Chapter 1 - Marketing Creating customer and Engagement PDF

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PrinciplesofMarketing GlobalEdition

Marketing: CreatingCustomerValueandEngagement

OBJECTIVE#1

KotlerandArmstrong

WhatisMarketing?

Chapter1:

•Definemarketingandoutlinethestepsinthe marketingprocess. WhatIsMarketing?

Marketing CreatingCustomerValue andEngagement

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Marketing: CreatingCustomerValueandEngagement

Marketing: CreatingCustomerValueandEngagement

WhatIsMarketing?

OBJECTIVE#2 Step1:UnderstandingtheMarketplaceandCustomerNeeds

MarketingDefined

Marketing is aprocessbywhichcompanies createvalueforcustomersandbuildstrong customerrelationshipsinordertocapture value fromcustomersinreturn.

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Explaintheimportanceofunderstandingthe marketplaceandcustomersandidentifythefive coremarketplaceconcepts. • CustomerNeeds,Wants,andDemands • MarketOfferings– Products,Services,and Experiences • CustomerValueandSatisfaction • ExchangesandRelationships • Markets Copyright©2016PearsonEducation,Inc.

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Marketing: CreatingCustomerValueandEngagement UnderstandingtheMarketplaceandCustomerNeeds

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

1.CustomerNeeds,Wants,andDemands

Needs

• Statesofdeprivation

Wants

• Formthatneedstake

Demands

• Marketofferingsaresome combinationofproducts, services,information,or experiencesofferedtoamarket tosatisfyaneedorwant. • Marketingmyopiaisfocusing onlyonexistingwantsand losingsightofunderlying consumerneeds.

• Wantsbackedbybuyingpower Copyright©2016PearsonEducation,Inc.

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Marketingexperiences: •More than just a mobile game app, Angry Birds is “a digital immersion in addictively cheerful destruction.” Creator Rovio plans to expand the Angry Birds experience through animated videos, licensed products, and even Angry Birds‐branded playgrounds and activity parks.

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Marketing: CreatingCustomerValueandEngagement UnderstandingtheMarketplaceandCustomerNeeds

•Many sellers suffer from marketing myopia, the mistake of paying more attention to the specific products they offer than to the benefits and experiences produced by these products.

3.CustomerValueandSatisfaction Customers • Valueand satisfaction

•Smart marketers orchestrate several services and products, thereby creating brand experiences for consumers.

Marketers • Settheright levelof expectations

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Marketing: CreatingCustomerValueandEngagement UnderstandingtheMarketplaceandCustomerNeeds

Marketing: CreatingCustomerValueandEngagement UnderstandingtheMarketplaceandCustomerNeeds

4.ExchangesandRelationships

5.Markets

Exchange istheactofobtainingadesiredobject fromsomeonebyofferingsomethinginreturn. Marketingactionstrytocreate,maintain,andgrow desirableexchangerelationships.

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Marketing: CreatingCustomerValueandEngagement

OBJECTIVE#3

Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

Step2:DesigningaCustomerValue‐DrivenMarketingStrategy

SelectingCustomerstoServe

• Identifythekeyelementsofacustomer‐drivenmarketing strategyanddiscussthemarketingmanagement orientationsthatguidemarketingstrategy. DesigningaCustomerValue‐DrivenMarketingStrategy

Marketingmanagementistheartandscienceof choosingtargetmarketsandbuildingprofitable relationshipswiththem.

‐ SelectingCustomers ‐ ChoosingaValueProposition

•Whatcustomerswillweserve? •Howcanwebestservethesecustomers?

‐ MarketingManagementOrientations

PreparinganIntegratedMarketingPlanandProgram

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Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

SelectingCustomerstoServe

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Positioning ositioning(P) (P) •Thecompanymustdecidehowitwill servetargetedcustomers—howitwill differentiateandpositionitselfinthe marketplace.

Marketsegmentation(S)referstodividingthe marketsintosegmentsofcustomers. Targetmarketing(T)referstowhichsegmentstogo after.

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Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

ChoosingaValueProposition

•Value proposition: Vine gives you “the best way to see and share life in motion” through “short, beautiful, looping videos in a simple and fun way for your friends and family to see.”

A brand’s value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs.

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Moree Moreexxamples: •BMWpromises“theultimatedrivingmachine” •NissanLeafelectriccaris“100%electric.Zerogas. Zerotailpipe.” •NewBalance’sMinimusshoesare“likebarefoot onlybetter.” •Vibram FiveFingers shoes:“Youarethe technology.” •Facebookhelpsyou“connectandsharewiththe peopleinyourlife” •YouTube“providesaplaceforpeopletoconnect, inform,andinspireothersacrosstheglobe.”

•Value propositions differentiate one brand from another. They answer the customer’s question, “Why should I buy your brand rather than a competitor’s?” Companies must design strong value propositions that give them the greatest advantage in their target markets.

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Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

MarketingManagementOrientations

MarketingManagementOrientations

Production concept

Product concept

Selling concept

Marketing concept

Societal Marketing concept

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• The production concept is still a useful philosophy in some situations. For example in the highly competitive, price‐sensitive Chinese market, both personal computer maker Lenovo and home appliance maker Haier dominate through low labor costs, high production efficiency, and mass distribution. • However, although useful in some situations, the production concept can lead to marketing myopia and losing sight of the real objective—satisfying customer needs and building customer relationships. 23 Copyright © 2016 Pearson Education, Inc.

1.Productionconcept: Consumerswillfavorproductsthatareavailableand highlyaffordable. 2.Productconcept: Consumersfavorproductsthatofferthemostquality, performance,andfeatures.Thefocusison continuousproductimprovements. Copyright©2016PearsonEducation,Inc.

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• Product quality and improvement are important parts of most marketing strategies. However, focusing only on the company’s products can also lead to marketing myopia. For example, some manufacturers believe that if they can “build a better mousetrap, the world will beat a path to their doors.” But they are often rudely shocked. Buyers may be looking for a better solution to a mouse problem but not necessarily for a better mousetrap. The better solution might be a chemical spray, an exterminating service, a house cat, or something else that suits their needs even better than a mousetrap.

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Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages, and prices it attractively; places it in convenient distribution channels; brings it to the attention of people who need it; and convinces buyers that it is a better product.

Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

MarketingManagementOrientations 3.Sellingconcept: Consumerswillnotbuyenoughofthefirm’sproducts unlessthefirmundertakesalarge‐scalesellingand promotioneffort. 4.Marketingconcept: Knowtheneedsandwantsofthetargetmarketsand deliverthedesiredsatisfactionsbetterthan competitors.

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• Such aggressive selling, however, carries high risks. It focuses on creating sales transactions rather than on building long‐term, profitable customer relationships. The aim often is to sell what the company makes rather than making what the market wants. It assumes that customers who are coaxed into buying the product will like it. Or, if they don’t like it, they will possibly forget their disappointment and buy it again later. These are usually poor assumptions.

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Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

Selling&MarketingConceptsContrasted

• Under the marketing concept, customer focus and value are the paths to sales and profits. 27 Copyright © 2016 Pearson Education, Inc.

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Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

Marketing: CreatingCustomerValueandEngagement DesigningaCustomerValue‐DrivenMarketingStrategy

MarketingManagementOrientations

ThreeConsiderationsUnderlyingtheSocietal MarketingConcepts

5.Societalmarketing: Thecompany’smarketingdecisionsshouldconsider consumers’wants,thecompany’srequirements, consumers’long‐runinterests,andsociety’slong‐ runinterests.

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Source: https://www.youtube.com/watch?v=7MV3HWQHl1s

Source: http://www.toms.com/

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•Toms designs and sells shoes based on the Argentine alpargata design as well as eyewear.[8] When Toms sells a pair of shoes, a new pair of shoes is given to an impoverished child,[9] and when Toms sells a pair of eyewear, part of the profit is usedto save or restore the eyesight for people in developing countries. Similarly, the company launched TOMS Roasting Co. in 2014. With each purchase of TOMS Roasting Co. coffee, the company works with other organizations that they refer to as “giving partners” to provide 140 liters of safe water (a one‐week supply) to a person in need.

•In 2015, TOMS Bag Collection was launched to help address the need for advancements in maternal health. Purchases of TOMS Bags help provide training for skilled birth attendants and distribute birth kits containing items that help a woman safely deliver her baby

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Publics: The Office Depot Foundation’s “Listen Learn Care” mission calls for giving children tools to succeed in school and life. Copyright © 2016 Pearson Education, Inc.

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Marketing: CreatingCustomerValueandEngagement Step3:PreparinganIntegratedMarketingPlanandProgram

Themarketingmixisthesetoftools(fourPs)the firmusestoimplementitsmarketingstrategy.This setincludesproduct,price,promotion,andplace. An integratedmarketingprogramisacomprehensive planthatcommunicatesanddeliverstheintended valuetochosencustomers.

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Marketing: CreatingCustomerValueandEngagement

OBJECTIVE#4 • Discusscustomerrelationshipmanagementandidentify strategiesforcreatingvaluefor customersandcapturing valuefrom customersinreturn. Step4:BuildingCustomerRelationships

Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

CustomerRelationshipManagement Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

‐ CustomerRelationshipManagement ‐ EngagingCustomers ‐ PartnerRelationshipManagement

CapturingValuefromCustomer

It deals with all aspects of acquiring, engaging, and growing customers.

‐ CreatingCustomerLoyaltyandRetention ‐ GrowingShareofCustomer ‐ BuildingCustomerEquity Copyright©2016PearsonEducation,Inc.

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Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

CustomerRelationshipManagement RelationshipBuildingBlocks Customer‐ perceivedvalue • Thedifference betweentotal customer perceived benefitsand customercost

Customer satisfaction • Theextentto whichperceived performance matchesa buyer’s expectations

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Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

CustomerRelationshipManagement CustomerRelationshipLevelsandTools

EngagingCustomers Customer‐EngagementandToday’sDigitalandSocial Media

BasicRelationships– low‐margin customers

FullPartnerships – high‐margin customers

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Frequency Marketing Programs– reward customers

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Customer‐EngagementMarketingmakesthebranda meaningfulpartofconsumers’conversationsandlives byfosteringdirectandcontinuouscustomerinvolvementin shapingbrandconversations,experiences,andcommunity.

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Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

Cust Customer‐ManagedR omer‐ManagedR omer‐ManagedRel el elationships ationships

EngagingCustomers CustomerEngagementandToday’sDigitalandSocial Media

•Marketers are now embracing not only customer relationship management, but also customer‐managed relationships, in which customers connect with companies and with each other to help forge their own brand experiences.

Customerengagement andthesocialmedia: Hertz’s“ShareItUp” socialmediacampaign

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•Hertzcreatedanew socialmediacampaign "ShareitUp" toencouragecustomerstoshare thecompany’spromotionsontheirsocial mediaaccounts.Witheachclickofthe“ShareIt Up!”buttononHertz’sFacebookpage,users willunlockdiscountsthattheycanuseon rentals. Eachpromotionalcouponincreasesinvaluethe moreitissharedwithinsocialnetworks— rewardingFacebookfans,Twitterfollowersand emailsubscribers.Allfanswhosharethe couponwillabletotakeadvantageofits savings. 48 Copyright © 2016 Pearson Education, Inc.

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•Thiscoupon,yousee,istheoretically worthupto$50offacarrental.A substantialsavings.Butinorderto activateits$50potential,threemore incrementshavetobe“unlocked”– a $30level,a$40level,and,don’tget aheadofme,the$50coupon.Each$10 levelmustbeactivatedbypassingon thecoupontoyoursocialcircle.Share thecouponwithsomeoneelseandif thatpersonalsosharesit,thecoupon’s valuegoesup. 50 Copyright © 2016 Pearson Education, Inc.

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Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

EngagingCustomers Consumer‐GeneratedMarketing Brandexchangescreatedbyconsumersthemselves— bothinvitedanduninvited—bywhichconsumersare playinganincreasingroleinshapingtheirownbrand experiencesandthoseofotherconsumers.

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Fo Forrexa exam mple •AtitsMyStarbucksIdeasite,Starbucks collectsideasfromcustomersonnew products,storechanges,andjustabout anythingelsethatmightmaketheir Starbucksexperiencebetter.

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Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

Marketing: CreatingCustomerValueandEngagement BuildingCustomerRelationships

EngagingCustomers

PartnerRelationshipManagement

Engaging customers: Life is good starts with a deeply felt, engagement-worthy sense of purpose: spreading the power of optimism. *Life is good is life style brand of optimistic T-shirts and hats.

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Partnerrelationshipmanagementinvolvesworking closelywithpartnersinothercompanydepartments andoutsidethecompanytojointlybringgreater valuetocustomers.

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Marketing: CreatingCustomerValueandEngagement CapturingValuefromCustomers

Step5:CreatingCustomerLoyaltyandRetention Customerlifetimevalueis thevalueoftheentire streamofpurchasesthat thecustomerwouldmake overalifetimeof patronage.

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•AtStewLeonard’sprofitablefour‐store supermarket,thelifetimerevenueofa customeris$50,000.Becausehis averagecustomerspendsabout$100a week,shops50weeksayear,and remainsintheareaforabout10years, losingonecustomercanbeasignificant loss.

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Copyright©2016PearsonEducation,Inc.

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