MARKETING: CREATING CUSTOMER VALUE AND ENGAGEMENT

Marketing: An

Introduction 15th Edition Gary Armstrong Philip Kotler Instructor’s Resource Manual

Revised by:

Susan Leshnower 1 / 4

Copyright © 2023 Pearson Education, Inc.1-1

CHAPTER 1

MARKETING: CREATING CUSTOMER VALUE AND ENGAGEMENT

PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES

1-1. Define marketing and outline the steps in the marketing process.1-2. Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.1-3. Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.1-4. Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.1-5. Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

JUST THE BASICS

CHAPTER OVERVIEW

Marketing is managing profitable customer relationships.The aim of marketing is to create value for customers and to capture value in return.Chapter 1 is organized around five steps in the marketing process (see Figure 1.1) – from understanding customer needs, to designing customer-driven marketing strategies and programs, to building customer relationships and capturing value for the firm.

ANNOTATED CHAPTER NOTES/OUTLINE

FIRST STOP

Amazon: Obsessed with Creating Customer Value, Engagement, and Relationships

When you think of shopping online—or of shopping anywhere, for that matter—chances are good that you think first of Amazon.

The online pioneer first opened its virtual doors in 1995, selling books. Amazon is rapidly moving beyond online selling, not just into physical stores but also into video and music streaming, cloud services, and the Internet of Things. If one company represents where the world is now headed, it’s probably Amazon.Its annual sales have rocketed from a modest $150 million in 1997. During just the past three years, Amazon’s revenues have more than doubled to $386 billion, an average of $283,000 every minute of every day.Currently, Amazon is the nation’s second-largest retailer, trailing only Walmart.

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Part 1 Defining Marketing and the Marketing Process

Copyright © 2023 Pearson Education, Inc.1-2 What has made Amazon such an amazing success story? Jeff Bezos puts it in three simple words: “Obsess over customers.” To its core, the company is relentlessly customer driven.

Amazon wants to deliver a special experience to every customer.

Visitors to Amazon.com receive a unique blend of benefits: huge selection, good value, low prices, and convenience. But it’s the “discovery” factor that makes the buying experience really special.

Amazon does much more than just sell goods online. It engages customers and creates direct, personalized customer relationships and satisfying experiences.

Amazon’s innovations have made the order and delivery process a breeze.As Walmart and other store retailers are increasingly invading Amazon’s digital domain, the online retailer is now invading their brick-and-mortar worlds. Amazon is expanding its physical store presence further with store concepts such as Amazon Books (books), Amazon 4-Star (selections of top-rated or trending items), Amazon Fresh (assortments of fresh and prepared food).Amazon has become the poster child for companies that are obsessively and successfully focused on delivering customer value. “Our customers are loyal to us right up until the second somebody offers them a better service,” says Bezos.

WHAT IS MARKETING?

A simple definition of marketing is engaging customers and managing profitable customer relationships.

Marketing must both attract new customers and grow the current customers.

Every organization must perform marketing functions, not just for-profit companies.Non-profits (colleges, hospitals, churches, etc.) also must perform marketing. Today’s marketers want to become a part of your life and enrich your experiences with their brands. They want to help you live their brands.Marketing Defined

Most people think of marketing as selling and/or advertising—“telling and selling.”

Selling and advertising are only part of a larger marketing mix—a set of marketing tools that work together to satisfy customer needs and build customer relationships.

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Chapter 1 Marketing: Creating Customer Value and Engagement

Copyright © 2023 Pearson Education, Inc.1-3 We define marketing as the process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return.Use Key Term Marketing here.Use Chapter Objective 1 here.The Marketing Process

Figure 1.1 shows the five-step marketing process.

• Understand the marketplace and customer needs and wants.
• Design a customer-driven marketing strategy.
• Construct a marketing program that delivers superior value.
• Build profitable relationships and create customer delight.
• Capture value from customers to create profits and customer quality.

Use Figure 1.1 here.

In the first four steps, companies work to understand 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 consumers, they in turn capture value from consumers in the form of sales, profits, and long-term customer equity.

UNDERSTANDING THE MARKETPLACE AND CUSTOMER

NEEDS Five core customer and marketplace concepts are critical: (1) needs, wants, and demands; (2) market offerings (products, services, and experiences); (3) value and satisfaction; (4) exchanges and relationships; and (5) markets.

Customer Needs, Wants, and Demands

The most basic concept underlying marketing is that of human needs.

Human needs are states of felt deprivation. They include physical, social, and individual needs. Marketers did not create these needs; they are a basic part of the human makeup.

Wants are the form human needs take as they are shaped by culture and individual personality. An American needs food but wants a Big Mac.

When backed by buying power, wants become demands.

Outstanding marketing companies go to great lengths to learn and understand their customers’ needs, wants, and demands.

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