Marketing: Creating &

Capturing Customer Value

Chapter – 01
Subject Teacher: Ms. Yasra Aslam
Book: Principles of Marketing (A South Asian Perspective)
By: Philip Kotler, Gary Armstong,Prafulla Y. Agnihotri & Ehsan ul Haque.
 Principles of Marketing
A South Asian Perspective
By : Philip Kotler,
Gary Armstong,
Prafulla Y. Agnihotri
& Ehsan ul Haque.

13th edition
Publisher: PEARSON

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– What image comes to mind when you
hear the word “marketing”?

– The Study of Market.

– Then What is Market..??

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 What is MARKET ?
• A regular gathering of people for the purchase and sale of
provisions, livestock, and other commodities.

• A market is one of many varieties of systems, institutions,

procedures, social relations and infrastructures whereby
parties engage in exchange.

• An actual or nominal place where forces of

demand and supply operate, and where buyers and sellers
interact (directly or through intermediaries) to trade goods,
services, or contracts or instruments, for money or barter.

• A public gathering held for buying and selling merchandise

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 Types of Markets
• Seller Market:
– Production, focus on company
– Buyer come to the seller
– It also called Product-focus market
– Sell as much as you can, in low cost
– Generate profit from volume
– Higher the market share generate more revenue from
volume, decrease the product cost

Higher revenue Lowe Cost More profit

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 Cont..,
• Buyer's Market:
– Companies give attention to customer wants, try to understand
customer needs.
– Profit generate from high premium value

– Provide product time after time , build “Customer Loyalty”,

“Customer Share” and “Share of Well”
– Company want to retain the customer, they start “ Cross
Selling” (e.g, Jeans & socks)

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 What is Marketing ?
• Many people think Marketing only selling & advertising.

• Old Sense “ Telling and Selling ”

• New Sense “ Satisfying customer needs”

•
• According to Management Guru Peter Drucker “ The aim of
marketing is to selling unnecessary “

• American Marketing Association defines marketing as

“Marketing is the activity, set of institutions, and processes for

creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large”.
(Approved October 2007)

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• Marketing is “managing profitable customer relationship”

• The Chartered Institute of Marketing (CIM) says:

“The management process responsible for identifying , anticipating and
satisfying customer requirements profitability”.

• Philip Kotler defines marketing as:

“Marketing is the social process by which individuals and groups obtain

what they need and want through creating and exchanging products and
value with others”.

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• It is process by which companies create value for the
customers and build strong relationship in order to
capture value from customers in returns

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 The marketing Process
Capture value from Capture value
Understand the customer in return
from customer
Market place and to create profits
customer needs,
& customer equity
wants Demand

Create value for customer

& build customer
relationship
Design a
Build profitable
customer-driven
marketing strategy
relation
Ship & create
customer delight
Construct an
integrated prog:
& deliver superior
value 11
Subject Teacher: Yasra Aslam
 Understand the Marketplace & Customer
Needs

• Customers Needs, Wants & Demands

– Needs - state of felt deprivation for basic items such as food and
clothing and complex needs such as for belonging. i.e. I am
thirsty

– Wants - form that a human need takes as shaped by culture and

individual personality. i.e. I want a Coca-Cola.

– Demands - human wants backed by buying power. i.e. I have

money to buy a Coca-Cola

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• Market Offering

– Products - anything that can be offered to a market for attention,

acquisition, use or consumption and that might satisfy a need or
want. Examples: persons, places, organizations, activities, and
ideas.

– Services - activities or benefits offered for sale that are

essentially intangible and don’t result in the ownership of
anything. Examples: banking, airlines, haircuts, and hotels.

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• Customer Value
– Benefit that the customer gains from owning and using a
product compared to the cost of obtaining the product.

• Customer Satisfaction
– Depends on the product’s perceived performance in
delivering value relative to a buyer’s expectations. Linked to
Quality and Total Quality Management (TQM).

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• Exchanges
– Act of obtaining a desired object from someone by offering
something in return.

• Transactions
– Trade of values between parties. Usually involves money and a
response.

• Relationships
– Building long-term relationships with consumers, distributors,
dealers, and suppliers to retain customer through deliver superior
customer value.
• Campaign
• Discount

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• Markets
– A set of all actual and Potential buyers of a product or service
• An actual buyer is someone who is committed to buying a
product whereas a potential buyer is some who is interested in
buying, but may not.

Company
Marketing Consumers
Suppliers Intermediaries
Competitors

Major Environment Forces

Demographic, political, economic, physical, technological, legal, social & cultural

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Core Marketing Concepts

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 Designing the customer-Driven Marketing
Strategy
• Marketing Management
– The Art and Science of Choosing Target market & Building
Profitable, Relationship with them.

1- Selecting Customer to Server: (WHO is your customer,

dividing the market into):

Market Segment

Target Marketing

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 Cont..,
• Marketing manager must decided their target market on the
basis of:
– Level
– Time ( time slicing in aids)
– Nature of demand

• Demarketing: (discouraging customers) “Advertising that urges

the public to limit the consumption of a product, as at a time of
shortage.
– E.g. Amusement Park, Any product

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2- Choosing Value Proposition: ( HOW it ‘ll sever target
customer, how it ‘ll Differentiate & Position itself in the
market lace).
– A company’s value proposition is the set of benefits or value it
promise to deliver to customer to satisfied their needs, e.g.

Look up to 10 Years*
Younger

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3- Marketing Management Orientation: ( Managers design
strategies it build the profitable relationship with target
market

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• There are five alternative concept to design strategies
1- The Production Concept
– Production orientation business dominated the market from the
beginning of Capitalism to the mid 1950’s
– Favor the product that are highly affordable, that’s why
management focus on improving the Production & distribution
– Production concept is more operations oriented rather then
others, & no need for special marketing.
– The demand is more than supply but risk is involve.

– E.g. Banks, Hospitals & Fast food industry

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2- The Product concept: Consumers favor products that offer the
most high in quality, performance, and innovative features
against a normal product.
 company make continuous improvement
 They try to satisfy the customer need on existing products
 E.g. Electronic products, FMCG products

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3- The selling concept (Consumers will buy products only if the
company promotes/ sells these product) High risk, in which company
focuses on Creation sales transaction rather then building Long-term
relationship.
– The aim of selling is to get every possible sale and don't need to worry
about satisfaction after the sale and the revenue contribution of the sale.
– Organization can work is held a large sales promotion, advertising or
salesmanship to promote their old or new product.
– e.g. Insurance companies & Blood donation

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4- The Marketing concept (Focuses on needs/ wants of
target markets & delivering satisfaction, better than
competitors.
 It is absolutely can build the company's long-term
profitability and customer loyalty.
 Product customization
 Tuff competition

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Comparison of Selling & Marketing
Concept

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5- The Societal Marketing concept ( Company marketing decision
should consider consumers’ wants, company requirement,
consumers’ long-run interest and society long-run interest. OR build
social & ethical consideration in their marketing practices.
 Enhances both the consumer's and the society's well-being.
 International healthcare program by (UNO), UNICEF (mothers and the babies
lives), Drug abuse, Heart, Diabetic & HIV (aids) awareness day & recycled
products.

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 E.g.

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Integrated Marketing Plane & Program:
Preparing an ( Marketer develop the marketing program that will
actually deliver the Intended vale to Target customers. company
Marketing Mix or 4 P’s.

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Building the Customer Relationship & create customer
delight : CRM (The overall process of building and maintaining
profitable customer relationship by delivering superior customer
value and satisfaction.

- Customer-perceived value. The customer’s evolution of the

difference between all the benefits and all the cost of a marketing
offer relative to those of competing offers. E.g.

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– Customer satisfaction. The extent to which perceived
performance matches a buy’s expectation. E.g., if performance
match the expectation customer is satisfied ,if performance
exceed the expectation , the customer is highly satisfied or
delighted.

• Delighted customer not make repeat purchase, they become willing

marketing partners and “ customer evangelists”

Capturing Value from customers:

- Creating customer loyalty & retention ( Difference in the
loyalty of customer who are less satisfied, satisfied, and
completely satisfied ). E.g. In India, Shopper Stop & in
Pakistan Bank Credit card.

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• Ensure customer retention by
providing privilege like: reward
point, special offers and sales
preview to its member.
• Customer Lifetime Value
– Losing a single customer
means losing entire stream of
purchases.
• Customer retention.
– Mobilink Club Red: Rewarding
the high-value prepaid
segment. They identified “
“High-value subscribers”

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• Growing Share of customer. The portion of the customer’s
purchasing that a company gets in its product categories. Cross sell
or up-sell. E.g. Amazon.com

• Building Customer Equity. The total combined customer lifetime

values of all of the company’s customer.

– “ The only value your company will ever create is the value that
comes from customers- the once you have now and the ones
you will have in the future. Without customer. You don’t have a
business”
– Customer as a assets for company, it classify its customer
according to their potential profitability & manage relationship.

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Build the Right Relationship with the Right customers

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