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Chapter One: Marketing - Creating and Capturing Customer Value

1. Overview of Marketing

  • Definition of Marketing:

    • A process by which companies create value for customers and build strong customer relationships to capture value in return.

2. Understanding the Marketplace and Customer Needs

  • Core Concepts:

    • Customer needs, wants, and demands:

      • Needs are basic human requirements; wants are the form that needs take; demands are wants backed by buying power.

    • Market offerings:

      • Combinations of products, services, information, or experiences meant to satisfy needs or wants.

    • Value and satisfaction:

      • Value calculated as Benefits/Costs.

      • Benefits can be functional and emotional. Costs include monetary, time, energy, and psychic costs.

    • Exchanges and relationships:

      • Exchange is obtaining a desired object from someone by offering something in return.

    • Markets:

      • Defined as actual and potential buyers of a product.

3. Designing a Customer-Driven Marketing Strategy

  • Marketing Management:

    • Art and science of choosing target markets and building profitable relationships.

    • Key Questions:

      • What customers will be served?

      • How can we best serve these customers?

  • Market Segmentation:

    • Dividing the market into segments of customers.

  • Target Marketing:

    • Choosing which segments to pursue.

  • Demarketing:

    • A strategy to temporarily or permanently reduce demand without destroying it.

  • Value Proposition:

    • The set of benefits or values promised to deliver to satisfy customer needs.

4. Marketing Management Orientations

  • Production Concept:

    • Focuses on production efficiency and availability.

  • Product Concept:

    • Emphasizes quality, performance, and features.

  • Selling Concept:

    • Belief that consumers will not buy unless there's a significant selling effort.

  • Marketing Concept:

    • Focuses on satisfying customer needs and wants better than competitors.

  • Societal Marketing Concept:

    • Decisions should consider consumer wants, company requirements, long-term consumer interests, and society’s interests.

5. Preparing an Integrated Marketing Plan and Program

  • Marketing Mix:

    • Set of tools (4Ps: product, price, promotion, place) used to implement strategies.

  • Integrated Marketing Program:

    • A comprehensive plan to communicate and deliver intended value to customers.

6. Building Customer Relationships

  • Customer Relationship Management (CRM):

    • Process of building and maintaining profitable customer relationships.

  • Key Components:

    • Delivering superior customer value and satisfaction.

  • Relationship Building Blocks:

    • Focus on customer value and satisfaction.

7. Changing Nature of Customer Relationships

  • Selective Relationship Management:

    • Targeting fewer, more profitable customers.

  • Interactive Relationships:

    • Two-way communication through digital platforms, fostering engagement.

  • Partner Relationship Management:

    • Collaboration with company's internal departments and external partners to enhance value delivery.

  • Supply Chain:

    • A network stretching from raw materials to final products.

8. Capturing Value from Customers

  • Customer Lifetime Value:

    • Total stream of purchases a customer makes over a lifetime.

  • Share of Customer:

    • Portion of a customer’s purchasing within a category that a company secures.

  • Customer Equity:

    • Total combined customer lifetime values for all customers.

  • Strategic Relationship Management:

    • Treatments of customers as assets, requiring tailored strategies.

9. The Changing Marketing Landscape

  • Major Developments:

    • Continuous evolution necessitates adaptation for companies to sustain customer value and competitiveness.