Chapter 1
MARKETING: CREATING CUSTOMER VALUE AND
ENGAGEMENT
MARKETING STARTER: CHAPTER 1
NIKE’s Customer Value-Driven Marketing: Engaging Customers and Building
Brand Community
Synopsis
When you think of sports gear, you think of Nike. The company sells sports apparel and gear for sports from
basketball to baseball to hiking and wall climbing.
From the start, Nike focused on product innovation and aggressive sports marketing. It is the world’s largest sports
apparel company, 44 percent larger than rival Adidas. It reaches an impressive 62 percent of the U.S. sports footwear
market versus number–two Skechers at only 5 percent and Adidas at 4.6 percent. What has made Nike such an
amazing success story? Nike knows that connecting today is a dialogue, according to its CEO. Nike’s chief
marketing officer states: “The engagement levels we have received…drive huge momentum for our brand…the
beginning of how we will connect with and inspire athletes around the world.” To its core, the company is
relentlessly customer driven.
Nike wants to deliver a special experience to every customer. Most regulars feel a surprisingly strong relationship
with the company. Nike’s mission is to “bring inspiration and innovation to every athlete in the world.” .
Nike builds customer engagement and relationships. Customers connect with Nike through ads, in-person events, at
Niketown stores, a local Nike running club, a Nike+ app, or one of the company’s many community web and social
media sites. These create opportunities for customers to bond with the Nike brand, through a personal
brand-customer connection. Nike’s digital and social media marketing interacts with customers to build brand
engagement, advocacy, and community.
Indeed, Nike has become the poster child for companies that are obsessively and successfully focused on delivering
customer value.
Discussion Objective
An active 10-minute discussion of the Nike story will help link students to key foundational marketing concepts.
Nike provides an excellent vehicle for introducing the overall marketing framework presented in Chapter 1 and
throughout the text: Good marketing is all about creating value for customers and building strong customer
relationships in order to capture value from customers in return. No company does that better than Nike.
Starting the Discussion
To start the discussion, ask the class, “Does anyone here wear the ‘swoosh?’” It may make more sense to ask
whether there is anyone who does not recognize the “swoosh.” Based on the show of hands, ask for students to share
their experience with the brand. What attracts them to Nike? What is it about the customer experience that is so
enticing?
Next, pull up Nike’s Facebook pages. Working with students, search for a few specific sports pages that interest
them. Click on articles and links to further explore. Together, note the variety of approaches Nike takes and the
focus on customers. Investigate Nike’s other social media feeds, including the company’s Web site, Twitter,
Snapchat, and YouTube. In what ways does Nike’s obsession with customer service show through in every feature
and detail?
You should be familiar with these Web sites in advance so that you can move purposefully to keep the discussion
moving. But let the class discussion interactively guide the sites that you explore, taking you deeper into each page.
Start with the first question below, and then ask other questions as the discussion allows. Throughout the discussion,
Copyright© 2018 Pearson Education, Inc.
keep your objective firmly in mind: to emphasize that good marketing is all about creating value for customers and
managing customer relationships in order to capture value from customers in return. The final question leads the
class into Chapter 1 and the discussion for the day. Have fun with this one!
Discussion Questions
1. The first marketing story in the text is about Nike. Let’s take a quick look at the “About Nike” link at the
bottom of the Nike home page and see what we can learn about the company and how it operates. Just
looking at this Web page, what stands out about Nike? Go to Nike’s other social media outlets to reinforce
the idea that everything points to Nike’s obsession with its customers—it’s all about connecting the
company and the customers.
2. How has what we are seeing on these sites contributed to Nike’s performance? How has Nike been
successful? (As indicated in the Nike story, the company has grown astronomically in market share and
strength of customer relationships, due largely to its obsession with customer satisfaction and customer
experience. Even in a slow retail economy, Nike’s sales have soared in recent years. Thus, by creating value
for customers, Nike has captured value from customers in return.)
3. Why did the authors choose Nike as the very first company to highlight in the first chapter of the text? How
does this opening story relate to the major points made in the rest of the chapter? (This question should lead
naturally into major Chapter 1 concepts: What is marketing and what is the marketing process? What is
customer-driven marketing? Why are customer value, customer satisfaction, and customer relationships so
important?)
CHAPTER OVERVIEW
Use Power Point Slide 1-1 Here
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,
the five steps in the marketing process are discussed—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, there is a discussion of the major
trends and forces affecting marketing in this age of customer relationships.
CHAPTER OBJECTIVES
Use Power Point Slides 1-2 here
1. Define marketing and outline the steps in the marketing process.
2. Explain the importance of understanding the marketplace and customers and identify the
five core marketplace concepts.
3. Identify the key elements of a customer value-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.
Copyright© 2018 Pearson Education, Inc.
CHAPTER OUTLINE
p. 2 INTRODUCTION
When you think of shopping for sports apparel, chances are
good that you think first of Nike. The company sells
everything from apparel and equipment for sports ranging
from basketball and baseball to biking, wall climbing, and
skateboarding.
From the start, Nike has grown steadily and strongly. In the
past decade, its global sales and income have more than
doubled, and its market share of sports apparel and footwear
overwhelms competitors
To its core, the company is relentlessly customer driven.
Nike wants to deliver a special experience to every
customer.
Nike’s social media marketing makes the brand experience
special by focusing on building relationships and
connections.
Nike successfully concentrates on delivering customer
value through its efforts to develop personal and deep
experiences.
p. 3
Photo: The Nike
swoosh
Opening Vignette Questions
1. Many companies claim to be obsessed with
customer service. What sets Nike apart from the
others?
2. In your opinion, is it possible to spend heavily
on media advertising and contracts with athletes,
and also successfully market through digital and
social media? Explain.
3. Do you believe that customers really want
long-term relationships with a company and
other customers? If so, how does Nike build
these relationships?
4. What if a close online competitor came along,
offering comparable items and service? Do you
think most Nike customers would remain loyal
to Nike? Defend your answer.
Copyright© 2018 Pearson Education, Inc.
PPT 1-3
PPT 1-4
p. 4
p. 5
Define marketing and outline the steps in the marketing
process.
WHAT IS MARKETING?
A simple definition of marketing is engaging customers and
managing profitable customer relationships.
Marketing must both attract new customers and grow
current customers.
Every organization must perform marketing functions, not
only for-profit companies.
Nonprofits (colleges, hospitals, churches, etc.) also must
perform marketing.
Marketing Defined
Most people think of marketing only as selling and
advertising or “telling and selling.”
Marketing must focus on satisfying customer needs.
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.
Learning Objective
1
p. 5
Key Term:
Marketing
p. 5
Photo: Social media
marketing on
mobile devices
Assignments, Resources
Use Discussion Question 1-1 here
Troubleshooting Tip
For most students, this will be their first introduction
to marketing and all its ramifications. To most of
them, marketing is nothing more than selling and/or
advertising, and this gets reinforced daily when they
see “marketing” job ads that are really sales
positions. It helps to get students talking about what
marketing is, and to give examples of what they
consider good marketing. Try to bring in
contemporary examples that the students can relate
to.
p. 6
PPT 1-5
The Marketing Process
Figure 1.1 shows the five-step marketing process.
1. Understand the marketplace and customer needs and
Copyright© 2018 Pearson Education, Inc.
wants.
2. Design a customer value-driven marketing strategy.
3. Construct an integrated marketing program that
delivers superior value.
4. Engage customers, build profitable relationships,
and create customer delight.
5. Capture value from customers to create profits and
customer equity.
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.
Review Learning Objective 1: Define marketing and
outline the steps in the marketing process.
p. 6
Figure 1.1: The
Marketing Process:
Creating and
Capturing Customer
Value
Assignments, Resources
Use Think-Pair-Share 1 here
p. 6
PPT 1-6
PPT 1-7
Explain the importance of understanding the
marketplace and customers and identify the five core
marketplace concepts.
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
As the first step in the marketing process, the company must
fully understand consumers and the marketplace in which it
operates.
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. These needs were not
Learning Objective
2
p. 6
Key Terms: Needs,
Wants, Demands
p. 6
Photo: Target
Copyright© 2018 Pearson Education, Inc.
created by marketers; 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 typical American
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.
Assignments, Resources
Use Additional Project 1 here
Use Think-Pair-Share 2 here
p. 7
PPT 1-8
Market Offerings—Products, Services, and Experiences
Needs and wants are fulfilled through market offerings—
some combination of products, services, information, or
experiences offered to a market to satisfy a need or want.
Market offerings include products and services—activities
or benefits offered for sale that are essentially intangible
and do not result in the ownership of anything.
Marketing myopia occurs when a company becomes so
taken with their own products that they lose sight of
underlying customer needs.
p. 7
Key Term: Market
offerings
p. 7
Photo: American
Girl
p. 7
Key Term:
Marketing myopia
p. 7
p. 8
PPT 1-9
Customer Value and Satisfaction
Customers 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 experiences.
Dissatisfied customers switch to competitors and disparage
the product to others.
Customer value and customer satisfaction are key building
blocks for developing and managing customer relationships.
Exchanges and Relationships
Exchange is the act of obtaining a desired object from
p. 9
Key Term:
Exchange
Copyright© 2018 Pearson Education, Inc.
someone by offering something in return.
Marketing consists of actions taken to build and maintain
desirable exchange relationships with target audiences.
p. 9
PPT 1-10
PPT 1-11
Markets
A market is the set of actual and potential buyers of a
product.
Marketing means managing markets to bring about
profitable customer relationships.
Figure 1.2 shows the main elements in a modern marketing
system.
Review Learning Objective 2: Explain the importance of
understanding the marketplace and customers and identify
the five core marketplace concepts.
p. 9
Key Term: Market
p. 10
Figure 1.2: A
Modern Marketing
System
Assignments, Resources
Use Discussion Question 1-2 here
Use Outside Example 1 and 2 here
p. 10
PPT 1-12
PPT 1-13
Identify the key elements of a customer value-driven
marketing strategy and discuss the marketing
management orientations that guide marketing strategy.
DESIGNING A CUSTOMER VALUE-DRIVEN
MARKETING STRATEGY AND PLAN
Marketing management is defined as 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 (what’s our target
market)?
2. How can we serve these customers best (what’s our
value proposition)?
Learning Objective
3
p. 10
Key Term:
Marketing
management
p. 10 Selecting Customers to Serve
A 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 go after (target marketing).
Copyright© 2018 Pearson Education, Inc.
Marketing managers know they cannot serve all customers.
By trying to do so, they end up not serving any well.
Marketing managers must decide which customers they
want to target and on the level, timing, and nature of their
demand.
Assignments, Resources
Use Discussion Question 1-3 here
Use Critical Thinking Exercise 1-6 here
Troubleshooting Tip
The concept of not serving all customers may be
confusing to students. Most of them have not yet
encountered anything like it. However, the light bulb
seems to go on with a discussion of crowded
national parks and the efforts made to have people
visit them during off-peak travel times. Having
students come up with their own examples will
increase the level of understanding.
p. 11
PPT 1-14
p. 11
PPT 1-15
Marketing management is customer management and
demand management.
Choosing a Value Proposition
A company’s value proposition is the set of benefits or
values it promises to deliver to consumers to satisfy their
needs. (BMW promises “the ultimate driving machine.”)
Such value propositions differentiate one brand from
another.
Marketing Management Orientations
Marketing management wants to design strategies that will
build profitable relationships with target consumers. But
what philosophy should guide these marketing strategies?
There are five alternative concepts under which
organizations design and carry out their marketing
strategies.
The Production Concept
The production concept holds that consumers will favor
products that are available and highly affordable.
p. 11
Photo: Hyatt
Regency
p. 11
Key Terms:
Production concept,
Product concept
Copyright© 2018 Pearson Education, Inc.
p. 11
Management should focus on improving production and
distribution efficiency.
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.
The Selling Concept
The selling concept holds that consumers will not buy
enough of the firm’s products unless the firm undertakes a
large-scale selling and promotion effort.
The concept is typically practiced with unsought goods—
those 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.
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.
Under the marketing concept, customer focus and value are
the paths to sales and profits.
Rather than a “make and sell” philosophy, it is a
customer-centered “sense and respond” philosophy.
The job is not to find the right customers for your product,
but to find the right products for your customers.
Customer-driven companies research current customers
deeply to learn about their desires, gather new product and
service ideas, and test proposed product improvements.
Customer-driven marketing requires understanding
p. 12
Key Term: Selling
concept
p. 12
Key Term:
Marketing concept
Copyright© 2018 Pearson Education, Inc.
PPT 1-16
p. 13
PPT 1-17
customer needs even better than customers themselves do
and creating products and services that meet existing and
latent needs.
Designing a Customer Value-Driven Marketing Strategy
Figure 1.3 contrasts the selling concept and the marketing
concept. The selling concept takes an inside-out
perspective. It starts with the factory, focuses on the
company’s existing products, and calls for heavy selling and
promotion to obtain profitable sales. It focuses primarily on
customer conquest—getting short-term sales with little
concern about who buys or why.
In contrast, the marketing concept takes an outside-in
perspective. The marketing concept starts with a
well-defined market, focuses on customer needs, and
integrates all the marketing activities that affect customers.
In turn, it yields profits by creating relationships with the
right customers based on customer value and satisfaction.
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 consumer’s and society’s
well-being.
As Figure 1.4 shows, companies should balance three
considerations in setting their marketing strategies:
company profits, consumer wants, and society’s interests.
p. 12
Figure 1.3: Selling
and Marketing
Concepts
Contrasted
p. 13
Key Term: Societal
marketing concept
p. 13
Figure 1.4: Three
Considerations
Underlying the
Societal Marketing
Concept
p. 13
Photo: Door to
Door Organics
Copyright© 2018 Pearson Education, Inc.