal

    • 5-step Marketing Process (Steps 1–4 create value; Step 5 captures value)

  • Marketplace & Customer Understanding:

    • Needs (Physical, Safety, Social, Ego, Self-development)

    • Wants (Shaped by culture + individual personality)

    • Demands (Wants backed by buying power)

    • Market Offerings & Marketing Myopia

    • Customer Value, Satisfaction, and Customer Delight

    • Exchanges, Relationships, and Definition of a Market

  • Relationship Management & Value Capture:

    • Customer Relationship Management (CRM)

    • Customer-Perceived Value & Customer Satisfaction

    • Customer Engagement Marketing & Customer-Generated Marketing

    • Partner Relationship Management

    • Customer Lifetime Value (CLV)

    • Share of Customer

    • Customer Equity

    • Customer Relationship Groups Matrix (Strangers, Butterflies, True Friends, Barnacles)

  • Modern Marketing Landscape:

    • Digital Age (IoT, Social Media, Mobile, Big Data, AI, Online Communities)

    • Changing Economic Environment

    • Growth of Not-for-Profit Marketing

    • Rapid Globalization

    • Sustainable Marketing (Environmental and Social Responsibility)