Mkt-Chapter-1-20022023-100211pm-21092023-092949am.ppt

The meeting was conducted in room F1 at 14:30 hrs. In the opening remarks, HOD (MS) thanked all the participants for their presence and explained the need for convening 20th DBOS on agenda points sponsored by the faculty members.

1. Principles of Marketing
By
Philip Kotler, Gary Armstrong, Prafulla Y.
Agnihotri, Ehsan ul Haque
17
th
Edition

2. Creating and Capturing Customer
Value
LECTURE-1

3. What is Marketing?
Managing profitable customer relationship

4. Goals of Marketing
•To attract new customers by promising
superior value
•To keep and grow current customers by
delivering satisfaction

5. What is Marketing?
Marketing is an organizational function
and a set of processes for creating,
communicating, and delivering value
to customers and for managing
customer relationships
in ways that benefit the
organization and its stakeholders.
(American Marketing Association Formal Definition)

6. StakeholderStakeholder
•A person, group or organization that has
interest or concern in an organization.
•Stakeholders can affect or be affected by the
organization's actions, objectives and policies.

7. Who does Marketing ?
•Profitable organizations
•Non- profitable organizations

8. Marketing
•Marketing as a process by which companies create
value for customers and build strong customer
relationships in order to capture value from customers
in return.
•It is a social process by which individual groups
obtain what they need and want through creating
offerings and freely exchange products & services of
value with others.

9. Marketing
•Many people think marketing is just selling
and advertising
•Bombardment of TV commercials
•Its is only tip of marketing iceberg
•Marketing must not be understood in old
sense “telling and selling”
•But in new sense “satisfying customer
needs”

10. The Marketing Process

11. Understanding the Marketplace and
Customer Needs
•Customer Needs, Wants and Demands
•Market Offerings- Products, Services and
Experience
•Customer value and satisfaction
•Exchanges and relationships
•Markets

12. Customer needs, wants and demands
•Needs
States of felt deprivation.
•Wants
The form human needs take as shaped by
culture and individual personality.
•Demand
Human wants that are backed by buying
power.

13. Market Offerings
•Some combination of products, services,
information or experiences offered to a
market to satisfy a need or want.
•Products
•Services
•Experiences
It also includes:
•Persons, place, organizations, information
and idea

14. Marketing Myopia
The mistake of paying more attention to
the specific products of a company offers
than to the benefits and experiences
produces by these products.

15. Customer value and Satisfaction
•Customers face so many products and
services.
•How do they choose from different offerings ?
•Customers form expectations:
Satisfied customers, delighted customers,
dissatisfied customers
•Marketers must set right level of expectations
Set expectations too low
Raise expectations too much

16. Exchanges and Relationships
Exchange
The act of obtaining a desired object
from someone by offering something in
return.
•Aim of exchanges and relationship
To create exchange relationship
Provide superior customer value
To grow their business

17. Markets
The set of all actual and potential buyers
of a product or service.

18. Modern Marketing System

19. Designing a Customer Driven Marketing
Strategy
•To win marketing strategy, marketing
manager must answer two important
questions:
•What customers we will serve (what is our
target market) ?
•How can we serve these customers best (what
is our value preposition) ?

20. Selecting customers to serve
•To whom company will serve ?
•It divides market into segments (market
segmentation)
•Then selecting which market it will go after
(target marketing)
•Demarketing:
To reduce the number of customers or to shift
their demand temporarily or permanently

21. Choosing a value preposition
•How it will serve target market?
•How it will differentiate and position itself ?
•Value preposition:
•Set of benefits or values it promises to deliver
to customer to satisfy their needs.
•An innovation, service, or feature intended to make
a company or product attractive to customers.
Examples:
Nokia “Connecting people – anyone, anywhere”
Land Rover “Go Beyond – to “ get taste of
adventure, whatever your tastes”

22. •Value preposition differentiates one brand
from another

23. Marketing management orientation
•Production concept
The idea that consumers will favor products
that are available and highly affordable and
that the organization should therefore focus
on improving production and distribution
efficiency
•Product concept
The idea that consumers will favor products that
offer the most quality, performance, and features
and that the organization should therefore
devote bits energy to make continue product
improvements.

24. •Selling concept
•The idea that consumers will not buy enough
of the firm’s products unless it undertakes a
large-scale selling and promotion effort.
•Aim is to sell what the company makes rather
than making what the customer wants.
•It has inside-out view that focuses on existing
products and heavy selling.

25. •Marketing concept
•The marketing management philosophy that
holds that achieving organizational goals
depends on knowing the needs and wants of
target markets and delivering the desired
satisfactions better than competitors do.
•This concept takes an outside-in view that
focusing on satisfying customer needs as a
path to profits

26. The Selling and Marketing Concepts
Contrasted

27. •Societal marketing concept
•The idea that a company’s marketing decisions
should consider consumer’s wants, the
company’s requirements, consumer’s long
term interests, and society’s long term
interests.
•Doing what is right, benefiting both consumers
and company
•Companies satisfying short term wants of
consumers and creates long term
environmental damage

28. Example
Bottled water industry (providing healthy, tasty
and clean water but its recycling process causes
carbon dioxide emission that creates global
warming)

29. Societal Marketing Concept

30. Preparing an Integrated Marketing Plan
and Program
Marketing mix
The set of marketing tools the firm uses to implement
its marketing strategy.
Classification of marketing mix (4P’s)
Product – Market offering
Price – How much will we charge for offering
Place – How offering will be available to target
customers.
Promotion - Communication

31. Building Customer Relationships
Customer relationship management:
The overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction.
•Customer value
•Customer satisfaction

32. Customer Value
Customer-perceived value
The customer’s evaluation of the difference between all the
benefits and all the costs of a marketing offer relative to
those of competing offers.
•Buyers buy products or services only when they
perceive it will satisfy their needs.
•Tangible or intangible benefits + Cost = Value
•Value perception increases with quality and service
•It decreases with price

33. Customer Satisfaction
Satisfaction
It reflects a person’s judgment of a product’s perceived
performance in relationship to expectations
•If performance fall short of expectations =
Disappointment
•If performance matches expectations = Satisfaction
•If performance exceeds expectations = Delighted
•High satisfaction = Customer Great Loyalty
•Smart companies aim to delight customers by promising
what they can deliver, then delivering more than they
promise.

34. •Delighted customers creates word of mouth. Encourage
other people to use that product
•Companies interested in delighted customers, they give
priority to more vale and satisfaction than actions and
policies.

35. Capturing value from customers
•Creating customer loyalty and retention
•Growing share of customer
•Building customer equity

36. Capturing value from customers
•It’s the last step in marketing process.
•Here, companies capturing value in return in the
form of current and future sales, market share
and profit
•By creating superior customer value, firm
creates highly satisfied customers who stay loyal
and buy more.

37. Creating customer loyalty and retention
•Good customer relationship management creates loyal
customers.
•They talk good about your products and services with
the others.
•There is high differences in the loyalty of customers:
•Who are less satisfied
•Somewhat satisfied
•Completely satisfied

38. •So, customer delight is more important than customer
satisfied
•Companies are realizing that loosing a customer means
loosing a single sale for the life time. Which is a big loss.

39. Building Customer Equity
•The ultimate aim of customer relationship is to produce
high customer equity.
Customer Equity
•The total combined customer lifetime values of all of the
company’s customers.
•The more loyal the firm’s profitable customers, the higher
the firms customer equity
•Customer equity is better measure of firm’s
performance than current sales or market

40. •Sales and market share reflects the past
•Customer equity suggests the future

41. Building the Right Relationship with the
Right customer
•Companies should manage customer equity carefully
•They should view customers as an asset
•all customers, not even loyal customers are good
investments
•Some loyal customers can be unprofitable
•Some disloyal customers can be profitable

42. Which customers should the Which customers should the
company acquire and retain ?company acquire and retain ?

43. Classification of company’s customers
•Classification of company’s customers
according to profitability and loyalty:
•Strangers
•Butterflies
•True friends
•Barnacles
Each group requires different Each group requires different management management
relationship strategyrelationship strategy

44. Strangers
•Low profitability and little loyalty
•Little fit between company’s offerings and
customer’s needs: lowest profit potential
•Relationship management strategy for these
types of customers is “ Don’t invest anything in
them”

45. Butterflies
•Profitable but not loyal customers
•There is a goof fit between company’s offerings
and customer’s needs: high profit potentials
•Like real butterflies, companies can enjoy these
types of customers for a short period of time and
they gone
•Example:
•Stock market investors

46. •Efforts to convert butterflies into loyal customers
are rarely successful
•Companies should enjoy butterflies for a
moment
•Companies should create satisfying and
profitable transactions with them but stop
investing in them until the next time around

47. True Friends
•They are profitable and loyal too
•A strong fit between their needs and the
company’s offerings
Importance:Importance:
•The firm wants to turn true friends into ‘true
believers’ to delight these customers, retain and
grow them
•They are the customers who come back regularly
and tell their good experience with other people

48. Barnacles
•Highly loyal but not profitable
•There is a limited fit between their needs and the
company’s offerings
•These are problematic customers
Example:Example:
•Strong bank customers