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Chapter 1 (Creating and Capturing Customer Value)

by: Aakash Lulla

Chapter 1 (Creating and Capturing Customer Value) MKTG2080

Marketplace > University of Cincinnati > MKTG2080 > Chapter 1 Creating and Capturing Customer Value
Aakash Lulla
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About this Document

The following document was made after collating information from the first chapter of the marketing textbook. It contains all the essential and important information from the first chapter in detai...
Introduction to Marketing
Jane Sojka
Class Notes
Intro to Marketing, customer value




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This 4 page Class Notes was uploaded by Aakash Lulla on Monday September 12, 2016. The Class Notes belongs to MKTG2080 at University of Cincinnati taught by Jane Sojka in Fall 2016. Since its upload, it has received 253 views.


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Date Created: 09/12/16
Chapter 1 (Creating and Capturing Customer Value) - Marketing is the process by which companies create valuefor customers and build strong customer relationships in order to capture value (usuallyinthe form of money) from customers in return. - A management guru Peter Drucker defined the aimof marketing as “tomake selling unnecessary.” The Marketing Process: 1. Understand the marketplace and customer needsand wants. 2. Designa customer-driven marketing strategy. 3. Construct anintegrated marketing program that deliverssuperior value. 4. Buildprofitable relationships and createcustomer delight. 5. Capturevaluefromcustomerstocreate profits and customer equity. Understand the Marketplace and Customer Needs and Wants Needsinclude physical,social andindividual needs: o Examples of physical needsare: food, clothing, warmth & safety. o Examples of social needs are: needs for belonging &affection. o Examples of individual needsare: needs for knowledge & self-expression. Wantsis theform that human needs take as they get shapedand influenced by culture and individual personality. Wants are shapedby one’s society. Demandsare human wants that arebacked by purchasing/buying power. Market Offeringsaresome combination of products, services,information or experiences offered to a market to satisfya need or want. Marketing Myopia is themistake ofpaying more attention to the specific products a company offers than to the benefits and experiences produced by theseproducts. * In terms of marketing, a Market is thesetof all actual and potential buyers of a product or service. Designing a customer-driven marketing strategy Marketing Management istheart and scienceofchoosing target markets and building profitable relationships with them. The marketing manager’s aimis to find, attract,keep, and grow target customers by creating, delivering,and communicating superior customer value. [Type here]  Marketing Management Orientations o ProductionConcept istheidea that consumers will favor products that are availableandhighly affordable; therefore, the organization should focus on improving production and distribution efficiency. (In some situations,the production concept could leadto marketing myopia). o Product Conceptis theidea that consumers will favor products that offer the most quality, performance, and features; therefore, the organization should devote its energy to making continuous product improvements. (This concept alsoleads to marketing myopia if the company focuses only on its products). o Selling Concept is theidea that consumers will not buy enough of the firm’s products unless the firm undertakes a large-scalesellingandpromotion effort. (Focuses more on creating sales transactions rather than on building long-term, profitable customer relationships). o Marketing Concept is theidea thatachieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactionbetter than competitors do. [Customer focus and value are the paths to sales andprofits (capturing value in return)]. o SocietalMarketing Concept is theidea thata company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests,and society’slong-run interest. (Focuses on creating economic valuein a way that alsocreates valuefor society). See figure 1.3 andfigure 1.4 in the Marketing Textbook (Page 11 & 12respectively) Preparing anIntegrated Marketing Plan and Program (that deliverssuperior value) The major marketing mix tools are classifiedinto4P’s that are: 1. Product (A need-satisfying market offering) 2. Price (how much) 3. Place(how will itbe made availableto target consumers) 4. Promotion (Persuade target consumers, i.e.Sales &Advertising) Building ProfitableCustomer Relationships Customer Relationship Management is theoverall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. (Deals withacquiring, keeping and growing customers). Customer-Perceived Value is thecustomers’ evaluation of the difference between all the benefits and all the costs ofa marketing offer relative to those of competing offers. (Basically,whyone company in the same market over the other). Customer Satisfaction is theextent to which a products perceived performance matches a buyer’s expectations. (Smart companies aim to delight customers by promising only what they candeliver and then delivering more than they promised) Customer-Engagement Marketing refers tomaking the brand a meaningful part of consumers’ conversations and lives byfostering direct and continuous customer involvement inshaping brand conversations, experiences,and community. Consumer-Generated Marketing exists whenconsumers willinglyadvertisea company’s products in the form of social media,blogs and other digital platforms. Partner Relationship Management refers toworking closelywith partners in other company departments and outside the company to jointly bring greater value to customers. Capturing Value from Customers Customer LifetimeValue is thevalue of the entire streamof purchases a customer makes over a lifetime of loyalty. *Good customer relationship management creates customer satisfaction.Inturn, satisfied customers remain loyal and talkfavorably to other about the company and its products. Even a slightdrop from complete customer satisfactioncancreateenormous drop in loyalty. Researchshows,it is 5times cheaper to keep an old customer than acquire a new one. (An Amazon Prime Member is about 8times more valuable to Amazon than a non- Prime Member) ShareofCustomer is the portion of the customer’s purchasing that a company gets in its product categories. Customer Equity is thetotal combined customer lifetime values of all the company’s customers. (Customer equity may be a better measure of a firm’s performance than current sales ormarket value) See figure 1.5 in the Marketing Textbook andread Page 23(Building the Right Relationships with the Right Customers) Digital & Social Media Marketing refers to makinguse of digital marketingtools suchas websites,mobile apps,socialmedia etc. that engage consumers anywhere at anytime, via their digital devices) See figure 1.6 in the Marketing Textbook (Page 29) Additional Advice: I recommend reading through some of the casestudies inthe chapter as they help in understanding the different concepts present in the book much better and alsohelp widen your perspective on pastmarketing practices and how it has and continues to influence current marketing practices. - AakashLulla


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