Ch 1: Creating Consumer Value and Engagement Flashcards
What is marketing
The process by which companies engage consumers, build strong consumer relationships, and create consumer value in order to capture value from consumers in return. (ex: Responding to Covid-19 crisis and changes in consumers’ shopping behaviour for groceries
Organizing local farmers and producers, providing home delivery (contactless service), local and fresh fruits, produce, and other food items. )
The marketing Process: creating and capturing customer value
(create value for customers and build customer relationships: Understand the
marketplace and customer needs and wants - > design a customer value-driven market strategy -> construct an integrated marketing program that delivers superior value (marketing in a nutshell) -> engage customers, build profitable relationships, and create customer delight
THIS LEADS TO CAPTURE VALUE FROM CUSTOMERS IN RETURN: capture value from customers to create profits and customer equity
Needs, wants, demands
Needs:
- states of deprivation
- physical (food, clothing, warmth, safety)
- social (belonging and affection)
- individual (knowledge and self-expression)
wants: form that needs take as they are shaped by culture and individual goals and personality, media and marketers
demands: wants backed by buying power and willingness to buy
what marketing tools do we have to fulfill needs and wants (marketing mix)
Marketing includes the development of products (brand, services, packaging) and the pricing (discount, offer price, credit policy), distribution/place (market, channel, distribution), and promotion (advertising , publicity and sales promotion) designed to make a profit and generate revenue (or support) for an organization
market offerings
Consumers’ needs and wants are fulfilled through market offerings—some combination of products, services, information, or experiences offered to a market to satisfy a need or a want.
Consumers Try to Match Product Attributes with their Needs and Wants
Product/Service Attributes
(Important Part of Market Offering) -> consumer needs and wants
marketing myopia
paying more attention to the specific products than to the benefits and experiences produced by these products
customer value
The difference between the perceived benefits versus the perceived costs of an exchange.
“What do I get and what do I give up in return?”
Nine Factors Affecting Customer Value: Value as Perceived by the Customer
VALUE AS PERCEIVED BY THE CUSTOMER: TOTAL PERCEIVED BENEFITS (Product, services, personnel, channel and image value) - TOTAL PERCEIVED COST (monetary, price, energy, and psychic cost)
The relationship between perceived value and differentiation
Any of the nine factors that add value to our brand can be considered as a potential “point of differentiation”
As it is discussed below (and later in the course) differentiation is communicating the unique relative advantages of a brand to target segment
(marketers usually focus one or two differentiation factors at a time)
(3)Factors Affecting Customer Value: Value as Perceived by the Customer
We can increase the value of our brand as perceived by the consumers in our target segment by
Increasing the benefits in one or more “boxes” in the previous model (top row)
Decreasing the costs in one of more “boxes” in the previous model (bottom row)
Or, doing both.
markets
not every consumer will have the need or want for the company’s product or service
exchange, building and sustaining relationship
- Manage exchange of market offering (value) for value consumer is willing to give up.
- Do not focus on a single transaction.
- Focus on building a “life-long” relationship.
Key Elements of a Successful Marketing Strategy (1 of 8)
- What consumers do we serve (what’s our target market)?
- Why do they care? (what’s our value proposition)? What mix of benefits and cost reductions are we going to offer to the consumers>
Designing a customer-driven marketing strategy (4)
CREATE VALUE FOR TARGETED CUSTOMERS
SELECT CUSTOMERS TO SERVE:
- Segmentation: divide the total market into smaller markets
- Targeting: select the segment or segments to enter
DECIDE ON A VALUE PROPOSITION:
- Differentiation: differentiate the market offering to create superior customer value
- position the market offering in the minds of target customers
Key Elements of a Successful Marketing Strategy: Value Proposition
Creating Customer Value via The Value Proposition
- Value Proposition: The full mix of benefits and reductions in costs on which a brand is differentiated from competitors is “value proposition”.
- It is the answer to the consumer question: “Why should I buy your brand”?
- Note that value proposition involves differentiation: clearly stating what is different about your brand.
Marketing Orientation of the Firm and Its Effect on Marketing Strategy
The design and execution of the marketing strategy is affected by the marketing orientation (philosophy) of the firm:
- production concept (improve efficiency, reduce cost and price)
- product concept (product quality is the key)
- selling concept (heavy promotion and selling is emphasized)
- marketing concept (satisfy customer needs at a profit)
- societal marketing concept (TRIANGLE: society want human welfare, customers want satisfactions, company wants profit)
Managing Customer relationships and capturing value from customers
basic relationships (for low-margin customers) -> parternerships (both internal and external supply chains, for highly profitable and strategically critical customers)
different segments of customers may require different degrees of relationships
what is crm
Customer relationship management (CRM) is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
Customer-perceived value
Customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers. See slide 15.
Customer satisfaction
Extent to which a product’s perceived performance matches a buyer’s expectations
Customer delight:
Companies aim to delight customers by promising only what they can deliver and then delivering more than they promise
Capturing value from consumers: consumer equity
The value of a company comes from the value of its current and future customers.
The ultimate aim of customer relationship management is to produce high consumer equity.
Consumer equity is the total combined consumer lifetime values of all of the company’s current and future consumers.
Consumer equity is regarded to be a better measure of a firm’s performance than current sales or market share.
Customer-engagement
Customer-engagement aims to make the brand a meaningful part of consumers’ conversations and lives.
Marketers must find ways to enter consumers’ conversations with engaging and relevant brand messages.
Executed mainly through digital marketing tools and social media.
Consumer-generated content
Brand exchanges created by consumers
Consumers play an increasing role in shaping their own brand experiences and those of other consumers.
Uninvited and Invited
Consumer-to-consumer exchanges
Consumers invited by companies
New product and service ideas
Active role in shaping ads and social media content
Create buzz around reintroduction of products
Anticipate potential negative consequences
Creating Customer Loyalty and Retention
Keeping customers loyal makes good economic sense.
Customer lifetime value (CLV) is the value of the entire stream of purchases a customer makes over a lifetime of patronage.
Customer defections can be costly
Can lose that customer’s lifetime value
May cause other customers to defect
CLV of a Lexus customer = $600,000
CLV of a Starbucks customer = $14,000
How can a company grow its “Share of Customer” (Also called “share of wallet”)
Portion of the customer’s purchasing that a company gets in its product categories
Share of Customer is increased by:
Great customer relationship management
Offering greater variety to current customers
Creating programs to cross-sell and up-sell to existing customers
There will be a WORD file on this important topic on Moodle.
Note “growing share of wallet” is part of “capturing value” from consumers also.
