Chapter1: Creating Customer Value And Engagement

Question 1

What is marketing?

Answer 1

Marketing is engaging customers and managing profitable customer relationships.

Definition: “the process by which companies engage customers, build strong customer relationships and create customer value in order to capture value from customers in return”

In other words, if the marketer engages consumers effectively, understands their needs, develops products that provide superior customer value, and prices, distributes, and promotes them well, these products will sell easily (big IFs).

Question 2

What are goals (2) of marketing?

Answer 2

Attract new customers by promising superior value.
Keep and grow current customers by delivering value and satisfaction.

Question 3

What is value?

Answer 3

Benefits / Costs

Question 4

What is the marketing process (creating and capturing customer value)?

Answer 4

Create value for customers and build customer relationships:
1. Understand the marketplace and customer needs and wants.
2. Design a customer value-driven marketing strategy.
3. Construct an integrated marketing program that delivers superior value.
4. Engage customers, build profitable relationships, and create customer delight.

Capture value from customers in return.
5. Capture value from customers to create profits and customer equity.

Question 5

What are customer needs?

Answer 5

States of felt deprivation:
Physical needs — food, clothing, warmth, and safety.
Social needs — belonging and affection.
Individual needs — knowledge and self-expression.

Question 6

What are customer wants?

Answer 6

Form taken by human needs when shaped by culture and individual personality.

Question 7

What are customer demands?

Answer 7

When backed by buying power, wants become demands.

Question 8

What are market offerings?

Answer 8

Products, services, information, or experiences offered to satisfy a need or want.

Question 9

What is marketing myopia?

Answer 9

Paying more attention to the specific products than to the benefits and experiences produced by these products (e.g., producers are focused on customer wants and lose sight of underlying customer needs).

Question 10

Satisfied vs dissatisfied customers

Answer 10

Satisfied customers buy again and tell others.
Dissatisfied customers switch to competitors and disparage the product to others.

Question 11

Setting the right level of expectations (customer value and satisfaction)

Answer 11

Low expectations may fail to attract buyers.
High expectations may disappoint buyers.

Question 12

What are markets?

Answer 12

Set of actual and potential buyers of a product or service.

Question 13

What is target marketing?

Answer 13

Selecting customers to serve. The company wants to select only customers that it can serve well and profitably.

Question 14

What is market segmentation?

Answer 14

Refers to dividing the markets into segments of customers.

Question 15

Designing a customer value-driven marketing strategy

Answer 15

Once a company fully understands its consumers and the marketplace, marketing management can design a customer value-driven marketing strategy.

Question 16

What is marketing management?

Answer 16

The art and science of choosing target markets and building profitable relationships with them.

Question 17

Designing a winning marketing strategy: 2 questions.

Answer 17

What is our target market? (What customers)
What is our value proposition? (How we can best serve them)

Question 18

Value proposition: definition and choosing a value proposition

Answer 18

A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs in a superior way.

Value propositions answer the customer’s question: why should I buy your brand rather than a competitors?

Choosing a value proposition — the company must decide how it will differentiate and position itself in the marketplace.

Question 19

What are the marketing management orientations?

Answer 19

Production concept, product concept, selling concept, marketing concept, societal marketing concept.

Question 20

What is production concept?

Answer 20

Holds that consumers will favour products that are available and highly affordable. Focus is on improving production and distribution.

Question 21

What is the product concept?

Answer 21

Holds that consumers will favour products that offer the most in quality, performance, and innovative features. Focus in on continuous product improvement.

Question 22

What is the selling concept?

Answer 22

Holds that consumers will not buy enough of the firm’s product unless it undertakes a large scale selling and promotion effort (e.g., unsought goods such as life insurance, disability insurance, prepaid funeral services).
Profits through sales volume.

Question 23

What is the marketing concept?

Answer 23

Holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors (customer centred approach).
Profits through customer satisfaction.

Question 24

What is the societal marketing concept?

Answer 24

Questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long term welfare. It calls for sustainable marketing.

Question 25

What are the three considerations underlying the societal marketing concept?

Answer 25

Society (human welfare)
Company (profits)
Consumers (want satisfaction)

Question 26

What is the integrated marketing plan and program?

Answer 26

The integrated marketing program will actually deliver the intended value to target customers.

Major marketing mix tools (four Ps of marketing):
Product, price, place, promotion.

Marketing mix tools should be blended into a comprehensive integrated marketing program.

Question 27

What is customer relationship management?

Answer 27

Delivering superior customer value and satisfaction to build and maintain profitable customer relationships.

Customer-perceived value, customer satisfaction, customer delight.

Question 28

What is customer-perceived value?

Answer 28

Customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers.

Question 29

What is customer satisfaction.

Answer 29

Extent to which a product’s perceived performance matches a buyer’s expectations.

Question 30

What is customer delight?

Answer 30

Companies aim to delight customers by promising only what they can deliver and then delivering more than they promised.

Question 31

What is customer-engagement marketing?

Answer 31

Customer engagement marketing is defined as a marketing strategy that focuses on increasing the engagement customers have with the brand by delivering personalized messages and interacting with customers across whichever channels they prefer.

Customer-engagement marketing makes the brand a meaningful part of consumers’ conversations and lives.

Question 32

What is partner relationship management?

Answer 32

Working closely with others both inside and outside the company to jointly engage and bring more value to customers:

Partners inside the firm — cross-functional teams.
Partners outside the firm — suppliers, distributors, retailers.

Question 33

Creating customer loyalty and retention

Answer 33

Keeping customers loyal makes good economic sense.

Question 34

What is customer lifetime value?

Answer 34

The value of the entire stream of purchases a customer makes over a lifetime of patronage.

Question 35

What is growing share of customer? What is share of customer increased by?

Answer 35

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 customer.
Creating programs to cross-sell and up-sell to existing customers.

Question 36

What are the 4 customer relationship groups?

Answer 36

A company can classify customers according to their potential profitability and manage those relationships accordingly.

Strangers (short-term projected loyalty and low potential profitability)

Butterflies (short-term projected loyalty, high potential profitability)

True friends (long-term projected loyalty, high potential profitability)

Barnacles (long-term projected loyalty and low potential profitability)

The goal is to build the right relationship with the right customer.