AFM101 Chapter Notes - Chapter 1-2: Customer Retention, Personal Selling, Longrun

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MM110 NOTES
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CHAPTER 1: MARKETING: CREATING AND CAPTURING CUSTOMER VALUE
LEARNING OBJECTIVES:
1. DEFINE MARKETIGN AND OUTLINE THE STEPS IN THE MARKETING PROCESS
Marketing is the process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return. Or, marketing is
the process of building profitable customer relationships by creating value for customers
and capturing value for them in return.
The marketing process involves 5 steps. The first four steps create value for customers.
First, marketers need to gain a full understanding of the marketplace and customer needs
and wants.
Next, marketers design a customer-driven marketing strategy with the goal of getting,
keeping and growing target customers. This is based on 2 questions, what customers will we
serve? (market segmentation and targeting) and how can we best serve our target
customers? (differentiation and positioning).
Thirdly, marketers construct a marketing program or value proposition that actually delivers
superior value.
All these steps form the basis of the fourth step, building profitable customer relationships
and creating customer delight.
In the final step, the company reaps the rewards of strong customer relationships by
capturing value from customers.
2. EXLPLAIN THE IMPORTANCE OF UNDERSTANDING CUSTOMERS AND THE
MARKETPALCE
Outstanding marketing companies go to great lengths to learn about and understand their
customers needs, wants and demands. This understanding helps them to design want-
satisfying market offerings and to build value-laden customer relationships by hich they
capture customer lifetime value and greater share of customer. The result is increased long
term customer equity for the firm.
The core marketplace concepts are needs, wants and demands; market offerings (products,
services and experiences); value and satisfaction; exchange and relationships; and markets.
Wants are the form taken by human needs when shaped by culture and individual
personality. When backed by buying power, wants become demands. Companies address
needs by putting forth a value proposition, a set of benefits that they promise to consumers
to satisfy their needs. The value proposition is fulfilled through a marketing offering, which
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delvers customer value and satisfaction, resulting in long term exchange relationships with
customers.
3. IDENTIFY THE KEY ELEMENTS OF A CUSTOMER-DRIVEN MARKETING STRATEGY
AND DICUSS THE MARKETING MANAGEMENT ORIENTATIONS THAT GUIDE
MARKETING STRATEGY
To design a winning marketing strategy, the company must first decide who it will serve. It
does this by dividing the market into segments of customers (market segmentation) and
selecting which segments it will cultivate (target marketing). Next, the company must decide
how it will serve targeted customers (how it will differentiate and position itself in the
marketplace).
Marketing management can adopt one of 5 competing marketing orientations. The product
concept holds that managements task is to improve production efficiency and bring down
prices. The product concept holds that consumers favour products that offer the most in
quality, performance and innovative features; thus, little promotional effort is required. The
selling concept holds that consumers will not buy enough of the organisations products
unless it undertakes large-scale selling and promotion effort. The marketing concept holds
that achieving organisational goals depends on determining the needs and wants of target
markets and delivering the desired satisfactions more effectively and efficiently than
competitiors do. The society marketing concept is for generating customer satisfaction and
long-run societal well-being thorough sustainable marketing strategies keyed both to
achieving the companys goals and to fulfilling its responsibilities.
4. DISCUSS CUSTOMER RELATIONSHIP MANAGEMENT AND IDENTIFY STRATEGIES
FOR CREATING VALUE FOR CUSTOMERS AND CAPTURING VALUE FROM
CUSTOMERS IN RETURN
The most important step in the marketing process involves building value-laden, profitable
relationships with target customers. Throughout this process, marketers practice customer
relationship management to create customer satisfaction and delight. In creating customer
value and relationships, however, the company cannot go it alone. It must work closely with
marketing partners both inside and outside the company and throughout the marketing
system. Thus, beyond practicing good customer relationship management, firms must also
practice good partner relationship management.
The first four steps of the marketing process create value for customers. In the final step,
the company reaps the rewards of its strong customer relationships by capturing value from
customers. Delivering superior customer value creates highly satisfied customers who will
buy more and will buy again. This helps the company to capture customer lifetime value and
greater share of customer. The result is increase long-term customer equity for the firm.
5. DESCRIBE THE MAIN TRENDS AND FORCES THAT ARE CHANGING THE MARKETING
LANDSCAPE IN THIS AGE OF RELATIONSHIPS
In the face of todays changing marketing landscape, companies must take into account 3
factors. In building customer and partner relationships, they must harness marketing
technology, take advantage of global opportunities and ensure that they act in an ethically
and socially responsible way.
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WHAT IS MARKETING?
- Creating value for customers
- Building strong relationships
- Capturing value from customers in return
Marketing is the activity, set of instructions and processes for creating, communicating,
delivering and exchanging offerings that have value for customers, clients, partners and
society at large.
THE MARKETING PROCESS
1. Understand the marketplace and customer needs, wants and demands
2. Design a customer driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Build profitable relationships and create consumer delight
5. Capture value from customers to create profits and customer equity
In the first 4 steps, marketing organisation uncover knowledge about consumers, create
customer value and build strong customer relationships. In the final step, companies reap
the rewards of creating superior customer value. By creating value for customers, they in
turn capture value from customers in the form of sales, profits and long-term customer
equity.
Needs:
- States of felt deprivation
- Physical needs for food
- Social needs for affection
- Individual needs for knowledge
- Marketers stimulate needs but do not create them.
Wants:
- The form human needs take as shaped by culture and individual personality.
- Described in terms of objects which will satisfy needs
- People have unlimited wants and limited resources
- Choose products which have most value and satisfaction for their money
- When backed by buying power, wants become demands
Demands:
- Human wants that are backed by buying power
DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY
- What customers will we serve? (who is the target market)
- How can we serve these customers best? (what is our value proposition)
Marketing management: the art and science of choosing target markets and building
profitable relationships with them.
MANAGING CUSTOMER DEMAND
Marketing decisions:
1. Finding, increasing and retaining demand
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Document Summary

Chapter 1: marketing: creating and capturing customer value. Learning objectives: define marketign and outline the steps in the marketing process. Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Or, marketing is the process of building profitable customer relationships by creating value for customers and capturing value for them in return. The first four steps create value for customers. First, marketers need to gain a full understanding of the marketplace and customer needs and wants. Next, marketers design a customer-driven marketing strategy with the goal of getting, keeping and growing target customers. This is based on 2 questions, what customers will we serve? (market segmentation and targeting) and how can we best serve our target customers? (differentiation and positioning). Thirdly, marketers construct a marketing program or value proposition that actually delivers superior value.

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