COMM 223 — Marketing Management
Chapter 1: Marketing — Creating Customer Value and
Engagement
Based on: Armstrong, Kotler et al., Marketing: An Introduction, 7th Canadian Edition
Chapter Overview: This chapter lays the foundational framework for all of marketing. It
answers the core question: What is marketing? It traces the complete five-step marketing
process — from understanding the marketplace and customer needs, to designing a
customer value-driven strategy and integrated marketing program, to managing customer
relationships and capturing value in return. It also examines how modern marketing is being
transformed by digital, social, and mobile media, globalization, not-for-profit marketing, and
the call for sustainable, socially responsible business practices. The central thesis runs
through every page: create superior value for customers, and they will reward you with
loyalty, revenue, and long-term profitability.
1. What Is Marketing?
Marketing, more than any other business function, deals with customers. The simplest
definition: marketing is engaging customers and managing profitable customer relationships.
The twofold goal of marketing is to (1) attract new customers by promising superior value, and
(2) keep and grow current customers by delivering value and satisfaction. Sound marketing is
critical to the success of every organization — large for-profit corporations like Google, Coca-
Cola, Procter & Gamble, and Microsoft, as well as not-for-profit institutions like universities,
hospitals, museums, symphony orchestras, and churches.
Marketing comes to us in traditional forms (store products, TV ads, mail) but also in a dazzling
array of new forms: imaginative websites, smartphone apps, blogs, online videos, and social
media. These new approaches do more than just blast messages to the masses — they reach
consumers directly, personally, and interactively. Today's marketers want to become a
meaningful part of consumers' lives and experiences.
Key Principle: Amazon's entire success rests on three words from founder Jeff Bezos:
'Obsess over customers.' Amazon creates genuine value for customers — personalized
experiences, vast selection, competitive prices, relentless speed, and constant innovation.
The result: customers reward Amazon with their spending dollars and loyalty. This create-
value-to-capture-value equation is the central thesis of all of marketing.
Marketing Defined
Many people think of marketing as only selling and advertising — 'telling and selling.' This is
only the tip of the marketing iceberg. Today, marketing must be understood in the new sense of
satisfying customer needs. If the marketer engages consumers effectively, understands their
needs, develops products that provide superior customer value, and prices, distributes, and
promotes them well, those products will sell easily.
According to management guru Peter Drucker: "The aim of marketing is to make selling
unnecessary." Selling and advertising are only part of a larger marketing mix — a set of
marketing tools that work together to engage customers, satisfy needs, and build relationships.
,Broadly defined, marketing is a social and managerial process by which individuals and
organizations obtain what they need and want through creating and exchanging value with
others. In a narrower business context:
Formal Definition: Marketing is the process by which companies engage customers, build
strong customer relationships, and create customer value in order to capture value from
customers in return.
The Marketing Process
Figure 1.1 presents a simple five-step model of the marketing process for creating and capturing
customer value. The first four steps focus on creating value for customers and building strong
relationships. The fifth and final step is where companies reap the rewards — capturing value
from customers in the form of sales, profits, and long-term customer equity.
# Step What Happens
1 Understand the Research consumer needs, wants, and demands. Understand the
marketplace and marketplace in which the company operates.
customer needs
and wants
2 Design a customer Choose target markets and determine the value proposition.
value-driven Select the right customers and decide how to serve them best.
marketing strategy
3 Construct an Develop the marketing mix (the four Ps: product, price, place,
integrated promotion) to deliver the value proposition to target customers.
marketing program
that delivers
superior value
4 Engage customers, The most important step. Build and manage profitable customer
build profitable relationships. Create satisfaction and delight to build loyalty.
relationships, and
create customer
delight
5 Capture value from Reap the rewards of superior value creation: loyal customers buy
customers to create more, buy again, and advocate the brand, producing long-term
profits and customer equity.
customer equity
2. Understanding the Marketplace and Customer Needs
As a critical first step, marketers need to understand customer needs and wants and the
marketplace in which they operate. There are five core customer and marketplace concepts: (1)
needs, wants, and demands; (2) market offerings — products, services, and experiences; (3)
customer value and satisfaction; (4) exchanges and relationships; and (5) markets.
, Customer Needs, Wants, and Demands
The most basic concept underlying marketing is that of human needs. These three terms are
distinct and must not be confused:
Term Definition Example
Needs States of felt deprivation. Include Hunger, the need to feel safe, the
physical needs (food, clothing, need for social connection.
warmth, safety), social needs
(belonging, affection), and individual
needs (knowledge, self-expression).
Marketers did not create these — they
are a basic part of human makeup.
Wants The form human needs take as they A person needs food (need) but
are shaped by culture and individual wants a Big Mac, fries, and a soft
personality. Described in terms of drink (want).
objects that will satisfy needs. Wants
are shaped by one's society.
Demands Human wants that are backed by A consumer who wants a luxury
buying power. Given their wants and car AND has the financial
resources, people demand products resources to purchase one has a
and services with benefits that add up demand.
to the most value and satisfaction.
Companies go to great lengths to learn about and understand customer needs, wants, and
demands. They conduct consumer research, analyze mountains of customer data, and observe
customers as they shop and interact. People at all levels of the company — including top
management — stay close to customers.
Real-World Example: Airbnb's CEO Brian Chesky and co-founder Joe Gebbia personally
stay at the company's host locations to understand the customer experience firsthand.
Target's CEO Brian Cornell makes regular unannounced visits to Target stores
accompanied by local moms and loyal shoppers — even visiting customers in their homes,
opening closets and cupboards to understand product choices and buying habits. This direct
customer immersion shapes new solutions grounded in real user experience.
Market Offerings — Products, Services, and Experiences
Market offerings are some 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 include:
• Physical products (tangible goods).
• Services — activities or benefits offered for sale that are essentially intangible and do
not result in the ownership of anything. Examples: banking, airline, hotel, retailing, and
home-repair services.
Chapter 1: Marketing — Creating Customer Value and
Engagement
Based on: Armstrong, Kotler et al., Marketing: An Introduction, 7th Canadian Edition
Chapter Overview: This chapter lays the foundational framework for all of marketing. It
answers the core question: What is marketing? It traces the complete five-step marketing
process — from understanding the marketplace and customer needs, to designing a
customer value-driven strategy and integrated marketing program, to managing customer
relationships and capturing value in return. It also examines how modern marketing is being
transformed by digital, social, and mobile media, globalization, not-for-profit marketing, and
the call for sustainable, socially responsible business practices. The central thesis runs
through every page: create superior value for customers, and they will reward you with
loyalty, revenue, and long-term profitability.
1. What Is Marketing?
Marketing, more than any other business function, deals with customers. The simplest
definition: marketing is engaging customers and managing profitable customer relationships.
The twofold goal of marketing is to (1) attract new customers by promising superior value, and
(2) keep and grow current customers by delivering value and satisfaction. Sound marketing is
critical to the success of every organization — large for-profit corporations like Google, Coca-
Cola, Procter & Gamble, and Microsoft, as well as not-for-profit institutions like universities,
hospitals, museums, symphony orchestras, and churches.
Marketing comes to us in traditional forms (store products, TV ads, mail) but also in a dazzling
array of new forms: imaginative websites, smartphone apps, blogs, online videos, and social
media. These new approaches do more than just blast messages to the masses — they reach
consumers directly, personally, and interactively. Today's marketers want to become a
meaningful part of consumers' lives and experiences.
Key Principle: Amazon's entire success rests on three words from founder Jeff Bezos:
'Obsess over customers.' Amazon creates genuine value for customers — personalized
experiences, vast selection, competitive prices, relentless speed, and constant innovation.
The result: customers reward Amazon with their spending dollars and loyalty. This create-
value-to-capture-value equation is the central thesis of all of marketing.
Marketing Defined
Many people think of marketing as only selling and advertising — 'telling and selling.' This is
only the tip of the marketing iceberg. Today, marketing must be understood in the new sense of
satisfying customer needs. If the marketer engages consumers effectively, understands their
needs, develops products that provide superior customer value, and prices, distributes, and
promotes them well, those products will sell easily.
According to management guru Peter Drucker: "The aim of marketing is to make selling
unnecessary." Selling and advertising are only part of a larger marketing mix — a set of
marketing tools that work together to engage customers, satisfy needs, and build relationships.
,Broadly defined, marketing is a social and managerial process by which individuals and
organizations obtain what they need and want through creating and exchanging value with
others. In a narrower business context:
Formal Definition: Marketing is the process by which companies engage customers, build
strong customer relationships, and create customer value in order to capture value from
customers in return.
The Marketing Process
Figure 1.1 presents a simple five-step model of the marketing process for creating and capturing
customer value. The first four steps focus on creating value for customers and building strong
relationships. The fifth and final step is where companies reap the rewards — capturing value
from customers in the form of sales, profits, and long-term customer equity.
# Step What Happens
1 Understand the Research consumer needs, wants, and demands. Understand the
marketplace and marketplace in which the company operates.
customer needs
and wants
2 Design a customer Choose target markets and determine the value proposition.
value-driven Select the right customers and decide how to serve them best.
marketing strategy
3 Construct an Develop the marketing mix (the four Ps: product, price, place,
integrated promotion) to deliver the value proposition to target customers.
marketing program
that delivers
superior value
4 Engage customers, The most important step. Build and manage profitable customer
build profitable relationships. Create satisfaction and delight to build loyalty.
relationships, and
create customer
delight
5 Capture value from Reap the rewards of superior value creation: loyal customers buy
customers to create more, buy again, and advocate the brand, producing long-term
profits and customer equity.
customer equity
2. Understanding the Marketplace and Customer Needs
As a critical first step, marketers need to understand customer needs and wants and the
marketplace in which they operate. There are five core customer and marketplace concepts: (1)
needs, wants, and demands; (2) market offerings — products, services, and experiences; (3)
customer value and satisfaction; (4) exchanges and relationships; and (5) markets.
, Customer Needs, Wants, and Demands
The most basic concept underlying marketing is that of human needs. These three terms are
distinct and must not be confused:
Term Definition Example
Needs States of felt deprivation. Include Hunger, the need to feel safe, the
physical needs (food, clothing, need for social connection.
warmth, safety), social needs
(belonging, affection), and individual
needs (knowledge, self-expression).
Marketers did not create these — they
are a basic part of human makeup.
Wants The form human needs take as they A person needs food (need) but
are shaped by culture and individual wants a Big Mac, fries, and a soft
personality. Described in terms of drink (want).
objects that will satisfy needs. Wants
are shaped by one's society.
Demands Human wants that are backed by A consumer who wants a luxury
buying power. Given their wants and car AND has the financial
resources, people demand products resources to purchase one has a
and services with benefits that add up demand.
to the most value and satisfaction.
Companies go to great lengths to learn about and understand customer needs, wants, and
demands. They conduct consumer research, analyze mountains of customer data, and observe
customers as they shop and interact. People at all levels of the company — including top
management — stay close to customers.
Real-World Example: Airbnb's CEO Brian Chesky and co-founder Joe Gebbia personally
stay at the company's host locations to understand the customer experience firsthand.
Target's CEO Brian Cornell makes regular unannounced visits to Target stores
accompanied by local moms and loyal shoppers — even visiting customers in their homes,
opening closets and cupboards to understand product choices and buying habits. This direct
customer immersion shapes new solutions grounded in real user experience.
Market Offerings — Products, Services, and Experiences
Market offerings are some 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 include:
• Physical products (tangible goods).
• Services — activities or benefits offered for sale that are essentially intangible and do
not result in the ownership of anything. Examples: banking, airline, hotel, retailing, and
home-repair services.
