Chapter 1 – Marketing: Creating Customer Value and Engagement (Revision)

Chapter Objectives

  1. Define marketing and outline the steps in the marketing process.
  2. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts.
  3. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.
  4. Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
  5. Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

What is Marketing?

  • Simple definition: Marketing is managing profitable customer relationships.
  • Marketing is all around you: product variety, TV advertisements, websites, magazine ads, news, websites, chat rooms, social networks, and mobile apps.
  • Marketers aim to enrich your experience and help you live their brands.
  • Where: Home, university, work, recreation, etc.

Marketing Defined

  • Marketing is not only selling and advertising.
  • The old sense of making a sale – ‘telling and selling’ vs. satisfying customer needs.
  • If the marketer understands customer needs; develops products that provide superior customer value, prices, distributes, and promotes them effectively, these products will sell easily.
  • Management guru Peter Drucker: “The aim of marketing is to make selling unnecessary”.
  • Selling and advertising are part of a larger ‘marketing mix’.
  • Marketers can be seen as planners and designers of a complete product or service, while salespeople close the deals.
  • Definition: Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

The Marketing Process (figure 1.1, page 30)


figure 1-1
Figure 1.1 – The Marketing Process: Creating and Capturing Customer Value

Understanding the Marketplace and Customer Needs

Five core customer and marketplace concepts:

  1. Needs and wants
  2. Market offerings (products, services, and experiences)
  3. Value and satisfaction
  4. Exchanges and relationships
  5. Markets

1.      Customer Needs, Wants, and Demands

  • Needs: States of felt deprivation.
    • Physical needs: food, clothing, warmth, and safety.
    • Social needs for belonging and affection.
    • Individual needs for knowledge and self-expression.

These needs were not created by marketers; they are a basic part of the human makeup.

  • Wants: The form human needs take as they are shaped by culture and individual personality.
    Ex: Children need food but want a Big Mac, French fries, and a soft drink.
    A health-aware person needs food but wants a grilled chicken breast with veggies.
  • Demands: Human wants that are backed by buying power.

2.      Market Offerings – Products, Services, and Experiences.

  • Customer needs and wants are fulfilled through market offerings – some combination of products, services, information, or experiences.
    • Physical products: soft drink, car, gift, etc.
    • Services: Activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything.
      Ex: Banking, airline, hotel, beauty parlor, and home repair services.
    • Other entities:
      • Persons: politicians, athletes, artists, etc.
      • Places: Tourist sites
      • Organizations: NGOs like CCCL or Beirut Marathon Association.
      • Information: Google, Zomato, Maps
      • Ideas: Advertising agencies
    • 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.
      Ex: Advanced remote controls, high-consumption cars.
    • Experiences: Dip’n’Dip, Classico, Formula 1, HP.

3.      Customer Value and Satisfaction

  • Customers face a variety of competing products and services.
  • They form expectations about the value delivered and buy accordingly.
  • Satisfied customers buy again and tell people about their positive experiences.
  • Dissatisfied customers often switch to competition and tell about their dissatisfactory experiences.
  • Setting the right level of expectation
  • Set expectations too low, satisfy current buyers but fail to attract new ones.
  • Set expectations too high, you might disappoint.

4.      Exchanges and Relationships

  • Exchange: The act of obtaining the desired object from someone by offering something in return.
    • Ex: Companies want sales
    • Politicians want votes
    • An orchestra wants an audience
    • A social action group wants acceptance.
  • Beyond attracting customers and creating transactions, marketers seek long-term relationships by continuously delivering superior value.

5.      Markets

  • Market: The set of all 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
Figure 1.2 – A Modern Marketing System

Designing a Customer Value – Driven Marketing Strategy and Plan

Customer Value – Driven Marketing Strategy

Marketing Management is the art and science of choosing markets and building profitable relationships with them. The marketing manager’s aim is to engage, keep, and grow target customers by creating, delivering, and communicating superior customer value.

To design a winning strategy, the marketing manager must answer two important questions:

  1. What customers will we serve (what’s our target market)?
  2. How can we serve these customers best (what’s our value proposition)?

Selecting Customers to Serve

The company must decide whom it will serve by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing).

Marketing managers know that they cannot serve all customers in every way. By trying to serve all customers, they may not serve any customers well. Instead, the company selects only customers that it can serve well and profitably.

Ultimately, marketing managers must decide which customers they want to target and on the level, timing, and nature of their demand. Simply put, marketing management is customer management and demand management.

Choosing a Value Proposition

In order to serve its target market well, the company must decide how it will differentiate and position itself in the marketplace.

A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. These propositions answer the customer’s question: “Why should I buy your brand rather than a competitor’s?”. Hence, designing strong value propositions would strengthen the company’s position against competition.

Marketing Management Orientations (p.35)

1. The Production ConceptBic Pens

The idea that consumers will favor products that are available and highly affordable and that the organization should, therefore, focus on improving production and distribution efficiency. Ex: Bic pens.

2. The Product ConceptRemote Controller

The idea that consumers will favor products that offer the best quality, performance, and features and that the organization should, therefore, devote its energy to making continuous product improvements. Ex: advanced remote controllers

3. The Selling ConceptInsurance salesman

The idea that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promoting efforts. Ex: Insurance or blood donations (unsought products).

4. The Marketing Concept

The marketing management philosophy that holds achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

figure 1-3
figure 1.3 – Selling Concept vs Marketing Concept

5. The Societal Marketing Concept

The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests.

The Societal Marketing Concept
Three Considerations Underlying the Societal Marketing Concept


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s