Creating and delivering customer value by Kotler

1. By: Gaurav Awasthi

2. What is Marketing?
 Many People think of marketing only as Selling
and Advertising.
 No Wonder - Because we bombarded with TV
Commercials, direct mail offers, sales calls
everyday.
 However Selling and Advertising are only the tip
of the marketing iceberg.
 Marketing must not be understood in the old
sense – “Telling and Selling”- but in the new
sense of Satisfying Customer Needs.
 If the marketer understand consumer needs;
develop products that provide superior customer
value; and prices, distributes and promotes them
effectively, these products will sell easily.

3. Marketing Defined
 According to Management Guru Peter Drucker “
The Aim of Marketing is to make selling
Unnecessary.”
 We Define Marketing as the process by which
companies create value for the customers and
build strong customer relationships in order to
capture value from the customer in return.

4. In the first four steps,
companies work to
understand
consumers, create
customer value, and
build strong Customer
The Marketing Process
Understand
the
Marketplac
e and
customer
needs and
wants
Design a
customer
driven
marketing
strategy
Construct
an
integrated
marketing
program
that
delivers
superior
value
Build
profitable
relationship
s and
create
customer
delight
Capture
value from
customers
to create
profit and
customer
equity
Create Value for customer and Build Customer
Relationships
Capture Value
From Customer
in Return
In the final step
companies reap the
reward of creating
superior customer
value by capturing
value from the
customer in the form
1. 2. 3. 4.
5.

5. 1. Understanding the Marketplace
and Customer Needs
 Marketing is all about creating value for the
Customer.
 So as a first step in the Marketing Process, the
company must fully understand consumers and
the marketplace in which it operates.
 We now examine five core customer and
marketplace concepts:
a) Needs, wants and Demands
b) Market Offerings (product, services and
experiences)
c) Value and Satisfaction
d) Exchange and Relationships
e) Markets

6. 1.(a) Customer Needs, Wants and
Demands
 The most basic concept underlying marketing is that
of human need.
 Needs are states of felt deprivation.
 They include basic Physical Needs for food,
clothing, warmth and safety; Social Needs for
belonging and affection and Individual Needs for
knowledge and self expression.
 Wants are the form human needs take as they are
shaped by culture and individual personality. E.g. An
Indian in Kolkata needs food but wants a bowl of Rice
and Fish.
 When backed by buying power, wants become
Demands.
 Given the wants and resource, people demand
products with benefits that add up to the most value
Outstanding marketing companies go extraordinary lengths to learn customer
needs, wants and Demands. E.g. at southwest airlines, all senior executives,
handle bags, check in passengers and serves as flight attendants once in every

7. 1(b) Market Offerings – Products,
Services, and Experiences
 Consumer needs and wants are fulfilled through
Market Offerings - some combination of
products, services, information, or experiences
offered to satisfy a need or want.
 Market offering examples are banking, air travel,
tourism etc
 E.g. in case of tourism the market offering is an
entire travel experience like MP Tourism’s The
Heart of India.
 Market offering also include Ideas. E.g. Tata Tea’s
“Jago Re” Campaign to promote good
governance and responsibility.
Many sellers make the mistake of paying more attention to the specific
product they offer than to the benefits and experiences produced by
these products. These sellers suffer from Marketing Myopia. E.g.
Manufacturer of Drill Bits think that the customers need drill bits but what
customer need is a hole. Smart Marketers look beyond and create

8. 1 (c) Customer Value and
Satisfaction
Q. How do customer choose among many market
offerings?
Ans. Customer form expectations about the value
and satisfaction that various market offerings
will deliver and buy accordingly.
 Satisfied customers buy again and tell others
about their good experience, dissatisfied one’s
switch to competitor’s product.
 Marketers, hence must be careful to set right
expectations.
 Too Low – fail to attract enough customers

9. 1 (d) Exchanges and
Relationships
“Marketing occur when people decide to satisfy
needs and wants through exchange relationships.
Exchange is the act of obtaining a desired object
from someone by offering something in return.”
 The marketer tries to bring about a response to a
market offering and it could more than just buying
e.g. Politician want votes, Orchestra wants an
audience
 Marketing consists of actions taken to build and
maintain desirable exchange relationships with
target audience.
 The goal is to build strong relationships with the
customers.

10. 1 (e) Markets
 The concept of exchange and relationships lead
to the concept of a market.
 A Market is the set of actual and potential buyers
of the product. These buyers share a particular
need or want that can be satisfied through
exchange relationships.
Supplie
rs
Compan
y
Competitor
s
Marketing
Intermediari
es
Consume
rs
A Modern Marketing

11. 2. Designing a Customer – Driven
Marketing Strategy
 Once the company fully understands consumers
and the market place, it needs to design a
customer-driven marketing strategy.
 A winning marketing strategy must contain
answers to the following questions:
a) What customers we will serve (what’s our
target market)?
b) How can we serve these customers best
(What’s our value proposition)?
c) What would be my marketing orientation?

12. 2 (a) Selecting Customers to
serve
 Marketing managers
know that they cannot
serve all customers in
everyway.
 Hence select only those
customers which you can
serve well and profitably.
E.g. Apple, Vertu
 The Company must first
decide who it will serve. It
does this by dividing the
market into segments of
customers(Market
segmentation).
 And select which
segments it will go after
(Target Marketing).
 A Vertu Diamond
Encrusted Phone

13. 2 (b) Choosing a Value
Proposition
 The Company must also decide how it will serve
the targeted customers.
 How it will differentiate and position in the
marketplace.
 “ A company’s value proposition is the set of
benefits or values it promises to deliver to
consumers to satisfy their needs”.
 E.g. with cell phones, Nokia is “Connecting
People – anyone, anywhere” whereas with
Apple’s iPhone, “ Touching is Believing”

14. 2 (c) Marketing Management Orientations
These are the philosophies that guides
the marketing strategy formulation
Production
Concept:
The idea that
consumers will
favour products
that are
available and
highly affordable
and that
organization
should therefore
focus on
improving
production and
distribution
efficiency
Product
Concept:
The idea that
consumers will
favor products
that offer the
most quality,
performance
and features
and that the
organization
should devote
its energy to
making
continuous
product
improvement.
Selling Concept:
The idea that
consumers will
not buy enough
of the firm’s
products unless
it undertakes a
large-scale
selling and
promotion effort.
Marketing
Concept:
It holds that
achieving
organizational
goals depends
on knowing the
needs and
wants of target
markets and
delivering the
desired
satisfaction
better than the
competitors do.
Societal
Marketing
Concept:
The idea that
company’s
marketing
decisions
should consider
consumer’s
wants, the
company’s
requirements,
consumers long-
run interests,
and society’s
long run
interests.

15. 3. Preparing an Integrated Marketing
Plan and Program
 Now the marketer develops an integrated
marketing program that will actually deliver the
intended value to the target customers.
 Its transforming Marketing Strategy into
action.
 It consists of firm’s marketing mix i.e. 4Ps.
Product:
The firm must first
create a need
satisfying market
offering
Price:
IT must decide
how much it will
charge for that
offering
Place:
How it will make
the offering
available to target
consumers
Promotion:
It must
communicate with
customer about
the merits of
offering.
The firm must blend all these marketing mix
tools into a comprehensive Integrated
marketing plan

16. 4. Building Customer
Relationships
 The previous three steps lead up to this most
important step: building profitable customer
relationships.
 CRM is not merely a data management activity.
 It deals with all aspects of acquiring, keeping and
growing customers.
 Companies interact with customers at many levels.
E.g. At one extreme HUL does not interact with
individual customers of surf but works through brand-
building, mass media advertising and on the other
extreme it customer team works in full partnership
with Walmart, Big-bazar etc.
 Companies also go for more selective relationship
management and interact at very deep level with
customers.
 Companies also need to work with Partners inside
and outside the company.

17. 5. Capturing Value from
Customers
 This final step involves capturing value in return
in the form of current and future sales, market
share and profits.
 Highly satisfied customers -> long run profits
 Good customer relationship creates customer
delight.
 Companies create Loyalty programs and look for
customers lifetime value: Customer Equity.
 Beyond simply retaining customers CRM could
help marketers increase share of wallet.
 It is essential to build right relationship with the
right customers.

18. Queries and Doubts?
Thank You Very Much…