Marketing: creating and capturing customer value

1. Topic One: Introduction Marketing: creating and capturing customer value

2. Objectives • Course Organization • Tasks of Marketing • Major Concepts & Tools of Marketing • Marketplace Orientations • Marketing’s Responses to New Challenges

3. Course/Text Organization • Part I - Understanding Marketing • Part II - Analyzing Marketing Opportunities • Part III - Identifying customer value • Part IV - Creating the Market Offering • Part V - Delivering and communicating Market Offering

4. Defining Marketing Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. - Philip Kotler (p. 7)

5. Core Concepts of Marketing Target Markets & Segmentation Needs, Wants, and Demands Product or Offering Value and Satisfaction Exchange and Transactions Relationships and Networks Marketing Channels Supply Chain Competition Marketing Environment

6. Communication Industry (a collection of sellers) Market (a collection of Buyers) Information Simple Marketing System Goods/services Money

7. Resources Resources Resource markets Money Money Services, money Taxes, goods Services, money Taxes Government markets Consumer markets Taxes, goods Services Services, money Taxes, goods Money Money Intermediary markets Goods, services Goods, services Structure of Flows Manufacturer markets

8. Place Product Price Promotion The Four Ps The Four Cs Marketing Mix Conven- ience Customer Solution Customer Cost Communication

9. Company Orientations Towards the Marketplace Consumers prefer products that are widely available and inexpensive Production Concept • Consumers favor products that • offer the most quality, performance, • or innovative features Product Concept Consumers will buy products only if the company aggressively promotes/sells these products Selling Concept Focuses on needs/ wants of target markets & delivering value better than competitors Marketing Concept

10. Starting point Focus Means Ends Factory Existing products Selling and promotion Profits through sales volume (a) The selling concept Market Customer needs Integrated marketing Profits through customer satisfaction (b) The marketing concept Customer Delivered Value

11. Traditional Organization Chart Top Management Middle Management Front-line people Customers

12. Customers Front-line people Middle management Customers Customers Top manage- ment Customer-Oriented Organization Chart

13. Finance Production Production Finance Human resources Human resources Marketing Marketing a. Marketing as an equal function b. Marketing as a more important function Evolving Views of Marketing’s Role

14. Production Production Finance Customer Marketing Human resources Human resources Finance Marketing c. Marketing as the major function d. The customer as the controlling factor Evolving Views of Marketing’s Role

15. Production Marketing Customer Human resources Finance e. The customer as the controlling function and marketing as the integrative function Evolving Views of Marketing’s Role

16. Image value Personnel value Total customer value Services value Product value Customer delivered value Monetary cost Time cost Total customer cost Energy cost Psychic cost Determinants of Customer Delivered Value

17. Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.

18. Satisfied Customers: • Are loyal longer • Buy more (new products & upgrades) • Spread favorable word-of-mouth • Are more brand loyal (less price sensitive) • Offer feedback • Reduce transaction costs

19. Capturing value from customers • Building customer relationship • Creating customer loyalty and retention • Customer lifetime value • Growing share of customer • share of customer • Building customer equity • customer equity: the total combined customer lifetime values of all of the company’s customers.