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Marketing: Creating and Capturing Customer Value


Marketing: Creating and Capturing Customer Value Market & Product A market is the set of actual and potential buyers of a product. These buyers share a particular ... – PowerPoint PPT presentation

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Title: Marketing: Creating and Capturing Customer Value

Marketing Creating and Capturing Customer Value
Chapter 1
Market Product
  • A market is the set of actual and potential
    buyers of a product. These buyers share a
    particular need or want that can be satisfied
    through exchange relationships.
  • Product (Marketing Offer) physical product,
    service, information, experience, person, place,
    organization, and ideas.

Examples of Product
National Milk Processors Education Program
Definition of Marketing
  • Marketing is the process of planning and
    executing the conceptions, pricing, promotion and
    distribution of ideas, goods, and services to
    create exchanges that satisfy individual and
    organizational goals. (AMA)
  • Marketing is meeting needs profitably.

Marketing Philosophy
  • The Production Concept
  • The Product Concept
  • The Selling Concept
  • --------------------------------------------------
  • The Marketing Concept
  • The Customer Concept
  • The Societal Marketing Concept

The Production Concept
  • The idea that consumers will favor products that
    are widely available and highly affordable.
  • Focus achieving high production efficiency, low
    costs, and mass distribution.
  • It is useful when (1) the demand for a product
    exceeds the supply (2) the products cost is too
  • Examples Fords Model-T, standard raw materials
    and components, CD, LCD.

The Product Concept
  • The idea that consumers will favor products that
    offer the most quality, performance, and
  • Focus making superior products and improving
    them over time.
  • Examples Digital Camera, CPU.
  • Better Mousetrap Fallacy
  • Marketing Myopia (Theodoes Levitt, 1960)

Product-Oriented vs. Market-Oriented Definition
Company Product-Oriented Definition Market-Oriented Definition
Disney We run theme parks. We create fantasies a place where America still works the way its supposed to.
Nike We sell shoes. We help people experience the emotion of competition, winning, and crushing competitors.
Revlon We make cosmetics. We sell lifestyle and self-expression success and status memories, hopes, and dreams.
The Selling Concept
  • The idea that consumers will not buy enough of
    the firms products unless it undertakes a
    large-scale selling and promotion effort.
  • Sergio Zyman (Coca-Colas former vice president
    of marketing) the purpose of marketing is to
    sell more stuff to more people more often for
    more money to make more profit.

The Selling Concept
  • Focus undertake an aggressive selling and
    promotion effort.
  • Examples unsought goods (e.g. funeral plots,
    encyclopedias, and foundations), election.
  • The selling concept assumes that customers who
    are coaxed into buying the product will like it.
    Or, if they dont like it, they will possibly
    forget their disappointment and buy it again

The Marketing Concept
  • The key to achieving its organizational goals
    consists of the company being more effective than
    competitors in creating, delivering, and
    communicating superior customer value to its
    chosen target markets.
  • Slogans Find wants and fill them, Love the
    customer, not the product, and We do it all for
    you (Toyota).

Contrasts Between the Sales Concept and the
Marketing Concept
  • Theodore Levitt selling focuses on the needs of
    the seller marketing on the needs of the buyer.
  • Selling the manufacturer This is what I make,
    wont you please buy it marketing the
    consumer This is what I want, wont you please
    make it
  • Selling inside-out perspective marketing
    outside-in perspective.

Contrasts Between the Sales Concept and the
Marketing Concept
The Marketing Concept
  • Four pillars
  • Target market
  • Customer needs
  • Integrated marketing
  • Profitability.

Target Market
  • Companies do best when they choose their target
    market(s) carefully and prepare tailored
    marketing program.

Case Veterinary Pet Insurance
  • Facts
  • More than 60 of all U.S. households own one dog
    or one cat or both.
  • There are more than 60 million dogs, 68million
    cats, and 2 million rabbits in U.S..
  • Spend 28.5 billion a year on the pets.
  • Nearly 75 of pet owners are willing to go into
    debt to pay for veterinary care.
  • Sales have grown 40 in each of the past year,
    reaching nearly 72million last year.

Customer Needs
  • Five types of needs
  • Stated needs, e.g. the customer wants an
    inexpensive car.
  • Real needs, e.g. the customer wants a car whose
    operating cost, not its initial price, is low.
  • Unstated needs, e.g. the customer expects good
    service from the dealer.
  • Delight needs, e.g. the customer would like the
    dealer to include an onboard navigation system.
  • Secret needs, e.g. the customer wants to be seen
    by friends as a savvy consumer.

Customer Needs
  • Responsive, anticipative, and creative marketing
  • A responsive marketer finds a stated need and
    fills it.
  • An anticipative marketer looks ahead into what
    needs customers may have in the near future.
  • A creative marketer discovers and produces
    solutions customers did not ask for but to which
    they enthusiastically respond.
  • Akio Morita once proclaimed that Sony doesnt
    serve markets Sony creates markets. The Walkman
    is a classic example.
  • 3M Our goal is to lead customers where they
    want to go before they know where want to go.

Marketing Debate
Does Marketing Create or Satisfy Needs? Take a
position Marketing shapes consumer needs and
wants versus Marketing merely reflects
the needs and wants of consumers.
Integrated Marketing
  • When all the companys departments work together
    to serve the customers interests, the result is
    integrated marketing.
  • Two levels
  • Integrating the various marketing functions.
  • Integrating marketing with other departments
    (production, finance, human resource).
  • External marketing and Internal marketing

The Four P Components of the Marketing Mix
Marketing-Mix Strategy
The Customer Concept
The Societal Marketing Concept
  • A principle of enlightened marketing that holds
    that a company should make good marketing
    decisions by considering consumers wants, the
    companys requirements, consumers long-run
    interests, and societys long-run interests.
  • Examples Body Shop, HSBC, Dell Asia, Bata
  • Johnson Johnsons Tylenol (240 million), ?????
    (NT 120 million), ??????.

Earth Tree
  • ???????????????,??????????????????????????,???????
  • ????Fair Trade?????,??????????????,???????,???????

Needs, Wants and Demands
  • Needs (??) the basic human requirements.
  • Physical food, clothing, shelter, safety
  • Social belonging, affection
  • Individual learning, knowledge, self-expression
  • Wants (??) when needs are directed to specific
    objects that might satisfy the need.
  • Demands (??) wants for specific products backed
    by an ability to pay.

Demand States and Marketing Tasks
  • Marketing managers are responsible for demand
  • Negative Demand ? Counter Marketing, e.g.
  • No Demand ? Stimulus, e.g. encyclopedias.
  • Latent Demand ? Developing, e.g. iPod ??????
  • Declining Demand ? Remarketing, e.g. Arm
    Hammers baking soda ? deodorizer school.

Demand States and Marketing Tasks
  • Marketing managers are responsible for demand
  • Irregular Demand ? Synchromarketing (????), e.g.
    ice cream museum.
  • Full Demand ? Maintain Marketing
  • Overfull Demand ? Demarketing (???), e.g. Mister
    Donut ??????.
  • Unwholesome Demand ? Social Marketing, e.g.
    cigarettes drunk-driving seat belt anorexia.

Customer Relationship Management (CRM)
  • The overall process of building and maintaining
    profitable customer relationships by delivering
    superior customer value and satisfaction.
  • On average, it costs 5 to 10 times as much to
    attract a new customer as it does to keep a
    current customer satisfied. (Sears 12 times)

Customer Lifetime Value and Equity
  • Customer lifetime value the value of the entire
    stream of purchases that the customer would make
    over a lifetime of patronage.
  • Lexus 600,000 Taco Bell 12,000 Supermarket
  • Customer equity the total combined customer
    lifetime values of all of the companys
  • Cadillac vs. BMW

Selective Relationship Management
  • Weed out losing customers and target winning ones
    for pampering.
  • Examples Citibank First Chicago Bank Fidelity
  • Risk future profits are hard to predict.

Selective Relationship Management
  • ????(Southwest Airlines)??????,?????????????,?????
    ,???????????,??????????Herb Kelleher?Kelleher???,?

????????? ??????? (p. 42, December 2007)
Customer Relationship Groups
Share of Customer
  • The portion of the customers purchasing in its
    product categories that a company gets.
  • Methods to increase share of customer
  • Offer greater variety to current consumers
  • Train employees to cross-sell and up-sell in
    order to market more products and services to
    existing customers.
  • Amazon books, music, videos, gifts, toys,
    consumer electronics, office products, and so on.

Customer Satisfaction
  • The extent to which a products perceived
    performance matches a buyers expectation.
  • Smart companies aim to delight customers by
    promising only what they can deliver, then
    delivering more than they promise.
  • Examples Lexus Southwest Airlines Seasons
    Hotels Nordstrom department store.

Satisfying Customer Complaints
  • Rate of dissatisfaction 25 rate of complaint
    in dissatisfaction 5.
  • 50 of complaints report a satisfactory problem
  • Examples Williams-Sonoma Enterprise Rent-A-Car.
  • On average, satisfied ?3 people, and dissatisfied
    ? 11 people.

  • ??????? Customer lifetime value?
  • ?????????????????????,?????????????
  • ??????,????????????????????????
  • ???????????,????????????????????

????????? ??????? (p. 44, December 2007)
Satisfying Customer Complaints
  • Rate of complainant repurchase

Resolved Resolved quickly
Major complaints 34 52
Minor complaints 52 95
Customer Relationship Levels and Tools
  • Level of relationship basiclt reactive (e.g.
    PG)ltaccountableltproactiveltpartnership (e.g.
  • Tools
  • Add financial benefits, e.g. frequent-flier
  • Add social benefits, e.g. club marketing program.
  • Add structural ties, e.g. McKesson FedEx.

Levels of Relationship Marketing
High margin Medium margin Low Margin
Many customers/ distributors Accountable Reactive Basic or reactive
Medium number of customers/ distributors Proactive Accountable Reactive
Few customers/ distributors Partnership Proactive Accountable
  • Harley Owners Group (H.O.G.)
  • H.O.G. benefits include Hog Tales, a touring
    handbook, emergency road service, a specially
    designed insurance program, theft reward service,
    discount hotel rates, and a Fly Ride program.
  • The company also maintains an extensive Web site
    devoted to H.O.G., which includes information on
    club chapters, events, and a special members-only

Discussion Question
In 1981, American Airlines first introduced the
AADVANTAGE frequent-flier program. When other
airlines copied this strategy, did they engage in
the prisoners dilemma?
Prisoners Dilemma
Player 1 ? Player 2 Cooperate Fink
Cooperate 2, 2 -3, 3
Fink 3, -3 -2, -2
Discussion Question
How can the firms escape from the prisoners
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