Marketing can be defined as building profitable customer relationships by creating value for customers and capturing value in return. But what is involved in the Marketing Process? What steps allow a firm to fulfil the definition of marketing? Here is a complete overview at one glance.
The Marketing Process can be divided into two large parts: the first one consists of activities that create value for customers. This is the largest and main part of the process, and can be further subdivided into four steps. In return, the company can capture value from customers, which is the second part of the Marketing Process. The steps are illustrated in the diagram below.
Part 1 of the Marketing Process: Creating Value for Customers
The first step of the Marketing Process looks at who the customer is and what he needs and wants. Before any other marketing activities make sense, the company should gain a complete understanding of the marketplace. For that, it must research the marketplace, as well as customer needs and wants. Simultaneously, the information about the marketplace and customer data, which is to say marketing information, must be managed.
The second step of the process is to design a customer-driven marketing strategy. How does a company do that? It involves first of all market segmentation and targeting. The firm must segment the market and then target and focus on one or more of these identified segments. This answers the simple question: What customers do we want to serve? Answering this question and thereby carrying out a proper segmentation and targeting is necessary because a company cannot serve all customers in every way. On the contrary, the company should focus its resources on those customers it can serve best and most profitably. Segmentation and targeting determines who will be served. The next question is how the targeted customers can be served best, which involves differentiation and positioning. What is the company’s value proposition, what makes it more valuable for customers than other companies and which position does it want to achieve in customers’ minds? Doing that also involves to choose a Marketing Concept, also called Marketing Management Orientation.
When the marketing strategy is designed, the company can address the third step, which focuses on constructing an integrated marketing programme, which is the so-called marketing mix. The purpose of the marketing programme is to turn the marketing strategy into real value for the customers. Therefore, the marketing programme should deliver superior customer value. The marketing programme is often called the 4 P’s, consisting of the four marketing mix elements. The marketing mix consists of the Product, Price, Place, and Promotion. The Product is about designing a product (or service) which is desirable for the targeted customers and creating strong brands around these products. Then, they must be priced so as to make them attractive to customers, and distributed (Place), managing demand and supply chains, to make them available to the targeted customers. To round the marketing mix off, a promotion strategy must be set up to communicate the customer value and the value proposition to target customers and convince them to take on the company’s offer.
The fourth step in the first part of the Marketing Process which aims to create value for customers is to build profitable customer relationships with target customers. The factor leading to success in this goes beyond satisfying customers. Instead, the orientation must be creating customer delight, meaning that the company’s offers exceed customers’ expectations. Then, customers will repeat the purchase action and stay loyal and profitable for the company. Therefore, this step may be the most important one in the first part of the Marketing Process. The process which leads to the creation and maintenance of customer relationships is CRM, Customer Relationship Management. However, the firm cannot do all of this alone. Creating customer value and maintaining strong customer relationships also requires strong relationships and collaboration
with marketing partners, which leads to PRM, Partner Relationship Management.
Part 2 of the Marketing Process: Capturing Value in Return
After these four steps have been accomplished, the firm has created value for the right customers by an integrated marketing programme leading to strong customer relationships. Now, it can reap the fruit of its work. The fifth step can now focus on capturing value from customers in return. Capturing value from customers means that the firm is able to create profits and customer equity. This is based on satisfied, delighted and loyal customers who repeat the purchase action and thus come back to buy more and again. Hence, the company can capture their value in the long-term, which is the Customer Lifetime Value (CLV). If all activities are planned and executed properly, the company will be able to increase its market share and win a greater share of customers to maximize the value it can capture from customers.
