Marketing: Creating Customer Value and Engagement

Topic Outline : What Is Marketing? • Understand the Marketplace and Customer Needs • Designing a
Customer-Driven Marketing Strategy • Preparing an Integrated Marketing Plan and Program • Building
Customer Relationships • Capturing Value from Customers • The Changing Marketing Landscape .

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

Understanding the Marketplace and Customer Needs

Core Concepts : Customer needs, wants, and demands • Market offerings • Value and
satisfaction • Exchanges and relationships • Markets
 Customer Needs:
Wants:
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
 Exchange is the act of obtaining a desired object from someone by offering something in
return
 Markets are the set of actual and potential buyers of a product

Designing a Customer-Driven Marketing Strategy

Marketing management is the art and science of choosing target markets and building
profitable relationships with them
– What customers will we serve?
– How can we best serve these customers?
 Selecting Customers to Serve :
 Market segmentation refers to dividing the markets into segments of customers
 Target marketing refers to which segments to go after
 Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to
destroy demand but to reduce or shift it
 Choosing a Value Proposition : The value proposition is the set of benefits or values a
company promises to deliver to customers to satisfy their needs
 Marketing Management Orientations :
 Production concept
When the production concept was defined, a production oriented business dominated the market.
This was from the beginning of capitalism to the mid 1950’s. During the era of the production
concept, businesses were concerned primarily with production, manufacturing, and efficiency
issues. Companies that use the production concept have the belief that customers primarily want
products that are affordable and accessible.

The production concept is based on the approach that a company can increase supply as it
decreases its costs. Moreover, the production concept highlights that a business can lower costs
via mass production. A company oriented towards production believes in economies of scale
(decreased production cost per unit), wherein mass production can decrease cost and maximize
profits. As a whole, the production concept is oriented towards operations.

The product concept

This concept works on an assumption that customers prefer products of
greater quality and price and availability doesn’t influence their purchase decision. And so
company develops a product of greater quality which usually turns out to be expensive.

One of the best modern examples would be IT companies, who are always improving and
updating their products, to differentiate themselves from the competition. Since the main focus of
the marketers is the product quality, they often lose or fail to appeal to customers whose demands
are driven by other factors like price, availability, usability, etc.

The selling concept

Production and product concept both focus on production but selling concept focuses on making
an actual sale of the product. Selling concept focuses on making every possible sale of the
product, regardless of the quality of the product or the need of the customer.

The selling concept highlights that customers would buy a company’s products only if the company
were to sell these products aggressively.This philosophy doesn’t include building relations with the
customers. This means that repeated sales are rare, and customer satisfaction is not great.

The marketing concept

A company that believes in the marketing concept places the consumer at the center of the
organization. All activities are geared towards the consumer. A business,aims to understand the
needs and wants of a customer. It executes the marketing strategy according to market research
beginning from product conception to sales.

By focusing on the needs and wants of a target market, a company can deliver more value than its
competitors. The marketing concept emphasizes the “pull” strategy". This means that a brand is
so strong that customers would always prefer your brand to others’.

The societal marketing concept

This is a relatively new marketing concept. While the societal marketing concept highlights the
needs and wants of a target market and the delivery of better value than its competitors, it
also emphasizes the importance of the well-being of customers and society as a whole (consumer
welfare or societal welfare).
 The societal marketing concept calls upon marketers to build social and ethical considerations into
their marketing practices. They must balance and juggle the often conflicting criteria of company
profits, consumer want satisfaction, and public interest.
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. It includes product, price, promotion, and place.
 Integrated marketing program is a comprehensive plan that communicates and delivers
the intended value to chosen customers.

Building Customer Relationships

 Customer Relationship Management (CRM) : The overall process of building and
maintaining profitable customer relationships by delivering superior customer value and
satisfaction Customer Relationship Management (CRM)

 The Changing Nature of Customer Relationships :

Relating with more carefully selected customers uses selective relationship management to target
fewer, more profitable customers • Relating more deeply and interactively by incorporating more
interactive two way relationships through blogs, Websites, online communities and social networks
The Changing Nature of Customer Relationships
Partner relationship management involves working closely with partners in other company
departments and outside the company to jointly bring greater value to customers
 Partners inside the company is every function area interacting with customers
– Electronically
– Cross-functional teams
 Partners outside the company is how marketers connect with their suppliers, channel
partners, and competitors by developing partnerships
 Supply chain is a channel that stretches from raw materials to components to final
products to final buyers
 Supply management
 Strategic partners
 Strategic alliances

Capturing Value from Customers

 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
 Growing Share of Customer : Share of customer is the portion of the customer’s purchasing
that a company gets in its product categories Growing Share of Customer
 Customer equity is the total combined customer lifetime values of all of the company’s
customers
  Building Customer Equity : Building the right relationships 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
– Build the right relationship with the right customers

1. Define marketing. what is marketing myopia and how can it be avoided?

Answer : marketing myopia occurs when an organization focuses too much on seeking sales and profits,
while ignoring the needs and wants of its customers. It is not wrong for a business to concentrate on
increasing sales and profits. In fact, that is what every business should be doing, or they won’t be “doing”
anything for much longer.

The problem occurs when a company, in its desire to grow, ignores the changing needs of its customer
base. Customers are always demanding new, improved, and innovative products that provide solutions to
them. A company that focuses on itself too much tends to forgo learning more about its customers needs.
The result is that these companies lose touch with their customers’ concerns and then eventually lose
these customers to their competitors. It’s because the company focused on what they wanted –
sometimes at the expense of its customers.

Marketing myopia can be avoided through filtering every strategic initiative and company program
through the screen of the customers it seeks to serve, Fundamentally, any company initiative or program
must have the customer at its heart.

2. Explain the importance of need, wants and demand and how these fame marketing
activities?
Needs wants and demands are a part of basic marketing principles. Though they are 3 simple worlds,
they hold a very complex meaning behind them along with a huge differentiation factor. In fact, A product
can be differentiated on the basis of whether it satisfies a customers needs, wants or demands. Each of
them is discussed in detail in this article

Needs
Human needs are the basic requirements and include food, clothing and shelter. Without these humans
cannot survive. An extended part of needs today has become education and healthcare. Generally, the
products which fall under the needs category of products do not require a push.
Instead the customer buys it themselves. But in todays tough and competitive world, so many brands
have come up with the same offering satisfying the needs of the customer, that even the “needs category
product” has to be pushed in the customers mind.
Wants
Wants are a step ahead of needs and are largely dependent on the needs of humans themselves. For
example, you need to take a bath. But i am sure you take baths with the best soaps. Thus Wants are not
mandatory part of life. You DONT need a good smelling soap. But you will definitely use it because it is
your want. In the above image, the baby needs milk but it WANTS candy
Example of wants category products / sectors – Hospitality industry, Electronics, Consumer Durables etc,
FMCG, etc.
Demands
You might want a BMW or a Mercedes for a car. You might want to go for a cruise. But can you actually
buy a BMW or go on a cruise? You can provided you have the ability to buy a BMW or go on a cruise.
Thus a step ahead of wants is demands.
When an individual wants something which is premium, but he also has the ability to buy it, then these
wants are converted to demands. The basic difference between wants and demands is desire. A
customer may desire something but he may not be able to fulfill his desire.
Example of demands – Cruises, BMW’s, 5 star hotels etc.
The needs wants and demands are a very important component of marketing because they help the
marketer decide the products which he needs to offer in the market. Thus the flow is like this.
Market >> Identify needs wants and demands >> Offer products to satisfy either needs wants or
demands.

3. Companies want to acquire profitable customers. Describe how marketers build

relationships with customers?
As a small business owner, you have an advantage when it comes to building customer rapport. The size
of your company allows you to reach people at a more personal level than big businesses, which turns
into stronger relationships with customers.
To create customer relationships, and keep them strong, you must do all you can to engage customers.
Here are five ways to build customer relationships and keep them coming back.
1. Communicate.
As a key to any good relationship, communication is an essential way to build customer relationships.
Promoting your business and listening to your customers are equally important.
Rather than just telling customers about your business, have conversations with them. Find out what your
customers need, then show them that you have a solution to their problem.
If you have employees, teach them how to effectively communicate with customers. Instead of waiting for
customer service to become a problem, foster communication skills with customers while onboarding
new employees. Maintain an employee policy, requiring timely follow-up, to make sure the customer’s
needs are met. Make sure your staff returns voicemail messages and emails promptly.
2. Exceed expectations.
Your customers expect great products or services from you. You should continue to raise the bar on what
your company offers.
To put it simply, under promise, and over deliver. When you impress customers, they keep coming back.
To exceed customer expectations, you can deliver a product or service faster than anticipated. When you
deliver earlier than expected, the customer will be happy about the surprise. For example, tell a customer
their order will be ready by the end of the month, knowing you will have it ready a week earlier.

3. Ask for feedback.

Whether customers have a good or bad opinion about your business, they will make their feelings known.
Invite customer feedback to show you are listening. Place comment cards on your business counter, or
conduct a survey.
Customer feedback helps you hone your customers’ specific needs so you can find the best solutions to
their problems. The better your offering meets their needs, the more your business will grow.
Always listen carefully to comments and respond promptly, whether it’s a compliment or a complaint. The
worst thing you can do is ask for feedback then not address concerns. Even negative feedback is
valuable and can give you an honest gauge of customer satisfaction.
4. Connect.
With technology, there are more ways to begin conversations with your customers than ever before.
There are many online tools and social media outlets you can use to reach customers.
When you engage with customers online, be careful not to create a one-way conversation. Ask
customers questions, and respond to their inquiries.
Also, make sure your website is top-notch, and start a blog to engage your customers and prospects.
Build customer relationships through your online presence.
5. Show appreciation.
Reward long-time customers with a loyalty discount program. You can hand out reward cards, or use a
loyalty program app to track customer rewards.
With a loyalty program, customers earn points for buying your goods or services. After earning a certain
number of points, the customer gets a reward. For example, you could reward a customer with a discount
on their next purchase.
Also give away inexpensive branded items, such as pens or notepads, or even expensive items, like
shirts, hats or jackets with your logo on it. It’s a small yet effective way to say thank you to customers
while keeping your business top-of-mind.

4. When implementing customer relationship management, why might a business desire

fewer customers over more customers? Shouldn’t the focus of marketing be to acquire as
many customers as possible.
Answer : It is important to build a good relationship and satisfy the current customers. The more people
the company try's to reach the more expensive it gets for the marketing budget. Often for smaller
businesses, their goal isn't to expand and have numerous customers because their inventory can not
handle it and they would rather keep their current customers. Luxury marketing often will be limited to a
small group of people to ensure there is exclusivity.
Trying to market the product to every customer is not beneficial because they may not be the target
market for the business. Customer loyalty is often what helps build strong relationships, and they will
continue to purchase products from the business, which in turn will increase profit for the business.