School of Business

Department of Marketing

BMKT300 – Marketing Theory and Principles

Chapter 1 | Part 1
Marketing – Creating Customer Value and Engagement

Spring 2020 - 2021

Objectives:

• Define marketing.
• Outline the steps in the marketing process.
What is Marketing? (p.28)

• Marketing, more than any other business function, deals with

customers.
• Marketing is engaging customers and managing profitable
customer relationships.
• The two goals of Marketing are:
1. To attract new customers by promising superior value.
2. To keep and grow current customers by delivering value and
satisfaction.
What is Marketing?

• Good marketing is essential to the success of every business,

both for-profit and not-for-profit organizations.
• Marketing is all around you, and it’s almost in everything you
do!
• Many people think of Marketing as only selling and
advertising. These are only the tip of the Marketing iceberg!
• Marketing is no longer defined by “telling and selling”. Rather,
in the new sense of satisfying customer needs.
What is Marketing?

• The aim of Marketing is to make selling unnecessary.

• If the marketer engages consumers effectively, understands
their needs, develops product that provide superior customer
value, and prices, distributes, and promotes them well, these
products will sell easily.
• Marketing: is the process by which companies engage
customers, build strong customer relationships, and create
customer value in order to capture value from customers in
return.
• Marketing Mix: a set of marketing tools that work together to
engage customers, satisfy customer needs, and build customer
relationships.
The Marketing Process (p.29)
The Marketing Process

• In the first four steps, companies work to understand consumers,

create customer value, and build strong customer relationships.
• In the final step, companies reap the rewards of creating
superior customer value. By creating value for consumers, they
in turn capture value from consumers in the form of sales,
profits, and long-term customer equity.
School of Business
Department of Marketing

BMKT300 – Marketing Theory and Principles

Chapter 1 | Part 2
Marketing – Creating Customer Value and Engagement

Spring 2020 - 2021

Objectives:

• Explain the importance of understanding the marketplace and

customers.
• Identify the five core marketplace concepts.
• Discuss the marketing management orientations that guide
marketing strategy.
Understanding the Marketplace
and Customer Needs (p.30)
Core Marketing Concepts

• As a first step, marketers need to understand customer needs,

wants, and the marketplace.

• Five core customer and marketplace concepts are to be

examined:
1. Customer Needs, Wants, and Demands
2. Market Offerings – Products, Services, and Experiences
3. Customer Value and Satisfaction
4. Exchanges and Relationships
5. Markets
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

• The most basic concept underlying marketing is that of human

needs.
• Human needs are states of felt deprivation. They include
physical, social, and individuals needs. These needs were not
created by marketers; they are a basic part of the human
makeup.
Example: Need for food.
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

• Wants are human needs directed to specific objects. They are

shaped by culture and individual personality.
Example: Want a burger.

• When backed by buying power (willingness and ability to pay),

wants become demands.
Example: KFC Zinger.
Understanding the Marketplace
and Customer Needs
Market Offerings

• Needs and wants are fulfilled through market offerings - some

combination of products, services, information, or experiences
offered to a market to satisfy a need or want.
• Market offerings include products as well as services which are
activities or benefits offered for sale that are essentially
intangible and do not result in the ownership of anything.

• Marketing myopia occurs when a company becomes so taken

with their own products that they lose sight of underlying
customer needs.
Understanding the Marketplace
and Customer Needs

Customer Value and Satisfaction

• Customers form expectations about the value and satisfaction

that various market offerings will deliver and buy accordingly.
• Satisfied customers buy again and tell others about their good
experiences. In contrast, dissatisfied customers switch to
competitors and disparage the product to others.
• Customer value and customer satisfaction are key building
blocks for developing and managing customer relationships.
Understanding the Marketplace
and Customer Needs

Exchange and Relationships

• Exchange is the act of obtaining a desired object from someone

by offering something in return.
• Marketing consists of actions taken to build and maintain
desirable exchange relationships with target audiences.
• Companies want to build strong relationships by consistently
delivering superior customer value.
Understanding the Marketplace
and Customer Needs

Markets

• A market is the set of all actual and potential buyers of a product

or service.
• Marketing means managing markets to bring about profitable
customer relationships.
Designing a Customer-Driven Marketing
Strategy

Marketing Management Orientations (p.35)

• Marketing management wants to design strategies that will build

profitable relationships with target consumers. But what
philosophy should guide these marketing strategies?
• There are five alternative concepts under which organizations
design and carry out their marketing strategies.
Designing a Customer-Driven Marketing
Strategy

Marketing Management Orientations

Designing a Customer-Driven Marketing
Strategy
Marketing Management Orientations

1. The Production Concept

The production concept holds that consumers will favor
products that are available and highly affordable. Management
should focus on improving production and distribution
efficiency. It might lead to marketing myopia.
Example: raw materials.
Designing a Customer-Driven Marketing
Strategy
Marketing Management Orientations

2. The Product Concept

The product concept holds that consumers will favor products
that offer the most in quality, performance, and innovative
features. Under this concept, marketing strategy focuses on
making continuous product improvements. It might lead to
marketing myopia.
Example: smart phones.

innovative.
Designing a Customer-Driven Marketing
Strategy

Marketing Management Orientations

3. The Selling Concept

The selling concept holds that consumers will not buy enough of
the firm’s products unless it undertakes a large-scale selling and
promotion effort.
Example: insurance.
Designing a Customer-Driven Marketing
Strategy

Marketing Management Orientations

3. The Selling Concept

• The concept is typically practiced with unsought goods -
those that buyers do not normally think of buying, such as
insurance or blood donations.
• These industries must be good at tracking down prospects
and selling them on product benefits.
Designing a Customer-Driven Marketing
Strategy

Marketing Management Orientations

4. The Marketing Concept

The marketing concept holds that achieving organizational goals
depends on knowing the needs and wants of target markets and
delivering the desired satisfactions better than competitors do.
Example: designer clothes.
Designing a Customer-Driven Marketing
Strategy

Marketing Management Orientations

4. The Marketing Concept

• Under the marketing concept, customer focus and value are
the paths to sales and profits.
• The job is not to find the right customers for your product,
but to find the right products for your customers.
• Customer-driven companies research current customers
deeply to learn about their desires, gather new product and
service ideas, and test proposed product improvements.
• Customer-driving marketing is understanding customer
needs, even better than customers themselves do, and
creating products and services that meet those needs.
Inside-Out vs. Outside-In
Designing a Customer-Driven Marketing
Strategy
Marketing Management Orientations

5. The Societal Marketing Concept

The societal marketing concept questions whether the pure
marketing concept overlooks possible conflicts between
consumer short-run wants and consumer long-run welfare.
Example: giving 10% to environmental causes.
Designing a Customer-Driven Marketing
Strategy

Marketing Management Orientations

5. The Societal Marketing Concept

The societal marketing concept holds that marketing strategy
should deliver value to customers in a way that maintains or
improves both the consumer’s and the society’s well-being.
Customers Goal Usefulness Risks
Production Favor available Improve efficiency of 1- Demand > Supply What if
Concept and affordable productivity and 2- Pressure to reduce high cost situations
products distribution change?

Product Favor best quality, Continuous If market is stable and no new New
Concept performance and improvement of features technologies in sight technology
innovation fashionably emerges

Selling Won’t buy enough Promote product and Unsought product Dissatisfacti
Concept- if no sales persuade people on leads to
“Inside Out” promotion or bad word of
selling effort mouth

Marketing Buy product to 1- Determine needs and When the needs of customers Might
Concept- satisfy needs and wants is clear and customer-driven overlook
“Outside In” wants 2- deliver satisfaction strategy can help learn about ethics,
more efficiently and desires- lead where customers society and
effectively than want to go before they know customers
competitors that they want to welfare

Societal Same as Marketing Balance Satisfaction in Same as Marketing ---

Marketing short term and long
Concept term, society and
company profits
School of Business
Department of Marketing

BMKT300 – Marketing Theory and Principles

Chapter 1 | Part 3
Marketing – Creating Customer Value and Engagement

Spring 2020 - 2021

Objectives:

• Discuss customer relationship management.

• Learn how to build the right relationship with the right customers.
Managing Customer Relationships and
Capturing Customer Value (p.38)
Engaging Customers and Managing Customer
Relationships

• Customer relationship management is the most important

concept of modern marketing. It is the overall process of
building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction.
• It deals with all aspects of acquiring, keeping, and growing
customers.
Managing Customer Relationships and
Capturing Customer Value
Engaging Customers and Managing Customer
Relationships

• Relationship Building Blocks: Customer Value and Satisfaction!

• The key to building lasting customer relationships is to create

superior customer value and satisfaction.
Managing Customer Relationships and
Capturing Customer Value
Engaging Customers and Managing Customer
Relationships

• Customers often do not judge values and costs “accurately” or

“objectively.”
• Customers act on customer perceived value: the customer’s
evaluation of the difference between all the benefits and all the
costs of a marketing offer relative to competing offers.
Managing Customer Relationships and
Capturing Customer Value
Engaging Customers and Managing Customer
Relationships

• Customer satisfaction: depends on the product’s perceived

performance relative to a buyer’s expectations.
• If the product’s performance falls short of expectations, the
customer is dissatisfied. If performance matches expectations, the
customer is satisfied. If performance exceeds expectations, the
customer is highly satisfied or delighted.
Managing Customer Relationships and
Capturing Customer Value
Engaging Customers and Managing Customer
Relationships

Higher levels of customer satisfaction lead to greater customer

loyalty.
Capturing Value from Customers

Building the Right Relationship with the Right

Customers (p.46)

• Not all customers, not even all

loyal customers, are good
investments.
• Building the right relationship
with the right customers
involves treating customers as
assets that need to be managed
and maximized.
• Different types of customers
require different relationship
management strategies.
Capturing Value from Customers

Building the Right Relationship with the Right

Customers

Customers are classified into one of four relationship groups,

according to their potential profitability and projected loyalty.
Building the Right Relationship with the Right
Customers

High

Butterflies True Friends

• Good fit between company’s • Great fit between company’s
offerings and customers’ needs offerings and customers’ needs
• High potential profit • Highest potential profit
• Efforts are rarely successful, learn • Make continuous investment to
Potential Profitability

to enjoy them retain nurture delight and grow

them
Strangers Barnacles
• Little fit between company’s • Limited fit between company’s
offerings and customers’ needs offerings and customers’ needs
• Lowest potential profit • Low potential profit
• Don’t invest anything with them • Selling more, increasing fees,
reducing service, or must be fired

Low Projected Loyalty High

Capturing Value from Customers

Building the Right Relationship with the Right

Customers

1. “Strangers” example: an individual that occasionally stops into

a minimarket to buy a stick of gum, but otherwise never comes to
the store.
Capturing Value from Customers

Building the Right Relationship with the Right

Customers

2. “Butterflies” example: customers who buy clothes during the

end-of-season promotions form different stores at the mall.
Capturing Value from Customers

Building the Right Relationship with the Right

Customers

3. “True friends” example: Apple “fanboys” who buy every

Apple product.
Capturing Value from Customers

Building the Right Relationship with the Right

Customers

4. “Barnacles” example: a customer who spends all day at a

restaurant and orders only a cup of coffee just to use the free
Wi-Fi.
If you have any questions, please
don’t hesitate to ask your instructor

Thank you!