Chapter 01 – Creating Customer Relationships and Value Through Marketing
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CHAPTER CONTENTS
PAGE
POWERPOINT RESOURCES TO USE WITH LECTURES ……………………………………. 1-2
LEARNING OBJECTIVES (LO) ……………………………………………………….……………………. 1-3
KEY TERMS ……………………………………………………….………………………………………………….. 1-3
LECTURE NOTES
• Chapter Opener: Creating Customer Value the Chobani Way …………………………..….. 1-4
• What Is Marketing? (LO 1-1) ……………………………………………………….………………….. 1-5
• How Marketing Discovers and Satisfies Consumer Needs (LO 1-2; LO 1-3) ………… 1-8
• The Marketing Program: How Customer Relationships Are Built (LO 1-4) ………….. 1-11
• How Marketing Became So Important (LO 1-5) …………………………..…………………… 1-16
APPLYING MARKETING KNOWLEDGE ……………………………………………………………. 1-21
BUILDING YOUR MARKETING PLAN …………………………..…………………………………… 1-25
VIDEO CASE (VC)
• VC-1: Chobani®: Making Greek Yogurt a Household Name …………………………..…… 1-26
IN-CLASS ACTIVITIES (ICA)
• ICA 1-1: Designing a Candy Bar ……………………………………………………….…………….. 1-31
• ICA 1-2: What Makes a Better Mousetrap? …………………………..………………………….. 1-35
CONNECT EXERCISES ……………………………………………… 1-42
• Customer Value and Relationship Strategies Click and Drag*
• 4 Ps of Marketing Click and Drag*
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Textbook Figures Slide
Figure 1-1 A marketing department relates to many people, organizations, and environmental
forces …………………………………………………………………………………………………………….. 1-9
Videos
1-1: Chobani Ad …………………………..……………………………………………………….…………………………… 1-3
1-3: Coca-Cola Stevia Ad ………………………………………………………………………………………………….. 1-12
1-5: Hermitage Tour Video …………………………..……………………………………………………….…………… 1-24
In-Class Activities (ICA)
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LEARNING OBJECTIVES (LO)
After reading this chapter students should be able to:
LO 1-2: Explain how marketing discovers and satisfies consumer needs.
LO 1-4: Explain how organizations build strong customer relationships and customer value
through marketing.
KEY TERMS
customer experience
marketing concept
customer relationship management
(CRM)
marketing mix
customer value
marketing program
customer value proposition
organizational buyers
environmental forces
product
exchange
relationship marketing
market
societal marketing concept
market orientation
target market
market segments
ultimate consumers
marketing
utility
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LECTURE NOTES
CREATING CUSTOMER VALUE: THE CHOBANI WAY!
A. Creating an Exceptional Product
• Chobani’s Web site proclaims its guiding mission is “better food for more
people.”
a. Starts with milk from local sources.
B. Connecting with Customers
• Little money for traditional advertising.
a. Relied on positive word-of-mouth.
b. Used social media such as Twitter and Facebook.
[Video1-1: Chobani Fruit Symphony Ad]
C. Chobani Today
• Continues to monitor changing consumer tastes and offers new products.
a. Yogurt drinks (Drink Chobani) and yogurt-crunchy toppings (Chobani Flip),
and a squeezable package called Chobani Savor.
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D. Chobani, Marketing, and You
• Hamdi Ulukaya faces competition in Greek yogurts from Yoplait, Dannon,
I. WHAT IS MARKETING? [LO1]
• You’re already a marketing expert because you do many marketing activities every
[ICA 1-1: Designing a Candy Bar]
A. Marketing and Your Career
• Marketing affects all individuals, corporations, industries, and countries.
• You will learn and “do” marketing:
• Hopefully, you will find marketing exciting and maybe find a career in the field!
• Elon Musk started and sold Zip2 software company, then started another business
that became PayPal. When PayPal was purchased by eBay, Musk founded Space
X, which develops and manufacturers space launch vehicles.
a. Today, Musk runs Tesla and SolarCity, a solar power company.
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B. Marketing: Delivering Value to Customers [LO 1-1]
• The American Marketing Association (AMA) represents those involved in the
development and practice of marketing worldwide. It defines marketing as “the
• To serve both buyers and sellers, marketing seeks to:
a. Discover the needs and wants of prospective customers.
b. Satisfy these needs and wants.
• Prospective customers include:
• Exchange:
a. Is the trade of things of value between a buyer and a seller so that each is
better off after the trade.
b. Is the key to discovering and satisfying consumer needs and wants.
C. The Diverse Factors Influencing Marketing Actions
• [Figure 1-1] A variety of other people, groups, and forces interact with marketing
to shape the nature of its actions. These include:
a. The organization itself, whose mission and objectives determine:
b. Management, which is responsible for establishing these goals.
c. The marketing department:
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• Environmental forces:
• Marketing is affected by and impacts society.
• The organization must strike a balance among competing interests of:
a. Customers (low price; high quality; value).
D. What is Needed for Marketing to Occur
Four factors are required for marketing to occur:
• Two or more parties with unsatisfied needs. A consumer who wants something,
and a seller who wants to sell something.
• A desire and ability to satisfy these needs.
• A way for the parties to communicate. The consumer learns about the product
(that it exists) and where to get it.
• Something to exchange. For a transaction to occur between a buyer and a seller:
a. Money or something else of value must be exchanged.
b. Each has satisfied each other’s unmet needs:
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LEARNING REVIEW
1-1. What is marketing?
1-2. Marketing focuses on _________ and _________ consumer needs.
1-3. What four factors are needed for marketing to occur?
Answer: The four factors are: (1) two or more parties (individuals or organizations)
II. HOW MARKETING DISCOVERS AND
SATISFIES CONSUMER NEEDS [LO 1-2]
Discovering and satisfying consumer needs is critical to marketing.
A. Discovering Consumer Needs
• Marketing’s first objective: discover the needs of prospective consumers.
B. The Challenge: Meeting Consumer Needs with New Products
• Experts estimate that it takes 3,000 raw ideas to generate one commercial success.
Of the estimated 33,000 new products introduced worldwide each month, roughly
40% will fail.
• Key principles for new product launches:
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a. Find out what consumers need and want.
• What are the potential benefits and “showstoppers” (factors that might doom the
offering) for the following products:
a. Google Glass (wearable computer)
[Video 1-2: Google Glass Video]
b. Coca-Cola Stevia No Sugar
[Video 1-3: Coca-Cola Stevia Ad]
c. YoYo (pay-per-mile car subscription model)
• Firms spend billions of dollars on marketing and technical research to reduce
new-product failures.
1. Consumer Needs and Consumer Wants.
a. Should marketers try to satisfy consumer needs or consumer wants? Both!
• Debates center around:
– Definitions of needs and wants.
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b. Does marketing persuade consumers to buy the “wrong” products?
• Marketing does try to influence what consumers buy.
• When should the government and society step in to protect consumers?
c. [Figure 1-2] Marketers carefully study prospective customers to understand:
• What they need and want.
• The forces that shape these needs and wants.
2. What a Market Is.
a. Potential consumers make up a market, which is people with both the desire
and the ability to buy a specific offering.
b. All markets are ultimately people.
C. Satisfying Consumer Needs
• An organization does not have the resources to satisfy the needs of all consumers.
[ICA 1-2: What Makes a Better Mousetrap?]
1. The Four Ps: Controllable Marketing Mix Factors. [LO 1-3]
After selecting its target market consumers, the firm must take steps to satisfy
their needs.
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c. These are the elements of the marketing mix, which are:
• The marketing manager’s controllable factors—product, price, promotion,
and place that…
d. An effective marketing mix conveys to potential buyers a customer value
proposition, which is the cluster of benefits that an organization promises
customers to satisfy their needs.
2. The Uncontrollable, Environmental Forces.
a. Environmental forces are the uncontrollable forces that affect a marketing
decision, which consist of:
• Social forces. What consumers themselves want and need.
b. These five forces may expand or restrict an organization’s marketing
opportunities.
III. THE MARKETING PROGRAM:
HOW CUSTOMER RELATIONSHIPS ARE BUILT [LO 1-4]
A marketing program connects the organization with its customers.
A. Relationship Marketing: Easy to Understand, Hard to Do
• Intense competition in global markets has caused many U.S. firms to focus on
customer value.
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a. What is new is a more careful attempt at understanding how a firm’s
customers perceive value.
b. The firm must then actually create and deliver that value to them.
• Customer value:
a. Is the unique combination of benefits received by targeted buyers.
b. Includes, at a specific price:
• Firms calculate the dollar value of a loyal, satisfied customer. Example:
Kleenex = $994.
• Firms cannot succeed by being all things to all people. Instead, they:
• Three strategies used to deliver customer value include:
a. Best price: Target—its brand promise is to “Expect More. Pay Less.”
• Relationship marketing:
a. Links the organization to its individual customers, employees, suppliers, and
• Information technology, along with other cutting-edge processes, better enables
companies to form relationships with customers.
a. Done through:
• “Internet of everything” helps create detailed databases about product
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B. The Marketing Program and Market Segments
• Product concepts are converted into a tangible marketing program—a plan that:
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LEARNING REVIEW
1-4. An organization can’t satisfy the needs of all consumers, so it must focus on one or
more subgroups, which are its __________.
1-5. What are the four marketing mix elements that make up the organization’s
marketing program?
1-6. What are environmental forces?
Answer: Environmental forces are the uncontrollable forces that affect a marketing
decision, which consist of social, economic, technological, competitive, and regulatory
forces.
C. 3M’s Strategy and Marketing Program to Help Students Study
• 3M’s David Windorski:
• Windorski worked with a team of college students to:
a. Observe and question college students about their studying, such as how they:
b. They often observed students highlight a passage and mark a page in their
textbooks with a Post-it® Note or Post-it® Flag.
c. Windorski realized he could help students study by:
1. Moving from Ideas to a Marketable Highlighter Product.
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b. The initial highlighter product with Post–it® Flags inside were produced and
given to students—and also office workers—to get their reactions.
c. A suggestion from users quickly emerged:
• The product needed a convenient, reliable cover to protect the Post-it®
2. Adding the Post-it® Flag Pen.
a. Windorski considered other related products.
b. Windorski observed that many office workers need immediate access to
3. A Marketing Program for the Post-it® Flag Highlighter and Pen.
a. [Figure 1-3] shows the strategies for each marketing mix element in 3M’s
marketing program to college students and office workers for the Post-it®
Flag Highlighter and the Post-it® Flag Pen.
b. Comparing the marketing program for each product:
• Post-it® Flag Highlighter (shown in the orange column).
– The target market is mainly college students.
– Gaining distribution in college bookstores was critical and would:
• Post-it® Flag Pen (shown in the green column).
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– Post-it® Flag Pens:
• The marketing program for Post-it® Flag Pens emphasize gaining
distribution in outlets used by purchasing department managers.
c. The Post-it® Flag Highlighters and Post-it® Flag Pens were so successful that
Windorski and his team received a prestigious award from 3M.
d. In 2008, Windorski was invited to appear on The Oprah Winfrey Show:
4. Extending the Product Line.
a. The success of the Post-it® Flag Highlighter and Post-it® Flag Pen:
b. The success of the second generation of products has led to a family of related
products (i.e. product line extensions).
IV. HOW MARKETING BECAME SO IMPORTANT [LO 1-5]
Marketing has become a driving force in the modern global economy.
A. Evolution of the Market Orientation
Many manufacturing organizations have experienced four distinct stages in the life of
their firms:
a. The marketing concept is the idea that an organization should:
• Strive to satisfy the needs of consumers while also trying to achieve the
organization’s goals.
b. General Electric:
Chapter 01 – Creating Customer Relationships and Value Through Marketing
• Firms such as Southwest Airlines, Marriott, and Facebook put huge efforts
into implementing the marketing concept, giving their firms a market
B. Focusing on Customer Relationship Management
• Digital marketing is a recent focus of the customer relationship era.
a. The focus on customers has led to customer relationship management
(CRM), which is the process of:
• Identifying prospective buyers.
b. This process requires:
• The commitment of managers and employees throughout the organization.
c. The foundation of CRM is customer experience, which is:
• The internal response that customers have to all aspects of an organization
and its offering.
• This internal response includes:
c. Trader Joe’s in consistently ranked as one of America’s favorite supermarket
chains. What makes the customer experience unique?
• Setting low prices using its own brands.
C. Ethics and Social Responsibility in Marketing: Balancing the Interests of
Different Groups
Today, the standards of marketing practice have shifted from an emphasis on
producers’ interests to consumers’ interests.
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1. Ethics.
2. Social Responsibility.
a. Is the idea that organizations are accountable to a larger society.
b. The societal marketing concept:
D. The Breadth and Depth of Marketing
Marketing affects every person and organization.
2. What is Marketed?
c. Ideas. Thoughts about concepts, actions, or causes.
d. All three of the above are considered products, which:
• Consist of a bundle of tangible and intangible attributes that…
[Video 1-5: Hermitage Tour Video]
3. Who Buys and Uses What Is Marketed? Two groups do:
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4. Who Benefits? Three specific groups benefit:
a. Consumers who buy.
• Competition ensures that consumers can find value from the best products,
c. Society as a whole. Marketing raises the standard of living for a country’s
citizens by:
5. How Do Consumers Benefit? Marketing creates utility, the benefits or customer
value received by users of the product. Four different utilities are created:
a. Form utility. Producing the product or service.
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LEARNING REVIEW
1-7. What are the two key characteristics of the marketing concept?
1-8. What is the difference between ultimate consumers and organizational buyers?