Chapter 1 Marketing: Creating and Capturing Customer Value

Learning Objectives 1. Define marketing and outline the steps in the marketing process. 2. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts. 3. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 4. Discuss customer relationship management, and identify strategies for creating value for customers and capturing value from customers in return. 5. Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Chapter Overview In this chapter, we introduce the basic concepts of marketing. It starts with the question, What is marketing? Simply put, marketing is managing profitable customer relationships. The aim of marketing is to create value for customers and to capture value from customers in return. Next, we discuss the five steps in the marketing process from understanding customer needs, to designing customer-driven marketing strategies and integrated marketing programs, to building customer relationships and capturing value for the firm. Finally, we discuss the major trends and forces affecting marketing in this age of customer relationships. Chapter Outline 1.0 INTRODUCTION Zappos was launched in 1999 as a website that offered the absolute best selection in shoes in terms of brands, styles, colors, sizes, and widths. From the start, customer service has been a cornerstone of its marketing. According to CEO, Tony Hsieh, Our whole goal at Zappos is for the Zappos brand to be about the very best customer service and customer experience. As a result, Zappos has grown astronomically; and besides shoes, it now carries many other categories of goods, such as clothing, handbags, and accessories. With 3 percent of the U.S. population shopping at Zappos, it now serves more than 10 million customers annually, and gross merchandise sales top $1 billion, up from only $1.6 million in 2000. Furthermore, despite the harsh economy, Zappos sales have continued to soar in recent years.

Opening Vignette Questions 1. What is the Zappos approach to media advertising? 2. How does the concept of customer intimacy relate to Zappos? 3. What does Zappos do to make sure that customer obsession permeates the entire organization?

1
2012 Pearson Education

Todays successful companies have one thing in commonlike Zappos, they are strongly customer focused and heavily committed to marketing. 2.0 WHAT IS MARKETING? A simple definition of marketing is managing profitable customer relationships. Marketing must both attract new customers and grow the base of current customers. Every organization must perform marketing functions, not just for-profit companies. Nonprofits (colleges, hospitals, churches, etc.) must also perform marketing. 2.1 Marketing Defined Most people think of marketing as selling and/or advertisingtelling and selling. However, marketing focuses on satisfying customer needs. Broadly defined, marketing is a social and managerial process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. 2.2 The Marketing Process The marketing process includes five steps: (1) understand the marketplace and customer needs and wants; (2) design a customer-driven marketing strategy; (3) construct a marketing program that delivers superior value; (4) build profitable relationships and create customer delight; and (5) capture value from customers to create profits and customer quality. 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. 3.0 UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS Five core customer and marketplace concepts are critical: (1) needs, wants, and demands; (2) marketing offerings (products, services, and experiences); (3) value and satisfaction; (4) exchanges and relationships; and (5) markets.

2012 Pearson Education

3.1 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 individuals needs. Marketers do 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. A person needs food but wants a Big Mac. When backed by buying power, wants become demands. The best marketing companies go to great lengths to learn and understand their customers needs, wants, and demands. 3.2 Market OfferingsProducts, Services, and Experiences Needs and wants are fulfilled through market offeringssome combination of products, services, information, or experiences offered to a market to satisfy a need or want. Market offerings are not limited to physical products. They also include services activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Broadly speaking, market offerings also include other entities, such as persons, places, organizations, information, and ideas. Many sellers make the mistake of paying more attention to the specific products they offer than to thebenefits andexperiences produced by these products.These sellers suffer from marketing myopia, being so taken with their products that they focus on existing wants and lose sight of underlying customer needs. 3.3 Customer Value and Satisfaction Customers form expectations about the value and satisfaction that various market offerings will deliver and then buy accordingly. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers switch to competitors and disparage the product to others. Marketers must be careful to set the right level of expectationsneither too high nor too low. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. 3.4 Exchanges and Relationships Marketingoccurswhenpeopledecidetosatisfyneedsandwantthroughexchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return. Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object. 3.5 Markets The concepts of exchange and relationships lead to the concept of a market; that is, the set of actual and potential buyers of a product. Marketing means managing markets to bring about profitable customer relationships. Although we normally think of marketing

2012 Pearson Education

as being carried out by sellers, buyers also perform marketing functions when they search for products, interact with companies, and make purchases. Figure 1.2 shows the elements in a modern marketing system (see p. 32 in your textbook). Marketing involves serving a market of final consumers in the face of competitors. A companys success at building profitable relationships depends not only on its own actions but also on how well the marketing system serves the needs of final customers. 4.0 DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY Once it fully understands its consumers and the marketplace, marketing management can design a customerdriven marketing strategy. Marketing management is the art and science of choosing target markets and building profitable relationships with them. The marketing manager must answer two important questions: 1. What customers will we serve (Whats our target market)? 2. How can we serve these customers best (Whats our value proposition)? 4.1 Selecting Customers to Serve A company must decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing). Marketing managers know they cannot serve all customers in every way. By trying to do so, they may end up not serving any customers well. Simply put, marketing management is customer management and demand management. 4.2 Choosing a Value Proposition A brands value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. Such value propositions differentiate one brand from another. 4.3 Marketing Management Orientations Marketing management wants to design strategies that will build profitable relationships with target consumers. However, what philosophy should guide these marketing strategies? There are five alternative concepts under which organizations design and carry out their marketing strategies: the production, product, selling, marketing, and societal marketing concepts. 4.3.1 The Production Concept

The productionconcept holds that consumers will favor products that are available and highly affordable. Management should focus on improving production and distribution efficiency. This concept is one of the oldest guides for sellers. 4.3.2 The Product Concept

The product concept holds that consumers will favor products that offer the most in quality, performance, and innovative features. Under this concept, marketing strategy focuses on making continuous product improvements.

2012 Pearson Education

4.3.3

The Selling Concept

The selling concept holds that consumers will not buy enough of the firms products unless it undertakes a large-scale selling and promotion effort. The concept is typically practiced with unsought goodsthose that buyers do not normally think of buying, such as insurance or blood donations. These industries must be good at tracking down prospects and selling them on product benefits. 4.3.4 The Marketing Concept

The marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. Under the marketing concept, customer focus and value are the paths to sales and profits. Instead of a product-centered make-and-sell approach, it is a customer-oriented sense-and-respond philosophy. Figure 1.3 on p. 34 in your textbook contrasts the selling concept (an inside-out perspective) and the marketing concept (an outside-in perspective). Implementing the marketing concept often means more than simply responding to customers stated desires and needs. Customer-driven companies research current customers deeply to learn about their desires, gather new product and service ideas, and test proposed product improvements. This approach works well when a clear need exists and when customers know what they want. In many cases, however, consumers dont know what they want or even what is possible. Such situation call for customer-driving marketingunderstanding customer needs even better than customers themselves do and creating products and services that meet existing and latent needs, now and in the future. 4.3.5 The Societal Marketing Concept

The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare. The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumers and the societys well-being. Therefore, it calls for sustainable marketing (socially and environmentally responsible marketing) that meets the present needs of consumers and businesses while preserving or enhancing the ability of future generations to meet their needs. 5.0 PREPARING AN INTEGRATED MARKETING PLAN AND PROGRAM The companys marketing strategy outlines which customers the company will serve and how it will create value for these customers. Next, the marketer develops an integrated marketing program that will actually deliver the intended value to target customers. The marketing program consists of the firms marketing mix, the set of marketing tools the firm uses to implement its marketing strategy. The marketing mix tools are classified into the four Ps of marketing: product, price, place, and promotion. The firm blends all of these marketing mix tools into a comprehensive integrated marketing program that communicates and delivers the

2012 Pearson Education

intended value to chosen customers. 6.0 BUILDING CUSTOMER RELATIONSHIPS The first three steps in the marketing process all lead up to the fourth and most important stepbuilding profitable customer relationships. 6.1 Customer Relationship Management Customer relationship management is the most important concept of modern marketing. In a broad sense, customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. 6.1.1 Relationship Building Blocks: Customer Value and Satisfaction

The key to building lasting customer relationships is to create superior customer value and satisfaction. Customer Value. Attracting customers is difficult. Consumers buy from companies that offer the highest customer-perceived valuethe customers evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers. Customers often do not judge values and costs accurately or objectively. Instead, they act on perceived value. Customer Satisfaction. Theconceptofcustomersatisfaction depends on the products perceived performance relative to a buyers expectations. If the products performance falls short of expectations, the customer is dissatisfied. If performance matches expectations, the customer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted. Outstanding marketing companies go out of their way to keep important customers satisfied. Even though the customer-centered firm seeks to deliver high customer satisfaction relative to competitors, it does not attempt to maximize customer satisfaction. A company can always increase customer satisfaction by lowering its price or increasing its services; however, this may result in lower profits. The purpose of marketing is to generate customer value profitably, a purpose which requires a delicate balance. 6.1.2 Customer Relationship Levels and Tools

Companies can build customer relationships at many levels. At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with customers. Many companies offer frequency marketing programs that reward customers who buy frequently or in large amounts. In club marketing programs, companies offer members special benefits and create member communities. 6.2 The Changing Nature of Customer Relationships Yesterdays big companies focused on mass marketing to all customers at arms length. Todays companies are building deeper, more direct, and more lasting relationships with carefully selected customers.

2012 Pearson Education

6.2.1

Relating with More Carefully Selected Customers

Few companies today still practice true mass marketing. Instead, most marketers realize that they dont want relationships with every customer. Instead, they target fewer, more profitable customers. Therefore, many companies now use customer profitability analysis to weed out losing customers and to target winning ones for pampering. 6.2.2 Relating More Deeply and Interactively

Todays marketers are incorporating interactive approaches that help build targeted, twoway customer relationships. Increasingly, marketers are using new communications approaches in building closer customer relationships. Consumers have more information about brands than ever before. Two-Way Customer Relationships. New technologies have profoundly changed the ways in which people relate to one another. This changing communications environment also affects how companies and brands relate to customers. For example, new approaches to communications let marketers create deeper customer involvement and a sense of community surrounding a brand. However, the new technologies also create challenges, in that they give consumers greater power and control. Thus, the marketing world is now embracing not only customer relationship management, but also consumer-managed relationships. Greater consumer control means that companies can no longer rely on marketing by intrusion when building customer relationships. Instead, marketers must practice marketing by attractioncreating market offerings and messages that involve consumers rather than interrupt them. Most marketers are still learning how to use social media effectively. The problem is to find unobtrusive ways to enter consumers social conversations with engaging and relevant brand messages. Consumer-Generated Marketing. According to the concept of consumer-generated marketing, consumers themselves play a bigger role in shaping their own brand experiences and those of others. Although this can happen through uninvited consumerto-consumer exchanges via social media, progressive companies are inviting consumers to play a more active role in shaping products and brand messages. Harnessing consumer-generated content can be a time-consuming, costly process, and companies may find it hard to glean even a little gold from all the garbage. Nevertheless, consumer-generated marketing has become a significant force in marketing. 6.3 Partner Relationship Management Todays marketers know they cannot create customer value and build strong customer relationships on their own. They must also work closely with a variety of marketing partners. Therefore, besides being good at customer relationship management, marketers must also be good at partner relationship management. 6.3.1 Partners Inside the Company

Traditionally, marketing was the responsibility of marketing, sales, and customer-support

2012 Pearson Education

personnel. Current thought recognizes that no matter what an employees job may be in a company, he or she must understand marketing and be customer focused. Therefore, instead of letting each department go its own way, todays firms are linking all departments in the cause of creating customer value. Rather than assigning only sales and marketing people to customers, they are forming cross-functional customer teams. 6.3.2 Marketing Partners Outside the Firm

Changes are also occurring in how marketers connect with their suppliers, channel partners, and even competitors. Marketing channels consist of distributors, retailers, and others who connect the company to its buyers. The supply chain describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers. Through supply chain management, many companies today are strengthening their connections with partners all along the supply chain. 7.0 CAPTURING VALUE FROM CUSTOMERS The first four steps in the marketing process involve building customer relationships by creating and delivering superior customer value. The final step involves capturing value in return, in the form of current and future sales, market share, and profits. By creating superior customer value, the firm creates highly satisfied customers who stay loyal and buy more. 7.1 Creating Customer Loyalty and Retention The aim of customer relationship management is to create not just customer satisfaction, but customer delight. This means that companies must aim high in building customer relationships. Customer delight creates an emotional relationship with a product or service, not just a rational preference. Companies are realizing that losing a customer means losing more than a single sale. It means losing customer lifetime value, or the entire stream of purchases that the customer would make over a lifetime of patronage. 7.2 Growing Share of Customer Beyond simply retaining good customers to capture customer lifetime value, good customer relationship management can help marketers increase their share of customer the share the company gets of customers purchasing in their product categories. Thus, banks want to increase share of wallet. In order to increase share of customer, firms can offer greater variety to current customers. They can also create programs to cross-sell and up-sell to market more products and services to existing customers. 7.3 Building Customer Equity Customer relationship management takes a long-term view. Companies not only want to create profitable customers but also to own them for life, capture their customer lifetime value, and earn a greater share of their purchases. 7.3.1 What Is Customer Equity?

2012 Pearson Education

The ultimate aim of customer relationship management is to produce high customer equitythe total combined customer lifetime values of all of the companys current and potential customers. Clearly, the more loyal the firms profitable customers, the higher the firms customer equity. Customer equity may be a better measure of a firms performance than current sales or market share; although sales and market share reflect the past, customer equity suggests the future. 7.3.2 Building the Right Relationships with the Right Customers

Companies should manage customer equity carefully because not all customers, not even all loyal customers, are good investments. In fact, customers can be classified into one of four relationship groups, according to their profitability and projected loyalty. Strangers show low potential profitability and little projected loyalty. The relationship management strategy for these customers is simpledont invest anything in them. Butterflies are potentially profitable but not loyal. The company should use promotional blitzes to attract them, create satisfying and profitable transactions with them, and then cease investing in them until the next time around. True friends are both profitable and loyal. There is a strong fit between their needs and the companys offerings. The firm wants to make continuous relationship investments to delight these customers, and to retain and grow them. Barnacles are highly loyal but not very profitable. There is a limited fit between their needs and the companys offerings. Different types of customers require different relationship management strategies. The goal is to build the right relationships with the right customers. 8.0 THE CHANGING MARKETING LANDSCAPE This section looks at five major trends and forces that are changing the marketing landscape and challenging marketing strategy: the uncertain economic environment, the digital age, rapid globalization, the call for more ethics and social responsibility, and the growth in not-for-profit marketing. 8.1 The Uncertain Economic Environment Beginning in 2008, the United States and world economies experienced a stunning economic meltdown, unlike anything since the Great Depression of the 1930s. This socalled Great Recession caused many consumers to rethink their spending priorities and cut back on their buying. In response, companies in all industries (ranging from discounters to luxury brands) have aligned their marketing strategies with the new economic realities. More than ever, marketers are stressing the value in their value propositions by focusing on value-for-the-money, practicality, and durability in their product offering and marketing pitches. The challenge is to balance the brands value proposition with the current times while also enhancing its long-term equity. The goal in uncertain times is to build market share and strengthen customer relationships at the expense of competitors who cut back. A troubled economy poses opportunities as well as challenges. For example, the fact that 40 percent of consumers say they are eating out less poses threats for many full-service restaurants. However, it presents opportunities for fast-food marketers. In addition, the trend toward eating at home plays into the hands of name-brand foods makers, who have positioned their wares as more convenient and less costly than eating out.

2012 Pearson Education

8.2 The Digital Age The recent technology boom has created a digital age. The explosive growth in digital technology has had a major impact on the ways companies bring value to their customers. Now, more than ever before, we are all connected to each other and to information anywhere in the world. As a result, the digital age has provided marketers with exciting new ways to track customers and create products and services tailored to the needs of individual customers. Digital technology also offers new communication, advertising, and relationship-building tools. Given these new tools, marketers can no longer expect consumers to seek them out; neither can they control conversations about their brands. Therefore, digital media must be fully integrated into a marketers customer-relationshipbuilding efforts. The most dramatic new technology is the Internet. The number of Internet users worldwide now stands at almost 1.8 billion and will reach an estimated 3.4 billion by 2015. By 2020, many experts believe the Internet will be accessed primarily via mobile devices operated by voice, touch, and even thought. Whereas Web 1.0 connected people with information, the next generation Web 2.0 has connected people with other people via blogs, social-networking, and video-sharing sites. In Web 3.0, small, fast, customizable Internet applications, accessed through multifunction mobile devices will usher in a virtual world that users will carry in their pockets. The interactive, community-building nature of these new web technologies will make them ideal for relating with customers. Online marketing is now the fastest-growing form of marketing, and business-to-business (B-to-B) commerce is booming. Thus, the digital age is providing exciting new opportunities for marketers. 8.3 Rapid Globalization In an increasingly smaller world, marketers are now connected globally with their customers and marketing partners. Almost every company, large or small, is touched in some way by global competition; moreover, American firms are challenged at home by European and Asian multinationals. Similarly, U.S. companies have developed truly global operations, making and selling products worldwide. Today, companies are not only selling more of their locally produced products in global markets but also buying more supplies and components abroad. Therefore, managers in countries around the world are taking a global, not just local, view of their industries, competitors, and opportunities. 8.4 Sustainable MarketingThe Call for More Social Responsibility Marketers are reexamining their relationships with social values and responsibilities, and with planet Earth that sustains us. Furthermore, they are being called upon to develop sustainable marketing practices. In addition, corporate ethics and social responsibility have become hot topics for almost every business, and few companies can ignore the demands presented by the environmental movement.

2012 Pearson Education

8.5 The Growth of Not-for-Profit Marketing In recent years, marketing has also become a major part of the strategies of many not-forprofit organizations. The nations nonprofits face stiff competition for support and membership. Sound marketing can help them to attract membership and support. Government agencies have also shown an increased interest in marketing. 9.0 SO, WHAT IS MARKETING? PULLING IT ALL TOGETHER Simply put, marketing is the process of building profitable customer relationships by creating value for customers and capturing value in return. The first four steps in the marketing process create value for customers: understanding the marketplace and customer wants and needs, designing a customer-driven marketing strategy, constructing an integrated marketing program that delivers superior value, and building profitable relationships and creating customer delight. The final step in the process (capturing value from customers to create profits and customer equity) allows the company to reap the rewards of its strong customer relationships by capturing value from customers. Finally, given todays changing marketing landscape, companies must take into account three additional factorsharnessing marketing technology, taking advantage of global opportunities, and ensuring that they act in an ethical, socially responsible way. Student Exercises 1. Key Term: Marketing

The two-fold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by keeping them happy. Take a look at Apple Computers (www.apple.com) and the American Cancer Society (www.cancer.org). How would you say these companies use marketing? 2. Key Term: Market Offering

According to the chapter, a market offering is some combination of products, services, information, or experiences offered to a market to satisfy a need or want. The US Forest Service and the Ad Council joined with DreamWorks Animation to launch public service advertisements featuring Shrek, with the purpose of getting young people to explore the joys of nature firsthand (see www.discovertheforest.org/). What is the market offering, in this instance? 3. Key Term: Marketing Myopia

Paying undue attention to the specific products offered and not enough attention to the benefits and experiences created by those products is classic marketing myopia. Consider the top smartphone operating systems: Android (www.android.com/), Blackberry (www.blackberry.com/), and Apple (www.apple.com/ios/). Do any of the advertising materials on these sites exhibit marketing myopia? 4. Key Term: Market Segmentation

Firms use market segmentation to decide which customers to serve. Visit the websites of Starbucks (www.starbucks.com), Caribou Coffee (www.cariboucoffee.com), and Dunkin

2012 Pearson Education

Donuts (www.dunkindonuts.com/). How does market segmentation apply to each companys marketing efforts? 5. Key Term: Societal Marketing Concept

The societal marketing concept is concerned with the long-term welfare of the consumer and society. However, at times this viewpoint may appear to conflict with the products a company is offering. How do you believe (or, do you believe) tobacco makers are employing this concept in the marketing of cigarettes? You may want to visit the websites of Philip Morris (www.philipmorrisusa.com), R.J. Reynolds (www.rjrt.com), and Lorillard (www.lorillard.com) to help you decide. 6. Key Term: Customer Relationship Management

The overall process of building and maintaining profitable customer relationshipsthe acquiring, keeping, and growing of customersis known as customer relationship management (CRM). Examine your college/university. How are they implementing CRM? 7. Key Term: Partner Relationship Management

Sometimes, to bring greater value to customers, even competitors work together and/or join forces. Time Warner and CBS formed a pact that includes higher fees for CBS and Showtime and that makes CBS shows available for Time Warner Cables video-ondemand services. What are some other high profile examples of competitors joining forces for the overall good of the consumer? 8. Key Term: Customer Equity

Maintaining loyal, profitable customers is the key to high customer equity. Dell Computers (www.dell.com), L.L.Bean (www.llbean.com), and Lexus (www.lexus.com) are all great examples. Look for examples in your local community of companies you consider holding high levels of customer equity. Why? 9. Key Term: Globalization

The global community impacts even the smallest company today, whether it is sparing with competitors halfway across the globe or receiving online orders for products to ship to another country. How has this globalization affected you directly? Has this globalization benefited you or do you think it has created more headaches than good? 10. Key Term: Social Responsibility

The social responsibility movement will place ever-stricter demands on companies in the future. Some companies resist this movement, adapting only when forced. Others, however, embrace their social responsibility to their customers and the world around them. What are some examples of companies you believe have this forward-looking view of social responsibility? What are some examples of companies you do not believe place much emphasis on this view? Marketing ADventure Exercises

2012 Pearson Education

1.

Ad Interpretation Challenge: Market Offerings Ad: Explore NatureUS Forest Service

Market offerings involve some combination of products, services, information, or experiences offered to a market to satisfy a need or want. What market offering elements are featured in the advertisement by DiscoverTheForest.org on p. 30 in your textbook? 2. Ad Interpretation Challenge: Value Proposition Ad: AutomobilesSmart Car

A brands value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. Consider the Smart car ad featured on p. 33 in your textbook. What customers are being targeted by this advertisement? 3. Ad Interpretation Challenge: The Production Concept Ad: Student Choice

One of the oldest marketing management orientations is the production concept, which states that consumers favor products that are available and highly affordable. Therefore, companies should focus on boosting efficiencies in production and distribution. Use the Internet to learn about two major players in the e-reader market: the Nook by Barnes & Noble and the Kindle by Amazon.com. In your opinion, do these retailers embrace the production concept? Why or why not? 4. Ad Interpretation Challenge: Customer Satisfaction Ad: Travel and TourismThe Ritz-Carlton

The concept of customer satisfaction depends on the perceived performance of a product or service relative to a buyers expectations. Review Ritz-Carltons website at www.ritzcarlton.com. Based on what you see on the website, how does this hotel chain focus on customer satisfaction? 5. Ad Interpretation Challenge: Customer Satisfaction Ad: Student Choice

Based on your work in the previous ADventure, find another ad of your selection that prominently displays the customer satisfaction concept and explain it. 6. Ad Interpretation Challenge: Customer-Managed Relationships Ad: MotorcyclesHarley-Davidson

The marketing world is now embracing customer-managed relationships, in which customers (empowered by todays digital technologies) interact with companies and with each other to shape their relationships with brands. Check out Harley-Davidson at www.harleydavidson.com. How is Harley-Davidson using its website to promote customer-managed relationships? 7. Ad Interpretation Challenge: Value Ad: Online RetailZappos

Successful firms use customer relationship management to build and maintain profitable customer relationships by delivering superior customer value and satisfaction. Review the

2012 Pearson Education

story of Zappos on pp. 2627 in your textbook. How do employees at Zappos use customer relationship management to create value for their customers? 8. Ad Interpretation Challenge: Customer Equity Ad: AutomobilesCadillac

The ultimate aim of customer relationship management is to produce high customer equity; that is, the total combined customer lifetime values of a companys current and potential customers. Your textbook states that to cultivate high customer equity, Cadillac must come up with more stylish modes and marketing (see p. 45). Pay a visit to Cadillacs website at www.cadillac.com Based on what you see there, what is Cadillac doing to produce high customer equity? 9. Ad Interpretation Challenge: Club Marketing Program Ad: Student Choice

One of the great ways to build customer loyalty is for the marketer to create programs that offer members special benefits and create member communities. Such programs have the potential to assist in long-term customer retention. For the ADventure, select an ad that you believe displays the concept of club marketing, and then be prepared to explain why you chose the ad. 10. Ad Interpretation Challenge: The Uncertain Economic Environment Ad: RetailTarget

Companies in all industries have aligned their marketing strategies with the new economic realities brought on by the Great Recession that started in 2008. According to your textbook, Target has responded by focusing on the pay less side of its Expect More. Pay Less value proposition. Visit Target online at www.target.com and locate three or four examples of the pay less strategy in action. Discuss how those examples contribute to the value of their products.

2012 Pearson Education