Strategic Marketing and Customer Value Creation

Posted on Feb 4, 2025 in Marketing

Define Marketing and Outline the Steps in the Marketing Process

  • Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The marketing process involves five steps. The first four steps create value for customers.
  1. Understanding the Marketplace and Customer Needs and Wants.
  2. Designing a Customer-Driven Marketing Strategy.
  3. Constructing an Integrated Marketing Plan that Delivers Superior Value.
  4. All of these steps form the basis for the fourth step: Engaging Customers, Building Profitable Customer Relationships and Creating Customer Delight.
  5. Capturing Value from Customers.

Importance of Understanding the Marketplace and Customers

  • Outstanding marketing companies go to great lengths to learn about and understand their customers’ needs, wants, and demands. This understanding helps them to design want-satisfying market offerings and build value-laden customer relationships by which they can capture customer lifetime value and greater share of customer. The result is increased long-term customer equity for the firm.

The Core Marketplace Concepts Are:

  1. Needs, Wants, and Demands
  2. Market Offerings (Products, Services, and Experiences)
  3. Value, Satisfaction, and Quality
  4. Exchange and Relationships
  5. Markets
  • Companies address needs, wants, and demands by putting forth a value proposition, a set of benefits that they promise to consumers to satisfy their needs. The value proposition is fulfilled through a market offering, which delivers customer value and satisfaction, resulting in long-term exchange relationships with customers.

Key Elements of a Customer Value-Driven Marketing Strategy

  • To design a winning marketing strategy, the company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will cultivate (target marketing). Next, the company must decide how it will serve targeted customers (how it will differentiate and position itself in the marketplace).
  • Marketing management can adopt one of five competing market orientations.
  • The Production Concept: Holds that management’s task is to improve production efficiency and bring down prices.
  • The Product Concept: Holds that consumers favor products that offer the most in quality, performance, and innovative features; thus, little promotional effort is required.
  • The Selling Concept: Holds that consumers will not buy enough of an organization’s products unless it undertakes a large-scale selling and promotion effort.
  • The Marketing Concept: Holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.
  • The Societal Marketing Concept: Holds that generating customer satisfaction and long-run societal well-being through sustainable marketing strategies is key to both achieving the company’s goals and fulfilling its responsibilities.

Customer Relationship Management

  • Broadly defined, customer relationship management is the process of engaging customers and building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
  • Customer-engagement marketing aims to make a brand a meaningful part of consumers’ conversations and lives through direct and continuous customer involvement in shaping brand conversations, experiences, and community.
  • The aim of customer relationship management and customer engagement is to produce high customer equity, the total combined customer lifetime values of all of the company’s customers. The key to building lasting relationships is the creation of superior customer value and satisfaction.
  • In return for creating value for targeted customers, the company captures value from customers in the form of profits and customer equity.

Major Trends and Forces Changing the Marketing Landscape

  • Dramatic changes are occurring in the marketing arena. The digital age has created exciting new ways to learn about and relate to individual customers. As a result, advances in digital and social media have taken the marketing world by storm. Online, mobile, and social media marketing offer exciting new opportunities to target customers more selectively and engage them more deeply. The key is to blend the new digital approaches with traditional marketing to create a smoothly integrated marketing strategy and mix.
  • The Great Recession caused consumers to rethink their buying priorities and bring their consumption back in line with their incomes. Even as the post-recession economy has strengthened, Americans are now showing an enthusiasm for frugality not seen in decades. The challenge is to balance a brand’s value proposition with current times while also enhancing its long-term equity.
  • In recent years, marketing has become a major part of the strategies for many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, foundations, and even churches. Also, in an increasingly smaller world, many marketers are now connected globally with their customers, marketing partners, and competitors. Finally, today’s marketers are also re-examining their ethical and societal responsibilities. Marketers are being called on to take greater responsibility for the social and environmental impacts of their actions.
  • Pulling it all together the major new developments in marketing can be summed up in a single concept: engaging customers and creating and capturing customer value. Today, marketers of all kinds are taking advantage of new opportunities for building value-laden relationships with their customers, their marketing partners, and the world around them.

Company-Wide Strategic Planning and Its Four Steps

  • Strategic planning sets the stage for the rest of the company’s planning. Marketing contributes to strategic planning, and the overall plan defines marketing’s role in the company. Strategic planning involves developing a strategy for long-run survival and growth.

It consists of four steps:

  1. Defining the Company’s Mission
  2. Setting Objectives and Goals
  3. Designing a Business Portfolio
  4. Developing Functional Plans
  • The company’s mission should be market-oriented, realistic, specific, motivating, and consistent with the market environment. The mission is then transformed into detailed supporting goals and objectives, which in turn guide decisions about the business portfolio. Then each business and product unit must develop detailed marketing plans in line with the company-wide plan.

Designing Business Portfolios and Developing Growth Strategies

  • Guided by the company’s mission statement and objectives, management plans its business portfolio, or the collection of businesses and products that make up the company.
  • The firm wants to produce a business portfolio that best fits its strengths and weaknesses to opportunities in the environment. To do this, it must analyze and adjust its current business portfolio and develop growth and downsizing strategies for adjusting the future portfolio.
  • The company might use a formal portfolio-planning method. But many companies are now designing more-customized portfolio- planning approaches that better suit their unique situations.

Marketing’s Role in Strategic Planning

  • Under the strategic plan, the major functional departments—marketing, finance, accounting, purchasing, operations information systems, human resources and others—must work together to accomplish strategic objectives.
  • Marketing plays a key role in the company’s strategic planning by providing a marketing concept philosophy and inputs regarding attractive market opportunities. Within individual business units, marketing designs strategies for reaching the unit’s objectives and helps to carry them out profitably.
  • Marketers alone cannot produce superior value for customers. Marketers must practice partner relationship management, working closely with partners in other departments to form an effective value chain that serves the customer. And they must also partner effectively with other companies in the marketing system to form a competitively superior value delivery network.

Elements of a Customer Value–Driven Marketing Strategy

  • Customer engagement, value, and relationships are at the center of marketing strategy and programs. Through market segmentation, targeting, differentiation, and positioning, the company divides the total market into smaller segments, selects segments it can best serve, and decides how it wants to bring value to target consumers in the selected segments.
  • It then designs an integrated marketing mix to produce the response it wants in the target market. The marketing mix consists of product, price, place, and promotion decisions (the four Ps).

Marketing Management Functions and Marketing ROI

  • To find the best strategy and mix and to put them into action, the company engages in marketing analysis, planning, implementation, and control. The main components of a marketing plan are the executive summary, the current marketing situation, threats and opportunities, objectives and issues, marketing strategies, action programs, budgets, and controls. Planning good strategies is often easier than carrying them out. To be successful, companies must also be effective at implementation – turning marketing strategies into marketing actions.
  • Marketing departments can be organized in one way or a combination of ways: functional marketing organization, geographic organization, product management organization, or market management organization. In this age of customer relationships, more and more companies are now changing their organizational focus from product or territory management to customer relationship management. Marketing organizations carry out marketing control, both operating control and strategic control.
  • More than ever, marketing accountability is the top marketing concern. Marketing managers must ensure that their marketing dollars are being well spent. In a tighter economy, today’s marketers face growing pressures to show that they are adding value in line with their costs. In response, marketers are developing better measures of marketing return on investment. Increasingly, they are using customer-centered measures of marketing impact as a key input into their strategic decision making.