Marketing for

Customer Value
1st UNIT
MODULE 1: Introduction to Marketing
 contents
• Introduction: Concept, nature, scope and importance of marketing;
• Marketing concept and its evolution;
• Marketing mix;
• Strategic marketing planning – an overview.
• Market Analysis and Selection:
• Marketing environment – macro and micro components and their
impact on marketing decisions.
• Concept of market segmentation, Bases for market segmentation,
 contents
• Types of market segmentation,
• Effective segmentation criteria, Evaluating & Selecting,
• Target Markets,
• Concept of Target Market,
• Positioning and differentiation strategies,
• Concept of positioning.
Value for customer
• Value for Customer is the incremental benefit which a customer
derives from consuming a product after paying in return
• The term value signifies the benefit that a customer gets from a
product
• It is the difference between the benefits (sum of tangible and
intangible benefits) and the cost
• Customer value is dependent on the three factors – Quality,
Service and Price
Customer value
• 1. Quality: well finished, long lasting, sturdy product will have more
value as compared to a poor, low-quality product
• 2. Price: if the customer feels justified, he or she can pay a higher price
if the perceive it as a high value product
• 3. Service: A company offering good service, quick customer response
and resolving customer queries, will always have an upper hand as
compared to competition
• 4. Marketing/Branding: A good, strong, positive branding about a
product can lead to higher value in the mind of the customer.
• 5. Social Influence: Word of mouth regarding the product as well as
perception of the product in the society also defines the customer value
which a product gets
• 6. Past Experience with the product: If a customer has used a product
in the past, and knows the exact benefit, there is high chance that the
customer would purchase the product again, and hence they have a high
value for the product & brand
Value for customers
• “Just do it.”--delivering on its promise to inspire and help everyday
athletes
• “find and discover anything they might want to buy online-Amazon
dominants the online marketplace by creating a world-class online
• “connect and share with the people in their lives.”-Facebook
• “Taste the Feeling” Coca-Cola has earned an impressive 49 percent
global share
Dell-direct model
• founding father—Michael Dell
• eliminate the intermediaries involved in selling custom computers to
the public
• eliminating unnecessary steps, which it also adopted for its marketing
strategies.
• They removed retailers and resellers from the equation, giving them a
first-hand understanding of consumer needs
• Outcome: There is no guesswork in marketing: you either know what
your consumers need or don't know
 MARKETING
• Marketing is a
• Social and managerial process by which individuals and organizations
obtain
• What they need and want through
• Creating and Exchanging Value with others
 Marketing
According to American Marketing Association," Marketing is 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."

According to Philip Kotlar," Marketing is human

activity directed at satisfying needs and wants through
exchange processes."
 Nature of Marketing.

• 1) Managerial function
• 2) Human activity
• 3) Economic function
• 4) Marketing is both Art & science
• 5) Consumer centric
• 6) Market research
• 7) Goal oriented
• 8) Dynamic process
Functions/ Scope of Marketing
• 1) Market Research • 8) Selling & distribution
• 2) Planning about • 9) After sales services &
product/service design customer relations
• 3) Organizing Resources
• 4) Packaging & labelling
• 5) Branding
• 6) Pricing of product
• 7) Promotion of product
 Importance of Marketing
• 1) Need/ Want satisfaction
• 2) Economic growth
• 3) Generates employment
• 4) Enhance standard of living
• 5) Attain Goals
• 6) Development of new products
• 7) Enhanced product quality
Marketing concepts
• 1) Exchange concept: exchange of things between seller and buyer
• 2) Production concept: customers will consume those products which are cheap and
widely available.
• 3) Product concept: assumed that quality products will be easily sold to customers
• 4) Selling concept: assume that any product will not be sold until we push them to
consumers
• 5) Marketing concept: marketer should identify consumer needs and try to satisfy
them
• 6) Societal concept: It shifts the focus from consumers to society
 UNDERSTANDING MARKETING
PLACE
• UNDERSTANDING MARKET PLACE AND CUSTOMER NEEDS
• (1) needs, wants, and demands;
• (2) market offerings (products, services, and experiences);
• (3) value and satisfaction;
• (4) exchanges and relationships; and
• (5) markets
UNDERSTANDING MARKET PLACE
• 1. NEEDS: Marketers did not create these needs; they are a basic part
of the human
• WANTS: human needs take as they are shaped by culture and
individual personality
• DEMANDS: When backed by buying power, wants become demands
• 4. Market offerings: filled through market offerings
• example: Buffalo Wild Wings (B-Dubs chicken)
 Marketing offerings
• Market Offerings—Products, Services, and Experiences
• Or benefits offered for sale that are essentially intangible and do not result in the
ownership of anything
• Examples -banking, airline, hotel, retailing, and home repair services
• 3. value and satisfaction: Marketers must be careful to set the right level of
expectations
• Customer value and satisfaction are key building blocks for developing and
managing customer relationships.
 customer value creation and
Importance
• An estimate of the average revenue that a customer will
generate through out their lifespan as a customer
• Customer Lifetime Value (CLV) = Customer Margin x (Retention Rate/ (1+
Discount – Retention Rate))
• where,
• Customer Margin = Average purchase x Number of purchases per year x
Average profit margin %
• Retention Rate = (Customer in a period – New acquisition) / Customers in the
beginning
Customer value example
Customer value creation
• price- which believes to less and gives more benefits
• Reducing price or giving more to same price
• Making convenient buy
• B2B giving price justification
• Image/ brand/trust in the company
• Making the customer feel valued
Customer value creation
Understanding customer value
• Something held to deserve
• Customer value is the perception of what a product or service is worth
to a customer versus the possible alternatives
• Worth means whether the customer feels s/he got benefits and services
over what s/he paid
• In a simplistic equation form, customer value is benefits – cost (CV =
B – C)
• also non-price terms such as time, effort, energy and inconvenience
4. Exchange relationship
• The marketer tries to bring about a response to some market offering
• The response may be more than simply buying or trading products
and services
• Example: A political candidate, for instance, wants votes; a church
wants membership and participation; an orchestra wants an
audience; and a social action group wants idea acceptance
5. Market: A market is the set of actual and potential buyers of a
product or service
These buyers share a particular need or want that can be satisfied
through exchange relationships
Customer integrated marketing

• Integrated marketing is a strategy for delivering a unified

message across all the marketing channels company’s
brand uses

• is a process through which organizations accelerate

returns by taking a customer-centric approach to aligning
their marketing and communication objectives with their
business or institutional goals
Customer integrated marketing
• "Integrated Marketing is a strategic approach to integrating communications
and interactive experiences targeting defined audiences and individuals which
coordinates all aspects of marketing of a brand, including:
• Paid media (offline advertising, direct marketing and online display and
programmatic);
• Earned media (Organic search fuelled by content marketing, PR and online
influencer outreach)
• Owned media (including social media, on-site UX, customer service and direct
messaging through email and mobile)
Steps/process of CIM

• Step 1: Know your target audience

• Step 2: Develop a situation analysis (SWOT)

• Step 3: Determining marketing communication objectives

• Step 4: Determining your budget

• Step 5: Strategies and tactics

• Step 6: Evaluation and measurement

Engage customer

• Customer engagement is forming and cultivating a

relationship between your business and your customers

• happens before and after a transaction is made and

often in the form of online engagement via your social
media channels, content, email marketing, and SMS
marketing

• Can also happen in real life or word of mouth marketing

Strategic Marketing Planning

• Strategic marketing planning is the process of writing and

following a plan to reach a specific marketing goal
• Companies plans to increase revenue and profits, achieve
greater visibility, discourage competitors or improve their
appearance through a total rebranding
• Strategic marketing planning is the development of
marketing strategies based on the overall business
strategy
Success is the residue of planning
Benjamin fraklin
• Process of strategic marketing
• Selecting Customers to Serve: through segmentation
• Choosing a Value Proposition: it will differentiate and position itself in the
marketplace.
• JetBlue promises to put “You Above All” by bringing “humanity back to
travel.”
• By contrast, Spirit Airlines gives you “Bare Fare” pricing: “Less Money. More
Go.”
• Homewood Suites by Hilton wants you to “Make yourself at home.”
Meanwhile, the Hyatt Regency brand declares that sometimes “It’s good not
to be home.”
Steps in strategic planning
 MARKETING MIX
• The marketing mix, also known as the four P's of marketing, refers
to the four key elements of a marketing strategy: product, price,
place and promotion
• Product. The item or service being sold must satisfy a consumer's
need or desire
• Price. An item should be sold at the right price for consumer
expectations, neither too low nor too high
• Promotion. The public needs to be informed about the product and
its features to understand how it fills their needs or desires.
• Place. The location where the product can be purchased is important
 PRODUCT

• a product is anything that can be offered to a market for attention,

acquisition, use, or consumption that might satisfy a want or need

• Apple iPhone, a Toyota Camry, and a Caffé Mocha at Starbucks are

products

• Zerodha online investment services, your Instagram account, and

advice from your family doctor.
 product

• What is the product?

• Is it a specific product or a service?

• What does the product accomplish?

• Does the product fulfil a need or provide a unique experience?

• Who are the target customers for the product?

• What differentiates the product from the competition?

• Nike Sneakers
• Core Level Product: A pair of shoes that are comfortable and
provide support while you are walking or running.
• Generic Level Products: A pair of sneakers that are available
in different colors and styles.
• Expected Level Products: A pair of sneakers that are
comfortable, stylish, and provide support while you are walking
or running.
• Augmented Level Products: A pair of sneakers that are
comfortable, and stylish, provide support while you are walking
or running, and come with Nike+ membership.
• Potential Level Products: A pair of sneakers that are
connected to the internet and provide real-time feedback on
your performance.
• Starbucks coffee
• Core Level Product: A cup of coffee that is brewed fresh and
has a rich flavor.
• Generic Level Products: A cup of coffee that is available in
different flavors and sizes.
• Expected Level Products: A cup of coffee that is brewed fresh,
has a rich flavor and is made with high-quality beans.
• Augmented Level Products: A cup of coffee that is brewed
fresh, has a rich flavor, is made with high-quality beans, and
comes with free refills.
• Potential Level Products: A cup of coffee that is connected to
the internet and allows you to customize your order.
 price

• How much do the competitors charge for similar products?

• What is the affordability and price range of target consumers?

• What is the lowest price that the product can sell for?

• What is the highest price that the product can sell for?

• What price is too high or too low for the target audience?

• What price is the best fit for the target market?

Types of pricing
Value based pricing
• It involves redesigning existing brands to offer more quality for a given
price or the same quality for less.
• Short run average cost curve
Cost-Plus Pricing
• Adding a standard markup to the cost of the product
Break-Even Analysis and Target
Profit Pricing
• The firm sets a price at which it will break even or make the target
return on the costs of making and marketing a product
• Target return pricing uses the concept of a break-even chart, which
shows the total cost and total revenue expected at different sales
volume levels.
Competition based pricing
• involves setting prices based on competitors’ strategies, costs, prices,
and market offerings
• Consumers will base their judgments of a product’s value on the
prices that competitors charge for similar products
Types of pricing
• Penetration pricing: getting a much lower price than competitors to
earn initial sales
• Skimming pricing: Businesses that charge maximum prices for new
products and gradually reduce the price
• High-low pricing: the price of a product drops significantly all at once
rather than at a gradual pace
• Premium pricing: prices are set higher than the rest of the market to
create perceived value, quality, or luxury
Types of pricing
• Psychological pricing: play on the psychology of consumers by
slightly altering price, product placement, or product packaging, buy
two, get one half off” deal or setting the price to Rs.499.99 than 500
• Bundle pricing: where two or more similar products or services are
sold together for one price.
• Competitive pricing: sets the price of your products or services at the
current market rate.
• Cost-plus pricing: involves taking the amount it cost to make the
product and increasing that amount by a set percentage to determine
the final price
 Place

• Which places or venues do buyers frequent for similar products and

services?

• Where is the competition selling its products?

• What are the shopping habits of the target audience?

• Will the product placement and distribution require a sales team, the use
of Salesforce or will it be self-service?

• How can the right distribution channels be accessed?

 Promotion
• When is the right time to reach the target audience?
• Which channels or mediums will the target audience get their
information from?
• What advertising approaches will be the most fruitful for the target
audience?
• Which channels are the most cost-effective and efficient for
product promotion?
• Which part of the target audience should be engaged?
• Where are the competitors spending their advertising efforts and
marketing revenue?
Product /market oriented –
business definition
• Facebook--We are an online social network--We connect people
around the world and help them share important moments in their
lives.
• Starbucks--We sell coffee and snacks---We sell “The Starbucks
Experience,”
• Walmart--We run discount stores--We deliver low prices every day
 Marketing environment
• Marketing environment is the combination of external
and internal factors and forces that affect the
company’s ability to establish a relationship and serve
its customers
• FEATURES
• Dynamic
• Uncertain
• Complex
TYPES OF MARKETING
ENVIRONMENT
• The microenvironment consists of the actors close to the company
that affect its ability to engage and serve its customers—the company,
suppliers, marketing intermediaries, customer markets, competitors,
and publics
• The macroenvironment consists of the larger societal forces that
affect the microenvironment—demographic, economic, natural,
technological, political, and cultural forces
Market Segmentation
• process of dividing a broad population into subgroups
according to certain shared factors

• These groups may have common demographics (age,

gender, etc.), geographic location, attitudes, behaviours, etc

• to develop detailed profiles of each market segment

• To know the highest potential of buying their products and

services
Advantages of market segmentation

-Drive more marketing ROI

– Reach new markets
– Cut customer acquisition costs
– Build better products
– Increase brand loyalty
Determination of Segmentation
• Phase I: Setting Expectations/Objectives
• Phase 2: Identify Customer Segments
• Phase 3: Evaluate Potential Segments
• Phase 4: Develop Segment Strategy
• Phase 5: Launch and Monitor
Three-step process
• Segment: Marketers divide the market into categories
based on shared traits.
• Target: They choose the market or target, who are most
likely to buy their products.
• Position: Marketers research what product, price,
promotion, and place combinations will attract
customers to buy their products.
Types of market segmentation
• The four main types of market segmentation are:
1. Demographic
2. Psychographic
3. Geographic
4. Behavioural
Demographic
• Definition: Demographic segmentation groups customers and
potential customers together by focusing on certain traits such as
age, gender, income, occupation & family status
• Age
• Gender
• Ethnicity
• Income
• Level of education
• Religion
• Occupation
• Family structure
Psychographic segmentation
• Psychographic segmentation – divides people into
groups based on their personality, lifestyle, social
status, activities, interests, opinions, and attitudes
• Geographic segmentation allows marketers to group
people based on where they live, work, or travel
• Grouping customers by the country they live in, or
smaller geographical divisions, from region to city, and
right down to postal code.
factors
1.Location (country, state, city, ZIP code)
2.Time zone
3.Climate and season
4.Cultural preferences
5.Language
6.Population type and density (urban, suburban, exurban
or rural)
Behavioral
• process in marketing which divides customers into
segments depending on their behaviour patterns when
interacting with a particular business or website.
1. Segmentation based on purchase and usage
behavior
2. Occasion or timing-based segmentation
3. Benefits sought segmentation
4. Segmentation based on customer loyalty
Effective segmentation
• It should be measurable, accessible, substantial, differentiable,
and actionable.
• When segmented should become more profitable and
successful in the long run
• Requisites of effective segmentation
• 1.Measurable: quantifiable data available
• 2. Accessible: customers and consumers are easily reached at an affordable cost

• 3. Substantial: justifiable number of people

• 4. Differentiable: different target markets respond differently to different marketing
strategies
• 5. Actionable: business is capable of carrying out that strategy
Customer segmentation: market
segmentation
• Nike’s Women’s Market Segmentation: By
recognizing this segment’s unique characteristics and
desires, Nike has become a dominant player in the
women’s athletic market, securing a loyal customer
base and driving substantial revenue growth
• Amazon’s Prime Membership Segmentation:
Amazon segmented its customer base by offering a
subscription-based service that provides exclusive
benefits such as free shipping, access to streaming
services, and special discounts
EVALUATION OF TARGET MARKET
• Involves the examination of various aspects and
measures of a market segment in comparison to the
firm’s goals and resources
• Defines the product/market
• Group consumers into different market segments
• Segment profiles are developed
• Target potential target markets are evaluated and
selected
EVALUATION CRITERIA

• Financial Issues

• Structural Attractiveness

• Marketing Expertise

• Opportunity Cost
FINANCIAL ISSUES
• Segment size: Each firm is likely to have minimum size requirements
for a market segment to be considered financially viable

• Obviously larger firms have higher requirements

• Segment growth rate: Segments with strong growth rates are more
attractive as firms can gain market share from primary demand

• Profit margins: target markets with higher profit margins are always
more attractive (Pursuing new target markets)
Structural Attractiveness

• Competitors: target markets with a fragmented

competition position are often preferred

• Distribution channels: The ability to establish

suitable channel relationships needs to be evident
Strategic Direction

• Strategy: a clear direction of the future of the

organization is generally understood and planned out

• Goals: The firms with higher growth goals are more

likely to adopt a multiple target market strategy and
will, therefore, be more willing to enter new markets
Marketing Expertise
• Resources: financial investment, staff time, and the
potential disruption to the balance of their business
• Capability: Does the firm have the capability to
develop appropriate products in a supportive marketing
mix
• Target markets that require the firm to develop new
expertise are generally best avoided
• Role of brand: Would the firm be required to create a
new brand, or could an existing brand be leveraged into
the new target market, or is brand relatively
unimportant?
Opportunity Cost
• Growth options : What is a range of other
opportunities available for growth to the firm
• Market development
• Market penetration,
• Product development,
• Product diversification or acquisition
Concept of positioning.
• Positioning refers to the place organization want the
brand or product to have within a particular target
market
• Positioning is the process of creating a distinct mental
position or image of a product or a service in the mind
of the customers as compared to other brands in the
market.
• The aim of positioning in marketing is to establish or
sway how consumers perceive you to gain
a competitive advantage
example
• A handbag maker may position itself as a luxury status
symbol
• A TV maker may position its TV as the most innovative
and cutting-edge
• A fast-food restaurant chain may position itself as the
provider of cheap meals
Strategies for positioning
• Product positioning: determine how to best
communicate product attributes to the target customers
based on customer needs, competitor products and how
the company wants its products to be perceived by the
customers
• Price and quality (e.g. Mercedes Bens)
• Target market (e.g. wipro baby)
• Competitors (e.g. Pepsi)
Strategies for positioning
• Brand positioning: create a unique impression of the
brand in the customer’s mind that makes them
desirable to identify, prefer it over competition and
consume the brand
• Price and value (e.g. Rolls Royce)
• Gender (e.g. Gillette)
• Age (e.g. Disney)
• Cultural symbols (e.g. Air India)
 Positioning and differentiation
strategies
• Positioning is the place you hold in the mind’s eye of your
target audience.
• strategic process that involves creating an identity/ image of the
brand or product within the target customers’ mind

• Types of positioning
• Pricing: impacts the decisions of most customers
• Quality: luxury cosmetics or cars, quality can define who the
competitors are.
• Differentiation: is what sets your product or service apart from
the crowd
Example for positioning

• Tesla and Audi position themselves as a luxury

status symbol

• Starbucks positions itself as a trusted source of

upscale quality coffee and beverage

• McDonald’s positions itself as a place to get quick and

cheap meals

• Microsoft and Apple position themselves as a tech

 Differentiation Strategy in Marketing
• Differentiation is how your firm is different or stands out from
your competitors on a non-price basis.
• Features – E.g., Volvo
• Performance – E.g., Apple
• Timing – E.g., Zara
• Distribution – E.g., Coca Cola
• Experience – E.g., Starbucks
• Price – E.g., Ferrari
 Differentiation strategy
• is a business strategy that distinguishes a product to help it stand out
from competitors and more efficiently engage a target audience

• It involves highlighting product’s lower prices, specialized features, and

better quality to gain brand-name recognition and market share
 Benefits of Differentiation Strategy

• Customer loyalty grows

• Customer satisfaction can improve
• Distinction attracts the right audience
• Specificity builds up brand image
 Differentiation Strategies
• Features: unique features and design elements can help set yours apart

• Pricing: Shoppers often compare the prices of similar products and

chose right price

• Quality: high-quality services can make company stand out

• Service: Great service can generate customer loyalty, and prospective

customers may be willing to pay more
Harley Davidson

• Founded in 1903, the American

motorcycle manufacturer
• rock solid reputation
• The sound of V-Twin engine
• customization style that gave
rise to the chopper motorcycle
style
• The company has hundreds of
fan clubs
• There are also theme
restaurants, such as the
Harley-Davidson Las Vegas
Café
Differentiation strategies
• Apple • Emirates-UAE-
3,600 flights per week to more
• Product design than 150 cities in 80 countries.
• Operating system • customer service-(entertainment
• Pricing stragegy and a limited variety of foods and
drinks)
• Tiffany & Co • Latest technology: - customer-
• Product differentiation- centric experience
hand crafted • Tesla: Product innovation-
• Brad names- innovative electric vehicles -
company with timeless environmentally friendly high
tech
designs
• referrals and word of mouth
• Price advertising
Questions
• Concepts, nature scope importance of marketing
• Marketing mix
• Marketing environment
• Market segmentation
• Target, positioning and differentiation marketing