Marketing:Creating and Capturing Customer Value

Marketing: Creating and Capturing Customer ValueDr. Tripthi M. Mathew, MD, MPH, MBA President & CEO, Alpha & Omega Healthcare Management Consultinghttp://www.alphanomega.info Lectured at Ashford University, July 11, 2011

Creating and Capturing Customer ValueWhat Is Marketing?Understand the Marketplace and Customer NeedsDesigning a Customer-Driven Marketing StrategyPreparing an Integrated Marketing Plan and ProgramBuilding Customer RelationshipsCapturing Value from CustomersThe Changing Marketing LandscapeTopic Outline

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 The most simple definition of marketing is “managing profitable customer relationships” (Kotler, P., & Armstrong, G., 2012)

What is Marketing? (cont’d)Marketing is defined as “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”(American Marketing Association, 2007).According to UK’s Chartered Institute of Marketing, “Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably”(Dibb, S., & Simkin, L., 2004).

“Marketing is a process that identifies market opportunities, satisfies customers, creates an edge over rivals, differentiates the product or service and generates suitable financial rewards for the business”. (Dibb, S., & Simkin, L., 2004) The Marketing Process

Marketing process consists of market analysis, formulation of marketing strategy, tactical marketing mix programs and operational controls to implement.Traditionally, the marketing mix consisted of the 4 P's (Product, Place, Price, and Promotion). In recent time, it has been extended to three more (People, Processes and Physical Environment) making it 7 P’s. In subsequent chapters we will be covering the marketing process in detail.The Marketing Process Cont’d

The Marketing Process Cont’d

Understanding the Marketplaceand Customer NeedsCustomer Needs, Wants, and Demands

Understanding the Marketplaceand Customer NeedsMarket offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or wantMarketing myopia is focusing only on existing wants and losing sight of underlying consumer needs

Understanding the Marketplaceand Customer NeedsCustomer Value and SatisfactionExpectations

Exchange is the act of obtaining a desired object from someone by offering something in returnUnderstanding the Marketplaceand Customer Needs

Understanding the Marketplaceand Customer NeedsMarkets are the set of actual and potential buyers of a product

Designing a Customer-Driven Marketing StrategyMarketing management is the art and science of choosing target markets and building profitable relationships with themWhat customers will we serve?How can we best serve these customers?

Designing a Customer-Driven Marketing StrategyMarket segmentation refers to dividing the markets into segments of customersTarget marketing refers to which segments to go afterSelecting Customers to Serve

Designing a Customer-Driven Marketing StrategyChoosing a Value PropositionValue proposition Set of benefits or values a company promises to deliver to customers to satisfy their needs

Designing a Customer-Driven Marketing StrategyMarketing Management Orientations

Designing a Customer-Driven Marketing StrategyProduction concept is the idea that consumers will favor products that are available or highly affordableMarketing Management Orientations

Designing a Customer-Driven Marketing StrategyProduct concept is the idea that consumers will favor products that offer the most quality, performance, and features. Organization should therefore devote its energy to making continuous product improvements.Marketing Management Orientations

Designing a Customer-Driven Marketing StrategyMarketing Management OrientationsSelling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort

Designing a Customer-Driven Marketing StrategyMarketing Management OrientationsMarketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do

Designing a Customer-Driven Marketing StrategyMarketing Management OrientationsSocietal marketing concept is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests

Designing a Customer-Driven Marketing Strategy

The marketing mix: set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion, and place.Integrated marketing program: comprehensive plan that communicates and delivers the intended value to chosen customers.Preparing an Integrated Marketing Plan and Program

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

Building Customer RelationshipsRelationship Building Blocks: Customer Value and Satisfaction

Building Customer RelationshipsCustomer Relationship Levels and Tools

Building Customer RelationshipsRelating with more carefully selected customers uses selective relationship management to target fewer, more profitable customersRelating more deeply and interactively by incorporating more interactive two way relationships through blogs, Websites, online communities and social networksThe Changing Nature of Customer Relationships

Building Customer RelationshipsCustomer-managed relationshipsMarketing relationships in whichcustomers, empowered by today’s newdigital technologies, interact withcompanies and with each other to shapetheir relationships with brands.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 customersBuilding Customer Relationships

Building Customer RelationshipsPartners inside the company is every function area interacting with customersElectronicallyCross-functional teamsPartners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnershipsPartner Relationship Management

Building Customer RelationshipsSupply chain is a channel that stretches from raw materials to components to final products to final buyersSupply chain managementPartner Relationship Management

Capturing Value from CustomersCustomer lifetime value is the value of the entire stream of purchases that the customer wouldmake over a lifetime of patronageCreating Customer Loyalty and Retention

Capturing Value from CustomersShare of customer is the portion of the customer’s purchasing that a company gets in its product categoriesGrowing Share of Customer

Capturing Value from CustomersCustomer equity is the total combined customer lifetime values of all of the company’s customers

Capturing Value from CustomersRight relationships with the right customers involves treating customers as assets that need to be managed and maximizedDifferent types of customers require different relationship management strategiesBuilding Customer Equity

The Changing Marketing LandscapeUncertain Economic EnvironmentNew consumer frugality

Marketers focus on value for the customerThe Changing Marketing LandscapeDigital AgePeople are connected continuously to people and information worldwide

Marketers have great new tools to communicate with customers

Internet + mobile communication devices creates environment for online marketingThe Changing Marketing LandscapeRapid Globalization

Marketing:Creating and Capturing Customer Value

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