Creating and delivering customer value
- 2. What is Marketing? Many People think of marketing only as Selling and Advertising. No Wonder - Because we bombarded with TV Commercials, direct mail offers, sales calls everyday. However Selling and Advertising are only the tip of the marketing iceberg. Marketing must not be understood in the old sense – “Telling and Selling”- but in the new sense of Satisfying Customer Needs. If the marketer understand consumer needs; develop products that provide superior customer value; and prices, distributes and promotes them effectively, these products will sell easily.
- 3. Marketing Defined According to Management Guru Peter Drucker “ The Aim of Marketing is to make selling Unnecessary.” We Define Marketing as the process by which companies create value for the customers and build strong customer relationships in order to capture value from the customer in return.
- 4. In the first four steps, companies work to understand consumers, create customer value, and build strong Customer The Marketing Process Understand the Marketplac e and customer needs and wants Design a customer driven marketing strategy Construct an integrated marketing program that delivers superior value Build profitable relationship s and create customer delight Capture value from customers to create profit and customer equity Create Value for customer and Build Customer Relationships Capture Value From Customer in Return In the final step companies reap the reward of creating superior customer value by capturing value from the customer in the form 1. 2. 3. 4. 5.
- 5. 1. Understanding the Marketplace and Customer Needs Marketing is all about creating value for the Customer. So as a first step in the Marketing Process, the company must fully understand consumers and the marketplace in which it operates. We now examine five core customer and marketplace concepts: a) Needs, wants and Demands b) Market Offerings (product, services and experiences) c) Value and Satisfaction d) Exchange and Relationships e) Markets
- 6. 1.(a) Customer Needs, Wants and Demands The most basic concept underlying marketing is that of human need. Needs are states of felt deprivation. They include basic Physical Needs for food, clothing, warmth and safety; Social Needs for belonging and affection and Individual Needs for knowledge and self expression. Wants are the form human needs take as they are shaped by culture and individual personality. E.g. An Indian in Kolkata needs food but wants a bowl of Rice and Fish. When backed by buying power, wants become Demands. Given the wants and resource, people demand products with benefits that add up to the most value Outstanding marketing companies go extraordinary lengths to learn customer needs, wants and Demands. E.g. at southwest airlines, all senior executives, handle bags, check in passengers and serves as flight attendants once in every
- 7. 1(b) Market Offerings – Products, Services, and Experiences Consumer needs and wants are fulfilled through Market Offerings - some combination of products, services, information, or experiences offered to satisfy a need or want. Market offering examples are banking, air travel, tourism etc E.g. in case of tourism the market offering is an entire travel experience like MP Tourism’s The Heart of India. Market offering also include Ideas. E.g. Tata Tea’s “Jago Re” Campaign to promote good governance and responsibility. Many sellers make the mistake of paying more attention to the specific product they offer than to the benefits and experiences produced by these products. These sellers suffer from Marketing Myopia. E.g. Manufacturer of Drill Bits think that the customers need drill bits but what customer need is a hole. Smart Marketers look beyond and create
- 8. 1 (c) Customer Value and Satisfaction Q. How do customer choose among many market offerings? Ans. Customer 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 experience, dissatisfied one’s switch to competitor’s product. Marketers, hence must be careful to set right expectations. Too Low – fail to attract enough customers
- 9. 1 (d) Exchanges and Relationships “Marketing occur when people decide to satisfy needs and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return.” The marketer tries to bring about a response to a market offering and it could more than just buying e.g. Politician want votes, Orchestra wants an audience Marketing consists of actions taken to build and maintain desirable exchange relationships with target audience. The goal is to build strong relationships with the customers.
- 10. 1 (e) Markets The concept of exchange and relationships lead to the concept of a market. A Market is the set of actual and potential buyers of the product. These buyers share a particular need or want that can be satisfied through exchange relationships. Supplie rs Compan y Competitor s Marketing Intermediari es Consume rs A Modern Marketing
- 11. 2. Designing a Customer – Driven Marketing Strategy Once the company fully understands consumers and the market place, it needs to design a customer-driven marketing strategy. A winning marketing strategy must contain answers to the following questions: a) What customers we will serve (what’s our target market)? b) How can we serve these customers best (What’s our value proposition)? c) What would be my marketing orientation?
- 12. 2 (a) Selecting Customers to serve Marketing managers know that they cannot serve all customers in everyway. Hence select only those customers which you can serve well and profitably. E.g. Apple, Vertu The Company must first decide who it will serve. It does this by dividing the market into segments of customers(Market segmentation). And select which segments it will go after (Target Marketing). A Vertu Diamond Encrusted Phone
- 13. 2 (b) Choosing a Value Proposition The Company must also decide how it will serve the targeted customers. How it will differentiate and position in the marketplace. “ A company’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs”. E.g. with cell phones, Nokia is “Connecting People – anyone, anywhere” whereas with Apple’s iPhone, “ Touching is Believing”
- 14. 2 (c) Marketing Management Orientations These are the philosophies that guides the marketing strategy formulation Production Concept: The idea that consumers will favour products that are available and highly affordable and that 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 devote its energy to making continuous product improvement. 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. Marketing Concept: It holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than the competitors do. Societal Marketing Concept: The idea that company’s marketing decisions should consider consumer’s wants, the company’s requirements, consumers long- run interests, and society’s long run interests.
- 15. 3. Preparing an Integrated Marketing Plan and Program Now the marketer develops an integrated marketing program that will actually deliver the intended value to the target customers. Its transforming Marketing Strategy into action. It consists of firm’s marketing mix i.e. 4Ps. Product: The firm must first create a need satisfying market offering Price: IT must decide how much it will charge for that offering Place: How it will make the offering available to target consumers Promotion: It must communicate with customer about the merits of offering. The firm must blend all these marketing mix tools into a comprehensive Integrated marketing plan
- 16. 4. Building Customer Relationships The previous three steps lead up to this most important step: building profitable customer relationships. CRM is not merely a data management activity. It deals with all aspects of acquiring, keeping and growing customers. Companies interact with customers at many levels. E.g. At one extreme HUL does not interact with individual customers of surf but works through brand- building, mass media advertising and on the other extreme it customer team works in full partnership with Walmart, Big-bazar etc. Companies also go for more selective relationship management and interact at very deep level with customers. Companies also need to work with Partners inside and outside the company.
- 17. 5. Capturing Value from Customers This final step involves capturing value in return in the form of current and future sales, market share and profits. Highly satisfied customers -> long run profits Good customer relationship creates customer delight. Companies create Loyalty programs and look for customers lifetime value: Customer Equity. Beyond simply retaining customers CRM could help marketers increase share of wallet. It is essential to build right relationship with the right customers.
- 18. Queries and Doubts? Thank You Very Much…