Principles of Marketing
Seventeenth Edition
Chapter 1
Marketing:
Creating Customer Value and Engagement
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Learning Objective 3
Identify the key elements of a customer-driven marketing strategy and discuss the
marketing management orientations that guide marketing strategy.
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Designing a Customer Value-Driven Marketing Strategy
Marketing management is the art and
science of choosing target markets and
building profitable relationships with them.
To design a winning marketing strategy, the
marketing manager must answer two
important questions:
• What customers will we serve (target
market)?
• How can we best serve these customers
(value proposition)?
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Designing a Customer Value-Driven Marketing Strategy
A brand’s value proposition is the set of benefits or values it promises to
deliver to customers to satisfy their needs.
New Balance’s Minimus
shoes are “like barefoot
only better.”
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Designing a Customer Value-Driven Marketing Strategy
There are five alternative concepts under which organizations
design and carry out their marketing strategies:
Societal
Production Product Selling Marketing
Marketing
concept concept concept concept
concept
marketing myopia
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Designing a Customer Value-Driven Marketing Strategy
Consumers will favor products that are available and highly
affordable.
There are five alternative concepts under which organizations
design and carry out their marketing strategies:
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 Societal
low labor
Production Product Selling Marketing
costs, high production efficiency, and mass distribution. Marketing
concept concept concept concept
concept
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.
marketing myopia
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Designing a Customer Value-Driven Marketing Strategy
1. Consumers
There are five alternative concepts under favor products that offer the most quality,
which organizations
performance, and features.
design and carry out their marketing strategies:
2. The focus is on continuous product improvements.
Product quality and improvement are important parts
of most marketing strategies.
3. However, focusing only on the company’s products
Societal
Production Product Selling Marketing
concept concept concept marketing myopia.Marketing
can also lead to concept
concept
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.
marketing myopia
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Designing a Customer Value-Driven
Marketing Strategy
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
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Education Ltd. All Rights Reserved.
Designing a Customer Value-Driven Marketing Strategy
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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Designing a Customer Value-Driven Marketing Strategy
Production concept:
•Consumers will favor products that are available and highly affordable. 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.
Product concept:
•Consumers favor products that offer the most quality, performance, and features. The focus is on continuous product improvements. 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.
Selling concept:
• Consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort. The selling concept is
typically practiced with unsought goods—those that buyers do not normally think of buying, such as life insurance or blood donations. These
industries must be good at tracking down prospects and selling them on a product’s benefits. Such aggressive selling, however, carries high risks. It
focuses on creating sales transactions rather than on building long-term, profitable customer relationships.
Marketing concept:
•Know the needs and wants of the target markets and deliver the desired satisfactions better than competitors. Under the marketing concept,
customer focus and value are the paths to sales and profits. Instead of a product-centered make-and-sell philosophy, the marketing concept is a
customer-centered sense-and-respond philosophy. The job is not to find the right customers for your product but to find the right products for your
customers.
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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There are five alternative concepts under which
organizations design and carry out their marketing
strategies:
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Transforming The Marketing Strategy Into Action
Designing a Customer Value-Driven Marketing Strategy
The marketing mix is comprised of a set of tools known a
the four Ps:
• product Finally, it must engage
• price the firm must first create
a need-satisfying market
It must then decide how
much it will charge for
how it will make the
offering available to
target consumers
target consumers,
communicate about the
offering, and persuade
offering (product). the offering (price)
• promotion (place). consumers of the offer’s
merits (promotion).
• place
Integrated marketing program—a comprehensive plan that communicates and
delivers intended value
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There are five alternative concepts under which
organizations design and carry out their marketing
strategies:
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Managing Customer Relationships and Capturing
Customer Value
Customer relationship
management—the overall
process of building and
maintaining profitable customer
relationships by delivering
superior customer value and
satisfaction.
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Managing Customer Relationships and
Capturing Customer Value
Relationship Building Blocks
Customer- Customer
perceived value satisfaction
• The difference • The extent to
between total which perceived
customer performance
perceived matches a
benefits and buyer’s
customer cost expectations
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Managing Customer Relationships and Capturing
Customer Value
Customer-Engagement Marketing
fosters direct and continuous customer
involvement in shaping brand
conversations, experiences, and
community.
Consumer-Generated Marketing
Brand exchanges created by consumers
themselves.
Consumers are playing an increasing
role in shaping brand experiences.
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Managing Customer Relationships and
Capturing Customer Value
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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Managing Customer Relationships and
Capturing Customer Value
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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Managing Customer Relationships and Capturing
Customer Value
Share of customer is the portion of the customer’s purchasing that a
company gets in its product categories.
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Managing Customer Relationships and Capturing Customer Value
Customer equity is the total combined customer
lifetime values of all of the company’s customers.
Customer equity may be a better measure of a firm’s
performance than current sales or market share. Whereas
sales and market share reflect the past, customer equity
suggests the future
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Managing Customer Relationships
and Capturing Customer Value
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Learning Objective 5
Describe the major trends and forces that are changing the marketing
landscape in this age of relationships.
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The Changing Marketing Landscape
Digital and social media marketing involves using digital marketing tools
such as web sites, social media, mobile ads and apps, online videos, e-mail,
and blogs that engage consumers anywhere, at any time, via their digital
devices.
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The Changing Marketing Landscape
• Not-for-profit marketing growth
• Rapid globalization
• Sustainable marketing
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So, What Is Marketing? Pulling It All Together
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